The sentries of the marketplace
They are among the most powerful people in corporate America. After the chief executive officer and chief financial officer, the general counsel is perhaps the most influential member of the senior management at a big US company.
He or she has the daunting task of ensuring that the company and its employees stay on the right side of a myriad of laws and regulations. One bad move in the post-Enron world and a company not only gets fined and sued for huge sums of money, but its stock price can also plummet and management may be forced out.
Such corporate crises as the one currently at American International Group, and previously at Marsh & McLennan, did not happen five years ago. But the bursting of the stock market bubble in 2000 and the subsequent slew of business scandals irrevocably changed attitudes to corporate behaviour.
For large US companies and their general counsel, minimising the risk of reputational damage is the biggest task confronting them today. For example, they know that they have to comply with the spirit as well as the letter of the 2002 Sarbanes-Oxley law on accounting and governance if they want to command confidence among investors.
But the potential sources of trouble are enormous. Internally, companies must contend with employment and health and safety laws. Externally, many must deal with a spider's web of domestic and foreign regulators together with laws on subjects as diverse as anti trust matters and the bribing of foreign government officials. It is therefore no coincidence that Chuck Prince, a former general counsel of the Commercial Credit Company, is chief executive of Citigroup, the world's biggest bank.
Citigroup, like its peers on Wall Street, has been learning to cope with relentless inquiries by regulators since the exposure of conflicts of interest inside investment banks three years ago.
Financial services is not the only sector feeling the heat from regulators. The energy and pharmaceutical industries are also coming under intense scrutiny.
And when the regulators come calling, they usually go to the same person: the general counsel.
Thomas Russo, chief legal officer at Lehman Brothers, the investment bank, dealt with Eliot Spitzer, New York state attorney-general, on the big settlement three years ago that resolved allegations that Wall Street firms compromised the independence of their equity analysts in the pursuit of investment banking revenues.
Mr Russo says that he devotes much of his time to fostering a culture of compliance among Lehman's 20,300 employees.
An effective compliance culture should increase the chances that any breaches of laws or regulations are one-off difficulties rather than systemic failures.
“If you look at the totality of the job at Lehman, it is really worrying about the defence of the company,” says Mr Russo. “The single most important aspect is to try and create an environment . . . which maintains the highest integrity possible, and which in turn helps to prevent problems.”
General counsel hammer home the compliance culture via close involvement in the core business. They and their legal departments are immersed in all aspects of the business, from strategy to particular deals.
Transactions are assessed not just for compliance with the law but also for their potential impact on a company's reputation.
Gary Lynch, general counsel at Credit Suisse First Boston, the investment bank, says: “Once we have decided that we are comfortable from a legal perspective on a matter, we then go on to consider the reputational consequences of doing a particular transaction.”
The close working arrangements between in-house lawyers and the core business create tensions and potential conflicts. The lawyers are supposed to be independent providers of advice, but their close involvement in the core business carries the risk of undermining their objectivity.
Lawyers argue, however, that they can only succeed in fostering a compliance culture if they are viewed as business partners rather than police officers.
It is all a far cry from 25 years ago, when general counsel remained aloof from the day-to-day business and instead gave verdicts on deals at the point of completion. Back then, the in-house lawyers lacked influence. The chief executive would rely on a senior partner at a leading law firm for advice.
But during the 1980s, big companies sought to cut their legal costs by ending their reliance on outside law firms. They developed their own legal departments, and they gave pay packages to general counsel that matched those of partners in outside law firms. During the 1990s, general counsel, like other senior management, were given lucrative stock options. Today, at Fortune 500 companies they often earn more than $1m a year.
It is not just the pay that is different. Today's corporate lawyers operate in a super-litigious society.
Kenneth Masterson, who retires next month after 26 years as general counsel of FedEx Corporation, the courier service, expresses concern at how class action lawsuits have recently been taken up by employees as well as shareholders.
He says that such lawsuits are the biggest challenge for general counsel, and expresses regret at “the tendency in this country for there to be lawsuits filed for any conceivable wrong, no matter how unlikely”.
The Sarbanes-Oxley law is meanwhile prompting general counsel to devote significantly more time to financial reporting issues.
A company's chief executive and chief financial officer have to certify the accuracy of its financial statements, and they face criminal penalties if they wilfully misrepresent the accounts. While it is the CFO's job to oversee compilation of the relevant data, the general counsel must check that the corporate response meets the disclosure requirements in the Sarbanes-Oxley law. The law also requires lawyers who represent companies before the Securities and Exchange Commission, the chief US financial regulator, to report any evidence of wrongdoing to the board if the CEO fails to act on their concerns.
Frank Fernandez, general counsel at Home Depot, the home improvement retailer, says that general counsel must execute policies that put ethics at the heart of business strategy.
But he expresses concern that some regulators are not recognising the right of companies to withhold details of confidential discussions with lawyers, and he says that such action should be questioned. “A lot of the fall-out from Enron and WorldCom is the government becoming a bit over zealous, a little bit over aggressive,” says Mr Fernandez. “When the government does that, there has to be a balance. And lawyers are part of that balance saying: ‘Wait a minute, there are limits.' ”
Prosecutors and regulatorsare putting in-house lawyers under unprecedented scrutiny. The SEC regards general counsel, like auditors, as what it calls “sentries of the marketplace”, and it is considering cases against in-house lawyers who assisted companies in covering up fraud.
Stephen Cutler, head of enforcement at the SEC, says: “At least some of the malfeasance we have seen in recent years would not have happened if a lawyer had raised his hand and said ‘Stop'.” General counsel may be increasingly powerful in the post-Enron world, but their personal exposure to lawsuits is also greater than ever before.
秤一秤企业律师“含金量”
他们属于美国企业界最有权势的人。在大型美国公司的高级管理层中，除了首席执行官和首席财务官之外，总法律顾问或许就是最有影响力的成员了。
他或她的任务令人生畏，那就是确保公司及其雇员不违反多如牛毛的法规。在这个“后安然”(post-Enron)时代，企业如果走错一步，不仅将遭到巨额罚款和赔偿诉讼，它的股价还可能暴跌，管理层或许会被赶下台。
5年之前，眼下发生在美国国际集团(AIG)和先前发生在马什?麦克里安(Marsh McLennan)的这种企业危机都不存在。但2000年股市泡沫破裂，以及随之而来的大量公司丑闻，不可逆转地改变了人们对企业行为的态度。
对大型美国公司和它们的总法律顾问来说，将名誉受损的风险降到最低已成为他们如今面临的最大任务。例如，他们知道，若要赢得投资者的信心，它们就必须遵守2002年萨班斯?奥克斯利(Sarbanes-Oxley)法的条款和精神，这是一部有关会计和公司治理的法律。
但是可能出问题的地方多得惊人。在内部，企业必须遵守雇佣、保健及安全方面的法律。在外部，很多企业必须应付错综复杂的国内外监管部门，以及各种法律，包括反垄断、贿赂外国政府官员等。因此，美国商业信用公司(Commercial Credit Company)前任总法律顾问查克?普林斯(Chuck Prince)成为全球最大银行花旗集团(Citigroup)首席执行官，并非巧合。
自3年前投资银行内部利益冲突的问题曝光以来，花旗集团就像它在华尔街的同行一样，一直在学习如何应付监管部门不断的质询。
感受到监管机构炽热压力的不止金融服务业一个行业。能源和医药业也正受到严厉审查。
而当监管人员前往公司察访时，他们通常都会找同一个人：公司的总法律顾问。
3年前，投资银行雷曼兄弟(Lehman Brothers)的首席法律顾问托马斯?拉索(Thomas Russo)就一桩重大调解案同纽约州总检查长艾略特?斯皮策(Eliot Spitzer)打过交道。有指控称，华尔街公司为追求投行业务收入而牺牲其股票分析师的独立性，那次调解解决了与之相关的指控。
拉索先生表示，大部分时间，他都致力于在雷曼2.03万名雇员中营造一种合规文化。
有了有效的合规文化，任何违反法律或法规的行为就更有可能是一次性的麻烦事，而不是系统上的失败。
“如果你关注雷曼的整体业务，就会发现公司的防御真是令人担心，”拉索先生表示。“最重要的方面是尝试并创造一种环境……令保持最高诚信度成为可能，进而帮助预防问题的发生。”
总法律顾问通过密切介入核心业务来灌输合规文化。他们和公司法律部渗透到企业的方方面面，从整体战略到具体的交易。
各项交易都会得到评估，不仅看它们是否符合法律规定，还看它们可能对公司声誉产生什么影响。
投资银行瑞士信贷第一波士顿(Credit Suisse First Boston)的总法律顾问加里?林奇(Gary Lynch)说：“一旦我们确定在法律角度上对某件事感到放心，就会接着考虑这宗交易对声誉的影响。”
利益冲突？
内部律师与核心业务部门之间密切合作，这种安排会造成紧张和潜在的冲突。律师们应当是独立的建议提供者，但他们密切介入核心业务，带来了破坏其客观性的风险。
但律师们辩解说，只有被视为商业合作伙伴，而不是警察，他们才能成功培育出合规文化。
这与25年前的情形截然不同。当时，总法律顾问超脱于公司日常业务之外，只是在交易完成之际才给出结论。在那时，内部律师缺乏影响力，首席执行官通常依赖某家领先律师事务所的高级合伙人提供建议。
但在80年代期间，大公司设法结束对外部律师事务所的依赖，以削减法律事务成本。它们建立了自己的法律部，为总法律顾问提供与外部律师事务所的合伙人相当的薪酬安排。90年代，总法律顾问像其他高管一样被分到丰厚的股票期权。如今，《财富》500强公司的总法律顾问年收入通常超过100万美元。
美国人爱打官司？
不仅是薪酬不同了。如今公司律师们正在一个超级爱打官司的社会中开展业务。
肯尼思?马思特森(Kenneth Masterson)已在快递服务商联邦快递公司(FedEx Corporation)担任了26年的总法律顾问，他将于下个月退休。对于近来雇员和股东纷纷采取集体诉讼的状况，他表达担忧。
他表示，这种诉讼是对总法律顾问的最大挑战。“美国存在一种趋势，对任何可以想到的错处都要提起诉讼，而不管有多离谱。”他对此表示遗憾 。
同时，萨班斯-奥克斯利(Sarbanes-Oxley)法正促使总法律顾问在财务报告问题上投入更多得多的时间。
公司的首席执行官和首席财务官必须保证财务报表的准确性。如果他们蓄意错误陈述账目，则会面临刑事处罚。首席财务官的职责是监督相关数据的编制，而总法律顾问必须核实公司报表符合萨班斯-奥克斯利法的披露要求。该法也对代表公司向证券交易委员会(SEC)的律师提出规定：如果他们发现违规行为，但首席执行官对他们的担忧无动于衷，那他们就要向董事会报告。
家居装饰零售商家得宝(Home Depot)的总法律顾问弗兰克?费尔南德斯(Frank Fernandez)表示，总法律顾问必须执行把道德规范放在商业战略核心位置的政策。
政府盯得太严？
但他表示担忧，称企业有权不透露公司与律师保密讨论的细节，而某些监管机构没有认识到这一点。他还表示，这类行动应受到质疑。“安然(Enron)和世通(WorldCom)事件之所以有这么大余波，很大程度上是因为政府变得过分热切，过分激进，”费尔南德斯先生说，“政府在这么做时必须掌握平衡，律师就是这一平衡的一部分，他们的责任就是说：‘等一等，这里有个限度。’”
检察官和监管机构正对公司内部的律师进行前所未有的严查。美国证交会把公司总法律顾问看成和审计师一样，是它所谓的“市场哨兵”，并考虑起诉那些帮助公司掩盖欺诈行为的内部律师。
美国证交会执法负责人斯蒂芬?卡特勒(Stephen Cutler)表示：“在我们近年来见到的违法行为中，如果有律师举起手来叫一声‘停’，至少有些违法行为就不会发生。”在“后安然”时代，总法律顾问的权力可能正日益增大，但他们个人面临诉讼的风险也比以往任何时候都要大。
