All too often the task of procuring and renewing D&O insurance at a portfolio company is assigned to the portfolio company’s CFO or Controller, who employs an insurance broker to find the best price for the amount of coverage deemed appropriate by the broker. When such insurance is procured and thereafter renewed, the CFO/Controller simply reports to the board the fact of the procurement/renewal and few questions about the terms of coverage are discussed at the board level. This can be a big mistake.

On October 21, 2010, the New York Court of Appeals ruled on certified questions in two cases: Kirschner v. KPMG LLP ("Kirschner"), certified by the United States Court of Appeals for the Second Circuit, and Teachers' Retirement System of Louisiana v. PricewaterhouseCoopers LLP ("Teachers' Retirement"), certified by the Delaware Supreme Court, reiterating and strengthening the in pari delicto defense.