Former U.S. Federal Reserve chairman Paul Volcker offered a plan Friday for Arthur Andersen LLP's survival that includes replacing top management and installing an independent board that he would head.

He said the plan would succeed only if the federal indictment of the firm were dismissed and if a cap is placed on the firm's financial liability from the Enron Corp. scandal.

"All that has to come together to make this initiative viable and successful," Volcker said at a hastily arranged news conference.

The changes outlined by Volcker go much further than recommendations made by his committee earlier this month, which included a proposal to split Andersen's auditing from its consulting services.

While the latest proposal is reasonable and could save the company from imploding, it should be seen as a "Hail Mary defense," said Itzhak Sharav, an accounting professor at Columbia University's business school.

"The problem he will have is convincing the Justice Department" to dismiss the indictment, he said. "They look at it as prosecutors who feel the company did not live up to obligations and should be punished."

Volcker, who heads an oversight committee charged with making sweeping reforms at the firm, said he would chair the new Andersen governing board. Other members would include former U.S. Senator John Danforth; C. Michael Cook, the former chief executive of Andersen competitor Deloitte & Touche; and former U.S. Comptroller General Charles Boucher.

The new board would fire top managers, he said. However, Volcker wouldn't comment on whether chief executive Joseph Berardino would be among those told to leave.

"There will no doubt be changes at the top," he said.

Volcker said the plan hinges on the Justice Department dismissing the obstruction of justice indictment against Andersen. He suggested it could be dismissed without prejudice, meaning the charge could be reinstated by prosecutors if they feel reforms at Andersen are insufficient.

Lawyers suing Andersen for its audits of Enron would have to agree to limit damages to an amount Andersen could pay without going out of business, he said. The Securities and Exchange Commission would also have to end its investigation without issuing a fine that could bankrupt the company, Volcker said.

Enron filed for bankruptcy in December following revelations that it used questionable accounting methods to mask billions of dollars in debt and inflate profits.

To prevent Andersen from collapsing, Volcker said, a significant number of senior Andersen partners must be persuaded to stay with the firm and participate in its rehabilitation.

"They have to decide," Volcker said. "This is a partnership; no one can compel them to do anything."

Volcker said he told company officials about his proposal approximately an hour before he announced his plan Friday afternoon in New York. He would not characterize the response, but said he thought company officials needed time to examine the plan.

A spokesman for Andersen, which appointed Volcker in early February to try to mend its tarnished reputation, did not immediately return a phone call seeking reaction.

Volcker said Andersen executives and government officials must decide within days whether to accept his recommendations, because dozens of major clients continue to abandon the company, and some of Andersen's foreign partners are defecting to competitors.

He would not give odds on the chances of the plan succeeding: "It's no use in me speculating. In a week we'll know."