An erroneous assessment of a client’s veracity, even if made innocently, can lead to severe consequences if the backdating perpetrates a fraud.Prudent lawyers should refrain from backdating if they are uncertain about when the relevant acts took place.The media’s coverage of the stock option scandals caused the public to strongly associate backdating with corporate malfeasance.
However, backdating to memorialize a prior act or event is a legitimate and necessary practice.
As a matter of contract law, it is not always easy to determine when parties reached an agreement.
An agreement is typically the product of various oral and written negotiations, which often take place over weeks or months.
Consequently, backdating the document formalizing the agreement to the date the parties struck the deal can be precarious.
If the agreement was reached earlier than the document’s date, the backdating memorializes; if the agreement was not reached until a later date, the backdating misrepresents.