Partners Robert Juceam, Robert Mollen and Karen Wiedemann quoted, <i>Lloyd's List</i>,

Partners Robert Juceam, Robert Mollen and Karen Wiedemann quoted, Lloyd's List, "Company Heads Face Higher Personal Risk of Litigation"

An article entitled "Company Heads Face Higher Personal Risk of Litigation in the May 27th Lloyd's List notes that "[r]epresentatives of Fried, Frank, Harris, Shriver & Jacobson[LLP] told an expert gathering that most directors and companies had failed to reassess their directors and officers liability insurance coverage with a view to the increased risks. Many companies were focusing on the cost of coverage, law firm partner Robert Juceam told corporate general counsels at a conference co-hosted by the firm with European affiliate of the Association of Corporate Counsel, 'but a cheap policy that doesn't pay, and leaves directors exposed, is very expensive.' Mr Juceam added that 'innocent directors who share coverage, particularly as part of a combined policy with their companies, may find that coverage is not there when they really need it. Why? The company may have exhausted the limits, or the insurers may seek to avoid liability under the policy based on alleged misrepresentations on the application form or misconduct by other officers or directors.' Directors should ask questions, and not wait until disaster strikes to investigate their coverage. Karen Wiedemann, another partner at Fried, Frank, said: 'The risk is not simply that of ultimate liability. It is also the very high cost for directors of defending investigations and claims. As recent high-profile cases in the US have shown, such costs easily can extend into the millions of dollars.' Ms Wiedemann said the US continued to be the source of greatest risk. While much had been said about the Sarbanes-Oxley reporting rules, some people had yet to realize that its certification requirements, audit committee requirements, 'up-the-ladder' reporting provisions, and internal control provisions had placed directors squarely in the firing line. Robert Mollen, another partner at Fried, Frank, said that non-US companies and their directors were being pursued in the US by the class action bar, the Securities and Exchange Commission, Elliot Spitzer and other state attorneys general and securities regulators, and a host of others. 'Some may see non-US companies and their directors as 'soft targets' because they are on unfamiliar turf and less well-equipped to deal with the issues.'"