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Edward O'Keefe, the new general counsel at Bank of America Corporation, has inherited what must be one of the biggest legal messes any general counsel could step into. And experts say it doesn't help that O'Keefe oversees 525 lawyers while he reports not to the chief executive or the board of directors, but to the bank's chief administrative officer.

As one former law department insider put it: "That's like telling your general counsel to report to the head of human resources."

O'Keefe, who declined an interview, moved up from deputy general counsel. In that role, he worked variously on staff support, global compliance and operational risk, and privacy. He joined the company in 2004 from Deutsche Bank AG, where he was responsible for global staff support of legal functions outside Germany.

He had filled in as Bank of America's GC on an interim basis since last January, after the bank ousted his previous boss—then–GC Tim Mayopoulos. Who did Mayopoulos report to? Not the CEO. At first he was under the chief finance officer; but it was his last supervisor, the chief risk officer, who terminated him. Both Mayopoulos and the bank declined to comment.

As the new general counsel, O'Keefe must be totally shell-shocked by now. Within a month of his taking the interim job, the bank's merger came under investigation by the Securities and Exchange Commission, the offices of the New York and the North Carolina attorneys general, and the House Committee on Oversight and Government Reform. Nearly two dozen shareholder or class action lawsuits over the merger also have landed on his desk.

O'Keefe's supervisor is Steele Alphin, the bank's chief administrative officer and the right-hand man to CEO Kenneth Lewis. Insiders say Lewis wants the numbers people, not the general counsel, to report to him directly. But that's a somewhat controversial stance, to both GCs and corporate governance experts.

That topic—who the general counsel reports to—is discussed often in the corporate legal community, according to Susan Hackett, general counsel of the Association of Corporate Counsel in Washington, D.C. Hackett says a few companies outside the United States have their chief legal officer report to the chief financial or administrative officer, "but it's not the norm." Besides Bank of America, she couldn't think of another major U.S. company that does it that way. Hackett adds, "Most chief legal officers tell us they would not like reporting to anyone other than the CEO."

And they are right, according to John Coffee, Jr., who teaches at Columbia Law School. "The general counsel should report to the chief executive," Coffee says. "To do otherwise is to diminish his authority and responsibility. And it allows the corporation to treat legal issues as a lower matter of [concern]."

You have to wonder if BofA would be in such a legal morass today if the CEO had given the GC his ear, not to mention his trust. 

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