Carrington Coleman - Practice Areas

Carrington Coleman has been providing corporate governance advice for many years. Our practice is grounded in broad experience. Given the recent rash of corporate failures - coupled with allegations of mismanagement and breaches of fiduciary duty – the spotlight of legislators, regulators, stock exchanges, and the public has been focused brightly on matters of corporate governance. A veritable blizzard of proposed reforms and a renewed focus on the oversight responsibilities of directors, officers, and majority shareholders make sound counsel and advice in this area more essential than ever. We are able to bring independent legal advice and counsel to directors, officers, similarly grouped board members, or members of special committees when a particular situation demands independence and decisive action.

There are six principal, but interrelated, aspects of the Carrington Coleman corporate governance practice: (1) advice to management, directors, and shareholders concerning their fiduciary duties and responsibilities; (2) advice regarding director and officer insurance and corporate indemnification; (3) Sarbanes-Oxley rules and regulations; (4) corporate governance litigation; (5) development of corporate compliance programs; and (6) advice concerning business entity separation.

1. Corporate Governance Advice.

This aspect of our corporate governance practice focuses upon guidance and advice to officers, directors, special committees, and shareholders regarding their fiduciary duties in varied situations. We most often analyze these matters in the context of Delaware or Texas corporate law. We have represented special committees in evaluating corporate strategic alternatives such as mergers, acquisitions, or internal growth strategies, conducting investigations, preparing reports regarding shareholder litigation demands, investigating transactions involving potential conflicts of interest with directors, and evaluating the composition and responsibilities of audit committees.

Examples of our activities in these areas include:

Represent a special committee investigating strategic alternatives available to a Fortune 500 company in connection with the consideration of several merger candidates; the resulting merger created a combined entity with a value of over $12 billion.

Represent, advise, and assist the board of directors of a multi-billion dollar company in the electronic information business with regard to a divestiture of the company by its parent.

Advise large insurance brokerage firm as to the fiduciary duty of the company and its directors under Delaware law in connection with the preparation for sale, auction, negotiation, and closing of a merger.

Investigate on behalf of various bankruptcy constituencies the conduct of directors and officers in their planning and execution of merger transactions to determine if they breached fiduciary duties in approving and consummating such transactions.

Advise a board of directors in connection with its decision to exercise a "material adverse change" termination provision for a major proposed acquisition of assets.

Represent, advise, and assist other professionals in successfully fending off a hostile takeover of a Fortune 500 client.

Supervise and implement all phases of a merger between two major medical products companies, including satisfaction of fiduciary duties in the merger process of public companies and coordination of responses to Delaware shareholder litigation that arose in connection with that proposed merger.

Represent and advise outside directors of a publicly held company with a divided board in connection with a cash-out merger of the company and the dismissal of derivative claims of the company against certain board members.

Represent a special litigation committee of a substantial oil and gas producer sued in a derivative action as a result of a limited partnership roll-up. The committee was formed to consider the terms of a proposed settlement.

Advise President and CEO of a public company in connection with an audit committee investigation regarding restatement of financial statements.

Advise an audit committee in connection with compliance with Section 404 of SOX (internal control over financial reporting) and delisting attempts by Nasdaq.

Dismissal of a lawsuit embodying both shareholder derivative and class action claims against a noted oil and gas company, based upon the work and recommendation of a special committee.

Advise a special committee appointed by the board of a publicly held transportation company in connection with the possible usurpation of corporate opportunities.

Advise outside directors of a publicly held airline company in connection with contemplated managerial changes.

Advise outside directors of a publicly held medical manufacturing company in connection with the removal of a senior executive.

Represent a two-member special litigation committee of a publicly held oil field service company sued in a derivative suit in Texas state court as a result of defensive actions taken to fend off a hostile tender offer. In the first use of a special litigation committee known to us in Texas, we advised the committee concerning procedures to be followed in its investigation, assisted in the investigation, provided advice concerning the applicable legal standards, and drafted the committee's report. Upon the committee's determination that the derivative suit be dismissed, we successfully moved for dismissal of the suit.

Dismissal of a lawsuit embodying both shareholder derivative and class action claims against a noted oil and gas company, based upon the work and recommendation of a special committee.

Advise outside directors of a publicly held entertainment company regarding their fiduciary duties as members of a divided board.

Advise a prominent national bank regarding whistleblower complaints under Sarbanes-Oxley.

Advise a special committee in regard to possible conflict of interest by its investment banking advisors.

2. Director and Officer Insurance and Indemnification.

We have represented many corporations, officers, and directors concerning the structure and essential component parts of corporate indemnification and director and officer insurance programs. We have structured programs to fill gaps in corporate indemnification in circumstances where indemnification is not allowed by law or when a corporation becomes financially unable to provide its promised indemnification.

We have also analyzed numerous D&O insurance and indemnification matters and evaluated such coverage from the perspective of potential litigation. In this work we have had occasion to examine and analyze D&O insurance portfolios of hundreds of millions of dollars of both public and private companies. As part of our recent practice we have held a number of seminars for officers and directors in connection with the issues of D&O insurance and corporate indemnification, and we have authored a chapter for the American Law Institute - American Bar Association's Continuing Legal Education Publication on Director and Officer and Professional Liability Insurance Issues.

Examples of specific recent activities in this area include:

Advise $4 billion fund concerning its D&O and indemnification coverage and the D&O coverage for all of its portfolios company.

Advise a newly established REIT and its management and owners regarding D&O and indemnification coverage as well as related corporate governance issues in connection with the formation of the REIT.

Develop innovative D&O indemnification agreements which provide additional protection beyond the coverage in typical corporate articles and by-laws.

3. Sarbanes-Oxley Rules and Regulations.

Many of the issues arising in the context of our corporate governance work concern issues arising under the Sarbanes-Oxley Act of 2002 ("SOX"). The Firm's Corporate Governance Practice Group publishes periodically an updated manual which summarizes the provisions of SOX, certain proposed and final rules issued by the U.S. Securities and Exchange Commission pursuant to SOX, and other rules approved by the Board of Directors of the New York Stock Exchange and the Board of Directors of The Nasdaq Stock Market, Inc. Click here to review the latest edition of this publication.

Examples of recent specific activities in this area include:

Advice to audit committee regarding representation of internal conduct over financial reporting.

Advice to company and individuals regarding whistleblower requirement and protections under SOX.

Advice concerning SOX Standards of Professional Conduct for attorneys appearing and practicing before the SEC.

Advice regarding applicability of SOX requirements regarding corporate responsibility for financial reporting (Section 302 and 906), forfeiture of bonuses and profits by CEO's and CFO's (Section 304), and management assessment of internal controls (Section 404).

4. Litigation Relevant to Corporate Governance Matters.

The corporate governance practice has necessarily included adversarial situations arising in the realm of corporate and partnership governance. Our widely respected litigation and insolvency practices provide us the expertise to handle such matters. Our litigation in this area has included claims of securities violations, proxy contests, disputes regarding mergers and acquisitions, and other types of disputes involving the duties and relationships between business entities, managers, and investors. This work also includes experience on the plaintiff and defendant sides of the docket in cases involving alleged breaches of fiduciary duties by directors and officers, often arising in the context of a failing or a failed enterprise or inopportune mergers or acquisitions. In that regard we have represented and opposed debtors and insolvency trustees in litigation in and out of bankruptcy court involving claims against directors and officers. In connection with this extensive trial experience, our lawyers have regularly appeared before state and federal courts in Texas, Delaware, and across the nation in cases of this kind.

Our recent experience in such cases includes:

Represent a plaintiff in a multi-million dollar claim against directors and officers of two corporations, their parent companies, and their investment bankers for breaches of fiduciary duty in connection with a merger transaction.

Represent outside directors of a publicly held corporation in Delaware Chancery Court in connection with the propriety of the removal of certain senior officers and significant minority shareholders of the corporation from the Board of Directors.

Represent the chairman of the board of a Fortune 100 corporation in multiple securities claims alleging securities improprieties in connection with SEC reporting requirements and the issuance of securities.

Represent directors and officers of a publicly held company in litigation brought by the trustee in bankruptcy in United States District Court for the District of Delaware alleging breaches of fiduciary duty in connection with the Chapter 11 filing of the company.

Represent directors of a company spun off from a Fortune 100 parent company in connection with shareholder class action lawsuits filed in the Delaware Chancery Court.

Represent an investment banking firm in response to a shareholder derivative suit filed as a result of an internal management dispute, including assistance with the creation of a special litigation committee.

Represent the former Chief Financial Officer of a large energy production services company headquartered in Houston, Texas in fiduciary duty litigation filed against him in federal and Texas state court.

Represent in Texas state fiduciary duty litigation the former Chief Executive Officer of a major global corporation that supplies pumps, valves, seals automation, and services to the power, oil, gas, and chemical industries.

Represent, in fiduciary duty litigation filed against them in Texas state court by a bankruptcy trustee, the Audit Committee of what had formerly been one of the nations largest distributors of computer supplies.

Represented the former Chief Financial Officer and Director of a publicly-traded food brokerage company in a lawsuit brought by the company's bankruptcy trustee alleging, among other things, breach of fiduciary duty against the officers and directors.

Advise the board of directors of an NYSE independent petroleum refiner on fiduciary duty issues arising from a prospective merger/tender offer. The matter ultimately was resolved favorably at trial in Delaware Chancery Court.

Represent directors of an NYSE company in a derivative lawsuit filed against them in State Court in Texas.

Defend the president of a wireless services company in a lawsuit alleging that he had breached his fiduciary duties to a former wireless partnership of which he had been a member. Plaintiff sought cancellation of wireless licenses and damages in the millions.

Represent outside directors of an energy company in litigation in Texas and Delaware Chancery Court.

Represent the largest shareholder of a Canadian company being acquired by a Delaware company in fiduciary duty litigation involving the Canadian company's officers and directors. The matter involved simultaneous litigation in Quebec, Canada, and Delaware Chancery Court.

5. Corporate Compliance.

In this aspect of our corporate governance practice, we assist corporations and their boards of directors in developing policies, processes and procedures to enable senior management and boards to fulfill their important oversight functions. We work with company management in evaluating legal compliance challenges posed by company activities and devising plans to encourage routine compliance with statutory and regulatory requirements drawing on specialized practice areas within the Firm. We also assist clients in developing compliance policies in particular legal areas such as insider trading, employee relations, foreign corrupt practices, occupational health and safety and environmental protection, and in recommending comprehensive compliance programs for corporations and their boards.

This practice also involves conducting legal audits to identify areas in which particular compliance attention is warranted and the review of the committee structure of the board of directors, committee charters and committee composition to identify potential issues for management consideration, especially in light of recent proposed rule changes by regulatory bodies. In our analysis we pay particular attention to areas that are increasingly being scrutinized when corporate difficulties cause the adequacy of internal reporting and control procedures to be called into question.

The United States Sentencing Commission's Federal Sentencing Guidelines provides that a criminal sentence of a corporation may be mitigated if the corporation has in place an effective compliance program. This fact, coupled with recent court decisions suggesting that a board of directors may incur personal liability for damages suffered by the corporation as a result of the board's failure to monitor corporate activities, makes an informed decision by management and its board on a corporate compliance program increasingly important.

Examples of our activities in these areas include:

Advise a board of a national bank in connection with their specific responsibilities under federal regulatory and state corporate law.

Devise various compliance policies for both publicly traded and privately held companies.

Advise publicly traded toy distributor in connection with the adoption of an audit committee charter and the composition of that committee.

Devise comprehensive compliance program for publicly traded clothing manufacturer.

6. Business Separation.

Our experience and multi-disciplinary approach in the corporate governance area has also led us to the representation of parties in various disputes regarding the separation of business relationships. These disputes arise in varied contexts, such as partners or shareholders of closely held entities encountering fundamental business disputes that require negotiation and resolution. We have been successful in representing a number of individuals involved in various businesses, including professional associations, in connection with the satisfactory settlement of such difficult matters. These negotiated settlements routinely employ the use of alternative dispute resolution techniques, such as mediation, to move the settlement process forward.

Our recent experience in this area includes:

Represent an individual in reacquiring his investment advisor company following a failed merger.

Represent company management in the entertainment industry in a negotiated settlement with a key performer and shareholder.

Represent an officer in the divestiture of multiple family businesses in the wake of family disputes following the death of the family patriarch.

Represent a minority shareholder and company management in the sale of interests in two companies following repeated disagreements with other majority shareholders.

Represent the board of directors in settling dispute with dissident minority shareholder.

Represent company management in the divestiture of the assets of a family business following repeated challenges to corporate control by a dissident family shareholder.

Not certified by the Texas Board of Legal Certification except as noted.

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