NEW YORK (CNN/Money) - Fired Arthur Andersen LLP partner David Duncan testified Tuesday that he didn't know he was committing a crime when he told employees last October to apply the firm's document retention policy to records of disgraced energy trader Enron Corp.

Duncan, in his first full day of testimony in the criminal case against his former employer, said he didn't realize until March or April, after the law was explained to him, that he had obstructed justice. The former lead auditor for Enron added that last fall he thought it was "entirely appropriate" for the accounting firm's employees to destroy documents until Andersen received a subpoena notifying it that Enron was the subject of a government investigation.

Duncan testified that he told employees to comply with the policy because Andersen attorney Nancy Temple reminded him twice -- once in conversation and once in e-mail -- to get "in compliance" with the firm's retention policy. No one ever mentioned that the policy calls for destroying documents, Duncan said, but he believed it was generally understood to mean that.

Duncan did admit that he and others at Andersen feared a Securities and Exchange Commission probe into Enron when he ordered workers to comply with the policy. Duncan also admitted that when he was first interviewed by investigators earlier this year, he failed to tell them that he had feared such an investigation last fall.

Andersen's defense team is likely to make much of Duncan's statement that he didn't intend to commit a crime. On Monday, Duncan testified that he had intended to obstruct justice.

"If that guy sounds like a criminal in there, I'll eat my hat," lead defense lawyer Rusty Hardin told CNN after testimony ended Tuesday.

Hardin described Duncan's testimony as "great and not very harmful to Andersen." He may cross-examine Duncan beginning Wednesday.

Andersen is accused of obstructing justice for shredding Enron documents while on notice of a federal probe. Enron told Andersen of an SEC probe on Oct. 19 and four days later Andersen employees began shredding documents, according to the government's indictment. Andersen did not receive a subpoena until Nov. 8 and at that time the document destruction stopped, the indictment said.

The Chicago-based accounting firm in January fired Duncan for directing the destruction of Enron documents. Duncan in April pleaded guilty and admitted to obstructing justice in an attempt to thwart a government investigation.

Duncan said Tuesday that he advised employees on Oct. 23 to get in compliance with the firm's document retention policies.

Duncan said he expected employees to "search personal files and search extraneous items that wouldn't be part of final work papers and get rid of them."

According to Andersen's 26-page guideline on retention, staff must keep work papers for six years before they can be destroyed. But client-related files, such as correspondence or other records, are kept only "until not useful," and managers and individual partners can then "purge" the documents, the policy states.

While Duncan personally didn't shred any Enron documents, he did delete some e-mails and handed some files for shredding to his secretary. Duncan later saw Houston staffers cleaning out the office area and shredding documents.

Government attorneys are trying to show that Andersen had a motive to destroy Enron documents because the accountant feared another SEC probe could result in the firm losing its license to conduct audits. Andersen was already on probation for its audit work for Waste Management Inc.

For Andersen to be found guilty of obstructing justice, the government must show that Duncan shredded the documents to protect the firm. Duncan said Tuesday that he thought it was good that employees adhere to guidelines "to protect the interests of the firm."

Earlier Tuesday, Duncan testified that he was worried last fall that Enron's questionable accounting could lead to a possible federal investigation and even litigation. Last week, SEC officials said they began looking at Enron in August 2001.

Duncan described how Andersen auditors clashed with Enron last fall on how to account for four specific partnerships, called "Raptors." Andersen's professional standards group wanted to treat the partnerships as separate vehicles. The auditors also were concerned last fall that such a change could lead the energy company to restate first- and second-quarter earnings for 2001, Duncan said.

Enron wanted to account for the partnerships as one vehicle, which would hide some of the weakness. Andersen at first capitulated, then changed its mind and decided to treat the vehicles separately, Duncan said.

Enron allegedly used thousands of off-the-book partnerships to hide nearly $1 billion in debt and inflate profits. The Houston-based energy trader eventually collapsed under its massive debt load and filed the largest bankruptcy in U.S. history on Dec. 2.

Andersen, as Enron's auditor for 16 years, signed off on Enron's financial statements.

In April, Duncan agreed to plead guilty and admitted overseeing the destruction of documents to thwart a government investigation. Under his deal with the government, Duncan is immune from further prosecution related to the Enron case as long as he continues to fully cooperate with federal authorities -- which could include testimony at future trials -- and agrees not to sell his story or otherwise profit from the debacle.

Prosecutor Andrew Weissman also questioned Duncan regarding a high-level meeting in February 2001 at which Andersen executives considered whether to keep Enron as a client. In a memo, Enron is characterized as "aggressive" and constantly searching for "where the lines of acceptability" are.

Duncan has said that an October e-mail from Nancy Temple, reminding executives of the firm's document retention policy, spurred the shredding. Temple last week invoked her Fifth Amendment right against self-incrimination by letter and has chosen to remain silent.

Separately, government lawyers earlier Tuesday filed a motion seeking to restrain Hardin for his conduct in the courtroom. Prosecutors claim Hardin has engaged in personal attacks, followed lines of questioning that previously were cut off, and has tried to litigate rulings in front of the jury.

Hardin, known for his aggressive bulldog behavior at trial, has called prosecutor Sam Buell a "boy scout" and has referred to government lawyers as "whiners." He also has taken various opportunities to call sidebars, and presiding Judge Melinda Harmon last week even criticized his use of sidebars, saying Hardin has "out side-barred [the government] by 200 to one."

For his part, Hardin complained that Andersen is not receiving a fair trial. "This is the most silly, thin-skinned motion I can imagine," Hardin said Tuesday.

Harmon has yet to rule on the government's motion.