It must have been an amazing thing for some of Silicon Valley's CEOs to watch Larry Sonsini hauled before Congress and forced to listen to speech after speech about the failure of ethics at HP.

The question of the day - as the San Francisco Chronicle has it - is how badly tarnished is Sonsini's reputation now?

"This is his Clark Clifford moment," said corporate watchdog Nell Minnow, referring to the lawyer who, after advising four presidents over the span of a half a century, faced criminal charges in the biggest banking scandal in history, the collapse of the Bank of Credit and Commerce International. Before his death, Clifford lamented that, in responding to the charges, he had a choice between seeming venal or stupid, an embarrassing predicament for a lawyer thought of as neither.

"It's no better to be a schnook than a crook," Minnow said. "Someone who has been very highly respected can find out that it can all come down like a house of cards with one sloppy decision."

Among the questions being thrown around now is whether the firm - which is estimated to have half of the valley's business - and Sonsini himself have too many clients to be able to avoid conflicts of interest. Many people interviewed in the Chronicle story said the potential for conflict is actually proof of Sonsini's high standards.

One of the things he is faulted for is that he is counsel to half the companies out there," said telecommunications pioneer Kenneth Oshman, chairman and CEO of Echelon Corp.

"In and of itself, that is enormous proof of his integrity. After all, no one makes a company use Larry. If companies had any questions about his integrity, they wouldn't hire him. He is so extraordinarily principled and extraordinarily honest that companies waive their conflicts of interest and let him represent another company that may compete with them. The CEOs and general counsels of Silicon Valley and the world are quite frankly voting with their feet that he's an honest guy."

The conflicts aren't limited to appearances, though. The firm created WS Investments, an arm of the firm that funnels money into promising startups.
The fund is in a way at attempt to formally deal with the fact that Wilson Sonsini lawyers are frequently offered investment opportunities in startups. And until 2003, many WS partners and lawyers and Sonsini himself sat on multiple boards.

"You can't be a director, an investor and a lawyer for the same people at the same time," Minnow said. Silicon Valley is "a culture that has benefited tremendously from a willingness to break the rules or to ignore the rules. That's a strategy that works really well for a short period of time. But you have to know when to stop, and that is when you are responsible for other people's money."

Even so, given the fierce loyalty long-timers have for him and the dominant position the firm holds in the valley, don't count on seeing Larry Sonsini fade away.