[textbook]Traversing the Ethical Minefield Problems, Law, and Professional Responsibility by Susan R. Martyn (z-lib.org)(1) (1)

don’t want you to think this is an issue, but what are the director fees, Ed? Under our rules
I would get to keep the fees. But I’ll have to report them to my compensation committee.”
“We pay our directors $50,000 per year, $5,000 per board or committee meeting. You
get some stock options, too.”
“I guess my partner John Mangas knows what your D & O coverage is. I hope you
don’t still have that Union American policy. My partners will want to know you have real
insurance,” Peter responded, thinking at the time that extra money might finance the little
Porsche he had been admiring.
But it certainly wasn’t just the money. He had been honored that the Hanscom board
valued his judgment. He had considered how going on the board would cement the
relationship between Caldwell & Moore and this valued client. Those poaching competitor
law firms, particularly the New York lawyers selling their expertise as if the Philadelphians
were country bumpkins, might, at last, back off once they knew Peter was sitting in the
inner sanctum.
But these arguments in favor did not forestall considerable discussion when he
breathlessly shared with his fellow partners his good news. His partners were hardly
enthusiastically endorsing his acceptance of this offer.
There were certain arguments that were stated openly. Hanscom’s stock had been
particularly volatile over the years. Caldwell & Moore earned giant fees defending two 10b-
5 actions when announcements of negative news had caused the share price to drop.
Hanscom engaged in risky lines of business — pharmaceuticals, chain saws. The company
was a defendant in Superfund litigation. The reasons that made Hanscom a fascinating
client hardly commended it as a company on whose board one would willingly serve.
Then there were the arguments that went unspoken, contained in simply a glance or an
avoidance in the halls. Peter could feel the resentment, the sense that he was being too
uppity, that the last thing he needed with his exalted partnership share was more income.
In the end, the executive committee had approved his going on the board. The
approval meeting went more smoothly than he had expected; whatever else could be said,
securing the Hanscom Industries client relationship was a priority. These perilous times
cried out for preserving existing clients at almost any cost.
It was only minutes later that Peter called Ed. “Caldwell & Moore is thrilled that you
asked me to join,” he lied. Then, compensating for his unprincipled characterization of the
firm’s deliberative process, he reminded Ed that he really didn’t think it was important that
they nominate him, hoping nonetheless that Ed would stick to his resolve.
Peter soon became a regular in the boardroom. Being a director was a genuine high.
Peter got to rub elbows with a cluster of prominent fellow Philadelphians — the CEO of
First Philadelphia Trust, the Provost of the University, and the head of the local NAACP
chapter.
The seat on the board also more than fulfilled his firm’s expectations that it would
cement the Hanscom-Caldwell & Moore relationship. Since all major corporate
transactions showed up on the board agenda at an early stage, it became politically
impossible for discussion to proceed other than on the assumption that Peter’s firm would
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