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Name and title: Margaret Maxwell “Peggy” Zagel, managing principal, risk, regulatory and legal affairs, and general counsel Age: 55 The company: Chicago’s Grant Thornton LLP is part of Grant Thornton International, the world’s fifth-largest accounting, tax and business advisory firm. Its clients include midlevel entrepreneurial customers (“our sweet spot on the audit side”) and Fortune 500 members (for business consulting, specialty tax advice and Sarbanes-Oxley assistance). Founded in 1924 as Alexander Grant & Co., and combined with the United Kingdom’s Thornton Baker in the merger of the parent companies’ two largest entities in 1986, Zagel’s company now has almost 4,000 U.S. employees housed in 49 domestic offices. The privately held company reported $565 million in revenue for fiscal year 2004. GT’s GC: Zagel reports to Chief Executive Officer Ed Nusbaum and U.S. Managing Partner Mike Starr, with whom she has enjoyed a 20-year business relationship. She is responsible for all of the firm’s legal services. Performing primarily on a strategic level for the business-operational side, she is adept in areas including complex litigation, risk management, regulatory investigations, corporate transactions, securities fraud and “governance, before it was popular.” Her department also oversees day-to-day matters such as employment and human resources issues. Grant Thornton has a large international practice, so Zagel must advise foreign clients on U.S. laws, as well as be cognizant of the differences between domestic and foreign laws, particularly in privacy rules, arbitration and litigation. The legal department also works with the company’s tax group to keep abreast of ever-changing tax laws. S&L crisis management: During the 1980s savings and loan meltdown, regulators including the Federal Deposit Insurance Co. (FDIC) and the Resolution Trust Corp. (RTC), along with the Department of Justice, closed failed S&Ls while pursuing their directors and accountants. Grant Thornton created a strike team to respond to the “hundreds of subpoenas” it received due to its involvement with collapsed S&Ls, and Zagel devised and executed a 10-year strategy to extricate the firm from its liabilities. Her efforts culminated in the “cost effective” resolution of eight major S&L suits. Grant Thornton was the only accounting firm to take the RTC to trial (it won), and the company, said Zagel, also “handed the FDIC its only defeat in a suit against a major accounting firm.” Sarbanes-Oxley: Zagel said that the Sarbanes-Oxley legislation has made the state of corporate governance “slightly better” than before the act, “but some things went too far, with a little too much form over substance.” Positive effects, she pointed out, are the curbing of abuses in compensation and corporate revenue recognition, as well as the establishment of a more rigorous analysis of stock sales. Most private companies are moving toward some degree of Sarbanes-Oxley compliance, Zagel asserted, and she advises her firm’s private clients to do the same. Grant Thornton successfully registered with the Public Company Accounting Oversight Board (PCAOB), newly created by the Sarbanes-Oxley Act to investigate accountants whose clients file with the Securities and Exchange Commission (SEC). “We have many public clients, so it is a lengthy and arduous process to undergo PCAOB inspection.” Zagel lamented the demise of Enron accounting firm Arthur Andersen LLP, pointing out that because public companies are huge, and there are no caps on accountants’ liability, an accountant can get fatally tagged for every lost cent. She added, “The climate needs to change a little more and swing back to a more fair and reasoned discussion of what the business community needs to see in financial statements-and auditors and corporations should be able to meet [the standards] without grievous loss.” She said that some new requirements are too stringent and not intelligently applied, and she characterized the process as “somewhat of a witch hunt.” Legal team: Zagel supervises eight attorneys, and is in the process of adding a ninth. Seventy-five percent to 80% of nonlitigation matters, including contracts, subpoenas, SEC issues and corporate governance, are handled internally. “We are very hands-on” in the area of litigation, she added, but the bulk of this work is handled by outside counsel she hires. Outside counsel: Zagel seeks expertise from law firms that can deliver more than one function, or that add value through their services or referral business with joint clients. The outside law firms she uses include New York-based Stroock & Stroock & Lavan; Chicago-based Winston & Strawn; Morrison & Foerster (for West Coast work); Chicago’s Mayer, Brown, Rowe & Maw; and Pittsburgh’s Cohen & Grigsby. Route to the top: Degrees from Newcomb College, Tulane University (B.A., 1970) and the University of Illinois College of Law (J.D., 1973) formed the foundation for Zagel’s 31 years of practice. Her career began with stints as Illinois appellate defender and clerk to Justice Seymour Simon of the 1st District Appellate Court of Illinois from 1975 to 1976. Next, until 1984, she specialized in corporate transactions and securities litigation for Chicago boutique Schuyler, Roche & Zwirner. Zagel then began a 15-year tour of duty with Grant Thornton, becoming one of “only four or five” women general counsel countrywide. “Now when I walk into GC meetings, people don’t assume I’m there to serve coffee,” Zagel noted with satisfaction. She subsequently moved to Tellabs Operations Inc., a telecommunications equipment manufacturer (1998-99), and Organic Inc., a San Francisco-based Internet consulting company (1999-2001), before serving as special counsel for Arthur Andersen in 2002. She spent 2002-2003 with the now defunct firm Altheimer & Gray as a practice leader in corporate governance, risk and crisis management, before being welcomed back to Grant Thornton as GC in December 2003. Personal: Zagel, a native of Centralia, Ill., is married to James B. Zagel, a U.S. district judge for the Northern District of Illinois, in Chicago. She fills her spare time with painting, writing, gardening and hiking. Last book and movie: Money to Burn, written by her husband, an “extremely well-reviewed” mystery about a federal judge who robs the Federal Reserve Bank, and Troy.

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