James Hardie has proposed to take lawyers out of the process of compensating asbestos victims - with potential savings running into the millions of dollars if compensation is administered via a capped statutory scheme.

Observers of what is shaping up as one of the most high profile scandals in Australian corporate history will note the irony in this proposal. The relationship between the company and its external legal advisers, Allens Arthur Robinson, came under close scrutiny during the Special Inquiry into the estimated $1bn to $2bn shortfall in the company's fund for asbestos victims. Moreover, lawyers figure prominently on the James Hardie board. Here we take a look at some of the key legal players involved.

Meredith Hellicar, BA LLM (Hons)
On August 11, Alan McGregor resigned as chairman of the James Hardie board and Hellicar was appointed to replace him.

Hellicar first joined James Hardie in 1992 as a director. She is the only woman on the James Hardie board. In one of her first public statements as chairman, Hellicar told the ABC's Kerry O'Brien she was "truly sorry" about the under-funding of the asbestos foundation the company had set up to meet future liabilities for claims. At the same time, Hellicar reiterated the company's position that the proposed compensation scheme for asbestos victims went beyond James Hardie's legal responsibilities.

From 1998 to 2001, Hellicar was chief executive officer at Corrs Chambers Westgarth. She sits on a number of boards, including AMP, Amalgamated Holdings and HIH Claims Support.

Alan McGregor, MA LLB
McGregor chaired the James Hardie board from 1995 until continuing ill health led to his resignation. He has also resigned from his position as chairman of food manufacturer Burns Philp. He is currently receiving treatment for a recurrence of lymphoma. McGregor is a corporate law expert and chaired James Hardie's nominating and governance committee.

At the Special Inquiry, McGregor was queried about the controversial cancellation of partly paid shares, which represented the lifeline between entities more directly involved in the company's asbestos activities and the capital of the reborn parent company. This lifeline was integral to the NSW Supreme Court's permission to allow James Hardie to move its headquarters offshore to the Netherlands.

McGregor has denied that he or the board requested independent advice on whether the cancellation of the partly paid shares should be disclosed to the NSW Supreme Court, the ASX or other parties.

Peter Cameron, BA LLB
Peter Cameron headed Allens' powerhouse M&A team until 2001, when he left the firm to chair the board of investment bank Credit Suisse. While at Allens, Cameron was James Hardie's chief external legal advisor. He joined James Hardie as a director last year.

A leaked confidential memo has outlined Allens' desire to re-employ Cameron as chairman with plans to re-join the partnership down the track. Among Cameron's other high profile clients during his time at Allens are BHP Billiton, Westpac and Woolworths. Cameron started working with Allens in 1976.

David Robb, BCom LLB
The corporate lawyer at Allens Arthur Robinson has been labelled the "point man" of the Special Inquiry. Robb gave evidence that he drafted advice to James Hardie on whether the court had been misled in relation to the cancelled partly paid shares. His advice was inexplicably cut from the final version of the advice that the James Hardie board received. The firm's failure to convey this advice to James Hardie could amount to misconduct, and negligence or fraud.

Apart from James Hardie, Robb has also advised on schemes of arrangement for CMPS&F Pty Limited and Sonic Healthcare.

Peter Shafron, BA LLM MBA
James Hardie's in-house counsel has two titles: senior vice-president finance and legal, and chief financial officer. Shaffron was an associate at Allen Allen & Hemsley. He moved in-house in 1993.

Counsel assisting the Special Inquiry John Sheahan QC has claimed that James Hardie CEO Peter Macdonald and his executives and directors were dishonest, negligent and recklessly indifferent. The QC also described Shafron as possibly fraudulent. Shafron is the author of CCH's guide titled Australian Trade Practices Compliance.

Shifting reponsibility
Only days after James Hardie's asbestos foundation was set up, AAR partner Roy Williams sent an email to James Hardie in-house counsel Peter Shafron, clarifying that previous advice the firm had given should not be interpreted as confirmation that the foundation has sufficient funds to meet claims. In reply, Shafron pointed out that, "We kept Allens close by our side throughout this transaction (and Allens billings will reflect that)."
The shifting or sharing of responsibility between in-house and external counsel prompted this protest from a lawyer who spoke with ALB:

"In commercial life, the clients just want something to keep in their records, so that in two years' time when they dig it out, they can say that they got legal advice for it. And that's a shame that it's turned out like that. Getting advice has become a box kicking exercise.

"If a company is not willing to take responsibility, they get legal advice because they know they can sue them later. And they don't care about the quality, as long as they get the answer they want. They can say, 'I got external advice, hey, that's [my] licence'... I hated that laziness with legal departments."
Food for thought for in-house counsel.