It was an annus horribilis for the in-house bar.
At least seven general counsel resigned or were fired in 2006 for their involvement in corporate misdeeds--most notably misdeeds involving backdated stock options. That scandal seemed to blindside many GCs. Fueled by a media frenzy, shareholders demanded that heads roll, and companies rushed to oblige. Some GCs were shown the door because they knew about the practice, but did nothing to stop it. Others left because they didn't know it was going on, but should have. And a few were fired because they profited from it. William Sorin was among that special breed.
On Nov. 2 Sorin plead guilty to charges he was involved in the backdating scandal at Comverse Technology Inc. He admitted that he not only knew that what his CEO was doing was wrong, but also helped him do it, earning about $1 million in the process. In his plea, the Harvard educated lawyer acknowledged he had "failed as a lawyer." He wasn't alone.
The same could be said of Ann Baskins. Although it appears she had no direct involvement in HP's pretexting scandal, her legal department did. It apparently approved a practice that even my 8-year-old niece would probably realize is illegal. Perhaps it is not fair to say that Baskins failed as a lawyer. But there is little doubt she failed as a manager.
To the uninitiated it would appear that one would have to be crazy to want to be the GC of a company, especially of a public company. There is little doubt that the job has become riskier as GCs are being held accountable for their clients' misdeeds. A recent Wall Street Journal article reported that because of this, fewer lawyers are seeking to go in-house.
The GCs I've spoken to don't think the position is becoming less desirable. In fact, they say the job is much more rewarding and appealing than it has ever been. In many companies the GC is now on equal footing with the CFO. It also has become, as Jeff Kindler has proved, a stepping-stone to the CEO's chair. Why? Because today's breed of GC is required to have an outstanding understanding of the law, unimpeachable ethics and excellent business judgment--skills that are in huge demand in corporate America, but in short supply.
What we are seeing now is perhaps a weeding out of the lawyers who don't have the right skills or ethical fiber required to be members of the in-house bar. What remains is a group of lawyers who are truly among the best in breed.