Six years later, the department is no longer a stranger to such challenges. Charnas left HP after being passed over for the permanent general counsel position for Holston, a former prosecutor and Morgan, Lewis & Bockius partner who represented the company in the pretexting scandal. Charnas read the selection of a litigator for the top spot as a harbinger of future legal battles to come.
"That led me to believe that the company thought it was in fairly deep trouble," he said.
Over the years, changes of the guard have altered the makeup of HP's legal department — especially in the wake of scandals. Charged with helping the company move forward after pretexting, Holston shook up the legal department. A champion of Hurd's push to cut costs, Holston submitted attorneys to more rigorous performance reviews and implemented layoffs — trading long-term lawyers for junior attorneys, some say. But others note that Holston leveraged his close relationship with Hurd to elevate the legal department. Whereas some of his predecessors had answered to the chief financial officer, Holston reported directly to Hurd.
Their bond grew more complicated when Holston was tasked with investigating Hurd's behavior after an HP contractor alleged Hurd had sexually harassed her. When Hurd resigned, Holston denounced his behavior as reflecting a "profound lack of judgment," though the company did not find evidence of sexual harassment.
"I think the writing was pretty much on the wall for him after that," a former HP lawyer said. "He was standing there like a federal prosecutor who had gotten his man."
Holston left shortly after Whitman was named CEO last fall. But Whitman reassured in-house lawyers that she was pleased with their performance and wanted the department to stay the course, a source at HP said. To that end, she may have found the right man in Schultz, who worked with Holston at Drinker Biddle & Reath; Morgan Lewis; and, finally, HP. Schultz, who served as HP's deputy general counsel for litigation investigations and global functions before assuming the top spot in May, earned a law degree at the University of Pennsylvania.
STAYING ON BOARD
In 24 years as general counsel, Jack Brigham said he shepherded HP through "plenty of crises." But the GCs who followed him when he retired in 2000 faced very different challenges, particularly with regard to dealing with the board, he noted.
"Our board was a very solid board," he said. "Ann Baskins and Mike Holston had some issues with their boards that I didn't have to deal with."
Since the passage of the Sarbanes-Oxley Act in 2002, corporate governance has been a much bigger task for most general counsel, Cooperman said. As the interface between the company and the board, the general counsel helps members make the most informed decisions, he noted.
"The board cannot do its job unless the general counsel plays a very active role in ensuring that they get the information that they need," Cooperman said.
The task is more difficult with a dysfunctional board, UC-Berkeley's Talley noted. HP's board has been blamed for many of the company's woes in recent years. Analysts are calling on HP to overhaul its board and some are going as far as to say that the company needs to be broken up.
