This article originally appeared in Washington CEO magazine, March 2006, Volume 17, Number 3, pages 48-67. Copyright © 2006 by Washington CEO Inc. All Rights Reserved. This article may not be reproduced by any means without prior permission of the publisher. COVER STORY Stories by Myke Folger, Scott Williams and Margot Walker Wa s h i n g t o n’s M o s t A m a z i n g A t t o r n e y s MILLIONS of dollars saved. Social justice. Personal perseverance. Speaking multiple 48 DENNIS WISE / STUDIO 3 INC.; LOCATION: THE FAIRMONT OLYMPIC HOTEL, SEATTLE From Left: Robert Kimball, RealNetworks; Aaron Owada, Northcraft, Bigby & Owada; Rob McKenna, Washington State Attorney General; Karen Sutherland, Ogden Murphy Wallace; Steve Dickinson, Harris & Moure. languages, blowing glass, running marathons, juggling children, spouses and careers while at the same time putting the fear of God into the cross-examined. These are some of the attributes of the state’s Most Amazing Attorneys. Washington CEO magazine wanted to know the why, how and wow! behind some of the state’s best attorneys. We learned about all the work that goes into practicing law well. We learned that equally important to what a lawyer manages in the courtroom is what is managed outside, from volunteer work to personal growth to truly participating in the community. And yet with all their differences, there is a common thread: boundless energy. It is encouraging to know that in addition to upholding the law, these attorneys are upholding their respective communities by joining the boards of hospitals, nonprofits and schools, volunteering at parks and music events – this in addition to providing for their families and enjoying their own hobbies. www.washingtonceo.com AARON OWADA Darth Vader YOU don’t get a nickname like “Darth Vader” for no reason. But that’s what business associates and respectful courtroom counterparts call Aaron Owada of Northcraft, Bigby & Owada PC (NBO) in Seattle. Why? Perhaps it’s his tactical attention to the facts in every case he presents. Maybe it’s because he dresses in black and wears a helmet. Certainly, the former could be a reason. But mainly it comes from his departure from a 16-year term as Washington’s assistant attorney general and arrival in the private sector defending businesses. As the assistant AG, Owada, (who wears traditional suits by the way) built guidelines and upheld laws that foisted more accountability upon CEOs and their corporations. Now with NBO, he spends most of his time defending the rights of corporations (the supposed “dark side”) on statewide compliance issues such as ergonomics, WISHA (Washington Industrial Safety and Health Act)/OSHA (Occupational Health and Safety Administration) regulatory actions and other workplace related issues. Hence, the nickname. “They say I’ve gone to the dark side but I view it as a compliment in that they recognize that I am a formidable opponent,” Owada says with a laugh. “I understand what it takes to prosecute a case.” Owada was the lead for the state in numerous high-profile cases such as the 1995 arson fire in Seattle’s International District that killed four firefighters. His efforts resulted in citations against the Seattle Fire Department for not having an effective internal system of communication. rials will be punished for not following safety rules. “I knew four out of the six guys at Equilon,” he recalls. “After seeing the effects and working with the families, it caused me to focus on what we could do to be effective. Safety is too big for government, labor and employers to handle by themselves.” Owada prosecuted cases against construction companies and builders. He was able to beef up penalties from $6,000 to $19,000, for various violations including improper trenching. “That was unheard of at the time,” He says. “I tried to be fair, and legitimate businesses appreciated it.” They appreciated it, he says, because the citations leveled the bidding field and reduced derelict underbidding. Owada had also been instrumental in getting labor, management and government working together on safety guidelines, so that each party knew what their responsibilities were. Together, under his lead, the “Stute” WISHA Regional Directive Guideline was established, which clarified construction law regarding the liability of a general contractor and created a significant change in the construction industry. Meanwhile, L&I had been issuing citations based on different standards and “I thought that was terribly unfair,” Owada says. “General contractors, if they don’t know what to do, how can they comply?” His philosophy and that of L&I separated. “I felt safety was more of a cooperative effort and that the priority should be on education and training. Only at worst should monetary citations be issued,” he says. “The department was coming down too heavy [on businesses] and was more focused on issuing citations.” So at the end of 1999, Owada took his governmental contacts and went to help businesses, first with Williams, Kastner and Gibbs PLLC (WKG) and then with NBO. “I don’t think there’s any question,” says Robert Pentimonti, a partner at WKG, “that combined with having all those connections, he’s the best lawyer in the state with respect to those issues.” – Myke Folger www.washingtonceo.com DENNIS WISE / STUDIO 3 INC. EXPLOSION DEATHS Owada was also the lead for the state in the 1998 explosion and fire at the Equilon Puget Sound Refinery in Anacortes that killed six workers. Owada settled that case for $4.5 million and made it known that businesses working with hazardous mateWASHINGTONCEO • MARCH 2006 49 ROBERT KIMBALL The Peacemaker all started with a phone call to Bill Gates. Rob Glaser, Gates’ longtime friend and business associate and chairman and CEO of RealNetworks Inc., offered the Microsoft Corp. chairman an olive branch. And a business deal. Tensions between RealNetworks and Microsoft had escalated, and gotten personal. Many of RealNetworks’ employees, including Glaser, got their start in technology at Microsoft. They were friends, spouses and neighbors. Their kids went to the same schools. But RealNetworks had grabbed the lead in an area of technology where Microsoft was slow to venture – streaming digital media over the Internet. And, when RealNetworks filed a huge antitrust suit against Microsoft in 2003, things only got worse. The two companies had their top attorneys on the case. For RealNetworks, that would be Robert “Bob” Kimball, a smart, energetic 42-year-old lawyer who cut his teeth in technology law working for IBM. For Microsoft, that would be Brad Smith, its Princeton- and Columbia Law School-educated general counsel who is responsible for implementing the company’s 2001 antitrust consent decree with the federal government and a number of states. The result, two years later, would be the $761-million antitrust settlement announced last October that also established RealNetworks as a partner, rather than an adversary, of Microsoft. Kimball’s work in negotiating the agreement will lead to a total bonus for Kimball of $3.25 million if he stays at the company through November 2008. The most remarkable part of the agreement may not be the $460 million in cash that RealNetworks will receive up front or the $301 million it will get over 18 months in cash and services, although that’s not bad for a company that had revenues of $82.2 million in its most recent third quarter. It is the mutual support that the two companies will provide each other. Besides settling the antitrust 50 WASHINGTONCEO • MARCH 2006 issues, the complex, multi-faceted deal also establishes grounds for a wide-ranging digital music collaboration between the companies, including Microsoft’s support for promoting and marketing RealNetworks’ market-leading Rhapsody digital music subscription service. The agreement should help the two companies compete with Apple Computer Inc., whose iPod and iTunes products have taken digital music by storm. RealNetworks has more than 2.2 million paid subscribers. And the other notable part of the story is the way both companies handled negotiations. “From the beginning,” explains Kimball, “both Microsoft and Real said the only way to settle this is by creating a business relationship around the deal. … We wanted more than détente. We wanted real peace. And the fact that we have real peace is one of the great outcomes of this.” “Nobody felt that just getting a big check was a win. We achieved the desired end result – not just blood on the courtroom floor but a meaningful business relationship,” adds Kimball, who at one point spent three straight days working until 4 a.m. or 5 a.m. locked away at the Hyatt Regency Bellevue negotiating final terms. “I think I slept, honestly, in three days, a total of six hours.” Both sides credited relationships between the two companies as the keystone in the agreement. Gates noted his relationship with Glaser, who had spent 10 years at Microsoft before leaving to create RealNetworks. “The whole team realized we were cut from the same cloth,” explains Kimball. – Scott Williams DENNIS WISE / STUDIO 3 INC. IT www.washingtonceo.com STEVE DICKINSON The Communicator from Harris & Moure of Seattle can awe many a Chinese local with his knowledge of Chinese literature, philosophy and history. Take a trip with him to Tokyo and you’ll have a built-in tour guide – he speaks fluent Japanese, too. Thinking of opening a coffee shop in Shenzhen or Osaka? Dickinson can advise you about Chinese and Japanese law. And though he’s no Chihuly, Dickinson is no slouch in the world of glass blowing, either. The multi-talented lawyer’s path to practicing law could be called serendipitous. He didn’t actually attend law school until he was 30. His first career was as a potter, which he did for four years out of high school. When he was 21, he went to college to study classical Chinese and chose to live in Taiwan for several years. At age 29, steeped in Asian culture, language and nuance, he had completed his education and decided that he needed a career. He wanted to do something where he could take advantage of his language skills. Law school seemed to make sense. “No one ever imagined that [China] would turn into the kind of place it is now,” Dickinson says. With a growing demand for “modern, sophisticated legal work,” people who had already learned Chinese for other reasons have had a great advantage in this growing market. “Chinese is so difficult to learn that it’s hard for other people to catch up,” he adds. Since the inception of this new career, Dickinson spent significant time in China and developed a close association with the Shanghai Bar Association. That relationship led to a special training program that was developed for Chinese legal professionals, which operated at the University of Washington (UW) from 1995-2000 and which Dickinson directed. He was also very involved in the development of Chinese law projects in the UW’s School of Law. Much of Dickinson’s casework is done in Chinese. His current cases mainly involve contract negotiations for U.S. companies doing manufacturing or investing in China or vice-versa. 52 WASHINGTONCEO • MARCH 2006 Recently, with his knowledge of the language and thorough understanding of Chinese and U.S. law, he was able to hash out and explain the conceptual problems that were holding up the client in a case that involved a Chinese company investing in the United States. The company and the lawyers had misconceptions about U.S. law that Dickinson straightened out. “It’s more than knowing Chinese,” he says. “You have to know the concepts; you have to know why they’re making the mistakes they’re making.” Although Dickinson’s cases seldom go to court, he has managed several criminal proceedings in China. But he didn’t get a chance to use his skills on the courtroom floor. “Foreign lawyers aren’t permitted to,” he says. “That’s a really strict rule in China. In the courtroom itself, only Chinese lawyers are allowed to appear at the bench.” Still, Dickinson, who last year spent 50 percent of his time living in China and plans to spend 70-80 percent there this year, gets much use out of his language skills while he’s there. But Dickinson hasn’t forgotten his roots. One benefit of spending so much time in China is that he has been able to bring his passion for art along for the ride. Besides owning his own art gallery in Seattle, the Phoenix Rising Gallery, he has also begun a glass-blowing project in China. The project involves working with glass-blowers there to create glass-blown art using U.S. designs. “There’s only one town [in China] that really has a tradition of blowing glass,” says Dickinson. “They knew how to blow glass, but they didn’t have any concept of design.” Most of the glasswork done in China, he says, is solid, not blown. Dickinson is also working on an exchange program between Chinese and American glass blowers. “They have some skills that no one in the United States has with sculptural glass,” he says. – Margot Walker DENNIS WISE / STUDIO 3 INC. BEIJING’S best have nothing on Steven Dickinson. The attorney www.washingtonceo.com KAREN SUTHERLAND The Artist Ogden Murphy Wallace PLLC (OMW) in Seattle, she generally puts in 11hour workdays, half-days on Saturdays and writes articles on Sunday for the King County Bar Bulletin, a publication put out by the King County Bar Association. The time left over? Well, it isn’t spent watching reruns of “Law and Order.” As with a number of attorneys in this state, Sutherland has woven remnants of her days into quite the side career: making art out of glass. She’s always had a lifelong passion for the stuff. As a kid she collected polished shards on the beach and glued them to wood. She cut glass and turned bottles into candleholders or planters. She then took her glass passion to another level, studying for years (mostly during a sabbatical) at the Pratt Fine Arts Center in Seattle and the Pilchuck Glass School in Stanwood, founded by the world-renowned glass artist Dale Chihuly. Her work isn’t confined to her home. The company needed someone with an eye for design, so she volunteered to decorate the office with her artwork and some from the Seattle Art Museum’s rental collection. “I’ve got art all over the office,” she says. Sutherland also opened her own studio, Sutherland Art Glass. She sells pieces through her website and spends about 10 hours a week creating art. Her creative outlet has become a communication aide or icebreaker when she’s interviewing witnesses at OMW, where she is the chair of the employment and labor practice area and specializes in construction and product liability law. “Being able to chat about [it] makes them less intimidated by the fact that they’re sitting there with a lawyer,” she says of her interviews with witnesses. Sutherland’s working knowledge of art materials has also come in handy in several cases. In a case where someone had 54 WASHINGTONCEO • MARCH 2006 been injured by shattered glass, Sutherland found her working knowledge of glass very helpful. Another case involved intellectual property interests relating to art. There, too, her knowledge of art design and how art is made – defining how one piece is similar or different from another – was very beneficial. Then there’s the attention to detail in glasswork that crosses over into her legal world. “[It] helps me a lot in reading people,” says Sutherland. In the courtroom, particularly, it helps her sense the “dissonance” when someone on the stand is giving inconsistent information. “In art you assess situations and try to find harmony and consistency, and you notice things that stand out as being different.” For Sutherland, even the courtroom becomes a place to highlight dissonances and “put across an image of harmony” to weave the tapestry of a case. – Margot Walker DENNIS WISE / STUDIO 3 INC. KAREN Sutherland doesn’t have a lot of free time. As a partner at www.washingtonceo.com ROB McKENNA The Cop ing news almost on a daily basis. Getting your name – and the name of your organization – in front of consumers regularly, for free. But, then again, that’s not too difficult if you are the state’s “Top Cop,” Attorney General Rob McKenna. And if you are an activist, working to protect the rights of the state’s citizens. In recent months, McKenna has been all over the newspapers. Fighting methamphetamine use. Toughening sexoffender laws. Warning consumers about scams. Bringing junk e-mailers to justice. And all of that in just two months. McKenna, a moderate Republican, has been in office just over a year, taking the place of Christine Gregoire who left after winning the gubernatorial post. In that relatively short time, he has established a record for taking on tough issues and winning. Is such activism unusual for the state’s top public lawyer? McKenna says no, not compared to other attorneys general around the country. But it is rare that an AG would move so quickly, he acknowledges: “For someone who has just finished his freshman year [as AG], it is unusual in the policy arena.” Where does all of this legal initiative come from? Partly from his background. A 1988 graduate of the University of Chicago Law School, one of the nation’s best, he has been a leader in community work since shortly after he arrived in the Pacific Northwest. His resume for community involvement includes 12 organizations – from the Rotary and the Boy Scouts of America to the Eastside Domestic Violence Program – that he has been involved with, mostly as co-chair or board member. He was a King County Councilman from 1996 to 2005, an elected position he left to become attorney general. His activism has led to a number of awards, including the national “Distinguished Eagle Scout 56 WASHINGTONCEO • MARCH 2006 Award” and an “outstanding” rating by the Municipal League of King County. McKenna credits his decade on the county council for the experience of being able to accomplish things politically. “It educated me in some public policy areas like consumer safety,” he explains. “It familiarized me with the legislative process. I am very comfortable working with legislators because I understand legislators.” The experience as a councilman also taught him to set political goals. “I came to the office of attorney general with a clear idea of what I wanted to accomplish in the public policy arena,” he says, going on to list those goals: open government, fighting methamphetamine use, expanding consumer protection and battling identity theft. All those issues that make front-page news. Might McKenna follow the path laid down by Gregoire and use the position of AG to move up another rung in the political ladder? For now, the answer would be, “No.” He’s enjoying his “Top Cop” job too much, for now. “My only definite plans are to run for re-election in 2008,” he states. “The attorney general is the best job a lawyer can have. It’s very rewarding and very interesting.” But, like any good politician, he’s keeping his options open. Beyond 2008, he says, “Who knows?” – Scott Williams DENNIS WISE / STUDIO 3 INC. HE’S doing something most CEOs would give their eyeteeth for – mak- www.washingtonceo.com MISCHELLE FULGHAM The Pugilist the teenage girl happily accepted the well-paying job at the assembly line. Two weeks later, the supervisor convinced her to run a work-related errand with him. After the errand, he casually pulled off the road, parked, then sexuallymolested her. She went to the police, and he was locked up. Mischelle Fulgham, a partner in the Spokane firm Lukins & Annis P.S., latched onto the criminal case, working behind the scenes supplying prosecutors with all the evidence she could bring forward. The defense attorney brought forward the teenager, put her on the stand and ripped into her. “Absolutely ruthless,” Fulgham says of the defense attorney’s examination of the teenager. “They put her through the ringer, had her mentally evaluated, tried to make the jury think she was crazy.” Unswayed, the jury unanimously convicted the man. But the mental beating the teenager endured in the case stuck with Fulgham, who was determined to fight for her in the fast-approaching civil case. The goal was to win. But even greater was to give the teenager sanctuary from the stand. “I started the civil case based on res judicata, the act speaks for itself,” Fulgham says. “The defendant denied it happened in the criminal case.” But because he’d been convicted, he couldn’t deny it in the civil case. The strategy worked and the teenager was spared the stand. “That was huge for the girl and her family, and that was a big deal to me,” Fulgham says. “That was so important to protect her, because it’s so hard, so traumatic that sometimes the victory at the end, they wonder if it’s worth it.” Fulgham was further able to get the employer (who had known the assaulter for years) and the assaulter both to pay a substantial settlement. The company had to pay because it did not have a sexual harassment policy in place, a sexual harassment compliance officer in place 58 WASHINGTONCEO • MARCH 2006 and, says Fulgham, “most egregiously, they didn’t believe her.” NO BULLYING Fulgham has secured a reputation as being boxer-tough, coming ultra-prepared and never wincing. “I don’t show any intimidation,” she says. “I’ve learned early on that if the other side thinks they can bully you, then you’ve lost half the battle already.” She also says female attorneys, if they want to win a case in the courtroom, especially in conservative areas, cannot appear hysterical or overly aggressive. “If you come across that way, you’re dead with the jury.” So instead of appearing “bitchy,” Fulgham takes a more subtle approach to finding “six different ways that people have lied.” The fighter in Fulgham exists outside the courtroom as well. She is the mother of a one-year-old and has become a stranger to sleep. Her husband is a pilot for United Parcel Service and is away days at a time. She spends most of her week in Spokane, but averages two days a week at the Coeur d’Alene office. Her major outlet is running. She loves to run (as do several in the law firm who introduced it to her a couple of years ago) and has entered numerous marathons throughout the state and western part of the country. Yet, last July, during a normal physical examination, her doctor felt a lump in the front of her throat. An ultrasound was performed, then a needle aspiration drawing fluid and tissue. She had no pain, no symptoms, but there the cancer was. “I convinced myself that it wouldn’t be anything,” she recalls. “I remember talking to Terry [Whitten, partner at Lukins & Annis] and saying ‘I really don’t want to have cancer.’” The thyroid cancer, doctors at Deaconess Medical Center in Spokane told her, was 97 percent curable. She has since had three surgeries and is undergoing radiation therapy, which, she says, makes her feel tired all the time. But things are looking promising, and she will never complain. “A partner here has a 36-year-old daughter who ran marathons, just like me, and there was nothing they could do. It hit our firm hard,” Fulgham says. “I’m going to her funeral. I’m lucky.” Since beginning with Lukins & Annis in 1992, Fulgham has been a borderline workaholic. But now, surveying her fortune in life, she wants to slow things down. She wants to volunteer to tell her story to other cancer patients (“I think I owe it”). She wants to see her daughter more and find balance. “Luckily,” she says, “my firm has been pretty supportive.” – Myke Folger SUPER SHOTS PORTRAIT STUDIO ENTRUSTING a family friend who was the supervisor at the factory, www.washingtonceo.com by Walter Bryant Ethics Under Fire Washington's history of stellar business leadership includes its misdeeds as well as triumphs CORPORATE raider Jay Gould, known as the “dark genius” of Wall Street, is perhaps the best known practitioner of questionable business ethics in American business history. Between 1880 and 1920, the “robber baron” speculator did it all, including paying bribes to President Ulysses S. Grant’s brother in order to gain insider information about the gold market. Gould bribed members of New York’s legislature to change laws that didn’t suit him. He illegally issued stock to keep rivals from gaining majority shares in his companies. In one scheme that was as wickedly shrewd as it was darkly evil, Gould borrowed shares from investors, sold them, then planted stories in newspapers to drive the share prices down. He then bought the shares back at artificially lowered prices and paid them back to the owners he’d borrowed them from, making huge profits in the process. In today’s business environment, much of what Gould did would be impossible, owing in no small part to government watchdog intervention. Government oversight of public companies has its roots, in fact, in the period just after the stock market collapse of 1929, when Franklin Delano Roosevelt decided the free market shouldn’t be quite so free after all. But in the late 1990s and into the 2000s, there’s been what some pundits might call a resurgence of ethical collapse. The very public ethics struggles at Arthur Andersen LLP, Enron Corp., Global Crossing Ltd., WorldCom Corp., Adelphia Communications, and Tyco International are all examples. Perhaps the epitome of this period, which most of the nation watched while it awkwardly unfolded on television, was the trial and jailing of America’s best-known expert on domestic matters, Martha Stewart, for insider trading violations. Here at home, it was Microsoft Corp. www.washingtonceo.com getting rapped on the knuckles for antitrust violations; The Boeing Co. being caught gilding the lily for Department of Defense contracts; a spate of shareholder lawsuits against high-tech companies related to collapsing share prices amid questionable management and accounting practices; and, heck, a Husky foot- ball coach who was gambling on college basketball games. There was even a Mariners second baseman, Bret Boone, who might have been on the “juice” when his batting average soared. THE TROUBLE AT BOEING The ethical collapses at Boeing have made worldwide headlines and dogged the aerospace contractor. Despite having an Ethics and Business Conduct Committee and a strong, company-wide program, including a well-publicized code of conduct, the corporate giant has had more than its share of moral compass needle spinning. For example, there was the matter of Boeing getting caught with 25,000 pages of documents belonging to arch-rival Lockheed Martin Corp. during a 1998 bidding competition. There was Phil Condit’s resignation in the wake of the Darleen Druyun hiring scandal, which also resulted in CFO Michael Sears’ resignation and subsequent four-month jail sentence (not to mention the company losing a $1 billion launch program contract). Druyun, a Defense Department buyer when she was discussing terms for a job at Boeing, was sentenced to 9 months in prison. Subsequently, U.S. Air Force Secretary James Roche resigned. THE NEXT GENERATION Are new business school graduates coming into the American business culture better equipped to deal with ethical issues? “In some ways people are rewarded in our culture for taking shortcuts,” says Seattle University’s Dana Gold. “People aren’t rewarded for ethics. The Enron debacle – certainly that was terrible, but I don’t know if it necessarily changed business practice. Business is competitive and political, and people are still being rewarded for short-term versus longterm value, and of course there’s still a focus on money.” Says SU’s ethics expert Professor John Dienhart, “All the skills in the world won’t create the desirable result if there’s a corrupt culture.” Dienhart points to Warren Buffett’s hiring philosophy: “Buffett says, ‘hire for knowledge, skills and integrity. Because without the last thing, the first two will kill you.’” WASHINGTONCEO • MARCH 2006 59 IS SHARE PRICE THE BEST INDICATOR? Dana Gold of Seattle University’s Center on Corporations, Law and Society, makes the argument that share prices historically have been the sole indicator of the health of a publicly-traded company. But in a new ethics era, she argues, some companies are focusing on other things and taking a more long-term view. “Share price is one indicator,” she emphasizes. “For those companies that are internalizing an ethical culture, they are thinking about the long term, creating value by understanding how their business models are affected by their value systems, the intangibles – things like brand value, public trust, employee loyalty, and treating employees with respect.” Gold says emphasis on these intangibles is a paradigm shift. “It dictates a different way for boards and management to really think about the role of their company, in terms of their practices.” A LITTLE HISTORY Dienhart points out that ethics as a subject of study in business goes all the way back to 1881, when John Wharton founded the Wharton School of Business. “He was a Quaker,” Dienhart says. “He felt that ‘ethics’ was only being applied in the sense of creating foundations, or contributing to museums. But Wharton believed the biggest ethical threats happen inside businesses and between businesses in business-to-business transactions. He wanted to found a school that would focus on good, ethical and honest business activity at the everyday level.” Since that time, business ethics as a topic of study, business application and government attention, has comes in waves. “In the 1970s there was Watergate,” Dienhart says. “Then the Lockheed bribe that brought down the Japanese government, 60 WASHINGTONCEO • MARCH 2006 and the Lockheed executives era usually result in watchdog resigning. That resulted in the legislation from an anxious Foreign Corrupt Practices Act, government trying to protect passed in 1977.” and/or appease its outraged Dienhart says that ethics citizenry. textbooks began making The most modern example is appearances in business the now well-known Sarbanesschools shortly after that, Oxley Act, passed in 2002. around 1979. “Scandals accelPut forth by U.S. Sen. Paul erate ethics as a topic, and Sarbanes (D-Maryland) and government reaction,” he U.S. Rep. Michael Oxley (Rsays. “Then it plateaus and it’s Dana Gold is the Ohio), “SOX” requires all quiet again, until another director of Seattle publicly traded companies in University’s Center scandal erupts.” the United States to submit on Corporations, True to form, Dienhart says Law and Society. annual reports detailing things went smoothly for a internal accounting controls while, until the savings and loan collapses to the Securities and Exchange of the 1980s. “Then we went through Commission (SEC). It’s similar to the another ‘dry’ spell in the 1990s,” Dienhart Turnbull document for the London Stock says. “The economy was growing so much, Exchange. no one was asking questions. But when the An even more recent example of the economy shrinks, people want to know government attempting to reign in this where the money went. It’s a lot harder to new spate of ethics violations is the targethide debts and losses when your revenue ing of government acquisition programs is shrinking.” for reform, led by Capital Hill luminaries such as Sen. John McCain (R-Ariz.). THE GOVERNMENT STEPS IN McCain was instrumental in uncovering As Dienhart points out, what usually hap- violations between the Air Force and pens in the wake of corporate malfeasance Boeing, and since then has become a is government intervention. Whether it leading public figure in the effort to was the ethics, governance and compli- reform how the government buys from ance failures that contributed to the stock the private sector. “Government regulamarket collapse in 1929, or the disclosure tion is tied to scandals,” Dienhart says. of illegal Gulf Oil LP campaign contribu- “When we have scandals that affect a lot of tions during Watergate or the roiled wake people, voters demand that something of Enron followed by WorldCom’s bank- must be done. From that, you have things ruptcy, scandals and ethics violations at like the Sherman Antitrust Act (1890), publicly held companies in the modern which was a populous revolt against the ANIL KAPAHI / SEATTLE UNIVERSITY Not long afterward, the airplane giant was rocked by Harry Stonecipher’s resignation due to what was called “an improper relationship with a female executive.” Stonecipher’s indiscretion was made worse by his proclamation that as CEO he would clean up Boeing with a zero-tolerance ethics policy. Ethics expert Professor John W. Dienhart, who holds the Frank Shrontz Chair for Business Ethics at Seattle University, and is director of both the Albers Business Ethics Initiative and the Northwest Ethics Network, says it’s important to look at these recent ethics events in an historical context first. Good examples? “Look at Wal-Mart, and then at Costco,” she says. “At Costco, they are overtly committed to investing in their employees, not paying them the absolute minimum and asking the government to pay their healthcare, which is the Wal-Mart model. They’ve created incredible consumer loyalty, good employee retention…they’ve even put a cap on profits on certain products, which is a better and more consistent return than constant cost-cutting. The Costco model is the model of understanding the intangible value of a company.” Gold says Starbucks is another such positive model. “They’re the same model,” she says, “focusing on what it means to be environmentally conscious, to treat your workers well. I think that these are two very significant models for ethical principles with sustainable business models that also create incredible profit models.” www.washingtonceo.com CULTURE SHIFT OR RED TAPE Dana Gold is the director of Seattle University’s Center on Corporations, Law and Society. She teaches whistleblowerprotection law and corporate governance to law students. “There was a shift away from ethics,” she says of the 1990s, “that resulted in financial fraud, accounting misrepre- www.washingtonceo.com ical place, where [people] do sentation. But post-Enron, the right thing. But it’s not just there’s been a movement to the CEO; it’s also at the board create more ethical business level. The more advanced cultures, and the governboards know they have a ment’s created regulation responsibility for the tone that (like SOX) to support better they and the CEO set.” corporate governance.” Dienhart says “culture” Gold, however, isn’t positive isn’t a fuzzy term. “Culture is that a culture shift has or will just the way things are done,” be achieved. SOX, she says, he explains. “If you smell is a legal framework. “Now something fishy, is it common we have to make sure we’re John W. Dienhart, an practice to ask about it? Or is checking off the boxes, to expert in ethics and of the Frank the common practice to keep fulfill our obligations to the holder Shrontz Chair for SEC. It’s a more formulaic, Business and Ethics at your mouth shut and your procedural response. The Seattle University, says head down? Most people walk into an organization and know point was to create more when the economy ethical cultures, but it ends shrinks, more corpora- within 15 minutes which one they’re in.” up, arguably, being a dis- tions are exposed. Changing culture, most traction when you focus on business experts agree, is a very difficult compliance. Says Dienhart, “It really comes down to thing to do. “WorldCom had to change the way companies are being run – who’s in completely,” Dienhart says. “They changed charge of the culture. We use a term called their senior management. They imple‘tone at the top’ – that tone has to be right mented an extensive ethics program. You for those below that level, in order for have to move the culture toward an open them to trust that their company is an eth- talk about ethical issues.” ANIL KAPAHI / SEATTLE UNIVERSITY oil companies.” But does government regulation after ethics violations make things better? “Well, you know that government is doing this because people are upset,” Dienhart says. “The representatives and senators at state and federal levels are responding – that’s the way democracies are supposed to work – but that doesn’t mean the process churns out the best law. But no one should be surprised that government gets involved.” Dienhart says he’s not even sure SOX would have been introduced, if WorldCom had not declared bankruptcy a scant four weeks after the rage over Enron was starting to die down. WASHINGTONCEO • MARCH 2006 61 MOVEMENT TO ALIGN “In the 1980s there was a real move to align management with shareholders, when you have executives getting paid in stock and stock options, to align their interests,” Gold says. But with golden parachute packages for executives, which gave them quick-outs and lessened their accountability, the ratcheting of salaries and more stock options, “this created a very distorted environment where tons of money was moving around very quickly,” she points out. “There weren’t really effective checks and balances in place.” Gold also points to the board of directors. Most boards are hand-picked by their CEOs, and many are chaired by CEOs. “Boards weren’t very active,” she says. “Boards weren’t independent.” But that’s changing, at least in some companies. Says Dienhart, “I think boards are becoming more aware of their duty to make sure the controls are right, that CEOs aren’t hand-picking their boards. There’s a trend toward people being picked for a board because they’re good at what the board needs – a marketing emphasis, a finance emphasis or a corporate governance emphasis. They are less and less the CEO’s friends.” Even stockholders may have to change. Rather than an emphasis on short-term gains, stockholders should invest for longer-term, sustainable growth. From this longer-term viewpoint, Gold says, not breaking the law and doing the right thing – even if these things produce a financial hit – have more value. HUMAN FOIBLES Despite all the business, law and economic theory behind what’s happened ethically these past few years, a lot of it boils down to how humans behave. Gold points out that trying to maximize shareholder profit, and thus personal profit, can explain a lot. “But it can’t explain everything,” she says. “I think some of it comes down to ego and greed. People were intoxicated by the tremendous amount of money being paid. Millionaires by age 30, this incredible infusion of money, to people who hadn’t had this access to money before.” Gold says, “This is heady, this incredible wealth generation, and the culture of the CEO rockstar. There were some real cultural issues around this. People liked what that represented, a human interest 62 WASHINGTONCEO • MARCH 2006 www.washingtonceo.com and greed and not thinking about the long term.” But Gold points out the market can create equilibrium when things go too far askew. “Of course there was a huge bust,” she says. “And now a radical shift, when the bottom fell out and the fraud that fed the frenzy was exposed. Now there’s a real cultural perception that’s no longer about the rockstar CEO . . . you see CEOs in handcuffs now . . . and executive compensation is the most active issue in shareholder interests, addressing that distortion between worker salaries and executive salaries.” GOING FORWARD Dienhart says it’s important to realize that Boeing’s difficulties really centered around three events that went terribly wrong, in a company of 150,000 people who were “… fundamentally trying to do their job well. So you need to put it in perspective. The Sears/Druyun affair, that was beyond belief,” he admits. “The right or wrong of that is so clear. Condit’s resignation came in the wake of that. And the Stonecipher issue – well, people still disagree about that, but if she’s an executive in the chain of command and he’s the www.washingtonceo.com CEO, you can’t have an affair with them. And if you do you should disclose it, even if that seems odd.” But Boeing made self-corrections, Dienhart says, to the point where the ethics expert now calls the company “A poster child for having an ethics program. They really are running the most extensive, most monitored, the most careful ethics program in the country for a publicly held company. I can’t imagine a program more thorough and rigorous. At Boeing, there’s a real urgency to get this right.” What Boeing and other companies are doing, Dienhart explains, is trusting, but verifying. “Boeing doubled the number of people in ethics,” he says. “And now ethics officers report to corporate rather than their own business units. Their paychecks are cut at corporate, rather than in their own business units. You have to have the right structure, the right incentive programs.” Boeing has also made it easier for their employees to report abuses, making reporting to their internal hotline an easier process. “Boeing is changing their corporate climate,” Dienhart says. “There are two major reasons why people don’t report ethics problems: they don’t think anything will come of it, or they fear retaliation.” Dienhart says Boeing is working to change both of those things. What’s interesting, according to Dienhart, is that all these new framework documents, such as England’s Turnbull for the London Stock Exchange and SOX here in the United States, is that they all start with the importance of corporate culture, in which “ethics, honesty and fidelity are just a way of life. These aren’t things you add on at the end of the project.” Walter Bryant is a Seattle-based freelance writer. WANT TO KNOW MORE? Seattle University is leading a conference this summer, July 6-7, titled “Business Ethics in the Corporate Governance Era.” For more information, contact Professor John Dienhart at 206-296-5714 or by email at [email protected]. WASHINGTONCEO • MARCH 2006 63 AT T O R N E Y S P E C I A L A D V E R T I S I N G S P R O F I L E S E C T I O N David C. Groff Michael J. Murphy Stephen T. Parkinson Groff Murphy Groff Murphy Groff Murphy 300 E. Pine Street Seattle, WA 98122 Tel: 206-628-9500 Fax: 206-628-9506 [email protected] www.groffmurphy.com 300 E. Pine Street Seattle, WA 98122 Tel: 206-628-9500 Fax: 206-628-9506 [email protected] www.groffmurphy.com 300 E. Pine Street Seattle, WA 98122 Tel: 206-628-9500 Fax: 206-628-9506 [email protected] www.groffmurphy.com PRACTICE AREAS: PRACTICE AREAS: PRACTICE AREAS: Construction • Government Contracts • Complex Dispute Resolution Litigation Construction • Land Use • Real Estate Environmental Law Dave Groff practices in the areas of construction law, government contracts and complex litigation. Mr. Groff represents regional, national and international contractors, engineering firms and owners in all aspects of their business, from dayto-day counseling on routine matters to complex dispute resolution. He is a frequent lecturer on construction law issues at both the local and national level. He is a founding member of the Northwest Chapter of the Design Build Institute of America. Mr. Groff is a cum laude graduate of the University of Michigan Law School where he served as an editor of the Law Review. 64 WASHINGTONCEO • MARCH 2006 Mike Murphy represents developers and contractors on a broad range of land use, construction and real estate issues. Mr. Murphy has represented clients on private and public projects across the state and the country – from a master planned community in King County to the seismic retrofit of a bridge in the Bay Area. He has extensive experience resolving disputes through mediation, arbitration and litigation, and routinely represents developers in transactions and complex landuse proceedings. He graduated magna cum laude from Georgetown University Law Center and is a member of the Utility Contractors Association of Washington, the Master Builders and the Associated General Contractors. Steve Parkinson’s practice focuses on environmental law, including real estate transactions involving contaminated properties, cleanup and cost recovery actions under state and federal superfund law, natural resource damages claims, and stormwater and wetlands issues. Mr. Parkinson is Vice-Chairman of the American Bar Association Committee on Superfund and Natural Resource Damages and a member of the Board of Trustees of the Association of General Contractors of Washington. He graduated cum laude from Harvard Law School and clerked for the Honorable Thomas Zilly, United States District Court for the Western District of Washington. www.washingtonceo.com Richard T. Beal, Jr. Stanislaw Ashbaugh LLP 4400 Columbia Center 701 Fifth Avenue Seattle, WA 98104 206-386-5900 PRACTICE AREA: Insurance Coverage Rick Beal’s practice focuses on disputes and litigation involving insurance coverage and claims handling for every kind of commercial policyholder. As a result, Mr. Beal has focused on a broad array of policy disputes, including those concerning comprehensive general liability, builders risk, errors and omissions, directors and officers, wrap coverage and specialty commercial policies. Mr. Beal handles a wide range of insurance disputes across the country including claims against insurance companies relating to bad faith and Consumer Protection Act violations and coverage issues related to natural disasters, property damage, business interruption losses, intellectual property and advertising injury claims. www.washingtonceo.com WASHINGTONCEO • MARCH 2006 65 T O P WA S H I N G T O N Washington’s Most Amazing Attorneys Attorneys were selected for the list through a voting process involving law firms throughout the state • Compiled by Margot Walker Attorney Firm Location ANTITRUST & TRADE REGULATION David C. Lundsgaard Paul R. Taylor Graham & Dunn Byrnes & Keller Seattle Seattle ARBITRATION & MEDIATION Lawrence R. Mills Christopher J. Soelling Fredric C. Tausend Mills Meyers Swartling Christopher J. Soelling PLLC Preston Gates & Ellis Seattle Seattle Seattle BANKING & FINANCIAL Norman B. Page Davis Wright Tremaine Seattle BANKRUPTCY & WORKOUT Sheena R. Aebig Marc L. Barreca Gayle E. Bush Jack Cullen Kimberly Osenbaugh Williams Kastner & Gibbs Preston Gates & Ellis Bush Strout & Kornfeld Foster Pepper Preston Gates & Ellis Seattle Seattle Seattle Seattle Seattle BUSINESS LAW Greg F. Adams Davis Wright Tremaine James L. Austin, Jr. Karr Tuttle Campbell Kumi Yamamoto Baruffi Graham & Dunn Scott Bell Cairncross & Hempelmann Bruce T. Bjerke Riddell Williams John P. Braislin Betts Patterson & Mines C. Kent Carlson Preston Gates & Ellis Stephan H. Coonrod Preston Gates & Ellis Michael D. Dwyer Lane Powell Stephen D. Fisher Bullivant Houser Bailey Patrick J. Franke Graham & Dunn Stephen M. Graham Orrick Herrington & Sutcliffe G. Scott Greenburg Preston Gates & Ellis Allen D. Israel Foster Pepper Gary J. Kocher Preston Gates & Ellis David R. Koopmans Short Cressman & Burgess Paul M. Larson Larson & Perkins Mike Liles Karr Tuttle Campbell Walter M. Maas III Karr Tuttle Campbell Michael E. Morgan Lane Powell R. Thomas Olson Miller Nash Bruce M. Pym Heller Ehrman Geoffrey G. Revelle Stoel Rives Vincent A. Ricci Orrick Herrington & Sutcliffe Bruce A. Robertson Garvey Schubert Barer Matt W. Runkel Hallisky & Philipp Alan C. Smith Orrick Herrington & Sutcliffe John M. Steel DLA Piper Rudnick Gray Cary US 66 WASHINGTONCEO • MARCH 2006 Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Yakima Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Attorney Jack G. Strother David K.Y. Tang Michael Tobiason Matthew S. Topham Firm Location Graham & Dunn Preston Gates & Ellis Graham & Dunn Preston Gates & Ellis Seattle Seattle Seattle Seattle CIVIL TRIAL Kelly Corr Corr Cronin Michelson Baumgardner & Preece Seattle Jenny A. Durkan Law Office of Jenny Durkan Seattle Mischelle R. Fulgham Lukins & Annis Spokane P. Arley Harrel Williams Kastner & Gibbs Seattle Thomas V. Harris Perey-Harris Trial Lawyers Seattle Paul N. Luvera Luvera Law Firm Mt. Vernon Judy Massong Peterson Young Putra Seattle Evan Schwab Dorsey & Whitney Seattle Robert M. Sulkin McNaul Ebel Nawrot & Helgren Seattle Christopher W. Tompkins Betts Patterson & Mines Seattle COMMERCIAL LITIGATION Randy J. Aliment John A. Bender Margaret M. Boyle David J. Burman Rudy A. Englund Larry S. Gangnes David R. Goodnight Henry C. Jameson Scott A.W. Johnson Barry M. Kaplan Jerry Kingdinger Bruce E. Larson Roger D. Mellem James D. Nelson Ralph H. Palumbo James P. Savitt William R. Squires III Jerry N. Stehlik David F. Taylor Stephen C. Willey Jay H. Zulauf Williams Kastner & Gibbs Ryan Swanson & Cleveland Hallisky & Philipp Perkins Coie Lane Powell Lane Powell Stoel Rives Jameson Babbitt Stites Lombard Stokes Lawrence Wilson Sonsini Goodrich & Rosati Ryan Swanson & Cleveland Karr Tuttle Campbell Ryan Swanson & Cleveland Betts Patterson & Mines Summit Law Group Savitt & Bruce Summit Law Group Bucknell Stehlik Sato & Stubner Perkins Coie Savitt & Bruce Hall Zanzig Zulauf Claflin McEachern Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Short Cressman & Burgess Oles Morrison Rinker & Baker Skellenger Bender Bullivant Houser Bailey Groff Murphy Trachtenberg & Everard Ater Wynne Hedeen & Caditz Seattle Seattle Seattle Seattle Seattle Seattle Seattle CONSTRUCTION John P. Ahlers Sam E. Baker, Jr. William J. Bender Jeffrey G. Frank David C. Groff, Jr. Greg Harris Arnold R. Hedeen www.washingtonceo.com T O P WA S H I N G T O N Attorney Firm Robert Mahler Andrew W. Maron Kendall H. Moore Michael J. Murphy Scott R. Sleight Aaron K. Owada David H. Smith Bullivant Houser Bailey Short Cressman & Burgess Short Cressman & Burgess Groff Murphy Trachtenberg & Everard Short Cressman & Burgess Northcraft Bigby & Owada Garvey Schubert Barer Location Seattle Seattle Seattle Seattle Seattle Seattle Seattle ENVIRONMENTAL & LAND USE William H. Chapman John Hempelmann Tom Kilbane Jeffrey W. Leppo Donald E. Marcy Bradley M. Marten Joel R. Paisner Stephen T. Parkinson Preston Gates & Ellis Cairncross & Hempelmann Ater Wynne Stoel Rives Cairncross & Hempelmann Marten Law Group Ater Wynne Groff Murphy Trachtenberg & Everard Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle GOVERNMENT & ADMINISTRATIVE Arthur A. Butler Kent Caputo Grace T. Yuan Ater Wynne Miller Nash Preston Gates & Ellis Seattle Seattle Seattle Foster Pepper Ogden Murphy Wallace Davis Wright Tremaine Miller Nash Seattle Seattle Seattle Seattle Stafford Frey Cooper Seattle HEALTH Attorney Firm Location LABOR & EMPLOYMENT Carolyn Cairns John H. Chun Rosemary Daszkiewicz James R. Dickens E. Ross Farr Kathryn L. Feldman Kelby D. Fletcher Clifford Freed Steven Goldstein Jeffrey A. Hollingsworth Mark A. Hutcheson Otto G. Klein III Richard J. Omata Anne F. Preston D. Michael Reilly Jerome L. Rubin Karen Sutherland Sheryl J. Willert Stokes Lawrence Preston Gates & Ellis Cairncross & Hempelmann Miller Nash Ogden Murphy Wallace Ater Wynne Peterson Young Putra Frank Freed Subit & Thomas Betts Patterson & Mines Perkins Coie Davis Wright Tremaine Summit Law Group Karr Tuttle Campbell Garvey Schubert Barer Lane Powell Stoel Rives Ogden Murphy Wallace Williams Kastner & Gibbs Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Camden Hall Stokes Lawrence Seattle Seattle MARITAL & FAMILY Camden M. Hall Gail Wahrenberger REAL ESTATE TRANSACTIONS & EMINENT DOMAIN Bradley Berg Donald W. Black Susan G. Duffy Robert Walerius INSURANCE A. Richard Dykstra INTELLECTUAL PROPERTY RIGHTS David A. Bateman David V. Carlson William O. Ferron, Jr. Steven Fricke Preston Gates & Ellis Seed IP Law Group Seed IP Law Group Christensen O'Connor Johnson Kindness Seann W. Hallisky Hallisky & Philipp Karl R. Hermanns Seed IP Law Group Mark S. Parris Heller Ehrman Adam L.K. Philipp Hallisky & Philipp Stephen J. Rosenman, Ph.D. Seed IP Law Group Jeffrey M. Sakoi Christensen O’Connor Johnson Kindness Richard G. Sharkey Seed IP Law Group Chad M. Smith Hallisky & Philipp Roger M. Tolbert Orrick Herrington & Sutcliffe Holly K. Towle Preston Gates & Ellis Scott G. Warner Garvey Schubert Barer Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle INTERNATIONAL Christopher J. Barry Steven M. Dickinson Daniel P. Harris Dorsey & Whitney Harris & Moure Harris & Moure Seattle Seattle Seattle J. Patrick Aylward Jeffers Danielson Sonn & Aylward Michael A. Barrett Perkins Coie Janene A. Collins Graham & Dunn Jerry A. Creim Williams Kastner & Gibbs Michael R. Garner Stokes Lawrence Kathleen J. Hopkins Real Property Law Group Michael D. Kuntz Foster Pepper Michael McCormack Jameson Babbitt Stites Lombard Jane Rakay Nelson Lane Powell Scott B. Osborne Preston Gates & Ellis Donald E. Percival Heller Ehrman David H. Rockwell Stoel Rives Shannon J. Skinner Preston Gates & Ellis Larry J. Smith Graham & Dunn Gordon W. Tanner Stoel Rives Guy I. Towle Miller Nash Daniel Charles Vaughn Cairncross & Hempelmann Wenatchee Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle WILLS, TRUSTS & ESTATES Dean V. Butler Eric Fahlman Dorothy K. Foster Marcia K. Fujimoto Wendy S. Goffe Douglas C. Lawrence Sandra Lynn Perkins Kenneth L. Schubert Barbara C. Sherland Livingston Wernecke Ann T. Wilson Carney Badley Spellman Fahlman Olson & Little Foster Law Group Graham & Dunn Graham & Dunn Stokes Lawrence Sandra Lynn Perkins Garvey Schubert Barer Stoel Rives Betts Patterson & Mines Law Offices of Ann T. Wilson Seattle Seattle Bainbridge Island & Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Seattle Every possible attempt has been made to compile correct information for this list within a reasonable time period. Please send comments to [email protected]. www.washingtonceo.com WASHINGTONCEO • MARCH 2006 67
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