Diversity as a Priority

In 1998, Malvern, Pa.-based IKON Office Solutions eliminated its legal department and put Philadelphia-based Ballard Spahr Andrews & Ingersoll in charge of all its legal work. The experiment lasted only a year, and Don H. Liu was hired as general counsel to rebuild the department. Two-thirds of his in-house attorneys are either minorities or women, a fact that reflects Liu's lifelong commitment to promoting diversity in the workplace.

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NAME AND TITLE: Don H. Liu, senior vice president and general counsel AGE: 40 THE COMPANY: IKON Office Solutions describes itself as “one of the world’s leading providers of products and services that help businesses communicate.” The company still has a hand in the business that put it on the map — leasing, selling and servicing photocopiers. But it also has branched out in a number of other directions, including computer network design, e-business development, copy center and mail room management and on-demand printing and distribution. The company also provides services tailored to the needs of attorneys, such as scanning and coding discovery documents for litigators. IKON, based in Malvern, Pa., a suburb of Philadelphia, has about 600 other locations and 37,000 employees worldwide. The company had revenues of $5.3 billion in fiscal 2001 and is currently ranked 326th among the Fortune 500. BIG CHANGE: When Korean-born Don Liu went from the No. 2 position in Aetna U.S. Healthcare’s legal department to general counsel at IKON in 1999, it was part of a major reorganization following a tumultuous period at his new company. Following rapid growth in 1997 and 1998, IKON’s stock had plummeted, the chief executive resigned, the company’s accounting methods were questioned and shareholder suits followed. One of the first things that incoming CEO James J. Forese did was to put an end to a short-lived experiment. In 1998, the company had completely eliminated its legal department by dismissing all 10 attorneys and put one of its law firm mainstays, Philadelphia-based Ballard Spahr Andrews & Ingersoll, in charge of all its legal work, including the oversight of other outside counsel. Four of the former IKON in-house counsel went to work for Ballard Spahr. IKON officials hailed the change as the wave of the future and expected to reap a savings of $1 million a year. But this change lasted only a year and by 1999 the company was committed to rebuilding its in-house legal department, the first step of which was the hiring of Liu in March. Liu says that it is rare for a Fortune 500 company to do without a general counsel and perhaps rarer still for such a move to succeed. Liu says that one of the major problems with outsourcing work to a firm with 400-plus lawyers was just finding out who was handling what. That’s not a problem he has now with the staff of nine other attorneys that he oversees. About eight months after arriving at IKON, Liu took part in the decision to settle the shareholder litigation for $111 million. Liu says that the company does not regret that decision, despite the fact that Ernst & Young, IKON’s outside auditor, which did not settle, was cleared of liability by the courts. Although IKON says that the settlement was not a concession of wrongdoing, the financial troubles and the litigation were humbling experiences. “One of the weaknesses that IKON has publicly discussed is that its internal controls could have been better,” Liu said. Nowadays, a major part of Liu’s job is to work closely with the company’s new in-house auditing department. BUILDING A DEPARTMENT: Although Liu would not recommend that a large company outsource its legal department, IKON’s experiment did give him a unique opportunity when he arrived in 1999 — the chance to handpick the ideal legal department. Of the nine attorneys who report to Liu, five do most of the company’s transactional work. Liu calls his two employment litigators and two commercials litigators “risk managers” since they try to resolve disputes before they reach the stage of litigation. The four oversee the work of outside litigators brought in to handle matters that can’t be nipped in the bud. Because of the nature of IKON’s legal problems, Liu puts a great deal of emphasis on big-firm experience in his hiring decisions. Two-thirds of his in-house attorneys are either minorities or women, according to Liu, a fact that reflects his lifelong commitment to promoting diversity in the workplace. IKON DIVERSITY: Before Liu’s arrival, IKON’s diversity policy, where it existed at all, was set by regional divisions. After Liu made the case for a companywide diversity policy, Forese asked him to create and chair a Diversity Council. The council has instituted training to help managers deal with sensitive issues. It started a mentoring program to retain minority recruits who might feel out of place and has reached out more assiduously to minority-owned suppliers. IKON’s legal department was awarded the Minority Corporate Counsel Association’s Diversity 2000 award. “For someone like me, who came to the United States from Korea when I was 11 years old, diversity is an issue you can’t avoid,” he says. Joining a diversity committee was one of the first things he did upon arriving at Middlebury College and he has stayed involved ever since, either formally or informally. Currently, he serves on the ABA’s Commission on Opportunities for Minorities in the Profession, the Asian-American Legal Defense and Education Fund and the National Asian Pacific American Bar Association. LITIGATION: When Liu arrived at IKON, there were 10 to 15 major lawsuits still unresolved, he says. He’s now got that down to one — an ERISA suit brought by participants in IKON’s 401(k) plan and based on the same drop in stock value that led to shareholder litigation. That case is in pretrial motions. Aside from that, Liu says he is blessed with problems that are mostly routine, including transactional work and employment litigation defense. Because IKON often acts as a bank of sorts for its customers through its leasing arm, Liu oversees quite a few collections cases. Although the company is merely a distributor of office equipment, it sometimes gets caught between disgruntled customers and manufacturers in products liability cases. ROUTE TO THE TOP: In many ways, Liu is the quintessential immigrant success story. Coming from humble origins — his parents ran a grocery and other mom-and-pop businesses — Liu graduated from Haverford College with Magna Cum Laude and Phi Beta Kappa honors. He was a Harlan Fiske Stone Scholar at Columbia University Law School, where he earned his J.D. in 1986. He clerked for one year with Justice Stewart G. Pollock at the New Jersey Supreme Court and then did securities and mergers and acquisitions work with two New York firms, Simpson Thacher & Bartlett and Richards & O’Neil. He was vice president and deputy chief legal officer of U.S. Healthcare (and its successor, Aetna U.S. Healthcare) from 1992 until 1999, when he joined IKON. OUTSIDE COUNSEL: Liu is not a believer in the trend toward “one-stop shopping” when it comes to outside counsel. He prefers to find individual attorneys whose qualifications he can be sure of, rather than leaving it to a firm to decide who will handle what. For transactional and corporate securities work, he relies on two “unbelievably well-regarded” partners at New York’s Cravath, Swaine & Moore: corporate attorney Alan C. Stephenson and litigator Thomas G. Rafferty, the latter of whom handled IKON’s shareholder litigation. John G. Harkins Jr. of Philadelphia’s Harkins Cunningham is representing IKON in the ERISA class action. IKON still has ties with Ballard Spahr, which handles some employee benefit matters for the company and which, coincidentally, is where Liu worked once as a summer associate. FAMILY: Liu’s wife, Jin, is a former practicing attorney, and they have two children, Jessica, 6, and Alexander, 4. LAST BOOK READ: “Korea’s Place in the Sun: A Modern History,” by Bruce Cumings.

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