Mindles H. Dreck has a very important post on recent trends in corporate regulation spawned by the last few year's scandals. Go read the whole thing, and also follow the links in the post - especially these posts on regulatory capture, and this gem about the ways professional service firms and securities firms try to play "pass-the-liability."

Though I'm an interested party (as an attorney), I believe that Mindles is incorrect when he predicts the imminent death of attorney-client privilege, for reasons he implies in his post: while the confidentiality of attorney-client communications are threatened by court decisions threatening privilige in certain situations, a more fundamental problem is the potential adversarial relationship contemplated by the attorney conduct rules under the Sarbanes-Oxley Act. While legal academics such as Eugene Volokh or Glenn Reynolds (it's too late for me to find the link, but I remember they were in favor of the idea. Or at least one of them was. Maybe.) or non-lawyers think it sounds self-evident, they ignore the realities of practice: once a new risk is introduced, it takes a while for the players to allocate the risks amongst themselves (as Mindles says, it's a game of pass-the-parcel) and communication is hampered while the players try to protect their own interests. These types of calculations are exactly the opposite of what is supposed to characterize the attorney-client relationship. The rules threaten to undermine the representation that lawyers are supposed to provide on a normal basis. And I don't think that will stand as a matter of practice. (And while beleagured clients might want to go after the trial bar, they will also want to retain the protected services of their own counsel - and it's pretty hard to subvert one side's privilege without harming the other's.)

Alternatively, it's possible that the attorney conduct regulations will have little effect, as a widely-held opinion of the NY securities bar (from my tiny corner of it) is that the SEC does not have the jurisdiction to regulate the attorney-client relationship. But if the best defense of a regulation is that it will be ignored, that's not much of a compliment.