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United States Government Accountability Office: 

Washington, DC 20548: 

May 22, 2007: 

The Honorable Max Baucus:
Chairman: 
The Honorable Charles E. Grassley: 
Ranking Member: 
Committee on Finance: 
United States Senate: 

The Honorable Edward M. Kennedy:
Chairman: 
The Honorable Michael B. Enzi: 
Ranking Member: 
Committee on Health, Education, Labor and Pensions: 
United States Senate: 

Subject: PBGC's Legal Support: Improvements Needed to Eliminate 
Confusion and Ensure Provision of Consistent Advice: 

The Pension Benefit Guaranty Corporation (PBGC) insures the pensions of 
nearly 44 million private sector workers in over 30,000 employer- 
sponsored defined benefit pension plans.[Footnote 1] Established in 
1974 as a self-financing government corporation, PBGC's primary 
responsibility is to insure, under statutory limits, the pension 
benefits of participants in covered private defined benefit plans. PBGC 
collects premiums from the sponsors of defined benefit pension plans 
and administers plans that are terminated for reasons such as plan 
insolvency or bankruptcy. In the event of a termination, PBGC assumes 
control of plan assets, determines plan benefit liabilities, and pays 
benefits as guaranteed by statute. In fiscal year 2006, about 612,000 
plan participants and beneficiaries received $4.1 billion in benefit 
payments from PBGC. An additional 659,000 participants in plans already 
trusteed by the corporation will receive benefits from PBGC when they 
become eligible to retire. An increase in underfunded plan terminations 
in recent years increased the number of plan participants receiving and 
eligible for benefit payments. 

Until recently, all of PBGC's attorneys worked in the Office of the 
General Counsel. The General Counsel reports to the Director[Footnote 
2] and until recently had responsibility for all legal matters, from 
representing PBGC in bankruptcy and litigation matters, to providing 
advice on personnel and procurement law. In 2005, PBGC reorganized, 
creating an additional legal department called the Office of the Chief 
Counsel, and placed this new office under the Chief Insurance Program 
Officer. The Chief Counsel was given the responsibility for overseeing 
legal issues pertaining to PBGC's core mission functions, such as 
negotiations involving terminations resulting from bankruptcies, while 
the General Counsel retained responsibility for such general law issues 
as ethics, procurement, and personnel law.[Footnote 3] 

The former Director responsible for the reorganization told us that the 
new legal structure was meant to align the staff performing PBGC's core 
mission-related work with the legal staff supporting that work. It was 
also meant to provide additional advancement opportunities for 
attorneys. Concerns have been raised, however, that this organizational 
change, a decentralization of legal functions, has affected the 
uniformity of PBGC's legal opinions, because there is no single chief 
legal officer ultimately responsible for overseeing all programmatic or 
regulatory issues. Because of these concerns, and in light of PBGC's 
growing workload, you asked us to examine the effect the reorganization 
of the corporation's legal functions into separate offices has had on 
PBGC's operations. Accordingly, we assessed whether the reorganization 
has (1) clearly defined the roles and responsibilities of PBGC's legal 
offices and (2) ensured that consistent legal advice is provided to the 
PBGC Director. 

We reviewed PBGC's current organizational structure, including its 
different legal components, such as the Office of the General Counsel 
and the Office of the Chief Counsel. To assess the effect the 
reorganization has had on the provision of legal services at PBGC, we 
reviewed PBGC memorandums and documents concerning the reorganization 
and interviewed the former Director who implemented these changes and 
the current and former general counsels and chief counsels. We also 
interviewed representatives from PBGC's union and several other 
management officials. Because PBGC officials said that its new legal 
structure was modeled after that of the Securities and Exchange 
Commission (SEC), we reviewed SEC documentation and spoke to an SEC 
official about that agency's organizational structure. We conducted our 
review from November 2006 through April 2007 in accordance with 
generally accepted government auditing standards. We provided a draft 
of this letter to the Department of Labor and the PBGC for comment. 

In summary, the restructuring of PBGC's legal functions into separate 
offices has caused confusion over each office's authority. As a result, 
PBGC staff has sought advice from both the Office of the General 
Counsel and the Office of the Chief Counsel, sometimes in an effort to 
obtain a desired response. Further, PBGC officials told us that 
attorneys from the Office of the General Counsel have provided legal 
advice when the Office of the Chief Counsel had responsibility for the 
issue, which resulted in confusion and conflicting opinions. 

PBGC's current legal structure does not guarantee that a chief legal 
officer has an opportunity to provide advice and views on legal 
matters, including those reaching the Director. Currently, the Chief 
Counsel does not have a reporting relationship to either the General 
Counsel or the Director. In an August 2006 report on a multimillion 
dollar business transaction, the Inspector General found that PBGC put 
itself at risk because the General Counsel was not informed and did not 
serve its function as a check on critical issues. When an organization 
implements a decentralized legal structure, all counsel housed in 
specific business units typically report administratively to a chief 
legal officer, such as a general counsel, who in turn reports directly 
to the agency head. 

This letter contains a recommendation to PBGC to provide for all legal 
functions to be overseen by a single chief legal officer who reports 
directly to the Director. In commenting on a draft of this letter, PBGC 
disagreed with our recommendation, stating that a recommendation to 
adopt a single law office model was unduly prescriptive. We did not 
intend for our recommendation to be read narrowly as endorsing a single 
law office model. Rather than endorsing a particular legal structure, 
we point out that the legal functions could be organized in different 
ways, and this could include a decentralized structure. PBGC also 
expressed concern that our report did not sufficiently recognize the 
improved communication, coordination, reporting processes and changes 
to its corporate culture that it has undertaken. After carefully 
reviewing its concerns, we continue to believe that our conclusions and 
recommendation are well founded. PBGC's comments are provided in 
appendix I. We did not receive formal comments from the Department of 
Labor however, both PBGC and the Department of Labor provided technical 
comments and clarifications, which we incorporated in the letter as 
appropriate. 

Background: 

PBGC collects premiums from the sponsors of defined benefit pension 
plans, oversees plan terminations, and ensures the proper disbursement 
of payments. The corporation charges premiums to defined benefit plan 
sponsors, so it may make insured benefit payments to participants in 
defined benefit pension plans that terminate with insufficient assets. 
Under certain circumstances, PBGC can determine that the termination of 
an employer's plan is necessary to protect the interests of plan 
participants or of PBGC's insurance program, for example, if a plan 
does not have enough money to pay benefits currently due. In such cases 
PBGC negotiates with the plan sponsor to terminate the plan and is 
routinely appointed its permanent trustee. The negotiations are often 
fast-paced, high-pressure situations that increasingly involve large 
corporations and millions of dollars. PBGC's Department of Insurance 
Supervision and Compliance (DISC) staff, who manage the negotiations, 
have extensive financial, actuarial, and market expertise. DISC's legal 
support comes from the Office of Chief Counsel, whose staff has 
extensive knowledge of bankruptcy and pension law. 

The Office of the Chief Insurance Program Officer, as shown in figure 
1, manages the Office of the Chief Counsel and DISC. DISC monitors the 
corporate events and transactions of defined benefit pension plan 
sponsors and provides the necessary analyses to enable PBGC to assess 
its insurance program. In coordination with the Office of the Chief 
Counsel, DISC determines and pursues recoveries of unpaid employer 
contributions. DISC also makes recommendations to the Director 
concerning the filing of liens and makes recommendations to the 
Internal Revenue Service concerning conditions for granting employers 
waivers of the minimum funding requirements, which are the minimum 
amount of assets an employer's defined benefit plan must hold in order 
to fund promised benefits. Neither office reports to or through the 
Office of the General Counsel. 

Figure 1: PBGC's Organizational Chart: 

[See PDF for Image] 

Source: PBGC. 

[End of figure] 

The Office of the Chief Counsel provides comprehensive legal services 
relating to PBGC's programs involving ongoing and terminated pension 
plans. Its attorneys represent PBGC in bankruptcy or insolvency 
proceedings, provide legal advice and services to support termination 
negotiations and settlements, and make recommendations concerning the 
initiation of litigation. Currently, the Office of the Chief Counsel 
has 50 attorneys. 

Since the reorganization, the Office of the General Counsel consists 
primarily of attorneys who had previously worked in the general law 
area and are tasked with functions related to ethics, procurement, and 
personnel law. According to PBGC documents, the Office of the General 
Counsel provides the Director and PBGC departments with legal advice 
and counsel on general law issues and can provide advice on pension-law 
matters at the request of the Director. The Office of the General 
Counsel is also responsible for deciding administrative appeals of PBGC 
decisions concerning benefit coverage and other determinations. 
Further, the General Counsel serves as Secretary to the PBGC's board of 
directors and keeps board meeting minutes.[Footnote 4] The office 
currently has 27 attorneys.[Footnote 5] 

Restructuring Has Resulted in Confusion over Legal Roles and 
Responsibilities: 

The restructuring of PBGC's legal functions has caused confusion within 
the corporation over each office's authority. As a result, PBGC staff 
has sought advice from both the Office of the General Counsel and the 
Office of the Chief Counsel, on the same or substantially similar 
issues, sometimes in an effort to obtain a desired response. In 
addition, PBGC officials told us that attorneys from both legal offices 
often provide legal advice on the same issues, which has resulted in 
confusion. For example, early in 2006, PBGC's Chief Financial Officer 
sent a memo to both offices requesting advice on an issue involving 
bankruptcy, and each office rendered a separate legal opinion. 
According to PBGC, the Office of Chief Counsel has responsibility for 
providing legal advice on issues involving bankruptcy matters, and the 
Office of the General Counsel has responsibility for providing legal 
services to the Financial Operations Department. While the legal 
conclusions of the two memos can be read in concert, the Chief 
Counsel's memo appears to reflect some level of disagreement with the 
General Counsel's approach to the issue raised. In another case, 
involving advice on a benefits issue concerning a specific pension 
plan, even though the Office of the Chief Counsel is generally 
responsible for providing legal advice to the Benefits Administration 
and Payments Department, both legal offices wrote memos to this 
department, presenting legal opinions that were in disagreement. After 
internal discussions among senior management, PBGC officers followed 
the advice presented by the Office of the General Counsel. 

Confusion over roles and responsibilities has led to problems for those 
outside of PBGC as well. In some cases, external clients, such as 
employers that sponsor defined benefit plans, have experienced delays 
in receiving advice because they mistakenly sent their legal queries to 
the Office of the General Counsel rather than the Office of the Chief 
Counsel. For example, according to a PBGC official, an outside attorney 
contacted the Office of the General Counsel seeking guidance on a 
transaction and was told to submit a written request for a legal 
opinion. PBGC officials later agreed that the inquiry should have been 
sent to the Chief Counsel's office. Determining internal jurisdiction 
delayed by about a month PBGC's analysis of the transaction and its 
guidance. In another example, the General Counsel's office was asked 
for advice regarding a plan that was seeking relief from its premium 
payments. An attorney from the Office of the General Counsel drafted a 
letter that would have allowed for such relief. The letter, had it been 
approved, would have permitted PBGC staff to stop collecting premiums 
from the specific plan sponsor, indicating that PBGC did not cover the 
plan. However, the Chief Counsel's office disagreed with the Office of 
the General Counsel's position, and found that PBGC did cover the plan. 
According to a PBGC official, if the plan sponsor had stopped paying 
premiums to PBGC, the law would still require PBGC to guarantee 
benefits if the plan terminated with insufficient assets. 

In an attempt to clarify the roles and responsibilities of the two 
legal offices, PBGC's Interim Director issued a memorandum in January 
2007 discussing certain areas of jurisdiction that were not clearly 
addressed in the reorganization. To a certain extent, the memo 
heightened the confusion because, according to some PBGC officials, the 
memorandum reassigned certain functions previously understood to be 
within the scope of the Office of the Chief Counsel to the General 
Counsel's office. For example, although benefit determinations are made 
based on legal advice provided by the Office of the Chief Counsel, the 
responsibility for deciding appeals of benefit determinations has been 
given to the Office of the General Counsel. The memorandum states that 
the Office of the General Counsel is responsible for leading litigation 
arising from such an appeal. This is in conflict with PBGC documents 
that state that the Office of the Chief Counsel will represent PBGC in 
litigation in all courts when the issue involves ongoing and terminated 
pension plans. PBGC union representatives also asserted that the 
memorandum was not consistent with the union-negotiated reorganization 
agreements with PBGC management. According to the union 
representatives, the reorganization agreements state that the Office of 
the Chief Counsel will consist of the group that had previously been 
responsible for litigating fiduciary breach and Appeals Board cases in 
the pre-reorganization Office of the General Counsel and do not mention 
transferring these functions, or any others, to the post-reorganization 
Office of the General Counsel. PBGC management disagreed with the 
union's views on the Interim Director's memorandum, and told us that 
PBGC has not yet finalized how the issues discussed in the memorandum 
will be implemented. 

Although officials at PBGC have acknowledged that there was confusion 
during the initial period of reorganization, they have also indicated 
that communication and collaboration among attorneys and clients has 
improved, and stated that the potential for future confusion is low. 
They explained that in response to the Interim Director's memorandum, 
PBGC's two legal offices now participate in biweekly meetings, to 
coordinate the matters his memo addressed. According to the officials, 
these meetings have enhanced collaboration. 

Current Structure Does Not Ensure That Advice of a Chief Legal Officer 
is Provided on Significant Legal Issues: 

PBGC's legal structure does not guarantee that a chief legal officer 
has an opportunity to provide advice on significant legal matters, 
including those reaching the Director. Organizations that implement a 
decentralized legal structure--by having all legal advice from counsel 
housed in specific business units pass through a chief legal officer, 
such as a general counsel, reporting directly to the agency head--can 
ensure that only legal advice that is backed by the chief legal officer 
reaches the agency head. However, PBGC's current legal structure fails 
to give the Office of the Chief Counsel an independent reporting line 
to either the General Counsel or the Director. In a 2006 survey of 186 
large private-sector corporations, 154 corporations reported having 
attorneys that were organized in a centralized structure. Eighty-nine 
percent of these corporations reported that between "76 and 100 
percent" of their attorneys report directly to a general counsel. In 
addition, 19 corporations reported having attorneys who were organized 
in a decentralized structure. The attorneys report directly to the head 
of their business units, with an indirect reporting relationship to a 
general counsel.[Footnote 6] An entity's general counsel commonly 
reports directly to the chief executive officer within the management 
hierarchy. 

The Chief Counsel reports to the Chief Insurance Program Officer, a 
position that also has responsibility for the high-pressure 
negotiations conducted by DISC. Given the high value and risk of these 
negotiations, an independent legal voice is important. PBGC officials 
told us that the lack of a direct-reporting line is remedied because 
legal questions can be discussed in the executive management forum, 
which includes the Chief Insurance Program Officer, the Director, and 
the General Counsel. However, legal issues raised by the Office of the 
Chief Counsel may not reach the Executive Management forum, if the 
Chief Insurance Program Officer does not elevate them to that forum. 
The Chief Insurance Program Officer could be faced with competing 
priorities. On the one hand, this official has staff negotiating high- 
pressure deals. On the other hand, this official has attorneys 
responsible for ensuring that the deals are legally sound. Under 
pressure to close the deal, the potential exists for this executive to 
make a decision or take an action without airing an important legal 
concern before the General Counsel or the Director. However, PBGC 
officials noted that the current Chief Insurance Program Officer is an 
attorney with the necessary expertise to manage the Office of the Chief 
Counsel effectively. They also noted that the position of the Chief 
Insurance Program Officer may not always be held by someone with legal 
qualifications. 

While PBGC documentation requires the General Counsel to review 
important transactions, this review does not always occur, which may 
put the corporation at risk. For example, in an August 2006 report, 
PBGC's Office of Inspector General found that the Office of the General 
Counsel had not been substantively involved in a multimillion dollar 
business transaction, even though PBGC documentation requires that the 
General Counsel review relevant proposed actions requiring approval of 
the Director. If, during the fast pace of decision making in 
negotiations, the Office of the General Counsel does not review 
important transactions, gaps in responsibility and accountability can 
occur. For example, an organization's General Counsel can help ensure 
that attorneys in the business units maintain their professional 
independence while providing specialized legal services.[Footnote 7] 
Under the current legal structure, the Office of the General Counsel 
cannot realistically be integrally involved in every aspect of 
negotiations, and there may be times when the Office of the General 
Counsel is not aware of an issue that can result in damage to the PBGC. 
The Inspector General found that PBGC put itself at risk because the 
General Counsel was not informed, and did not serve its function as a 
check on critical issues facing PBGC. 

According to PBGC officials, the corporation refined its practices 
after this transaction and the report by the Office of Inspector 
General, and began coordinating better in a variety of areas. For 
example, the Interim Director implemented biweekly meetings on major 
cases, at which key senior staff are alerted to major developments that 
may require their input. According to PBGC officials, during a 
subsequent transaction, there was improved cooperation across all 
department lines that, according to the officials, resulted from the 
implementation of these meetings. 

The former Director, responsible for the reorganization, told us that 
the new legal structure is modeled on that of the SEC. At SEC, there is 
an Office of the General Counsel that reports to the SEC Chairman. 
There are also several Chief Counsels who are embedded in the various 
business units, and they report directly to the department heads--not 
necessarily the General Counsel. However, according to an SEC official, 
it is agency practice that the Chief Counsels' most important actions 
are reviewed by the Office of the General Counsel. In addition, the 
official also told us that the heads of the majority of SEC's business 
units are required to be filled by attorneys, whereas at PBGC the Chief 
Insurance Program Officer position, although currently filled by an 
attorney, is a general management position. 

Conclusions: 

The current organization of PBGC's legal functions lacks a clear 
division of authority and does not ensure that the Director receives 
legal advice directly and with the full support of a chief legal 
officer. Currently, there are two distinct legal offices within PBGC, 
but there is no single legal voice. The current structure creates 
confusion for PBGC both internally and externally, which could 
seriously affect PBGC's mission. While PBGC's legal functions could be 
organized in different ways, we believe that the lack of a direct 
reporting line from the Chief Counsel to the General Counsel or the 
Director could result in decisions made without consideration of PBGC's 
overarching legal concerns. In short, the current legal structure has 
resulted in various problems and has the potential to create additional 
problems in the future. Therefore, this matter deserves prompt 
attention to eliminate such problems. 

Recommendations for Executive Action: 

In order to promote clear lines of authority and the provision of 
consistent legal advice, we recommend that PBGC: 

* provide for all legal functions to be overseen by a single chief 
legal officer with full authority to delineate the duties of each legal 
office and a direct reporting relationship to the Director. 

Agency Comments and Our Evaluation: 

We provided copies of a draft of this letter to the Secretary of Labor 
and PBGC's Interim Director for their comments. The Department of Labor 
provided technical comments which we incorporated in our final letter 
as appropriate. PBGC provided written comments which are reproduced in 
appendix I. In its comments, PBGC stated that it disagrees with our 
recommendation, which it characterizes as an unduly prescriptive 
recommendation that it adopt a single law office model. We did not 
intend for our recommendation to be read narrowly as endorsing a single 
law office model. Rather than endorsing a particular legal structure, 
we point out that the legal functions could be organized in different 
ways, and this could include a decentralized structure. We recommended, 
and continue to believe, however, that in determining the most 
appropriate structure for providing legal support, PBGC should ensure 
that all legal functions are overseen by a single chief legal officer 
with authority and accountability for all legal advice provided to the 
Director and the various departments within PBGC. Without a single 
chief legal officer, we believe that the inconsistency and confusion 
that we documented in the report are likely to continue. Indeed, our 
recommendation is consistent with the views of four former General 
Counsels of the PBGC. We interviewed these individuals, with a combined 
28 years of service as General Counsel, and each of them independently 
stated that having a chief legal officer oversee PBGC's attorneys is 
the best approach for the corporation. 

PBGC also expressed concern that our report did not sufficiently 
recognize the improved communication, coordination, reporting processes 
and changes to its corporate culture that it has undertaken. While we 
have modified the report to include these stated changes, we point out 
that, during our five month review we saw little evidence of such 
change. We believe that the new biweekly meetings implemented by the 
Interim Director are a step in the right direction, and involving the 
General Counsel in the oversight of major agency decisions is 
consistent with our recommendation. However, relying solely on improved 
cooperation and communication is not an adequate approach for improving 
a flawed organizational structure. 

In addition to its written comments, PBGC also noted several technical 
corrections to the letter, which we incorporated as appropriate. 

As arranged with your offices, unless you publicly announce its 
contents earlier, we plan no further distribution of this letter until 
30 days after the date of the letter. At that time, we will send copies 
of this letter to the Secretary of Labor, the Interim Director at PBGC, 
and other interested parties. We will also make copies available to 
others on request. In addition, the letter will be available at no 
charge on GAO's Web site at http://www.gao.gov. 

If you or your staff have any questions about this letter, please 
contact me at (202) 512-7215 or bovbjergb@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this letter. Other key contributors to this letter 
were Blake Ainsworth, Assistant Director; Monika Gomez; Jason Holsclaw; 
Kisha Clark; and Craig Winslow. 

Sincerely yours, 

Signed by: 

Barbara D. Bovbjerg:
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Appendix I: Comments from the Pension Benefits Guaranty Corporation: 

Protecting America's Pensions: 
Pension Benefit Guaranty Corporation:
1200 K Street, N.W., 
Washington, D.C. 20005-4026: 
Office of the Director: 

May 8, 2007: 

Barbara D. Bovbjerg, Director: 
Education, Workforce, and Income Security Issues: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Re: Response to GAO's Draft Report on PBGC's Legal Support: 

Dear Ms. Bovbjerg: 

I appreciate the opportunities you have given PBGC to provide input for 
this report. On May 3, 2005, we submitted technical corrections that 
clarified PBGC's statutory mandates and numerical data about the 
insurance program. PBGC also provided additional information concerning 
the current and historical responsibilities and reporting roles of 
various units and officials. At a meeting with GAO officials on May 4, 
2007, PBGC provided factual corrections to several of the examples in 
the draft report. PBGC does not know the extent to which the final 
report will reflect these comments, but as we clarified during the 
meeting, the draft report draws conclusions from incidents that 
occurred some time ago during a period when PBGC was in transition, and 
does not reflect the extensive coordination practices that PBGC has 
implemented since that time. As the Interim Director during this time 
of transition, I continued to implement the reorganization mandated by 
the previous Director in a manner that ensured that the legal offices 
were productive and provided the agency with quality legal advice. 

As with any reorganization, a number of different models could be 
pursued. In fact, PBGC itself has used different models, including one 
in which the General Counsel reported to the Chief Operating Officer 
(approximately 1995 to 2003). No one model is necessarily right. 
Indeed, I believe that the issues that have arisen in connection with 
this reorganization derive primarily from the need to enhance 
communication and collaboration, rather than from structural problems. 
Making structural changes now might not only fail to address problems 
with the current system, but could also create new problems. 

Following any reorganization, a period of adjustment is necessary. It 
is critical to the success of any organizational model that the 
affected offices actively foster a culture of co-operation and 
communication. While the legal reorganization certainly created some 
difficulties for PBGC staff as roles and responsibilities evolved, 
these were internal problems only, and did not affect the quality of 
the legal work of the Corporation. Over time, the Corporation has 
instituted processes and procedures for its legal offices that 
facilitate greater communication and co-operation. 

PBGC is concerned that the report does not capture this evolution, but 
rather, focuses on problems that occurred during the early days of the 
reorganization. Moreover, PBGC believes that some of the information in 
the report is not factually accurate, and is therefore appending to 
this response a list of technical corrections to the report (Attachment 
1). PBGC requests that it be provided the opportunity to respond to any 
new or additional facts that GAO may decide to include in the report. 

Specifically, the draft report focuses on a period when the 
reorganization had not fully been assimilated, and when lines of 
communication were not nearly as well developed as they are today. In 
the last several months, we have made substantial progress. For 
example, PBGC now holds biweekly meetings to report major bankruptcy 
and transactional matters to the Interim Director, the General Counsel, 
the acting Chief Financial Officer, and other senior staff. Issues are 
vetted, concerns are raised and addressed, and all are kept apprised of 
significant developments and events on the horizon. As appropriate, 
other senior officials are brought into the case as their respective 
areas of expertise or responsibility are implicated. In reciting the 
findings of an Office of Inspector General report, the draft fails to 
note that PBGC later refined its coordination practices, and adopted 
additional practices. A good example is the recently completed Delta 
Airlines bankruptcy, which included a complex settlement with PBGC on a 
variety of issues. The General Counsel was asked to review the final 
settlement documentation, as well as a report on Delta's pension plan 
investment practices. In a similar vein, the Department of Insurance 
Supervision and Compliance and the CFO organization worked closely 
together, with advice of counsel, to negotiate appropriate treatment of 
the Delta common stock that was issued to PBGC in exchange for its 
claims. 

There are also biweekly meetings among the Chief Counsel and General 
Counsel and their senior staff members. At these meetings, less visible 
but nevertheless novel and difficult legal issues are vetted, and 
further coordination is planned. Several examples of fruitful 
collaboration have resulted from these meetings, in areas not clearly 
addressed by the Mission and Functions statements. Perhaps more 
important, the corporate culture is evolving to one of open lines of 
communication. In those instances where there is a diversity of legal 
opinion, this helps to elucidate the issues and inform the decision 
makers. 

Regardless of formal lines of reporting, a lawyer's duties are defined 
by applicable legal ethics standards. And although there may be 
differences of opinion on how best to protect the agency's interests, 
PBGC has resolved this issue as most organizations do, by making 
written assignment of responsibility to different departments, 
including the two law offices. As in any organization, the Director is 
surely entitled to consult with the General Counsel, the Chief Counsel, 
or any other member of his staff as he sees fit. 

We are particularly troubled by the Recommendation portion of the 
report. To recommend that an agency adopt a single organizational model 
to clarify lines of authority and promote consistent legal advice seems 
to us unduly prescriptive. The problems that the Recommendation 
purports to resolve can also exist within a single law office model. 
Indeed, PBGC experienced some of these same difficulties when the 
agency had a unified legal office. The Recommendation also gives far 
too little weight to the improved communication, coordination, and 
reporting processes and changes in corporate culture described above. 
PBGC has made significant progress in addressing past problems with 
cooperation and communication and, therefore, the agency disagrees with 
the Recommendation to restructure. 

Sincerely, 

Signed by: 

Vince Snowbarger: 
Interim Director: 

Attachment: 

[End of section] 

(130647): 

FOOTNOTES 

[1] Defined benefit plans pay specific retirement benefits, generally 
based on years of service or earnings or both; the sponsoring company 
is responsible for ensuring that plan assets are sufficient to pay 
liabilities. 

[2] Until recently, the PBGC was headed by an Executive Director, but 
the Pension Protection Act of 2006 changed the title to Director and 
provided for appointment by the President with the advice and consent 
of the Senate. Pub. L. No. 109-280,  411(a), 120 Stat. 780, 935 (to be 
codified at 29 U.S.C.  1302(a)). Throughout this letter, we use the 
term Director. 

[3] In addition to the Office of the Chief Counsel, the reorganization 
created another legal office, called the Legislative and Regulatory 
Department, to monitor and provide legal advice on, and analysis and 
drafting of legislative proposals and regulations related to PBGC's 
mission. 

[4] 29 C.F.R.  4002.6 (2006). 

[5] The Legislative and Regulatory Department currently has 11 
attorneys. 

[6] The Hildebrandt 2006 Law Department survey was conducted by 
Hildebrandt International, a professional services consulting firm. Its 
benchmarking survey provides information on legal spending, staffing, 
management, and compensation. The median company in its survey is one 
with approximately $8 billion in worldwide revenues, 20,000 worldwide 
employees, and a U.S. law department with over 20 lawyers and 40 total 
staff. 

[7] E. Norman Veasey, and Christine T. Di Guglielmo, "The Tensions, 
Stresses, and Professional Responsibilities of the Lawyer for the 
Corporation," The Business Lawyer (Vol. 62, Nov. 2006).

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