INSURANCE, INDEMNIFICATION, AND CONTRACTUAL MATTERS
He who builds according to everyman's advice will have a crooked house.
-- Danish Proverb
It used to be that the fees, the public distinction, the ego gratification, the exclusivity, elitism, and the privilege of providing a needed service made directorship a much desired goal. Now the legal responsibilities of a corporate director expose statutory board members to liabilities for which indemnification provisions and insurance protection may be inadequate to protect a corporate director at least in the United States. I fear that one of our country's greatest exports is the litigiousness that accompanies doing business in these complex days. The conventional wisdom is that being an advisory director avoids the liability exposure of a statutory director as long as there is no participation in the decision-making process.
There is no voting power attributed to the advisor (see specimen advisory contract language later in this chapter). This advisory role is yet to be tested in court. However, the legal status of advisory directors is receiving increasing attention from corporate counselors. On May 1, 1986, Northwestern University School of Law held their sixth annual Ray Garrett Institute program. At the workshop on Protecting Corporate Directors, moderator Thomas A. Cole of Sidley & Austin, a Chicago law firm, discussed directors' and officers' liability insurance and the range of responses available to corporations and their directors upon learning that coverage will be subject to unac-