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Future Uncertain for Sun Lawyers After Oracle Merger
The Recorder
April 23, 2009
No one at Oracle is talking about what it will do with the lawyers it acquires when it devours Sun Microsystems like a $7.38 billion snack. But if Oracle's past repasts are any indication, many of them will be looking for jobs elsewhere.
Take the story of Keith Facer, a commercial transactions lawyer who was working at BEA Systems when it was taken over by its rival Oracle last spring for $8.5 billion.
From the start, when Oracle offered just two low-level positions to the five seasoned lawyers in Facer's commercial transactions group, he said "it became obvious really quickly that they really weren't interested in keeping anyone on staff."
Facer had developed an expertise in doing deals involving BEA's popular Tuxedo software, which is used for validating things like ATM transactions. But he said Oracle legal didn't have much use for his insights after the deal closed in April 2008. At first it was agreed that he would stay on temporarily until September. He left in July when a piece of litigation he'd been handling in Europe finally wrapped up and he got another job offer.
"Basically the answer was, 'No, we don't need you,' and that was basically the attitude across the board to our legal department," Facer said. "It was kind of discouraging, because we had a great legal department; there was a wealth of knowledge there and Oracle was saying, 'We don't need it.'"
Of the 20 or so lawyers and eight legal staffers that worked in the BEA legal department, only two staffers and one lawyer based in Sweden have jobs at Oracle now, former BEA lawyers said. Most were laid off, including Silicon Valley veteran and BEA General Counsel Robert Donohue, they said. Donohue declined to comment, saying only that he is now working part-time somewhere.
"The senior legal team relatively early on were made aware that there were no positions available for them," said Randi Friedman, VP and associate general counsel at BEA, who is now consulting. While it's no surprise an acquiring company might do that, she said it's not always the best move. "I think they have an opportunity to bring in some very senior people with a lot of knowledge who are flexible, and I think they cut their nose off to spite their face."
BEA lawyers got a severance package -- one year for vice-presidents and above and six months for more junior lawyers. But that was because of a change-of-control clause written in by BEA, not Oracle's generosity.
Oracle did offer a few BEA lawyers permanent spots, like James Barnett, another VP and associate GC and nine-year veteran at BEA. But Barnett opted for the severance package, staying on only to help with the transition for four months. Now a consultant, Barnett said Oracle's offers or non-offers depended on your specialty.
"If you were in the commercial group, they would sort of fit you into the Oracle organization differently than if you were one of the more core corporate and IP lawyers," said Barnett, counting himself in the latter group.
Of course, Oracle has a long history of taking over companies and laying off the newly acquired in-house lawyers. Almost all of PeopleSoft's 50-lawyer legal department was laid off after Oracle won a drawn-out takeover battle in 2004.
So what will happen to Sun's hefty legal department, which listed 170 lawyers in 2006?
"Unless they have a very unique area of expertise where there might be a need for Oracle, I would suggest they would start looking for jobs," said former BEA lawyer Friedman. "A year after the thing closes, my guess would be, less than 10 percent of the Sun legal department will be left."
Any lawyer working with software should pretty much forget it, said Facer, because Oracle will use its own lawyers for that. "Sun's legal team, from that standpoint, won't be needed."
However, he and others pointed out that since Sun is also in the hardware industry with its server business, more lawyers may get to stick around than when Oracle was simply swallowing software rivals.
"Certainly with Sun there's less overlap with technology, and therefore the patent lawyers and the licensing attorneys would have a little more job security than they might otherwise," said Cary Platkin, a solo practitioner who worked at another Oracle takeover target, Siebel Systems. Platkin left Siebel before the 2005 deal for other reasons.
Calls to GC Michael Dillon and other Sun lawyers were referred to a Sun spokeswoman, who wouldn't comment on whether or how many Sun lawyers would be joining Oracle. An Oracle spokeswoman also declined to comment.
