powerful Wall Street lawyer who defended Richard A. Grasso's initial plan to take $48 million in future payments is also helping to prepare a crucial report about how the New York Stock Exchange needs to revamp its corporate governance practices.

Martin Lipton, a founding partner of Wachtell, Lipton, Rosen & Katz, has worn a number of different hats as the opposition to Mr. Grasso's $139.5 million pay package has built over the last month: chairman of the exchange's legal advisory committee, chief counsel to the corporate governance committee, and, according to stock exchange directors, sounding board for Mr. Grasso.

These multiple roles have been criticized by investor advocates and board members as posing a potential conflict of interest.

After Mr. Grasso tendered his resignation to the board last week, Mr. Lipton asked directors whether he should stay on their conference call in his capacity as chief counsel to the board's corporate governance committee, according to several directors. The board already had concerns about Mr. Lipton's consulting with Mr. Grasso, and H. Carl McCall, the chairman of the governance committee, told Mr. Lipton not to participate, these directors said.

Mr. Lipton has been the Big Board's top lawyer since 2001 and has lent his imprimatur to a number of corporate reform committees at the exchange. Reached in his office yesterday, Mr. Lipton declined to comment on his relationship with Mr. Grasso.

Mr. Lipton's offering advice to Mr. Grasso at the same time that he was serving in crucial advisory roles at the exchange underscores in critics' eyes how the stock exchange remains a warren of insider relationships and cozy, if not conflicted, ties.

"I think it's inappropriate for someone to represent both the exchange and directors as human beings," said Sarah Teslik, the executive director for the Council of Institutional Investors, a prominent investor advocacy group that will soon be meeting with the Big Board's governance committee.

"The conflicts here are substantial," Ms. Teslik said yesterday. "It's also worrisome because Mr. Lipton is an apologist for corporate management. It's not the advice that the N.Y.S.E. needs to be getting now."

The corporate governance report will define the way the exchange is run. Of paramount importance will be its recommendations on whether the institution can continue to operate as both a regulator and a marketplace for stocks.

Other issues are whether the duties of chairman and chief executive should be split, and the composition of the board, including the possibility that the top executive be prevented from selecting his own directors. Mr. Grasso, who was chairman and chief executive, has been criticized as having an undue influence on the board's nominating and compensation committees.

Mr. Lipton has been an outspoken advocate on a broad range of corporate governance matters and has published articles urging directors to take more initiative in the wake of corporate scandals.

While confirming that Mr. Lipton's firm did legal work for the Big Board, a spokesman for the exchange declined to comment on Mr. Grasso's legal ties to Mr. Lipton.

John S. Reed, the new interim chairman and chief executive, could not be reached for comment yesterday.

Perhaps trying to distance themselves from Mr. Lipton, directors said yesterday that the exchange had hired Sullivan & Cromwell for the negotiations with Mr. Grasso over his severance package. Mr. Grasso has hired a lawyer at Simpson Thacher & Bartlett, these directors said.

In many ways, Mr. Lipton's various roles show the deep intertwined roots between the board of the stock exchange and some of Manhattan's most prominent power brokers.

Mr. Lipton, 72, is chairman of the board of trustees of New York University. Mr. Grasso is a member of the university's board, too, as is Kenneth G. Langone, a friend of Mr. Grasso and a leading member of the compensation committee that drew up the 1999 contract that largely allowed him to leave with $139.5 million.

The N.Y.U. board also includes Laurence D. Fink, the chief executive of BlackRock, an investment management company in New York and the chairman of the exchange search committee that chose Mr. Reed to succeed Mr. Grasso.

Completing the circle is John E. Sexton, the president of the university, who was a member of the exchange's nominating committee, which has the responsibility for finding candidates for the stock exchange's board. Mr. Sexton recently resigned from the committee.

"All these circles lead back to Marty Lipton," said Ms. Teslik, who has published a report on the many different strands that connect various directors at the exchange and will bring up Mr. Lipton's role when she meets with the directors. "It's almost as if they got the N.Y.S.E. and the N.Y.U. initials mixed up."

It is not surprising that Mr. Grasso would turn to Mr. Lipton for guidance. Mr. Lipton is among the last of a breed of Wall Street lawyers who blend bread-and-butter advice on mergers and acquisitions and other financial matters with more rarefied personal counsel to a select group of Manhattan's corporate titans.

Since he hung out his shingle in 1965 with a few other graduates from New York University's law school, Mr. Lipton has been whispering advice into the ears of Wall Street executives during their times of maximum legal stress.

Felix Rohatyn, the former mergers and acquisitions banker at Lazard Frères, is a longtime client. Sanford I. Weill, the chairman of Citigroup, called on Mr. Lipton's counsel when Eliot Spitzer, the New York attorney general, singled out Mr. Weill during his investigation of research and banking conflicts on Wall Street.

Mr. Lipton is also believed to be one of the most highly paid lawyers in town. According to American Lawyer magazine, the average salary for partners at Wachtell, Lipton is $2.9 million a year — a million dollars more than the No. 2 firm.

Despite his successes, his record as an adviser is not perfect. In 1991, he advised John Gutfreund, then the chief executive of Salomon Brothers, in the midst of a Treasury bond trading scandal. Within months, Mr. Gutfreund resigned, and Mr. Lipton's investigation of Salomon's practices was terminated.

Mr. Lipton's relationship with Mr. Grasso has been a lucrative one for his firm. In addition to his advisory role to the exchange, Wachtell, Lipton has conducted staff work on exchange projects over the last three years.

But it is his discussions with Mr. Grasso, together with his role as counsel to the Big Board's governance committee, that raise the possibility he may have conflicting loyalties, directors said.

At two important meetings of the exchange board, Mr. Lipton was in attendance for discussions of Mr. Grasso's pay and related issues. On Sept. 9, Mr. Grasso made the case that if he gave up the $48 million payment, it would be a "repudiation of the process" that had awarded him close to $188 million since 1995. Mr. Lipton spoke up in favor of this argument.

Given the furor over the payout, the advice went unheeded by some directors who argued that Mr. Grasso should forgo the future payments, as he ultimately did.

The second meeting was held on the day Mr. Grasso resigned, when Mr. Lipton was excused from the call.

Minutes from meetings of the board's compensation committee in July, before Mr. Grasso's package became public, also show that Mr. Lipton met with Mr. McCall, "on the subject of disclosure," apparently referring to the disclosure of Mr. Grasso's pay.