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With the stock market in a lather over Hewlett-Packard’s troubled leak investigations, HP CEO Mark Hurd tried on Friday to take control of the situation. But in doing so, he left unanswered key questions about legal representation in the festering matter. In a brief press conference, Hurd addressed some investor concerns by announcing that Patricia Dunn, the former chairwoman who ordered an aggressive probe of boardroom leaks, would be leaving the board immediately, and that Hurd would be taking over as chairman. Hurd and Morgan, Lewis & Bockius partner Michael Holston disclosed some details of what a company investigation has found, including the fact that Hurd himself was kept informed of certain parts of the leak probe. It’s not clear, though, at what point Hurd knew that investigators “pretexted” � lied � to gain access to board member, employee and journalist phone records. Morgan, Lewis was hired Sept. 8 to perform an independent investigation, and to represent the company in talks with federal and state prosecutors. But one statement by Hurd raised questions for many lawyers: “Morgan, Lewis reports to me, not to the HP board,” he said. Such a statement might have been a reassurance last Tuesday. Until then, the leak investigation seemed to be more a board problem than one pointing to Hurd. But by Friday, news reports � and several remarks by Hurd and Holston at the press conference � made it clear that Hurd’s role in the probe is also being examined. For example, Hurd acknowledged Friday that he attended a March 2006 meeting at which a summary of the investigation was presented. “I understand there is also a written report of the investigation addressed to me and others, but I did not read it,” Hurd said. “I could have, and I should have.” Speaking privately � largely because they hope to some day be hired in the HP matter � several lawyers who conduct internal corporate investigations said this could compromise the investigation, since Morgan, Lewis is expected to independently investigate potential wrongdoing, and is likely to report to prosecutors on its findings. But, they added, it’s not unheard of for such situations to pop up. There’s no concrete guidance from the federal government on when outside counsel conducting an internal investigation has a conflict. “There’s no statutory definition of what an internal investigation is,” said one former federal prosecutor who asked not to be named. The former prosecutor said that as a probe goes on, questions often come up about seemingly uninvolved parties’ role in possible wrongdoing. “When you’re looking into various things, trying to figure out what happened, your initial impression could change,” the ex-prosecutor said. “And when your initial impression changes, your opinion of who should do what should change.” That could mean additional counsel must be brought in, said several white-collar lawyers. PRETEXT IN CONTEXT Follow all the coverage of Hewlett-Packard’s boardroom spying scandal � and the continuing legal fallout. Of course, these aren’t the first questions about independence to come up in the case. Morgan, Lewis came in at a time when the board’s normal outside counsel, Larry Sonsini of Wilson Sonsini Goodrich & Rosati, was under immense press scrutiny for what he knew about the leak probe. Sonsini had been the one to communicate with former HP director Thomas Perkins � whose resignation spurred the leak probe crisis � in the days before it blew up. And e-mails between Sonsini and Perkins that made it into several press outlets showed that Sonsini had some knowledge of the investigation, though it’s not clear he knew what tactics were involved. Over the last few weeks, Sonsini, along with other partners at his firm, seem to have taken a diminished role in the HP matter. While at least one lawyer at the firm went with Morgan, Lewis lawyers to meet with federal prosecutors on Sept. 11, the company said in recent days that Morgan, Lewis attorneys would be in charge of dealing with the government. The Hewlett-Packard mess began last year when Dunn � whose lawyer, James Brosnahan, didn’t return calls by press time Friday � ordered an investigation to identify the source of leaks about board deliberations. That initial investigation turned up nothing, Hurd and Holston said Friday. But, they added, a subsequent probe conducted last year identified a leaker responsible for providing information used in a Jan. 23 CNet story on the company’s overall direction. While it’s been reported in several news outlets that the leaker was former board member George Keyworth � who stepped down last week � the CNet story does not appear to contain any company information that had not already been made public. After the second investigation was announced to the board this past spring, an outraged Perkins quit in protest. The disclosure of the investigation followed Perkins’ resignation. Though Perkins resigned on May 18, it was not until Sept. 6 that the company gave details � as required by law � about the director’s action. In that filing, the company said it had received a comment letter from the SEC asking for more information about Perkins’ resignation. Perkins’ lawyer, Viet Dinh, a professor at Georgetown University Law Center, has said his client engaged in a 3 1/2-month effort to get Hewlett-Packard to come clean about why Perkins quit. Perkins abruptly quit during an HP board meeting after Keyworth was asked to resign. (Keyworth at first refused to resign, but then agreed to step down as part of a settlement with the company.) Investigators apparently used legally suspect means � including impersonating the targets of their probe � to access the phone records of board members, HP employees, journalists and Sonsini. A Boston investigative firm has been cited as the one responsible for hiring people to lie in calls to phone company officials to gain access to the phone records of board members. Boston investigative firm Security Outsourcing Solutions reportedly provided HP with an opinion from a Boston lawyer that the “pretexting” was legal. The legality of such tactics is up for consideration by the San Francisco U.S. attorney’s office and the California attorney general. They’re both investigating the issue, and Attorney General Bill Lockyer has said he has enough evidence to indict people inside and outside HP, and has met with HP representatives more than once since the scandal broke.

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