Former NSW premier Morris Iemma has joined his Labor predecessor Bob Carr in calling on the government to legislate to strengthen the state's corruption watchdog following a damaging High Court ruling that effectively narrowed its powers.

But the former Liberal premier who established the Independent Commission Against Corruption, Nick Greiner, said the agency should focus on cases of serious or systemic corruption.

The majority High Court decision last week found ICAC did not have the power to investigate Crown prosecutor Margaret Cunneen, SC, over allegations she told her son's girlfriend to fake chest pains to avoid a police breath test after a car accident.

The commission says the four-to-one majority decision imperils some of its most high-profile investigations and past convictions and wants Premier Mike Baird to pass retrospective legislation to bolster its powers.

The decision means ICAC cannot investigate private citizens who mislead public servants who themselves do not act corruptly, for example where contractors collude to rig a tender outcome.

But Mr Iemma said this type of investigation was "ICAC's bread and butter".

"This has serious implications for a large slice of ICAC's work in protecting the integrity of public sector dealings with contractors and businesses," he said.

He said that while retrospective legislation was something he does not support "in principle", if it protected past findings and convictions then the government should do so.

On Wednesday Mr Carr said "everything should be considered" by the Baird government, including retrospective legislation "if that is required for ICAC to proceed with the cases that have generated the headlines."

However, Mr Greiner said there was a question about the governance of the commission that needed to be addressed.

He agreed with comments made by Sydney barrister Bruce McClintock, SC, on Wednesday that the commission should not have investigated Ms Cunneen, regardless of whether it had the power to do so.

There is a provision in the ICAC Act, inserted in 2005 on Mr McClintock's recommendation, which directs the commission to focus "as far as practicable" on serious and systemic corruption and to take into account the role of other bodies such as the police in the prevention of corruption.

Mr Greiner said that even if ICAC had the power to investigate Ms Cunneen – which the High Court found it did not –  "no sensible organisation could have made a decision to pursue that matter".

"The problem is, frankly, how one has to look at the governance of ICAC to prevent it making really stupid decisions within its powers," he said.

"You clearly can't rely on its present structure, and I don't think it's just the present personalities, I think it's probably endemic to the structure."