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2007 Leigh Dance

2007 Leigh Dance. The reproduction, modification, or distribution by whatever means of the whole or any part of this presentation (including, without limitation, all images, logos, graphs, charts and quotes) is strictly forbidden without specific written permission from the author.

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2007 Leigh Dance

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  1. 2007 Leigh Dance The reproduction, modification, or distribution by whatever means of the whole or any part of this presentation (including, without limitation, all images, logos, graphs, charts and quotes) is strictly forbidden without specific written permission from the author.

  2. Systems, Structures & Procedures to Reduce Professional Risk In-house Counsel Liability Session IBA Budapest – March 29, 2006 E. Leigh Dance, ELD International, Inc. eldance@eldinternational.com Bruno Cova, Paul Hastings brunocova@paulhastings.com

  3. Ten minutes • Dramatic rise in professional risk for in-house counsel – Why? • What you can do about it • Area for improvement: governance in remote subsidiaries

  4. The Good News: More respect, more impact, higher compensation • Broader risk management role and accountability from executives and boards • Surveys show that boards more likely to rely on in-house counsel than outside counsel for advice: governance, process, education

  5. The Good News: More respect, more impact, higher compensation “In the past, a CEO might have looked to the senior partner of a law firm as his trusted adviser. The General Counsel increasingly fills that role.” - Rosemary Berkery, GC, Merrill Lynch A typical work day for Microsoft’s GC, Brad Smith: “I drop my son off at the school bus and get into work by 7:15am. Steve Ballmer [Microsoft CEO] typically stops in my office at about 8am. We compare notes and often that results in a few additional things for me to address as the day progresses.”

  6. The Bad News: Higher Professional Risk “I think the board’s view of the legal function has improved – they are very much looking to us to help keep them out of trouble by spotting key issues before they would normally be put to us, and at the same time they are demanding a lot more from us.” - Michael Fricklas, GC, Viacom

  7. The Bad News: Higher Professional Risk “Every facet of the [pharmaceutical] business is regulated, meaning that corporate strategy is intertwined with legal and regulatory functions of a general counsel. It’s not even possible to think of a business strategy without a legal and regulatory element to it.” - Ken Frazier, GC, Merck, in Financial Times

  8. The Bad News: Higher Professional Risk “looking to us to help keep them out of trouble” “every business strategy has a legal and regulatory element” Each month, another General Counsel is held publicly accountable for his or her company’s alleged wrongdoing.

  9. The Bad News: Higher Professional Risk • In January 2005 the SEC listed corporate counsel they had targeted, including Warnaco’s GC, Gemstar-TV Guide’s former GC, and Google’s General Counsel. • "We have seen too many examples of lawyers who twisted themselves into pretzels to accommodate the wishes of company management, and failed in their responsibility to insist that the company comply with the law." • - SEC spokesman

  10. The head of legal’s mission is to preserve corporate credibility: judged by quality and reliability of information Help the company keep its promises to shareholders, customers, employees, lenders, suppliers, communities, governments, regulatory bodies II. What You Can Do About it

  11. Exercise moral courage Question suspicious transactions Encourage business people to report questionable activities or transactions Lead by example: root-out potential wrongdoing Take confessions from anyone: avoid bias II. What You Can Do About it

  12. Strengthen control of legal function In-house lawyers must report hierarchically or functionally to the head of legal Enhance your personal role: it matters to whom you report Direct, unencumbered access to executives and the Board II. What You Can Do About it

  13. Know and Control Your Advisers You must have direct responsibility for outside counsel that advise company on key transactions Retain, instruct, manage and pay the bills of the company’s outside lawyers Ensure reputation of integrity for the company’s outside advisers II. What You Can Do About it

  14. Systems, Structures & Procedures to Reduce Professional Risk In-house Counsel Liability Session IBA Budapest – March 29, 2006 E. Leigh Dance, ELD International, Inc. eldance@eldinternational.com Bruno Cova, Paul Hastings brunocova@paulhastings.com

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