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Why I Believe Professor Kim Is Asking The Wrong Question About Gatekeepers

In a forthcoming chapter in The Cambridge Handbook of Investor Protection (Cambridge University Press, 2021) UCLA Law Professor Sung Hui Kim asks "Do Lawyers Make Good Gatekeepers"?   She posits that there is "a strong case for imposing gatekeeping duties on lawyers" while acknowledging that "prominent segments of the legal profession have long resisted such responsibilities".  While I may not qualify as "prominent", I do count myself among the resistance.  My principal reasons for opposing gatekeeper status are as follows:

  • Conflicts of Interest.  If a lawyer is a gatekeeper, then she has responsibilities beyond the client.  It establishes a situation akin to Justice Louis Brandeis’ notion of “counsel to the situation” rather than counsel to the client.  Even Brandeis ran into a lot of trouble with clients who thought that he should be looking out for their interests, and not the interests of the situation.  See Melvin I. Urofsky's fascinating biography, Louis D. Brandeis: A Life (pages 65-70).  Our legal system works best when a party has a lawyer that represents only that party and not the situation, the deal or society as a whole.

  • Attorney-Client Confidentiality.  Gatekeeper status invites violations of the confidentiality of attorney-client communications.  For example, the Security and Exchange Commission’s Part 205 rules purport to immunize attorneys who disclose client confidences in certain circumstances.  In California, the State Bar Act requires attorneys to "maintain inviolate the confidence[s], and at every peril . . . to preserve the secrets, of his or her client[s].  Cal. Bus. & Prof. Code § 6068(e).   This obligation is independent of an attorney's obligations with respect to the attorney-client privilege as set forth in the Evidence Code (Sections 950-962) and the California Rules of Professional Conduct.   Jim Fotenos, Steve Hazen, Jim Walther, Nancy Wojtas and I spilled a pot full of ink over this topic in this law review article.

  • Regulatory Capture.  As I noted in this piece (see p. 84), the lawyer as gatekeeper may be more encouraged to stay in the good graces of the regulatory agency than to act as a vigorous advocate for his or her clients’ interests.

  • Quis Custodiet Ipsos Custodes?  If lawyers are gatekeepers, who will watch the gatekeepers?  Presumably, this will be the very  regulatory agencies and thus we are led back into the problems of divided loyalties and regulatory capture.

In short, the correct question is would you want to be advised and represented by a gatekeeper with divided responsibilities?  

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 306
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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