Editors' Blog

In-housers should be careful what they wish for

Posted 13/02/2007 by John Malpas

By the end of 2006 at least 15 senior corporate counsel in the US had lost their jobs in the wake of share option backdating investigations. Last month, William Sorin, general counsel at Comverse Technology, became the first general counsel to plead guilty to criminal charges relating to backdating. He was fined $3m (£1.5m) and could face up to five years in jail.

In recent years there has been an ongoing debate among general counsel on both sides of the Atlantic over how to gain that proverbial seat at the boardroom table. The assumption is that this is a goal every self-respecting general counsel should aim for, not just because of the prestige and accompanying pay rise but also because of the increased influence such a position is assumed to hold.

Unfortunately, it would appear from the stock option scandal that this new-won power has gone to rather too many lawyers’ heads. Our reporter Michelle Madsen explores this issue in the corporate counsel section of this coming Thursday’s issue of Legal Week.

The high number of legal casualties in the share option scandal certainly does suggest that far from being kept in the dark over share options, many corporate counsel became part of the problem.

In-house lawyers rightly set much store by their professional training and their subsequent adherence to a set of values that sets them apart from colleagues in other disciplines. But only a fool would pretend that close involvement with the decision-making process does not carry inherent risks for lawyers.

Given the US prosecuting authorities’ enthusiasm for going after general counsel, it might be time to reappraise the desirability of winning that coveted boardroom seat.