HP’s board dismisses Sonsini as counsel
Hewlett-Packard Co. and lawyer Lawrence W. Sonsini -- two icons of Silicon Valley -- are parting ways in the wake of HP’s corporate spying scandal.
HP decided to drop Sonsini as chief counsel to its board of directors, a person familiar with the situation said Thursday. The computer maker, however, still will use Sonsini’s firm, Wilson, Sonsini, Goodrich & Rosati, said the person, who did not want to be named because he had business ties to both parties.
Sonsini, a Silicon Valley power broker who has counseled Apple Computer Inc. and Google Inc., advised HP’s board about the legality of a campaign to root out the source of leaks of information from the boardroom to the news media.
That campaign, the existence of which was disclosed in September, led to criminal charges against former HP Chairwoman Patricia C. Dunn and four others and $14.5 million in fines against the computer maker.
Sonsini, 65, also is entangled in questions arising from the practice of backdating stock options at technology firms.
Combined, the two scandals show that Sonsini is “not the infallible rock star that he once was,” said Gregory P. Taxin, chief executive of Glass, Lewis & Co., which advises institutional investors. “I think a little bit of the bloom is off the rose, but he remains an extremely well-connected and able lawyer and will have many clients for a long time.”
Said Tim Bajarin, president of tech-industry consulting firm Creative Strategies Inc.: “Larry Sonsini is one of the most powerful lawyers in Silicon Valley and will continue to be so.”
Neither Sonsini nor executives at his law firm responded to calls for comment.
HP spokesman Ryan J. Donovan declined to identify a successor to Sonsini as the board’s chief counsel. His only comment was that “HP continues to have a relationship with Wilson Sonsini.”
Stephen Gillers, a New York University law school professor and ethics expert, said HP’s action was a smart move to head off possible repercussions at the Securities and Exchange Commission.
The commission could view Sonsini’s actions in looking into and approving the company’s tactics as “too manipulative,” he said.
“The SEC expects lawyers who counsel companies to assist the regulator and, indirectly, the client by candid compliance with SEC regulations,” Gillers said. “The SEC might look at HP and say, ‘Look, if you’re staying with Sonsini, maybe we can’t trust the company anymore.’ ”
The split was first reported by the New York Times.
This year has been one that Sonsini would probably like to forget.
First, numerous companies that he advised were among dozens that federal regulators began investigating to see whether they illegally rewarded employees with options to buy company stock at artificially low prices by backdating the securities.
Sonsini is a former director at Brocade Communications Systems Inc., where two former executives have been charged with criminal wrongdoing related to options.
Then HP revealed that it had spied on directors and reporters. Though Sonsini was not involved in the spying campaign, his advice in two circumstances has drawn intense scrutiny.
In May, director Thomas J. Perkins resigned. He says he quit over the board’s handling of its leak inquiry, but Sonsini concluded after interviewing him that Perkins didn’t resign over a disagreement with HP. Had Sonsini found otherwise, the company would have had to notify the SEC.
Perkins also told the board that he was a victim of “pretexting” -- impersonating someone to gain access to private records. Sonsini told him that the practice was “within legal limits,” but when disclosing the spying, the company said its outside lawyer “could not confirm” that the tactics “complied in all respects with applicable law.”
