Corporate Officer and Director Liability:
Trend Toward Increased Exposure for Individual D&Os

D&Os owe statutory and common law duties to shareholders, including fiduciary duties of care and loyalty. As long as they take reasonable steps to inform themselves and discharge their duties, D&Os are supposed to be protected by the business judgment rule. But this protection is not absolute, and even allegations of violations or breaches of fiduciary duties can lead to an expensive, time-consuming lawsuit with potentially devastating personal liability for directors, officers, and LLC managers. Our panel of experienced litigators from Williams & Connolly LLP and Gilbert LLP will discuss lessons learned from recent actions by federal and state regulators to hold individual D&Os liable for corporate misconduct. In addition, the panel will address recent cases where courts have made it easier to sue directors or officers in their individual capacities. The CLE will provide practical guidance on how to mitigate personal liability and fund the defense of individuals, including indemnification provisions and D&O insurance, without waiving privilege.

Outline

  1. Director and officer liability
    1. Fiduciary duties
    2. Business Judgment Rule: statute/common law
      1. Limitations at the MTD stage
    3. Exposures
      1. Damages
      2. Disgorgement
      3. Penalties
  2. Recent efforts to impose liability on individual D&Os
    1. Government enforcement action
      1. DOJ
      2. SEC
      3. Other regulators
    2. Individual shareholder actions
      1. Direct shareholder actions
      2. Derivative shareholder actions
  3. Mitigating personal liability
    1. Indemnification
      1. Limitations
      2. Discretionary nature of advancement
    2. D&O insurance
      1. Understanding Side A and Side B coverage
      2. What constitutes a “claim” and when to provide notice
      3. Key exclusions: regulatory exclusion; insured-versus-insured exclusion; conduct exclusion
  4. Best practices
    1. Indemnification
    2. D&O insurance
    3. Mitigating risk of privilege waivers in communications with insurers
Strafford and HB Logos

On Demand CLE Webinar

A Strafford production specially selected for HB audiences.

Speakers

Steven M. Cady
Partner
Williams & Connolly

Ryan T. Scarborough
Partner
Williams & Connolly

Daniel I. Wolf
Partner
Gilbert

Benefits

The panel will address these and other key issues:

  • Primer on the basics of D&O liability
  • The trend for individual D&O exposure in government enforcement actions
  • How D&Os can mitigate risk, including when a state allows shareholders to file direct claims of personal liability
  • Exceptions and exclusions that D&Os should be aware of in D&O insurance policies