Media Alert: Domestic Corporate Counsel Unite with the Association of Corporate Counsel to Protest Proposed Disclosure Rules

Business Wire, July 25, 2008

ACC Files Comments Critical of FASB 5, Citing Serious Concerns that Amendment Would Do More Harm than Good

WASHINGTON -- The Association of Corporate Counsel (ACC), joined by General Counsel and senior attorneys from more than 50 leading companies, today filed comments addressing serious concerns that the Financial Accounting Standards Board's (FASB) proposed amendments would not only harm companies, but also the owners and investors the FASB seeks to protect. Through resulting unprecedented waivers of attorney/client and work product privileges and onerous reporting requirements, the proposed amendments would provide adversaries with an unfair window into company litigation strategies, opening companies up to greater losses, and negatively impacting owners and investors.

Co-signed by Laura Stein, Chair of the ACC Board of Directors, and Senior Vice President & General Counsel of The Clorox Company, and ACC President Frederick J. Krebs, ACC's letter notes that the proposed amendments to FASB 5, as applied to litigation-related contingencies, fail the key test for a standards change as the problems they create far outweigh any benefit that may accrue.

According to Stein, "The proposed amendments are a solution in search of a problem. The signatories on our letter, from such industries as health care, pharmaceuticals and chemical to manufacturing, retail and technology, represent a broad cross-section of the US economy. We trust that FASB will recognize the depth and breadth of their concerns, and drop these misguided proposals."

Krebs notes that "these changes will create a vicious cycle that leads to inaccurate cost estimates that rob stakeholders of the very information they need in order to evaluate a company's litigation exposure, while at same time, because of the waiver of privileged information, result in further litigation and ultimately expose the company to greater losses."

The Financial Accounting Standards Board (FASB) released a June 5, 2008 Exposure Draft of proposed amendments to their disclosure requirements in FASB Statements No. 5, Accounting for Contingencies, and 141(R). If adopted they would become effective December 15, 2008.

NOTE TO MEDIA: ACC Comments to Amendment of FASB 5 available upon request.