Public companies in the United States are subject to litigation in various areas, including: shareholder litigation; government investigations and enforcement actions; environmental litigation and intellectual property disputes. While certain litigation may be frivolous or merely routine, other claims may be costly and potentially damaging to the company’s bottom line, reputation, or both. It is important that boards be equipped to manage and mitigate risks associated with litigation deemed material to the company. The following tips are designed to give boards a framework from which to approach litigation oversight.

Exercise the Duty of Care -

Providing ongoing oversight of material litigation is part of a director’s general duty of care. In the litigation context, effective oversight involves:

1. Getting involved in the right cases and the right potential claims

2. Receiving regular reports from management

3. Asking the right questions to hold management accountable

4. Keeping abreast of the company’s liability insurance policies