In a recent press conference, Hurd addressed some investor concerns by announcing that Patricia Dunn, the former chairwoman who ordered an aggressive probe of boardroom leaks, would be leaving the board immediately, and that Hurd would be taking over as chairman.
Hurd and Morgan, Lewis & Bockius partner Michael Holston disclosed some details of what a company investigation has found, including the fact that Hurd himself was kept informed of certain parts of the leak probe. It’s not clear, though, at what point Hurd knew that investigators “pretexted” — lied — to gain access to board member, employee and journalist phone records.
Morgan Lewis was hired Sept. 8 to perform an independent investigation, and to represent the company in talks with federal and state prosecutors.
But one statement by Hurd raised questions for many lawyers: “Morgan Lewis reports to me, not to the HP board,” he said.
Such a statement might have been a reassurance Sept. 19. Until then, the leak investigation seemed to be more a board problem than one pointing to Hurd. But by Friday, news reports — and several remarks by Hurd and Holston at the press conference — made it clear that Hurd’s role in the probe is also being examined.
For example, Hurd acknowledged Friday that he attended a March 2006 meeting at which a summary of the investigation was presented. “I understand there is also a written report of the investigation addressed to me and others, but I did not read it,” Hurd said. “I could have, and I should have.”
Speaking privately — largely because they hope to some day be hired in the HP matter — several lawyers who conduct internal corporate investigations said this could compromise the investigation, since Morgan Lewis is expected to independently investigate potential wrongdoing, and is likely to report to prosecutors on its findings.
But, they added, it’s not unheard of for such situations to pop up.
There’s no concrete guidance from the federal government on when outside counsel conducting an internal investigation has a conflict.
“There’s no statutory definition of what an internal investigation is,” said one former federal prosecutor who asked not to be named.
The former prosecutor said that as a probe goes on, questions often come up about seemingly uninvolved parties’ role in possible wrongdoing.
“When you’re looking into various things, trying to figure out what happened, your initial impression could change,” the ex-prosecutor said. “And when your initial impression changes, your opinion of who should do what should change.”
That could mean additional counsel must be brought in, said several white-collar lawyers.
Of course, these aren’t the first questions about independence to come up in the case.
Morgan Lewis came in at a time when the board’s normal outside counsel, Larry Sonsini of Wilson Sonsini Goodrich & Rosati, was under immense press scrutiny for what he knew about the leak probe.
Sonsini had been the one to communicate with former HP director Thomas Perkins — whose resignation spurred the leak probe crisis — in the days before it blew up. And e-mails between Sonsini and Perkins that made it into several press outlets showed that Sonsini had some knowledge of the investigation, though it’s not clear he knew what tactics were involved.
Over the last few weeks, Sonsini, along with other partners at his firm, seem to have taken a diminished role in the HP matter. While at least one lawyer at the firm went with Morgan Lewis lawyers to meet with federal prosecutors on Sept. 11, the company said in recent days that Morgan Lewis attorneys would be in charge of dealing with the government.
The Hewlett-Packard mess began last year when Dunn — whose lawyer, James Brosnahan, didn’t return calls by press time Friday — ordered an investigation to identify the source of leaks about board deliberations.
That initial investigation turned up nothing, Hurd and Holston said Friday. But, they added, a subsequent probe conducted last year identified a leaker responsible for providing information used in a Jan. 23 CNet story on the company’s overall direction.