CyberTech Rambler

April 10, 2008

Why Big Business have big legal department?

Filed under: Uncategorized — ctrambler @ 4:41 pm

One good reason for big business having big legal department that is disproportional to its size is it is getting flank just because it is big. Here is one demonstration of the thing you get when you are big.

Remember that Microsoft was found guilty of antitrust violation? One consequence I was not expecting is some MEP (Member of European Parliament) asking the EC (European Commission) on whether that is sufficient ground to bar Microsoft from EC contracts (See this groklaw article). The grounds for excluding Microsoft is from Article 93:

Candidates or tenderers shall be excluded from participation in a procurement procedure if:

(b) they have been convicted of an offence concerning their professional conduct by a judgment which has the force of res judicata;

(c) they have been guilty of grave professional misconduct proven by any means which the contracting authority can justify;

I am going to assume that “candidates” means any entity bidding for a job and “tenderers” as entity that is currently holding a “contract” with the EC. This means they can be either companies or persons. When referred to a person, provision (b) and (c) is relatively straightforward, especially if you are a professional and your professional body kick you out or have been judged to had “failed to discharge one’s duty properly”. When referred to a small company, the provisions are normally clear coz small companies are usually ‘one-trick pony’, providing only one particular services and more or less behave like an single individual.

Things are getting more blur with increasing company size. It is difficult to define “professional misconduct” for medium size companies who provide several distinct services. Is it fair to exclude a mid-size company for just one misconduct in several distinct services or should the exclusion be limited to that one service only? One can argue that even if the professional misconduct is limited to one service, it may be justifiable to exclude the company altogether since there is likely to be cross-over of personnels in the different services. Practically speaking, it is also easy for mid-size company to keep their nose clean.

However, for big companies like Microsoft, excluding the company because it behave wrongly in one of the tens of services it provide is unfair. Furthermore, if you do enforce the exclusion of a company for a small misconduct in any service, you will find that all big companies have to be excluded as one time or another they fell foul of the provisions.

Sure, you can find big, I mean really big, professional misconduct where the whole company must be excluded. One example is Anderson, the accountancy firm involved in the Enron scandal. That is why such provision still have to be kept on the book

Finally, why does this have to do with big business having big legal departments? They need more staffs to help them defend themselves when they find themselves in such a bind.

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