Can you trust your general counsel?

There has been some recent buzz about current and former general counsels stepping down from their high-powered posts at major companies. Last week, Andrew Langhoff, a former general counsel at Dow Jones and European publishing chief of the Wall Street Journal, resigned from his position after allegations emerged of questionable methods used to boost circulation figures.

According to reports, an internal investigation at Dow Jones revealed that Langhoff struck an agreement with Executive Learning Partnership (ELP), a Netherlands-based consulting firm, and personally pressured two reporters into writing articles featuring ELP.

Langhoff was formerly – in 2003 – general counsel of a division of Dow Jones called Ottaway (now named the Local Media Group) – a separate role from his most recent position as publisher of WSJ Europe and head of Dow Jones in EMEA.

However, there are no excuses for this former general counsel’s missteps because his errors are of such magnitude: someone with his level of legal experience should have had better judgment.

As a result of Langhoff’s missteps, media giant Rupert Murdoch is out yet another senior executive. This NewsCorp scandal, which has dragged on throughout the past calendar year, continues to add additional chapters to mogul Murdoch’s dubious ethical history. Hence, many of his trusted advisers have left for greener and less embattled pastures.

Adding to this turmoil, also last week, Institutional Shareholder Services called for the ousting of the Murdoch father and son tandem and 11 other directors including Aurthur Siskind, NewsCorp’s former general counsel, who resigned from his position in 2004 after 13 years of service. (Siskind continues to serve as a senior adviser to Murdoch and holds a spot on the company’s board.)

Paradoxically, his successor, Lawrence ‘Lon’ Jacobs stepped down in June – a month before the company’s phone hacking scandal reached severe levels.  Janet Nova, who now serves as Murdoch’s temporary group general counsel, has clearly stepped into some muddy waters.

‘Departure of a lawyer from representation may suggest discomfort on the lawyer’s part with the actions taken by his or her client,’ says Scott Univer, general counsel of WeiserMazars, a regional accounting and consultation firm. ‘Usually the lawyer cannot explain the reasons for departure because such explanation would reveal client confidences and the impression may not be a good one for the client. On the other hand, the departure may be due to dissatisfaction of the client with the lawyer.’

Univer (pictured left) has 24 years experience as a general counsel and previously worked at auditing firm heavyweights like Ernst & Young and BDO Seidman.  He says that one attribute a successful general counsel must possess is trust. Essentially, when you sit among the most trusted advisers at a company, you have certain responsibilities to uphold and that’s to make sure, if possible, you never leave a company during a time of crisis or make unethical decisions.

In the case of Murdoch, Univer points out that the sudden turnover in this integral position suggests some underlying issues. ‘A great deal of effort was put into explaining the transition from Siskind to Jacobs with the intention that Jacobs would have the role for the long term,' he says. 'For him to leave suggests problems with leadership, among other things.’  

Langhoff’s impromptu departure amid the ethics row, and Siskind and Jacobs leaving the company while embroiled in a legal battle, suggest that these general counsels were not prepared to face the consequences of their actions. Essentially, looking at these high-level general counsel's mistakes might lower your level of trust in lawyers in general. One might ask, if it can happen to NewsCorp, why can’t it happen to my company?

Univer, a veteran lawyer, provides some tips for general counsel to avoid stepping in hot water:

(i) Crisis management.  This is a key skill for a general counsel. Different but consistent messages have to be sent to different constituencies (shareholders, employees, business partners, lenders, analysts, regulators, and so on) with different levels of specificity. In short, the lawyer’s role is to make sure such messages are credible, take ‘ownership’ of the problem and are not harmful to positions that will have to be taken in litigation.
 
(ii) Be more involved in training with employees so you can answer questions they may have about certain regulations/policies. Training helps to avoid problems and makes the implementation of solutions easier. If all levels of corporate staff have trust and confidence in legal advisers, they will bring their problems to the surface before they become crises.
 
(iii) Accessibility. This is another attribute of skillful general counsel that reduces the risk of crises and makes remediation easier. It starts with responsiveness on small issues. Nine out of 10 calls are not emergencies. But if you don’t respond promptly to the nine that aren’t, you probably will never get the 10th – try to avoid this at all cost.
 
Univer stresses that maintaining your integrity remains critical during a time a crisis. ‘Minimizing a problem that you know won’t go away quickly is a sure way to lose credibility,’ he says. ‘By saying that everything is under control (when it isn’t); we understand what went wrong (when you don’t); or the solution is just around the corner (when you have no idea how long it will take to fix the problem)’ is never a good way to deal with legal issues.

After all, no general counsel wants to follow in the footsteps of NewsCorp’s dwindling legal team.