I found the article, "HP Move Leaves Legal Issues Open" on law.com.
The citation is the September 25 issue of The Recorder. If you have the
hard copy of the September 25 issue, would you please let me know on
which page the article appears?
TIA,
Margaret Heath
Margaret M. Heath
Librarian
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue NW
Washington, DC 20005
p: 202-371-7760
f: 202-661-9075
e: mheath@skadden.com <mailto:mheath@skadden.com>
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HP Moves Leave Legal Issues Open
By Justin Scheck <mailto:letters_to_the_editor@corp.law.com>
The Recorder
09-25-2006
With the stock market in a lather over Hewlett-Packard's troubled leak
investigations, HP CEO Mark Hurd tried on Friday to take control of the
situation. But in doing so, he left unanswered key questions about legal
representation in the festering matter.
In a brief press conference, Hurd addressed some investor concerns by
announcing that Patricia Dunn, the former chairwoman who ordered an
aggressive probe of boardroom leaks, would be leaving the board
immediately, and that Hurd would be taking over as chairman.
Hurd and Morgan, Lewis & Bockius partner Michael Holston disclosed some
details of what a company investigation has found, including the fact
that Hurd himself was kept informed of certain parts of the leak probe.
It's not clear, though, at what point Hurd knew that investigators
"pretexted" -- lied -- to gain access to board member, employee and
journalist phone records.
Morgan Lewis was hired Sept. 8 to perform an independent investigation,
and to represent the company in talks with federal and state
prosecutors.
But one statement by Hurd raised questions for many lawyers: "Morgan
Lewis reports to me, not to the HP board," he said.
Such a statement might have been a reassurance Sept. 19. Until then, the
leak investigation seemed to be more a board problem than one pointing
to Hurd. But by Friday, news reports -- and several remarks by Hurd and
Holston at the press conference -- made it clear that Hurd's role in the
probe is also being examined.
For example, Hurd acknowledged Friday that he attended a March 2006
meeting at which a summary of the investigation was presented. "I
understand there is also a written report of the investigation addressed
to me and others, but I did not read it," Hurd said. "I could have, and
I should have."
Speaking privately -- largely because they hope to some day be hired in
the HP matter -- several lawyers who conduct internal corporate
investigations said this could compromise the investigation, since
Morgan Lewis is expected to independently investigate potential
wrongdoing, and is likely to report to prosecutors on its findings.
But, they added, it's not unheard of for such situations to pop up.
There's no concrete guidance from the federal government on when outside
counsel conducting an internal investigation has a conflict.
"There's no statutory definition of what an internal investigation is,"
said one former federal prosecutor who asked not to be named.
The former prosecutor said that as a probe goes on, questions often come
up about seemingly uninvolved parties' role in possible wrongdoing.
"When you're looking into various things, trying to figure out what
happened, your initial impression could change," the ex-prosecutor said.
"And when your initial impression changes, your opinion of who should do
what should change."
That could mean additional counsel must be brought in, said several
white-collar lawyers.
Of course, these aren't the first questions about independence to come
up in the case.
Morgan Lewis came in at a time when the board's normal outside counsel,
Larry Sonsini of Wilson Sonsini Goodrich & Rosati, was under immense
press scrutiny for what he knew about the leak probe.
Sonsini had been the one to communicate with former HP director Thomas
Perkins -- whose resignation spurred the leak probe crisis -- in the
days before it blew up. And e-mails between Sonsini and Perkins that
made it into several press outlets showed that Sonsini had some
knowledge of the investigation, though it's not clear he knew what
tactics were involved.
Over the last few weeks, Sonsini, along with other partners at his firm,
seem to have taken a diminished role in the HP matter. While at least
one lawyer at the firm went with Morgan Lewis lawyers to meet with
federal prosecutors on Sept. 11, the company said in recent days that
Morgan Lewis attorneys would be in charge of dealing with the
government.
The Hewlett-Packard mess began last year when Dunn -- whose lawyer,
James Brosnahan, didn't return calls by press time Friday -- ordered an
investigation to identify the source of leaks about board deliberations.
That initial investigation turned up nothing, Hurd and Holston said
Friday. But, they added, a subsequent probe conducted last year
identified a leaker responsible for providing information used in a Jan.
23 CNet story on the company's overall direction.
While it's been reported in several news outlets that the leaker was
former board member George Keyworth -- who stepped down last week -- the
CNet story does not appear to contain any company information that had
not already been made public.
After the second investigation was announced to the board this past
spring, an outraged Perkins quit in protest.
The disclosure of the investigation followed Perkins' resignation.
Though Perkins resigned on May 18, it was not until Sept. 6 that the
company gave details -- as required by law -- about the director's
action. In that filing, the company said it had received a comment
letter from the SEC asking for more information about Perkins'
resignation.
Perkins' lawyer, Viet Dinh, a professor at Georgetown University Law
Center, has said his client engaged in a 3 1/2-month effort to get
Hewlett-Packard to come clean about why Perkins quit.
Perkins abruptly quit during an HP board meeting after Keyworth was
asked to resign. (Keyworth at first refused to resign, but then agreed
to step down as part of a settlement with the company.)
Investigators apparently used legally suspect means -- including
impersonating the targets of their probe -- to access the phone records
of board members, HP employees, journalists and Sonsini.
A Boston investigative firm has been cited as the one responsible for
hiring people to lie in calls to phone company officials to gain access
to the phone records of board members. Boston investigative firm
Security Outsourcing Solutions reportedly provided HP with an opinion
from a Boston lawyer that the "pretexting" was legal.
The legality of such tactics is up for consideration by the San
Francisco U.S. Attorney's Office and the California attorney general.
They're both investigating the issue, and Attorney General Bill Lockyer
has said he has enough evidence to indict people inside and outside HP,
and has met with HP representatives more than once since the scandal
broke.
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