SEC Fraud

Traditionally, the law firms Hogan Lovells and Skadden, Arps, Slate, Meagher & Flom have provided counsel to News Corporation. However, in spite of four decades of previous service, the Rupert Murdoch media conglomerate chose to hire Williams & Connolly, including its high-profile litigator, Brendan V. Sullivan Jr., to handle the current legal crisis News Corporation is facing.

Although Murdoch stated last week that Joel I. Klein, an experienced Washington lawyer, would be managing investigations regarding News Corporation’s allegations of phone hacking, the recent hiring of Williams & Connolly seemingly undermines his new role.

However, Klein’s employment at News Corporation was never meant to be focused on legal matters regardless. Klein may have worked as one of President Clinton’s top antitrust lawyer in his Justice Department, but it was his position as chancellor of New York City Pubic Schools that acquired him the position at News Corporation where he was to develop “entrepreneurial ventures” which were centered around education.

When phone-hacking allegations surfaced last week, Murdoch was without general legal counsel and was forced to ask Klein to switch his focus from education to legal matters.

Regardless of who is now handling News Corporation’s legal matters, the company can expect to deal with legal troubles rising at an exponential rate. Problems are no longer reserved for Britain anymore. Once news hit the United States, criminal investigations, civil suits, and government probes all quickly followed. The Federal Bureau of Investigations even began a preliminary inquiry on Thursday to determine if News Corporation had in fact tried to retrieve the phone record of September 11th victims.

Due to the allegations, Senator Frank R. Lautenberg of New Jersey even suggested that U.S. government authorities should consider beginning a formal investigation of their own considering the possible violations of the Foreign Corrupt Practices Act.

While firms Hogan Lovells and Skadden, and individuals such as Klein, may be upset by Murdoch’s choice to hire Sullivan, there is no question as to why he chose to do so. Klein has represented high-profile clients including former senator Ted Stevens, New York Stock Exchange’s Richard Grasso, and Oliver North during the Iran-Contra affair.

Hogan has long been tied to News Corporation, and been the one of the company’s first choices when it comes to outside counsel. None of the lawyers within Hogan have commented on News Corporation’s choice; however, the tension is apparent especially since Williams & Connolly was started by Hogan’s leading lawyer of 1967, Mr. Edward Bennett Williams.