"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.
"When you are teaching courses on corporate governance, it's hard not to use HP as a cautionary tale," Talley said.
But Schultz could be a big part of the solution, Talley noted. A general counsel cannot change board members' temperaments, but he can remind them of their legal responsibilities to shareholders, Talley said. That message can do much to smooth over disagreements and spark discussion, he added.
Outside the boardroom, Schultz may have to address turnover in the legal department. Legal recruiter PJ Harari said that after public struggles, companies risk losing both rank-and-file lawyers and top deputies. HP has not yet named a replacement for Porrini, the deputy general counsel who left in July, leaving the corporate and securities wing of the legal department without a leader, a source at HP said.