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When it comes time to fill an in-house legal post, more companies are headhunting in Washington, D.C. Not surprisingly, former government lawyers are especially in demand at businesses under investigation by prosecutors or regulators. But even corporations that don’t have to worry about a federal probe have found that D.C. veterans are useful for navigating the nation’s capital. Companies “recognize that the government is more and more involved in what companies are doing,” says David Leitch, a former deputy White House counsel who became Ford Motor Company’s new GC in April. “So a working knowledge of Washington and government are all things that are becoming increasingly more valuable in corporate America,” Leitch says. Hard data on the number of recent moves from government agencies to corporate law departments is hard to come by. But legal recruiters June Eichbaum and Victoria Reese of Heidrick & Struggles International Inc. have tallied a list of almost two dozen former government lawyers who have moved into top corporate legal positions over the past five years [see chart]. Of course, a revolving door between agencies and companies isn’t particularly new. As far back as 1969, International Business Machines Corporation � then facing a federal antitrust action � hired former Johnson administration attorney general Nicholas Katzenbach as general counsel. Benjamin Heineman, who was assistant secretary of the Department of Health, Education, and Welfare during the Carter administration, took over General Electric Company’s legal department in 1987. And in 1994 William Barr, attorney general under President George H.W. Bush, became general counsel at GTE Corporation. But these men were more the exception than the rule. Times have changed, Barr says. These days, when headhunters ask him to suggest candidates for in-house jobs, they’re often looking for people with top-level government experience � and Barr is able to oblige. Currently general counsel at GTE’s successor, Verizon Communications Inc., he says, “Now most lawyers I know on the outside would come in-house for the right job.” The demand for D.C. attorneys has been partly driven by stepped-up government scrutiny of companies due to the recent wave of corporate fraud. By bringing former regulators on board, businesses are letting Washington know that they take the increased regulation seriously. That certainly seemed to be the rationale behind UBS AG’s decision to hire David Aufhauser as GC of its investment bank in 2004. Earlier that year Federal Reserve regulators slapped UBS with a $100 million fine for hiding money transfers to countries under U.S. sanctions, including Iran, Libya, and Cuba. A little more than a month after the fine was disclosed, the bank announced that it was bringing on Aufhauser. While he’s one of the country’s top experts on international money laundering, Aufhauser was also GC at the U.S. Department of the Treasury while that agency participated in the Federal Reserve’s UBS probe. Aufhauser, while declining to comment on the investigation, notes that companies like UBS are always concerned about “getting it right” with government regulators. How much reward a business gets from hiring a government lawyer is hard to measure. Most of the D.C. veterans now in corporate jobs have yet to weather a serious federal probe. But Stan Anderson, the chief legal officer at the U.S. Chamber of Commerce, says that companies are already benefiting from hiring former D.C. officials. “These guys are trained to look at issues from a policy standpoint, so it’s often easier to get them to understand the issues at the 30,000-foot level than people who don’t have their background or training,” Anderson explains. Though these in-house attorneys say they occasionally pick up the phone to call old colleagues, they try to avoid any appearance of currying favor because of their former position. Federal ethics rules prohibit ex-officials from lobbying their agency for at least one year, and ban them from working on any matter they handled directly inside the agency. Still, government vets bring a wealth of inside knowledge, as well as relationships they can use to advise a company on whom to talk to or how best to finesse an argument in its favor. For example, Chevron Corporation GC Charles James was a key figure behind the scenes when his company battled China’s Cnooc Ltd. for control of Unocal Corp. this summer. The biggest stumbling block to gaining antitrust approval from the Federal Trade Commission involved fees Unocal collected for a patented blend of gas sold in California. James, who headed the antitrust bureau at the the U.S. Department of Justice during President Bush’s first term, agreed that Chevron would drop the Unocal fees if the merger was approved. One of Chevron’s outside counsel, Alfred Pepin at Pillsbury Winthrop Shaw Pittman, says that James “came up with the strategy and focused our organization to bring about the resolution in a matter satisfactory to the FTC.”

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