KRC and Foley & Lardner Measure SOX Impact
In July of 2002, President Bush responded to the corporate governance crisis by signing into law the Sarbanes-Oxley Act (SOX), an unprecedented set of rules designed to address corporate misconduct and abuse.
In response to the new legislation, national law firm Foley & Lardner organized a Corporate Governance Team—a multi-disciplinary group of attorneys focused on helping clients navigate the complex governance issues created by SOX. The firm recognized the significant business opportunity governance reform represented. Launching the team would leverage the business opportunity and showcase the firm’s strengths in key areas of the law. However, it also presented a number of challenges:
- While Foley & Lardner had been servicing clients on governance issues long before the Act was even signed into law, the firm was somewhat late in developing a defined team dedicated to these new issues.
- By April of 2003, corporate governance dominated both the news and general business dialogue, as numerous law firms across the country were already working furiously to capitalize on the same opportunities. Foley & Lardner needed to break through the clutter.
To do this, Foley & Lardner, working with Weber Shandwick, went beyond a typical “launch” of the Team and instead embarked on a campaign to measure the true cost for businesses to implement SOX while discovering attitudes associated with this data. The answers to these difficult questions would then become the platform the firm needed to seize control of the dialogue and generate broad recognition of the firm’s leadership in this area.
There was only one problem: how do you measure the impact of reforms that were less than a year old and had yet to be fully defined?
Working with Weber Shandwick and Foley & Lardner, KRC developed and implemented a research plan with four components:
- An open-end, paper-and-pencil survey was mailed to more than 7,000 corporate financial executives, and asked them to estimate cost increases in key areas related to SOX.
- A systematic review was conducted of 450 proxy statements filed with the SEC to generate hard data on the increases in audit and non-audit fees related to governance reform.
- In-depth, one-on-one interviews were conducted among 16 service providers who were impacted by regulations required by SOX.
- An on-line survey was distributed to 2,000 C-level executives to measure their attitudes toward SOX and governance reform.
- As a whole, the four research components provided Foley & Lardner with a clear picture of the financial impact of Sarbanes-Oxley—a measure that no one else had.
Over a three-month period, the program resulted in 220 media placements, including placements in top-tier venues such as The Wall Street Journal and the Financial Times as well as targeted industry publications. Traffic to Foley & Lardner’s web site increased dramatically, including 615 individual visitors to a Web site dedicated to the result of the study. In addition, Foley & Lardner received more than 254 requests for the research from organizations around the world, and the research study continues to be referenced by academic and regulatory groups.
In 2004, the campaign won the Campaign of the Year Award from PR Week.
The research was so successful, that Foley & Lardner subsequently worked with KRC annually to update it.
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