Allen & Overy hosted discussions last week between City lawyers and the Securities and Exchange Commission (SEC) on the impact of the Sarbanes-Oxley Act on lawyers outside the US.
The videoconference discussions were chaired by the firm's joint head of US law and derivatives Geoffrey Golden. On the SEC side, Giovani Prezioso, the SEC General Counsel, and his deputy were involved.
Nine US firms sent representatives from their London offices, with Debevoise & Plimpton, Freshfields Bruckh-aus Deringer, Norton Rose and Herbert Smith also present. Two of the accountancy-tied firms have been involved for some time in separate negotiations with the US regulator.
However, while Landwell is handling its own lobbying and negotiations, KLegal has no direct input into the SEC consultation. Its interests are being represented by its accounting parent KPMG.
Despite the fact that KLegal is not directly involved, managing partner Nick Holt said: “How Sarbanes-Oxley applies is an issue that concerns all the accountancy-tied firms.”
Sources inside KLegal have indicated to The Lawyer that there is a significant amount of concern internally about how the act will affect MDPs, and KLegal in particular.
Tite & Lewis managing partner Christopher Tite said the firm would comment once it had seen the draft SEC regulations. He also claimed: “We're pretty sanguine. We don't think the new rules will have any impact over and above the existing SEC guidelines.”
It seems that the SEC might be flexible on the extra-territorial application of the act's corporate governance provisions. It is an approach that would benefit all law firms but that bestows particular advantages on accountancy-tied firms, which are concerned that provisions on auditor independence may threaten multidisciplinary partnerships (MDPs).
However, the regulator is immovable on the rigorous application of disclosure provisions to non-US companies, a stance that will concern foreign law firms, which may have to share previously client-confidential information with the SEC.