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The biggest problem that the Big Five accounting firms face is huge potential exposure in professional liability suits. Case in point: Ernst & Young’s predicament in the CUC International/Cendant Corp. debacle. It’s no wonder then, that for a Big Five firm, expertise in auditor defense is a precious commodity. In fact, it’s that background that landed Philip R. Rotner, 53, in the top legal spot at Deloitte & Touche USA. Rotner, formerly a partner at San Francisco’s McCutchen, Doyle, Brown & Enersen L.L.P., had focused on shareholder class actions with a hefty dose of accounting-firm defense work. Although Rotner was a seasoned litigator, he says, he had “absolutely no background in corporate law” and no in-house experience. But in 1995, in the course of representing Deloitte, the firm’s then-CEO, J. Michael Cook, asked whether he would be interested in becoming Deloitte’s general counsel. As Cook recalls, it was over dinner in a Salt Lake City restaurant that the CEO “popped the question.” Rotner immediately pointed out the gaps in his experience. But, he says, Cook reassured him with the reply: “You can get the best people you can find working for you on the corporate law side, but you need to get the litigation right, and that’s why I’m asking you to do this.” With his wife willing to relocate, the Chicago native swapped coasts. It wasn’t the first time Rotner had changed course. While a college student at the University of California at Berkeley, he had been set to pursue a Ph.D. in English literature, but “by some impulse,” he applied to a single law school — Harvard. “I never thought I would get in, and I never thought I was serious about applying to law school, but they accepted me. I thought about it and just switched gears immediately.” Now, situated in his corner office with a dead-on view of the Hudson River, Rotner reports, “Our firm has not had one of the mega-cases that some of the other firms have had — knock on wood.” Although Rotner’s paneled office has plenty of wood to knock, his success in defending against auditor liability claims is more than pure luck. While Cook — who retired last year after 15 years as CEO, during which he served as the first CEO of the combined Deloitte & Touche — was quick to praise Rotner as “a superb negotiator” who “knew when to hold ‘em and when to fold ‘em,” the fact is that even Rotner’s adversaries hold him in high regard. Paul F. Bennett, a name partner at San Francisco’s Gold Bennett Cera & Sidener L.L.P. who has crossed paths with Rotner as an adversary in several cases during the past 20 years, describes Rotner as a good, bright lawyer, “with a sense of balance and good judgment,” who doesn’t engage in “a lot of puffery � He was reasonable, but he would also vigorously defend his client.” Among the law firms that Rotner uses for class actions, which remains the most pernicious category of cases against the Big Five, is Skadden, Arps, Slate, Meagher & Flom L.L.P. Rotner says that as a matter of policy, he cannot comment on any particular case against Deloitte, including a recent suit, seeking more than $300 million in damages, that claims Deloitte failed to detect fraud that allegedly led to the failure of InverWorld Inc., a San Antonio-based investment firm. In addition to class actions, Rotner’s other major projects include Deloitte’s ongoing globalization of everything from its management structure, to its technology, to its delivery of professional services. Then there is the “rapidly changing regulatory environment,” including the auditor independence and multidisciplinary practice debates, which Rotner tracks as he “advises the firm on those matters.” Some 30 in-house lawyers report to Rotner. But, like all of the Big Five firms, Deloitte employs many hundreds of law school graduates. What’s it like working for Deloitte? “It means you’re dealing with very intelligent, very accomplished people all of the time, and I think it kind of raises your game,” Rotner says. “This is a very sophisticated client.”

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