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I only read three threads here at this point:  this one, recently viewed movies, and whatever the latest timdraft is (I enjoy them and like tim just fine--what can I say).  So I have a honest-to-baby-jeebus work quandary (more so than last week), and this seems a more appropriate place than the other two threads to post it.  Besides, the average IQ in here is higher and I actually received helpful advice last week.
My boss proposed to me today that he is going to reorganize our department.  Not a surprise as I knew he'd been considering it.  What was a surprise is that he wants to move an entire other group (two lawyers and four paralegals) under me.  This group does a bunch of stuff that is outside my area of expertise (intellectual property, marketing, sourcing), but generally I don't mind that as I like new challenges and to learn new things.  It will be a huge amount of extra work, more than doubling my number of direct reports, but would involve a job title change/promotion, more money, etc.  It also sets me up as the more obvious successor to him, though I already know anyway that I'm the only person he's identified as a successor.  Of course, that part doesn't matter as we implement EarlyRetirement2013.  In any case, he knows very well that I like extra responsibility, and I don't really have much choice but to agree.
The problem arises that the person currently running the group, who would now report to me, is right now a direct peer/equal of mine.  So he would be getting a demotion.  Making it even more fun is that my boss tells me that the person (let's call him "Zack Morris") is "not going to make it" in terms of the company, or at least he doesn't think Zack will.  In other words, Zack is about to go on a Performance Improvement Plan, which is the first step to being fired.
So the boss wants to know what my recommendation is in terms of whether he should go ahead and fire Zack so that I can get a new person in place and I don't have to take on "his problem" (he freely admits that would be what is happening), or whether I should take Zack on for a time to give him (my boss) additional verification that his thoughts on Zack are correct and that his performance is not going to improve, or possibly to see if I could have more luck with him.  If he's going PIP/firing now, there's a timing issue as my boss wants to announce his new plans soon, and our PIPs require a 68-day period for improvement or some such.
So...I can say I'll take this guy on, but (1) not only am I taking on a whole new group and working them into my group, overseeing a million initiatives with this new group for which we will not have appropriate staffing, hiring a new lawyer who starts in December, and handling our IPO next year, all in addition to my regular job, but I have to try to get someone's performance up to par after they've been a lawyer and developed bad habits for 30 years, and (2) if I am unsuccessful, the blood ends up on my hands, it looks like I'm the one who ousts him, and I'm the one who has to have that difficult conversation.  OR, I recommend that one of my colleagues be fired.
Oh, and did I mention that Zack is by far my best friend in the whole department?   
 
Holy crap.
My boss has generously given me 48 hours to come back to him with all of my coherent and cohesive thoughts on the subject.
Any advice would be greatly appreciated.
And because I feel guilty about bringing this thread down when it had been very entertaining today, 
I hereby offer you this incredibly embarrassing and cringe-worthy version of my white-man's overbite dance from the late 90s.