A shred of hope: how a major corporate disaster helped shape a GC career
There are defining moments in every lawyer's career - in mine, it was a twelve-month period in the aftermath of the Enron scandal...
April 27, 2015 at 11:08 AM
4 minute read
There are defining moments in every lawyer's career – in mine, it was a twelve-month period in the aftermath of the Enron scandal.
On 12 March 2002, Arthur Andersen was indicted in connection with the now-infamous document shredding in one office in the US. A reputational tsunami hit every country across the globe. Andersen firms and people had to run for safety as their clients started to drop them. It was as dramatic as if, say, PwC or Clifford Chance were to disappear between now and year end.
As deputy to Arthur Andersen's global general counsel, I took on the transactional side of the crisis, while he took on the litigation defence. I had the combined challenge of building a 50-strong team of specialist internal and external lawyers, while letting go most of the internal legal team.
Strange as it sounds, this period in my career still stands out as one in which I feel most proud. As a team, we successfully dismantled one of the world's most highly respected global firms. We did it swiftly and safely. We isolated, as far as possible, the exposures facing the US entity, where the Enron plaintiffs' claims originated, from the other 100+ Andersen firms across 86 countries. We negotiated with the banks to prevent default being called on our $800m lines of credit. We met weekly in order to review whether or not a declaration of insolvency was inevitable.
We also negotiated agreements for the local Andersen firms that joined the now-Big Four accounting networks. We mitigated successor liability, although not always enough and some suitor networks stepped back from taking onboard a particular Andersen firm. We ensured that Andersen's intellectual property could continue to be used by legacy Andersen firms in their new 'homes'. Lastly, we created a bespoke mediation process and settlement agreement to settle outstanding inter-company payments – a little like chasing green fees from members who have already left the golf club, except in this case they totaled $900m!
However, we proactively secured an arbitration decision in Switzerland that endorsed the fairness of our mediated settlement agreements, helping ensure all former members of the club would pay their dues and their share of any liability.
You cannot live through a crisis like this without learning a huge amount. I am sure my colleagues in the Andersen 'Transition Team' would say the same. For me, I have sought to apply the lessons in my subsequent roles as general counsel at Ernst & Young Global and at the Boston Consulting Group. Three of the most important ones are:
• our teaming was truly effective because there was a spirit of unconditional collaboration and integrity;
• the general counsel's role is most effective where there has been investment in building reciprocal trust and relationship with each individual in the C-suite; and
• the lawyer's ability to remain calm at all times is of critical value, including knowing when to turn right when others are turning left.
Wherever you may be in your career, your success will snowball the more you have a spirit of collaboration, the more you build relationships of trust with your executive colleagues and the calmer you remain in moments of crisis.
"If… you keep your head while those around you are losing theirs… you can be a general counsel!"
Jeremy Barton is a partner and global general counsel at The Boston Consulting Group. This article was commissioned for the Turning Points hub, an online career development resource from Legal Week in association with Berwin Leighton Paisner.
For more Turning Points stories, see:
- Snuff and nonsense – why a 2:2 from Hull is no bar to a career at the Bar
- An unrefusable offer – from The Godfather to a career in-house
- Supply and demand – the 'slow hunch' that led to a groundbreaking legal services venture
- It pays to read the small print – the dissertation on IT and law that transformed a career
- Get up, stand up – how a mis-sold pension sparked a career in law
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