Prof. Charles Elson, who sits as a director on the boards of both Nuevo Energy Co. and Sunbeam Corp., laments that this noble calling–once considered a measure of a businessperson's standing and expertise–now strikes fear into the hearts of even the most altruistic executives. "These are troublesome times for corporate directors," says Elson, director of the Center for Corporate Governance at the University of Delaware.

The trepidation of would-be board directors is many-fold: the fusillade of lawsuits arising from the recent corporate scandals, heightened public scrutiny of corporate leaders, greater liability exposures from new corporate governance initiatives and the real kicker–the dire possibility that they will have to face all this without insurance to cover the costs of defending themselves against securities and shareholder litigation just when they need it most. "Since we can be sued to the full extent of our personal wealth, this is no laughing matter," Elson says. "Few people would be willing to sit on a board in the current environment. How many executives are going to take the risk of digging into their own pockets to pay their legal expenses to defend actions taken by management that were unknown to them? Frankly, the whole D&O situation gives me heartburn."

The problem? Insurance bought by corporations to cover their directors and officers against lawsuits filed against them in their board and management roles is in total disarray in the wake of an avalanche of multibillion-dollar shareholder suits and disclosures of alleged corporate fraud at numerous high-profile companies.