Federal judges are beginning to question why companies are cutting off legal fees to their executives when they become caught up in criminal investigations.
The judge in the tax-shelter trial of former tax professionals at KPMG last week ordered a hearing to determine whether prosecutors had improperly put pressure on the accounting firm to stop paying the defendants’ legal bills. Last month, a federal judge in New Hampshire granted five former executives of Enterasys Networks a three-month reprieve in their trial after he questioned whether there was undue influence to cut off their legal payments. (The company has since restored them.)
The questions have emerged as other companies, including Symbol Technologies and HealthSouth, have stopped paying former executives’ bills for lawyers.