HP's board members and ex-board members are lawyering-up. Tom Perkins, for example, retained Viet Dinh, who was actually the chief architect of the USA Patriot Act.

After all, it looks like California's attorney general, Bill Lockyer, wants to take some shots at HP bigwigs. Yesterday he made an appearance on the NewsHour with Jim Lehrer show and said that there was enough evidence to bring indictments.

This escalating scandal started with Patricia Dunn, who initiated an investigation of the company's board regarding leaks of confidential information (yesterday she said she will depart the board). The contractors involved in the investigation used the dubious practice of pretexting, which involves impersonating people to get personal phone records.

The investigation was quite aggressive, as it looks like the pretexting targeted board members, media, and employees at HP.

The problem for HP is that Lockyer deems pretexting to be a criminal act (at least in California).

It's impossible to know if and when charges may come. But it could be soon. Why else go public on a national news show on the matter? Yes it looks like Lockyer is milking the PR value.

But the clear winner in all this? Of course, it's the attorneys.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

It's not common when a national magazine like Newsweek has a corporate-governance as its cover story. True this may happen if there is a mega scandal such as Enron or WorldCom, but for the current issue of Newsweek, there is picture of HP's chairman Patricia Dunn on the front page with the title: "The Boss Who Spied on Her Board."

This story is more than just about corporate government. It's about privacy – especially in the Internet Age. If the board of a global company is being investigated then aren't we all fair game?

Well now HP's board has decided to remove Dunn as chairman. In her place will be the company's CEO, Mark Hurd. As I wrote in a post yesterday, the scandal was a perfect opportunity for Hurd to consolidate his power. And given his sterling performance at the helm, shareholders are definitely happy.

Essentially, over the past few years, the HP board had become quite powerful. After all, in early 2005, the board ousted its CEO Carly Fiorina. Such a move is very rare.

And it was Dunn who orchestrated the coup.

While this turned out to be good move, it looks like Dunn went too far. That is, when she wanted to stop leaks from board members, she led an investigation. Of course the tactics were extreme as one of the investigators engaged in a questionable practice known as pretexting, which involves impersonating people to get phone records.

Instead, Dunn should have hired an independent law firm to provide advice on how to handle the investigation. It would have given her a strong layer of protection.

In the end, it was a painful lesson about power.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

The controversy at HP won't go away. Perhaps it didn't help that the company's investigator searched the personal records of journalists (yes, this is usually a bad PR move).

In fact HP had an emergency board meeting on Sunday. There was no indication what the topic was. But, hey, what else could the board be talking about?

Thomas Perkins, who resigned from the HP board when he learned about the investigation of the company's board, made his opinion clear: the chairman of the board, Patricia Dunn, must resign.

He certainly has a lot of credibility on the matter. After all it was in 1963 that Bill Hewlett and Dave Packard selected Perkins to head-up the research department at HP.

As for Dunn, she led the investigation of the HP board. And there is always a risk these things can go awry.

And things certainly did. A contractor of the investigation firm used the questionable technique of pretexting, which involves personating people to obtain phone records. Now California Attorney General Bill Lockyer is looking into the matter.

Interestingly enough this mess may be great news for HP's current CEO, Mark Hurd. Over the past year he has greatly improved the operations of the company, as the stock price has soared. He is also making significant headway against fierce competitors like Dell.

Given all this the board will probably be very reluctant to rid HP of Hurd.

But if Dunn leaves, as well as George Keyworth, the board member under investigation. Hurd will be able to name his own board members. What's more, he may even become the new chairman of the board.

Perhaps this is why HP's stock has held strong throughout the drama.

But the drama is going to continue. The board is going to resume its meeting today. Stay tuned.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

As I posted yesterday in BloggingStocks.com, the drama at HP is likely to heat up. Well, today, we did get some feedback from the company's chairman, Patricia Dunn. She said she was "appalled" to learn that contractors – ultimately paid by HP – used questionable tactics when investigating the board. The most controversial technique was pretexting, in which an outside contractor impersonated HP directors in order to obtain personal phone records.

Appalled? Give me a break. Hey, if HP hired me to get dirt on the board, do you think I would go the extra mile? Absolutely.

Something else: how much did these contractors get paid?

Besides, wouldn't a reasonable person think there are some risks when hiring a private investigator – especially when you are targeting high-profile people?

Well, Dunn said she will not resign.