The American Bar Association (ABA) is lobbying hard to stop the adoption of a new SEC rule that would require lawyers to make a "noisy withdrawal" - essentially requiring that they become whistleblowers - if their clients are involved in wrongdoing. On April 4, Alfred P. Carlton, president of the ABA, wrote a comment letter to the Securities and Exchange Commission, voicing his objections to the proposed procedure.

In his letter to the SEC, Alfred Carlton, president of the ABA, said that the new rule would erode the client-attorney privilege and create a conflict of interest for lawyers, who must weigh their own liability against the interests of their clients. The purpose of the rule is to protect the rights of investors by making lawyers hesitate before advising clients on questionable tax schemes or business deals. If the rule were adopted, lawyers with public companies would have to resign if they found client wrongdoing and notify the SEC.

Mr. Carlton wrote that the "noisy withdrawal" measure is not required by the Sarbanes-Oxley Act and is unnecessary in light of recent reforms in corporate governance and accounting practices and the new "ladder up" reporting system for lawyers. In January, the SEC adopted reporting-up rules, which require lawyers to report material violations up the corporate ladder, all the way to the board of directors.

In making his case to the SEC, Mr. Carlton wrote, "it would be a mistake to fashion a mandatory withdrawal and reporting out regime" that would "have the potential to impede the ability of lawyers to effectively counsel legal compliance by clients."

If the SEC adopts the proposed rule, it will make whistleblowing regulations for lawyers uniform throughout the country. Currently, four states - Florida, New Jersey, Virginia, and Wisconsin - require lawyers to blow the whistle on client wrongdoings while nine states expressly forbid it.