Corporate Crisis Management

Fielding a Winning Team for Shareholders

Wichita, KS, was an unlikely spot for finding metaphors. Sitting in a rental car on the steaming asphalt outside the Summer College Baseball World Series, I took a cell phone call from my old friend and client, Craig Conway, President and CEO of PeopleSoft, Inc. Craig, at 48, had led his company into the real big leagues. Under his leadership, PeopleSoft had become the second largest software applications business in the world, only to find itself in August of 2003 fending off a hostile tender offer launched 2 months earlier by number three, Oracle Corporation. And Oracle had deep pockets for the fight and a deeper reputation for fighting dirty.

The following week, I walked into the executive suite at PeopleSoft's headquarters in Pleasanton, CA. After a round of intensive interviews with senior officials and the chair of the PeopleSoft Board's Transaction Committee, I was named Special Counsel for Oracle-Related Affairs. Vested with exceptional powers, I had a directive that was both comprehensive and critical: to confidentially manage PeopleSoft's legal, political and communications strategies, including all activities in state and federal courts and with the SEC, at both ends of Pennsylvania Avenue, in the European Commission and in other venues worldwide.

For the next 14 months, I helped design and direct PeopleSoft's storied defense against Oracle's takeover. The 500-day battle (the longest in American corporate history) ended last December, with the board accepting Oracle's final offer of $26.50 per share — some $3.5 billion more for PeopleSoft's shareholders than initially offered. I believe PeopleSoft's bold decision to install an independent Special Counsel to manage its response to the takeover bid contributed materially to creating this added shareholder value.

The Role of Special Counsel in a Crisis

Corporate crises threaten both the business of a company and the business judgment of its board of directors. The independence of the board's actions must be established and communicated to all constituencies, be they shareholders, industry analysts, customers, government regulators or employees. After the well publicized sagas of WorldCom, Enron and Disney, there is little doubt that the state of the art now calls for the appointment of special, independent counsel to advise boards and management on the proper response to a corporate threat.

As Special Counsel, my charter required me to hire (and fire) U.S. and European corporate, securities and litigation counsel; direct round-the-clock, multi-counsel coordination sessions; hold daily strategic planning meetings with PeopleSoft's five chief officers and worldwide sales executives; develop press releases and analyst briefings; direct the production of over 3 million documents/databases in response to five antitrust investigations and civil cases pending in California and Delaware; eyeball critical SEC and court filings; and manage over $90 million in billings from two dozen law firms and related service vendors. I regularly briefed the PeopleSoft Board of Directors up to the October, 2004 trial in Delaware Chancery Court over the company's takeover defenses. Oracle's final offer and PeopleSoft's acceptance came like many do, in the middle of trial when each party finally decides it has too much to lose to press on.

As I learned under fire during the PeopleSoft War, dispensing legal advice is only part of the job of special counsel to a public company under siege. The role requires decisive managerial skills, an ability to craft and communicate the corporate cause, peripheral vision, and unflagging stamina. The lessons I learned through this assignment should apply equally to all such crises, whether created by cutthroat competition, opportunistic class actions, zealous governmental regulation or mass tort claims.

Special Counsel's Place At the Table

Independent, special counsel can be responsible to either the board of directors (or a committee of the board), or to management – but, according to current “best practices,” ought not try to serve both masters. In post-scandal corporate America, shareholder activists are demanding greater and greater separation between those who manage and those who direct. Especially in the context of a hostile takeover, cautious legal advisers press for a separation of the board from “insiders,” lest managerial “entrenchment” taint the board's independent business judgment. At PeopleSoft, I was engaged as a legal manager, reporting directly to the CEO, but with regular advisory duties to the board. When the board's Transaction Committee met to vote on Oracle's serial tender offers, however, Craig Conway (a member of the board as well as the CEO) was excluded from its final deliberations, as was I. The Committee had additional independent counsel available to advise it at those times. Although awkward at times, maintaining the absolute independence of the board was necessary to PeopleSoft's takeover defenses. Companies engaging special, independent counsel need to decide whether that counsel will be responsible to management, the board, or both, as may be appropriate under the circumstances.

Bench Strength

Managing major corporate crises to successful resolution has a lot in common with managing a major league baseball team to the World Series. The process can be long and arduous, plagued by public controversy, internal dissention and injury. Ultimate success can only arise from a blend of superb talent, strong technology, guts, fan loyalty — and luck.

When I arrived at PeopleSoft 2 months into the battle, I found a company that prided itself on performing at the top of its game and providing its Fortune 500 customers worldwide with the most powerful applications technology ever conceived. I found a remarkably energized esprit de corps. But I also found a crisis team in disarray. Turf battles and a clash of personalities were straining the company's ability to fend off Oracle's unwanted advances. The vaunted PeopleSoft software applications had not been designed to generate reliable forensic data support to the company's own lawyers and economists, charged with establishing the anticompetitive nature of Oracle's bid. A slow exodus of exhausted executives to companies out of the line of fire would soon create a serious “brain drain.”

Corporate crisis management requires an early and critical assessment of the company's hard and soft assets – its “money” players, financial strength, technological capabilities, fan (ie, customer) support, and most of all, its collective will. Unrelenting controversy and relentless pressure saps strength and tests personal commitment to the breaking point. You need to know early on how deep your bench is.

Order and the Chain of Command

At my first appearance before the PeopleSoft board in October 2003, I told them I had one goal in mind for the legal side of the takeover fight — to prevent it from interfering with the continued business success of the company. In 30 years as a complex corporate litigation attorney, I had seen litigation take on a life of its own, “Jarndyce”-like, detracting from vital corporate goals. In my opinion, PeopleSoft was going to survive only if its performance and stock price continued to outpace its stalker. Our path to success would have to be through the marketplace, not the courtroom.

Over the same 30 years, however, I had never seen such a Rube Goldberg polyglot of legal advisers and service vendors as that which was ringing up nearly $5 million a month in fees and costs. The first task was to bring order to this chaos and design a master legal strategy for the entire effort — from cooperation with antitrust authorities worldwide and prosecuting civil litigation nationwide, to confronting Oracle-driven SEC investigations and inspiring political leaders in state and national capitals. Clear chains of command and crisp directives were required to keep lawyers from stumbling over themselves and letting the balls drop between them. Nothing less than daily steering committee conferences that knit together the litigation, corporate, antitrust, SEC and political efforts would keep the team members on task. This process succeeded in holding lawyers accountable, meeting time-critical deadlines, impressing upon counsel the exigencies of running a business through the crisis, and satisfying the board and management that all this lawyering would not be a drag on corporate profits.

The lesson here is that the first step in responding to a crisis may be to hire the best and the brightest — but that by no means can be the last step in the process.

Life in a Fishbowl

Public companies operate in the public eye. Securities regulators impose severe restrictions on corporate speech, particularly where it may move markets. In addition, industry analysts, institutional shareholders, arbitrageurs and the business press parse every word uttered by a company in crisis. Every analyst call, press release and discovery response finds an eager audience, simultaneously looking for strengths, weaknesses, contradictions and revelations. In the merger context, customer constituencies are also looking for evidence of stability and a continuing flow of commerce. Add active and acrimonious litigation to the cauldron, and the mix can be fraught with peril for company spokespersons.

The Oracle/PeopleSoft drama began with the fabled clash of verbal swords between the companies' respective samurai, Craig Conway and Larry Ellison. Conway declared the tender offer to be “atrocious behavior from a company with a history of atrocious behavior.” Ellison upped the ante with a joke about killing either Conway or his dog. He styled his tender offer “the war game in a box.” The nasty public tone was set even before there was a serious offer for the PeopleSoft board to consider. These executive shots across the bow colored not only public perception of the corporate clash but a court's perception, too. In the Delaware Chancery Court litigation over PeopleSoft's takeover defenses, Vice Chancellor Leo Strine repeatedly chastised counsel on both sides over the “sandbox behavior” of their clients. Conway took most of the heat, since it was his company's board that was supposed to be considering the tender offer rationally and independently from “entrenched management.” Ellison got off as the rogue “bad boy” of technology.

As special counsel, it was incumbent upon me to harness public statements to the company's legal actions. We took Conway's aggressive comments as a customer-rallying cry that might prompt official Washington to act. We made Oracle's e-mail traffic the cornerstone of our unfair competition suit. We persuaded the SEC that our use of the generic word “tactic” in a press release describing Oracle's offer was not a public accusation of criminal activity requiring factual support. Harmonizing corporate communications with legal action required daily working sessions with the company's marketing, institutional investor and public relations teams, and outside communications and proxy advisors. Together we handcrafted each press statement and release, Web site and blog posting, Wall Street Journal ad, on- and off-record sessions with the press, even our seemingly casual hallway banter with reporters covering the Justice Department/Oracle antitrust trial in San Francisco.

Handling a high-profile crisis under the microscope of public and regulatory scrutiny requires articulating a consistent theme to all constituencies, attention to minute nuance and the ability to persuade corporate officials that, sometimes, “silence is golden.”

Pocketbook Politics

There is a dimension to the public company crisis that attracts little academic attention but must catch the eye of the legal crisis manager. Under the familiar exhortation, “It's the economy, stupid!” a threat to the corporate economy usually implies a threat to a larger, public economy — and therefore a threat to constituents of one politician or another. In the PeopleSoft War, major customers of the target included the largest employers in many states and many states' universities, colleges and governments. Oracle broadcast loud and clear when it launched its offer that it intended to euthanize the entire PeopleSoft product line, economically orphaning all these major customers who had committed hundreds of millions of dollars deploying PeopleSoft applications to run their most complex business operations. The adverse customer reaction reverberated throughout statehouses and the U.S. Capitol and became a prime source of pressure on the Justice Department to seek to block the merger as anticompetitive and harmful to commerce. Eventually, ten states joined the federal government in suing Oracle under federal antitrust laws.

Anticipating the need to open a political front in this war, early on I sought to enlist PeopleSoft's Washington presence. I discovered there was none. Where Oracle had teams of lawyers and lobbyists already in place in the Capital, PeopleSoft, that $7 billion multi-national software giant, had no one. Apparently corporate success in Pleasanton, California had not required attention to federal legislation affecting such Silicon Valley hot-buttons as intellectual property, international trade or immigration.

We immediately engaged Washington government relations and antitrust counsel. Through their efforts, we were able to attract the attention of key players on both sides of the Hill and down Pennsylvania Avenue, with a raft of information about competitive harm to their constituents. Our efforts had the additional effect of neutralizing the Oracle-sponsored op-ed pieces in the major national dailies and some of the back room visits to DOJ from their well-connected D.C. counsel. This was crucial to our shareholder and customer constituencies as well as to those who would later attempt to block the proposed merger.

Targeted impact communications can generate crucial public support for a public company's efforts to successfully manage a corporate legal crisis. Special counsel can make a significant contribution by effectively mobilizing public constituencies and aligning them with corporate goals.

Budgetary Control

Corporate crises can easily churn out “bet the bank” costs. Directors and officers are hard-pressed to ration supplies to the front when the corporate headquarters is being threatened. Human nature also play a role — often, it's “other people's money” (meaning insurers') being spent, and managerial attention is rightly focused on winning the battle, not accounting for the cost of munitions.

During the PeopleSoft War, I was responsible for overseeing a legal blitzkrieg, mobilizing the forces of over 300 professionals worldwide, backed up by multiple data, investigative and other ancillary support services. The cost of defense exceeded $90 million. At the company, the effort swallowed up hundreds of software programmers, technicians, financial and investment staff and public relations personnel. Our versions of “Rosie the Riveter” were at their keyboards day and night, churning out competitive bid data in response to Justice Department document demands.

Many months into the PeopleSoft saga, we discovered that our outside data processing vendors had reached the limit of their capacity to timely and accurately produce millions of pieces of information in the format that was demanded simultaneously for both the Department of Justice antitrust trial and coast-to-coast civil cases. Throwing money at the problem was not a solution. So we turned inward. Deep in the corridors of the company's campus, we discovered a talent pool unmatched by any available outside vendor. Coordinating with counsel, vendors and our in-house technicians, we were able to achieve stunning and timely results at a fraction of the cost, without jeopardizing the company's business.

Threats to the corporate franchise will always justify hiring the best and the brightest attorneys, economists, investment bankers and other professionals, and rightly so. But don't believe that “this is no time to economize.” Rather than cutting back essential services, however, special counsel can make an important contribution by clamping down on wasteful inefficiencies and duplication of effort. Having the same costly services provided by different professionals multiple times saps both human and financial capital. To keep the cost of crisis response from creating its own crisis for the company, special counsel must anticipate what will be needed in every venue and carefully synchronize the company's global resources to meet the challenges.

An Integrated Approach

If I learned anything from my stint as Special Counsel, it was the value of an integrated approach to managing corporate legal crises. While preparing testimony for the European Community's antitrust hearings, I worked with PeopleSoft's Chief Technology Officer Rick Bergquist to develop a visual model of the company's software products — a six-radii star identifying the six requirements that characterize the high-function business applications software sold worldwide only by PeopleSoft, Oracle and Germany's SAP. The six radii are: Assess and Secure Resources; Establish Order and Chain of Command; Articulate a Positive Goal; Align Communications; Enlist Public Support; and Control Expenses.

That star became a perfect model for my view of the role of special counsel to a corporation under crisis conditions. In addition to sound legal advice, counsel must have the ability and authority to accomplish six mission critical functions.

Casey Stengel once said, “Managing is getting paid for home runs someone else hits.” The savvy manager, however, knows who to lead off with and who should bat clean-up, whose arm needs rest, when to trade for a superstar and what to tell the press during a slump. If baseball is a metaphor for life, it is also a fitting metaphor for handling legal crises when they challenge your company.

Fielding a Winning Team for Shareholders

Wichita, KS, was an unlikely spot for finding metaphors. Sitting in a rental car on the steaming asphalt outside the Summer College Baseball World Series, I took a cell phone call from my old friend and client, Craig Conway, President and CEO of PeopleSoft, Inc. Craig, at 48, had led his company into the real big leagues. Under his leadership, PeopleSoft had become the second largest software applications business in the world, only to find itself in August of 2003 fending off a hostile tender offer launched 2 months earlier by number three, Oracle Corporation. And Oracle had deep pockets for the fight and a deeper reputation for fighting dirty.

The following week, I walked into the executive suite at PeopleSoft's headquarters in Pleasanton, CA. After a round of intensive interviews with senior officials and the chair of the PeopleSoft Board's Transaction Committee, I was named Special Counsel for Oracle-Related Affairs. Vested with exceptional powers, I had a directive that was both comprehensive and critical: to confidentially manage PeopleSoft's legal, political and communications strategies, including all activities in state and federal courts and with the SEC, at both ends of Pennsylvania Avenue, in the European Commission and in other venues worldwide.

For the next 14 months, I helped design and direct PeopleSoft's storied defense against Oracle's takeover. The 500-day battle (the longest in American corporate history) ended last December, with the board accepting Oracle's final offer of $26.50 per share — some $3.5 billion more for PeopleSoft's shareholders than initially offered. I believe PeopleSoft's bold decision to install an independent Special Counsel to manage its response to the takeover bid contributed materially to creating this added shareholder value.

The Role of Special Counsel in a Crisis

Corporate crises threaten both the business of a company and the business judgment of its board of directors. The independence of the board's actions must be established and communicated to all constituencies, be they shareholders, industry analysts, customers, government regulators or employees. After the well publicized sagas of WorldCom, Enron and Disney, there is little doubt that the state of the art now calls for the appointment of special, independent counsel to advise boards and management on the proper response to a corporate threat.

As Special Counsel, my charter required me to hire (and fire) U.S. and European corporate, securities and litigation counsel; direct round-the-clock, multi-counsel coordination sessions; hold daily strategic planning meetings with PeopleSoft's five chief officers and worldwide sales executives; develop press releases and analyst briefings; direct the production of over 3 million documents/databases in response to five antitrust investigations and civil cases pending in California and Delaware; eyeball critical SEC and court filings; and manage over $90 million in billings from two dozen law firms and related service vendors. I regularly briefed the PeopleSoft Board of Directors up to the October, 2004 trial in Delaware Chancery Court over the company's takeover defenses. Oracle's final offer and PeopleSoft's acceptance came like many do, in the middle of trial when each party finally decides it has too much to lose to press on.

As I learned under fire during the PeopleSoft War, dispensing legal advice is only part of the job of special counsel to a public company under siege. The role requires decisive managerial skills, an ability to craft and communicate the corporate cause, peripheral vision, and unflagging stamina. The lessons I learned through this assignment should apply equally to all such crises, whether created by cutthroat competition, opportunistic class actions, zealous governmental regulation or mass tort claims.

Special Counsel's Place At the Table

Independent, special counsel can be responsible to either the board of directors (or a committee of the board), or to management – but, according to current “best practices,” ought not try to serve both masters. In post-scandal corporate America, shareholder activists are demanding greater and greater separation between those who manage and those who direct. Especially in the context of a hostile takeover, cautious legal advisers press for a separation of the board from “insiders,” lest managerial “entrenchment” taint the board's independent business judgment. At PeopleSoft, I was engaged as a legal manager, reporting directly to the CEO, but with regular advisory duties to the board. When the board's Transaction Committee met to vote on Oracle's serial tender offers, however, Craig Conway (a member of the board as well as the CEO) was excluded from its final deliberations, as was I. The Committee had additional independent counsel available to advise it at those times. Although awkward at times, maintaining the absolute independence of the board was necessary to PeopleSoft's takeover defenses. Companies engaging special, independent counsel need to decide whether that counsel will be responsible to management, the board, or both, as may be appropriate under the circumstances.

Bench Strength

Managing major corporate crises to successful resolution has a lot in common with managing a major league baseball team to the World Series. The process can be long and arduous, plagued by public controversy, internal dissention and injury. Ultimate success can only arise from a blend of superb talent, strong technology, guts, fan loyalty — and luck.

When I arrived at PeopleSoft 2 months into the battle, I found a company that prided itself on performing at the top of its game and providing its Fortune 500 customers worldwide with the most powerful applications technology ever conceived. I found a remarkably energized esprit de corps. But I also found a crisis team in disarray. Turf battles and a clash of personalities were straining the company's ability to fend off Oracle's unwanted advances. The vaunted PeopleSoft software applications had not been designed to generate reliable forensic data support to the company's own lawyers and economists, charged with establishing the anticompetitive nature of Oracle's bid. A slow exodus of exhausted executives to companies out of the line of fire would soon create a serious “brain drain.”

Corporate crisis management requires an early and critical assessment of the company's hard and soft assets – its “money” players, financial strength, technological capabilities, fan (ie, customer) support, and most of all, its collective will. Unrelenting controversy and relentless pressure saps strength and tests personal commitment to the breaking point. You need to know early on how deep your bench is.

Order and the Chain of Command

At my first appearance before the PeopleSoft board in October 2003, I told them I had one goal in mind for the legal side of the takeover fight — to prevent it from interfering with the continued business success of the company. In 30 years as a complex corporate litigation attorney, I had seen litigation take on a life of its own, “Jarndyce”-like, detracting from vital corporate goals. In my opinion, PeopleSoft was going to survive only if its performance and stock price continued to outpace its stalker. Our path to success would have to be through the marketplace, not the courtroom.

Over the same 30 years, however, I had never seen such a Rube Goldberg polyglot of legal advisers and service vendors as that which was ringing up nearly $5 million a month in fees and costs. The first task was to bring order to this chaos and design a master legal strategy for the entire effort — from cooperation with antitrust authorities worldwide and prosecuting civil litigation nationwide, to confronting Oracle-driven SEC investigations and inspiring political leaders in state and national capitals. Clear chains of command and crisp directives were required to keep lawyers from stumbling over themselves and letting the balls drop between them. Nothing less than daily steering committee conferences that knit together the litigation, corporate, antitrust, SEC and political efforts would keep the team members on task. This process succeeded in holding lawyers accountable, meeting time-critical deadlines, impressing upon counsel the exigencies of running a business through the crisis, and satisfying the board and management that all this lawyering would not be a drag on corporate profits.

The lesson here is that the first step in responding to a crisis may be to hire the best and the brightest — but that by no means can be the last step in the process.

Life in a Fishbowl

Public companies operate in the public eye. Securities regulators impose severe restrictions on corporate speech, particularly where it may move markets. In addition, industry analysts, institutional shareholders, arbitrageurs and the business press parse every word uttered by a company in crisis. Every analyst call, press release and discovery response finds an eager audience, simultaneously looking for strengths, weaknesses, contradictions and revelations. In the merger context, customer constituencies are also looking for evidence of stability and a continuing flow of commerce. Add active and acrimonious litigation to the cauldron, and the mix can be fraught with peril for company spokespersons.

The Oracle/PeopleSoft drama began with the fabled clash of verbal swords between the companies' respective samurai, Craig Conway and Larry Ellison. Conway declared the tender offer to be “atrocious behavior from a company with a history of atrocious behavior.” Ellison upped the ante with a joke about killing either Conway or his dog. He styled his tender offer “the war game in a box.” The nasty public tone was set even before there was a serious offer for the PeopleSoft board to consider. These executive shots across the bow colored not only public perception of the corporate clash but a court's perception, too. In the Delaware Chancery Court litigation over PeopleSoft's takeover defenses, Vice Chancellor Leo Strine repeatedly chastised counsel on both sides over the “sandbox behavior” of their clients. Conway took most of the heat, since it was his company's board that was supposed to be considering the tender offer rationally and independently from “entrenched management.” Ellison got off as the rogue “bad boy” of technology.

As special counsel, it was incumbent upon me to harness public statements to the company's legal actions. We took Conway's aggressive comments as a customer-rallying cry that might prompt official Washington to act. We made Oracle's e-mail traffic the cornerstone of our unfair competition suit. We persuaded the SEC that our use of the generic word “tactic” in a press release describing Oracle's offer was not a public accusation of criminal activity requiring factual support. Harmonizing corporate communications with legal action required daily working sessions with the company's marketing, institutional investor and public relations teams, and outside communications and proxy advisors. Together we handcrafted each press statement and release, Web site and blog posting, Wall Street Journal ad, on- and off-record sessions with the press, even our seemingly casual hallway banter with reporters covering the Justice Department/Oracle antitrust trial in San Francisco.

Handling a high-profile crisis under the microscope of public and regulatory scrutiny requires articulating a consistent theme to all constituencies, attention to minute nuance and the ability to persuade corporate officials that, sometimes, “silence is golden.”

Pocketbook Politics

There is a dimension to the public company crisis that attracts little academic attention but must catch the eye of the legal crisis manager. Under the familiar exhortation, “It's the economy, stupid!” a threat to the corporate economy usually implies a threat to a larger, public economy — and therefore a threat to constituents of one politician or another. In the PeopleSoft War, major customers of the target included the largest employers in many states and many states' universities, colleges and governments. Oracle broadcast loud and clear when it launched its offer that it intended to euthanize the entire PeopleSoft product line, economically orphaning all these major customers who had committed hundreds of millions of dollars deploying PeopleSoft applications to run their most complex business operations. The adverse customer reaction reverberated throughout statehouses and the U.S. Capitol and became a prime source of pressure on the Justice Department to seek to block the merger as anticompetitive and harmful to commerce. Eventually, ten states joined the federal government in suing Oracle under federal antitrust laws.

Anticipating the need to open a political front in this war, early on I sought to enlist PeopleSoft's Washington presence. I discovered there was none. Where Oracle had teams of lawyers and lobbyists already in place in the Capital, PeopleSoft, that $7 billion multi-national software giant, had no one. Apparently corporate success in Pleasanton, California had not required attention to federal legislation affecting such Silicon Valley hot-buttons as intellectual property, international trade or immigration.

We immediately engaged Washington government relations and antitrust counsel. Through their efforts, we were able to attract the attention of key players on both sides of the Hill and down Pennsylvania Avenue, with a raft of information about competitive harm to their constituents. Our efforts had the additional effect of neutralizing the Oracle-sponsored op-ed pieces in the major national dailies and some of the back room visits to DOJ from their well-connected D.C. counsel. This was crucial to our shareholder and customer constituencies as well as to those who would later attempt to block the proposed merger.

Targeted impact communications can generate crucial public support for a public company's efforts to successfully manage a corporate legal crisis. Special counsel can make a significant contribution by effectively mobilizing public constituencies and aligning them with corporate goals.

Budgetary Control

Corporate crises can easily churn out “bet the bank” costs. Directors and officers are hard-pressed to ration supplies to the front when the corporate headquarters is being threatened. Human nature also play a role — often, it's “other people's money” (meaning insurers') being spent, and managerial attention is rightly focused on winning the battle, not accounting for the cost of munitions.

During the PeopleSoft War, I was responsible for overseeing a legal blitzkrieg, mobilizing the forces of over 300 professionals worldwide, backed up by multiple data, investigative and other ancillary support services. The cost of defense exceeded $90 million. At the company, the effort swallowed up hundreds of software programmers, technicians, financial and investment staff and public relations personnel. Our versions of “Rosie the Riveter” were at their keyboards day and night, churning out competitive bid data in response to Justice Department document demands.

Many months into the PeopleSoft saga, we discovered that our outside data processing vendors had reached the limit of their capacity to timely and accurately produce millions of pieces of information in the format that was demanded simultaneously for both the Department of Justice antitrust trial and coast-to-coast civil cases. Throwing money at the problem was not a solution. So we turned inward. Deep in the corridors of the company's campus, we discovered a talent pool unmatched by any available outside vendor. Coordinating with counsel, vendors and our in-house technicians, we were able to achieve stunning and timely results at a fraction of the cost, without jeopardizing the company's business.

Threats to the corporate franchise will always justify hiring the best and the brightest attorneys, economists, investment bankers and other professionals, and rightly so. But don't believe that “this is no time to economize.” Rather than cutting back essential services, however, special counsel can make an important contribution by clamping down on wasteful inefficiencies and duplication of effort. Having the same costly services provided by different professionals multiple times saps both human and financial capital. To keep the cost of crisis response from creating its own crisis for the company, special counsel must anticipate what will be needed in every venue and carefully synchronize the company's global resources to meet the challenges.

An Integrated Approach

If I learned anything from my stint as Special Counsel, it was the value of an integrated approach to managing corporate legal crises. While preparing testimony for the European Community's antitrust hearings, I worked with PeopleSoft's Chief Technology Officer Rick Bergquist to develop a visual model of the company's software products — a six-radii star identifying the six requirements that characterize the high-function business applications software sold worldwide only by PeopleSoft, Oracle and Germany's SAP. The six radii are: Assess and Secure Resources; Establish Order and Chain of Command; Articulate a Positive Goal; Align Communications; Enlist Public Support; and Control Expenses.

That star became a perfect model for my view of the role of special counsel to a corporation under crisis conditions. In addition to sound legal advice, counsel must have the ability and authority to accomplish six mission critical functions.

Casey Stengel once said, “Managing is getting paid for home runs someone else hits.” The savvy manager, however, knows who to lead off with and who should bat clean-up, whose arm needs rest, when to trade for a superstar and what to tell the press during a slump. If baseball is a metaphor for life, it is also a fitting metaphor for handling legal crises when they challenge your company.