A provision that would require lawyers to take evidence of potential fraud to a company's top managers and even its board could drastically hinder business deals, the lawyers contend. And they are livid over a provision requiring them to withdraw from representing a client -- and to tell the government that they have withdrawn -- if the client did not appropriately resolve a lawyer's concerns about possible fraud. That would violate the privilege preserving the confidentiality of conversations with clients, as the lawyers see it. The American Bar Association has created a task force to respond to the proposed rules, in addition to an existing task force responding to the corporate scandals. A few lawyers at big firms -- the kind of $600-an-hour corporate advisers not used to regulation of their own jobs -- have begun a letter-writing campaign seeking to kill some of the provisions.

The proposed rules, which would take effect at the end of January, were called for in corporate governance legislation this summer, and comments are being accepted through tomorrow. The agency is holding an open roundtable this afternoon on the proposed rules' impact on lawyers from abroad.

The Securities and Exchange Commission released the proposals on Nov. 21, just weeks after the commission's chairman, Harvey L. Pitt, announced he would resign. Some lawyers have said that they hope Mr. Pitt's successor will be less aggressive and will listen to the objections of the profession.

William H. Donaldson has been selected by the administration to lead the commission, but Mr. Pitt will remain in the job until Mr. Donaldson is confirmed.

"There's a high level of concern about the implications of this," said Fred Krebs, president of the American Corporate Counsel Association, whose members are mostly internal lawyers for companies. "There's a very real fear that the rules will change the relationship" with the client, he said.

While the profession may come up with a counterproposal before the deadline tomorrow, the comments already show some support from outside the legal profession, but clear opposition from corporate lawyers.

"You have proposed rules which, going beyond anything explicitly or implicitly required by the Sarbanes-Oxley Act, demean and directly undermine those lawyers' prime professional responsibility," a group of 29 lawyers wrote to the S.E.C.

Another lawyer criticized the timing of the release of the rules. "By requiring that comments on the release be received on or before Dec. 18, 2002, in the midst of the Thanksgiving and Christmas holidays, the S.E.C. will be deprived of many of the thoughtful comments from the legal community which are necessary to evaluate the fundamental changes in the attorney-client relationship," wrote Frederick D. Lipman, a lawyer at Blank, Rome, Comisky & McCaulley.

Geoffrey Hazard, a law professor at the University of Pennsylvania, said, "Lawyers are allergic to regulation of any kind." The provisions of these rules are tougher for lawyers because they do not require that a lawyer know of a potential fraud, but merely that the lawyer have evidence of it, he said.

"It's one thing to stare someone in the eye and say you knew this, and quite another to say it was there to be seen," he said. After any fraud is found, lawyers will be subject to criticism that they should have noticed evidence of fraud, he said.

The current system of regulating lawyers is adequate, said Alfred P. Carlton Jr., president of the American Bar Association. "We have a very fine system of lawyer regulation in this country that for 200 years has been run by state judiciaries," said Mr. Carlton, who created the professional task force evaluating the proposed rules and considering possible responses.

"If lawyers have transgressed, they will be called to account," he said. Very few lawyers have been the targets of criminal prosecution in any of the corporate collapses of the last year, he added.

Mr. Krebs of the corporate counsel association said that the rules would not necessarily prevent fraud anyway. "It's a bit optimistic to assume that there's all kinds of nefarious, inappropriate, illegal conduct going on out there that is going to be changed if only the attorneys and accountants are forced to disclose either to boards or to the government," he said.

Of most concern to many lawyers is what is being called the noisy withdrawal requirement, which says a lawyer should resign and report the resignation to the S.E.C. when a client does not take appropriate steps in response to a report of evidence of potential fraud. "In effect, you would have to point the finger at a client," violating the attorney-client privilege, one corporate lawyer said.

But Roger C. Cramton, a professor at the Cornell University Law School, said that many states already allow (but do not require) lawyers to disclose client confidences to prevent fraud. "Has it destroyed the ability to represent them?" he asked rhetorically. "The answer clearly is no."

The proposed rules may simply give some teeth to state ethical rules that lawyers should follow anyway, but that are rarely enforced, Mr. Cramton said. And lawyers prefer less enforcement over more, he added.

Some large firms may still organize a group response to the proposed rules, said Paul B. Ford Jr., a senior partner at Simpson, Thacher & Bartlett in New York. "There's going to be a lot of discussion," he said, adding that "hopefully there'll be some emerging consensus about how we can give guidance to the S.E.C."

The legal community is not unified in opposing the proposed rules, though. Some plaintiff-side securities lawyers, far from thinking the rules would go too far, suggest that the proposals do not go far enough.

"The rules do not provide for any obligation on the part of corporate counsel to investigate anything," said Nicholas E. Chimicles, a plaintiffs' lawyer at Chimicles & Tikellis in Haverford, Pa. "Without a duty of investigation, there are no teeth to the rules and no expectation that the rules' application would result in the discovery of concealed violations."

So far, companies have kept relatively quiet on the matter. Kimberly Pinter, director for corporate finance and tax at the National Association of Manufacturers, said that she had not yet heard from the organization's members that the proposed rules were a problem because most executives were still digesting them.

"We're not getting the doors broken down," she said. "But I certainly expect that we will hear from people."

Copyright 2002 The New York Times Company