"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.
Rank-and-file attorneys who jump ship can be hard to replace, said Harari, who is co-global leader of the in-house practice group for Major, Lindsey & Africa. But a high-profile opening at a troubled company can intrigue seasoned lawyers who are looking for a challenge. And a candidate's interest may be piqued if they are offered more money and influence — perks that companies in crisis often dangle to sweeten the deal, Harari said.
"You can attract some very high-level talent if you are experiencing setbacks," Harari said. "We find that there are people who gravitate toward those turn-around situations."
Acquisitions can also trigger departures from in-house legal departments, Harari said. And HP has been highly acquisitive over the past decade. Adjunct law professor Guy Kelley, a long-time HP lawyer who left in 2008, hopes the Autonomy deal undermines the strategy of "buying innovation." Brigham thinks the process of integrating company after company made in-house lawyers' jobs harder, too.
"The 'HP way' was watered down a bit as they acquired companies," Brigham said. "As the management style changed, the issues that came up for the legal department changed."
Lawyers who remain at HP are working hard to move past the Autonomy debacle, a source at HP said. But Hardcastle, the former IP lawyer, thinks their performance is somewhat beside the point. HP needs better business decisions, not better legal advice, he said.
"Certainly, you have an avenue to prevent your client from acting illegally," he said. "But if they're going to do something that's legal but stupid, you might not get all that far."
This article originally appeared in The Recorder.
