What's a GC to Do?
Blogging on the recent corporate scandals involving GC Ann Baskins at Hewlard-Packard (see this multi-part coverage at Alexander Simpson's Corporate Securities Law Blog) and the ouster of Bristol Myers' GC, Peter Henning concludes that "it can be mighty tough to be a general counsel these days." And Henning's article does not even touch on the backdating of stock options matter that's been discussed for the past few months and raises questions about whether GCs and outside counsel should have flagged potential legal problems associated with companies' failure to disclose backdating.
Yes, these scandals are putting some corporate counsel on the hot seat, but the scandals also raise the question, "Where were the lawyers?" That's a topic that's not been covered thus far. This article in today's Washington Post, Silicon Valley's Golden Past Tarnished, quotes one defense attorney who suggests that many of the Silicon Valley companies now in trouble "lacked in-house
accounting and legal expertise." But these days, these same companies are served by blue-chip firms and experienced in-house counsel. Shouldn't that lead to a reduction in corporate scandal?
Are today's newest corporate scandals caused by added complexity of laws governing corporations and the increased criminalization of corporate conduct? Or has the legal profession grown so competitive that lawyers will banish the word no from their vocabularies to retain their corporate clients? And are GCs hiring outside counsel with "brand recognition," without engaging in due diligence to determine whether those outside lawyers best serve the corporate client.
We can agree with Henning's conclusion that times are tough for GCs today. The more interesting issue is whether the GCs themselves are to blame.
Posted by Carolyn Elefant on September 14, 2006 at 07:18 PM | Permalink
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