HP's legal circle

11/21/12

Erin Geiger Smith

The auditors have taken center stage in l'affaire Hewlett Packard, where the focus has been on how accountants missed an alleged cooking of the books by Autonomy, the British software maker HP acquired in October 2011. But the role of the lawyers is also being questioned, which prompted Summary Judgments to see where the relevant legal players may have intersected with the company in the past.

As Reuters reported on Tuesday, the legal team for HP on the deal included Gibson, Dunn & Crutcher, Freshfields Bruckhaus Deringer, and Drinker Biddle & Reath. HP's board relied on Skadden, Arps, Slate, Meagher & Flom. It turns out that representing the board has been a repeat gig for Skadden. In 2010, for example, the firm defended directors against a shareholders suit challenging the severance package awarded to HP's former CEO, Mark Hurd.

Another firm that surfaces pretty regularly in HP's world is Morgan Lewis & Bokius. In the shareholders suit it represented HP (Law 360 covered that suit's dismissal and detailed the legal teams), and it also played a role in the October 2011 deal now under scrutiny. In that deal, however, Morgan Lewis was on the other side of the M&A table, advising Autonomy along with British Magic Circle firm Slaughter & May.

Morgan Lewis, moreover, appears to be something of a grooming station for HP top in-house lawyers. Former GC Michael Holston was a partner at Morgan Lewis when he was brought onboard by Hurd in February 2007, reported Aric Hesseldahl at All Things D. Holston left in December 2011, three months after the Autonomy deal, and was replaced by Fenwick & West M&A partner David Healy, who was tapped as interim GC. Healy left in April 2012 when current GC John Schultz, another former Morgan Lewis partner, was named to the top lawyer post.

Schultz was only on the job a month when the Autonomy bombshell was dropped in his lap. According to The Wall Street Journal, he said HP's internal investigation began shortly after an unnamed Autonomy executive told him of accounting improprieties at Autonomy.

Schultz brought the information straight to current HP CEO Meg Whitman and the rest, as they say, is (still being written) history.

Software glitch

11/21/12

By Dan Brillman

Let the blame game begin. With Hewlett Packard crying foul over its 2011 merger with Autonomy, the computer giant has begun retracing the steps that led to the $11.1 billion deal. HP says it was shown inflated books that caused it to vastly overpay for Europe's second-biggest software outfit, and it recently reported an $8.8 billion write-down. (According to Reuters, an FBI/SEC investigation has already begun, and investor lawsuits are sure to follow.)

As The Wall Street Journal reports, no one -- not HP execs, general counsel or the accounting firms hired to vet the deal -- can yet provide clues as to how the purchase went through, even though there were reports of irregularities at the time.

So where were the lawyers? Gibson Dunn, Freshfields and Drinker Biddle were the three outside firms working the Autonomy deal for HP, with Skadden, Arps, Slate, Meagher & Flom representing HP's board.

Granted, it was an 11-figure transaction, but that's still a lot of attorneys. The firms weren't talking, so the Journal spoke with an expert who said that a lawyer's primary functions in putting these deals together are to do due diligence and review "non-price-related" items, and not to spot holes in a company's books.

But as Texas Tech professor Eric Chiappinelli told the Journal, M&A lawyers do "put their nose under the tent," even if they "aren't trained as accountants."

Next time, maybe one of them should also sniff.

A new and improved filibuster?

11/21/12

By Erin Geiger Smith

Summary Judgments readers are familiar with the fact that President Barack Obama hasn't been too successful with filling open judgeships in the federal courts. But in The New Yorker this week, Jeffrey Toobin suggests that there might be a light at the end of the tunnel.

It comes by way of potential filibuster reform proposed by two newcomer in the Senate from Oregon and New Mexico, says Toobin. Under current law, senators can effectively filibuster simply by announcing they plan to do it. But if the reform is adopted, 10 senators would have to sign a petition to organize any filibuster. This change could have great impact because, as was shown in a classic "West Wing" episode, actually carrying out a team filibuster is hard work.

Getting the reform through is no small task, explains Toobin, and it will succeed only with a big push from Senate Majority Leader Harry Reid. One incentive for Democrats to get on board, Toobin says, is this: The Senate has a constitutional obligation to take up Obama's judicial nominees, and without filibuster reform those nominees are unlikely to get through. And if they don't get through  well, Toobin says, the Democrats "will likely doom the President's second-term legacy before he even has a chance to write it."

Terrorist hanged

11/21/12

By Suhrith Parthasarathy

India today hanged the lone surviving militant from the November 2008 attacks in Mumbai that killed more than 160 people, regarded as one of the worst acts of terrorism the country has seen. Ajmal Kasab's hanging in a jail in Pune, a western city near Mumbai, was shrouded in secrecy and comes only a day after the United Nations General Assembly passed a draft resolution banning the death penalty, The New York Times reports.

Thirty-nine countries opposed the resolution, including India, which prescribed the death penalty 435 times between 2007 and 2011, according to Amnesty International. A counselor from the Indian Mission to the UN told The Press Trust of India that states have the right to determine their respective legal systems and to punish criminals according to their laws. Kasab's was the first execution in eight years.

India's courts generally prescribe capital punishment only in the "rarest of rare cases," a standard imposed by its Supreme Court, according to the Wall Street Journal. Last year, the Human Rights Group says, China executed more people than any other country, followed by Iran (360), Saudi Arabia (82), Iraq (68) and the United States (43).

The language police

11/21/12

By Caitlin Tremblay

Can you get arrested for saying to a policeman, "Excuse me, do you realize your horse is gay"? In the United Kingdom, the answer is yes. You can also be arrested for uttering a "woof" or a "daft little growl" in the direction of a dog.

With the passage of Public Order Act 1986, Section 5, the UK criminalized insults, holding that "A person is guilty of an offense if he (a) uses threatening, abusive or insulting words or behavior, or (b) displays any writing, sign or other visible representation which is threatening, abusive or insulting, within the hearing or sight of a person likely to be caused harassment, alarm or distress thereby."

But the public isn't having it anymore, according to RT, the website for Russian TV network, Russia Today. Reform Section 5, an official movement to change the law, has kicked off a campaign to raise awareness of the legislation and to work to get it changed. RT reports that only 58.8 percent of 18- to 24-year-olds were proud of the UK's free speech record.

The campaign, which began in mid-October, has the support of many prominent people, including "Mr. Bean" actor Rowan Atkinson and European Parliament Member and leader of the UK Independent Party Nigel Farage, who is quoted on the campaign's website as saying "In a robust democracy people must be free to insult and be insulted."

More stories of Section 5 arrests can be found here.

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