Identifying the corporate client

Abstract

Introduction While the question whether corporate lawyers have a social role to perform is contentious, there is no dispute about their professional and legal duty to act in their clients' interests. Given that the profession's market success depends on its ability to service its corporate clients' needs, complying with this duty should be relatively unproblematic. This is not so, however, because identifying the client is far from straightforward in the corporate context, although it is critical to the lawyer's corporate governance role and to the proper performance of his professional duties. The nature of the problem varies, depending on the type of company involved. In owner-managed companies, and in corporate groups, uncertainty arises over who exactly the lawyer represents. Thus it may be unclear whether a lawyer represents the company and one or more of the owner-managers, only the company, or only the owner-manager(s). This ambiguity creates corporate governance problems. For example, if an owner-manager erroneously believes that the company lawyer also represents him, he may fail to strike a bargain which adequately protects his interest in the company and so lose the opportunity to protect, ex ante , his position as a shareholder. From the lawyer's perspective, where client identity is ambiguous the lawyer may find himself exposed to professional liability from unexpected quarters. Lack of clarity over client identity can also cause problems over the scope of legal professional privilege and confidentiality.