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Sun’s CEO on Lawyers

2007 January 15
by John Wallbillich

Rarely do CEOs speak directly about their in-house lawyers. Rarer still is when they talk about their impact on the business.

But rare is a good description for Sun CEO (and blogger) Jonathan Schwartz. He was interviewed this weekend in the New York Times. Mr. Schwartz was asked about how many companies went astray in the options-dating imbroglio:

Q. Did the Valley get bad legal advice regarding options practices?

A. I’ll give you my view on legal advice. Lawyers are the very core of Sun Microsystems. I mean in essence we’re a company that monetizes intellectual property. There’s a lot of lawyers involved in helping us think through open source licensing arrangements, you know, customer indemnity. These are not simple things. But at the end of the day, when folks inside of Sun come to me and say, a lawyer wouldn’t let me do X or Y or Z, my response is, well, then why don’t I move headcount under the lawyer, because who’s making the decision here — the lawyer or the businessperson? So legal advice is just that, it’s advice.

Wow. That’s refreshing on three fronts. First, Mr. Schwartz gives a nod to the IP underpinnings of the modern tech-driven company. Score one for the lawyers. Next, Mr. Schwartz apparently doesn’t like line executives who impassively act like the lawyers are running things. (This is known in the trade as blame ‘em when things go wrong and ignore ‘em when things go right). Finally, Mr. Schwartz flips the subject over and also notes that legal advice (in general, presumably) is advisory, not mandatory.

Sun GC Mike Dillon apparently has an enlightened (and demanding) client. That’s about all you can ask for.

(Update 17 Jan 07): Carolyn Elefant, writing yesterday at Legal Blog Watch, has a slightly different view:

So while lawyers can add value, at the end of the day, it’s the business folks who run things. And if business doesn’t want to listen to the lawyers, they don’t have to — because legal advice is merely advisory. With that kind of attitude from clients, being a GC can’t be easy …

I actually inferred Mr. Schwartz’s comment this way: in the context of business decisions, legal advice is just that. The business person is paid to be responsible and accountable.

For purely legal matters, I’d bet the GC is similarly responsible, perhaps relying on advice from other lawyers (inside or outside).

The reality for the GC is that many business matters have law mixed in for good measure. It makes the job challenging (and interesting). But, as Ms. Elefant points out correctly, definitely not easy.

But if a company wants a lawyer running the show, make him or her CEO. Hmmm…, sounds familiar.

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