Sunday, 19 May 2013
Sunday, 4 November 2012
In order to avoid the temptation to be introspective, let's start with what the CEO is thinking about. The answer, of course, is very different from what the Legal department is worrying about. Any company's CEO is focussed on a few strategic imperatives. They may change over time, but at any given moment, there are not going to be many of them. In my own case, I had five.
To get a large group to achieve a difficult goal, you have to have more than a plan. You have toorganize (which includes putting the right people into the right jobs), communicate so that everyone knows where you're trying to get to and measure, so you can track how you're progressing. In the hope that a picture really is worth a thousand words, here's my suggestion of what is involved.
|What your CEO is thinking about|
|A lawyer's view of how to get good results isn't the same as a CEO's|
|Risk - keeping your Audit Committee up at night|
|The Legal Department's endless To-Do list|
What I can say with confidence, based on almost every discussion I have with in-house lawyers, is that there is a limitless demand for legal services in any business and the Legal Department often feels overwhelmed and unable to cope. This creates ambivalent feelings in most in-house lawyers. It can cause them to feel angry and frustrated, but they often like the security that comes from feeling wanted and in great demand.
|What the CEO and the Board want from their legal advisers|
First, "Execution". This is probably the element which most Legal teams spend their time worrying about - getting the job done. Whatever the job is (buy company X, enter into an alliance with Y), your CEO and your Board expect Legal to get it done, whether with internal resources or with external help. They also expect Legal not to be spending its time on things which don't matter to the company.
What are the things they do well? (1) Lawyers are very good at absorbing and synthesising complexity. They can master and marshal a large amount of detail and are undeterred by it. (2) Lawyers are extremely resilient under pressure. They are trained to argue from facts and to stand their ground. That makes them good at speaking truth to power. (3) Lawyers are able to keep confidences, something which many other professional advisers seem unable to do consistently. That means lawyers can be trusted with the most sensitive information.
Legal Departments are extremely well placed to develop further as critical components of well-run companies. If they are to do so, they need to concentrate on going beyond execution and towards insight. Based on what I hear from others, I'm a little concerned that too many Legal teams are engaged in the production of management information which is defensive in nature, intended to demonstrate how busy the Legal Department is. I'm not suggesting that MI around execution isn't worthwhile, but some of it may be wasted if it is motivated by defensive thinking.
If Legal Departments can bridge the current gap in financial understanding, they have an enormous opportunity to bring their other talents to bear in creating meaningful insights for their businesses. That will bring competitive advantage. And that really will be valued.
Sunday, 20 May 2012
My advice to GCs is not to be defensive. You and your business colleagues may not know what a particular metric means. To decide, you’ll need insight. But metrics are a powerful tool in running any business and the legal function is no exception.
Sunday, 26 February 2012
Inevitably we covered the interaction between in-house Legal teams and HR. There were a couple of comments in this section which deserve to be examined more closely, because they tell you a lot about why Legal isn't part of the mainstream in many companies.
The first comment was that lawyers looking to broaden their career could go into HR. Excuse me? Let's just try that the other way around. HR managers looking to broaden their career could go into Legal and give that a go. Or perhaps if people in Legal or HR are bored, they might like to try being the company's Financial Controller? A quick read through IFRS ought to do it.
Maybe this idea of lawyers going into HR makes sense for employment law specialists. But for others? I led HR for 2 months last year and I can tell you good intentions and common sense aren't enough. If I ask you whether Learning & Development should be grouped with Organisation & Staffing, what's the answer? Everything is specialised nowadays. Don't make the mistake of thinking "I'm a smart lawyer. How hard can it be?" I devoted a lot of those 2 months to hiring an excellent, professional HR leader to replace me.
The second comment was that Legal is "special" and some things which HR push, such as talent management programs, aren't going to work for Legal. I have to say I think this is dangerous nonsense. How exactly are the people in Legal different from the professionals in Finance or Tax or any number of other functions in a business? Of course there are differences between Sales and Legal. But the idea that the company's HR programmes aren't applicable doesn't make any sense.
Thinking back over my career, I realise I've heard this "we're special" line again and again. Open plan offices? No thanks, we're special. Electronic filing? No thanks, we're special. Really?
I think this mentality, comforting though lawyers may find it, is a perfect predictor of how engaged Legal will ever be in the mainstream of company life. The more special you think you are, the less you'll be able to achieve.
I'm currently acting Chief Executive Officer of my company. Among the 4,000 employees, there are 35 in Legal. If I heard them telling me "I'm special", I'd tell them "no you're not, you're just another part of the company". And that's a good thing.
Monday, 12 December 2011
OK, you got me. That law firm number dates from 2010. Perhaps 2011 was a barnstorming year and they added a zero after 12 Stakhanovite months of wild billing. But probably not. In fact, based on published numbers, you'd need to add the revenues of the world's top 15 law firms before you get one Big 4 firm.
The largest law firms are very respectable sized businesses, but the Big 4 are so massive they make the law firms look like boutiques. I'm not suggesting revenue is everything, but it's a perfectly reasonable measure of how much the rest of the world wants you around.
The Big 4 don't just sell audit or accountancy advice, they sell all kinds of professional services. That statement also describes one of their weaknesses. They have a tendency to appear at the elbow of the people on the opposite side of the table. Law firms are still focused enough to have narrower loyalties. But, apart from that, what's the Big 4's secret? Here are a few brief thoughts on their approach to client care, entirely based on unscientific personal experience.
First, the Big 4 are thoughtful about what's really important to their clients. Take for example advice on areas like tax or remuneration. In most law firms, these areas of practice are mostly regarded by the mainstream corporate lawyers as esoteric areas staffed by technical propeller-heads. But at the Big 4, they understand that both are key areas of discussion in any boardroom. They lead with strong practices in these areas and they're prepared to push the partners who understand them into the boardroom as the face of their businesses. In terms of building relationships, it works.
Second, there's little oppositional debate between "in-house" and "out-house" accountants. I don't see CFOs and the partners at the Big 4 firms involved in sterile debates about whether "business" is polluting the purity of accountancy or whether they should have direct access to the staff outside Finance. Lawyers take note. The race isn't with another part of your own profession. If we all combine to work out how to serve our clients, our profession will thrive. In-housers are just as culpable. Recently, I was challenged on whether I really involved my external legal advisers in the development of my department's strategy. I confess I'm nothing like systematic enough and that's going to change.
Third, the Big 4 think very carefully about how to engage with and develop their current and future clients. Everyone publishes briefing papers and many of them are very good. I have a Big Law corporate briefing and a Big 4 quarterly briefing on the table in front of me. Both are excellent. Law firms do very good training for their clients. But the Big 4 take this quite a lot further. One of them runs a "CFO Programme", designed for those in senior positions in Finance, who are either recently promoted into the CFO role or may soon be. The aim of the programme is to help budding CFOs prepare for and cope with the sheer complexity of their roles. That's a pretty clever way of building loyalty amongst a grateful client base. If there's a law firm with a systematic development programme for prospective General Counsel, I'm yet to hear of it.
Fourth, there's something important about the psychology of how they interact with you. In the past month, two partners from different Big 4 firms have come to see me. They opened the discussions by saying "Help me to understand you" and then they were nice enough to sit, patiently, listening. The General Counsel isn't their most important client inside a company. So, the fact they showed up at all is revealing. How many lawyers go to see the CFO to find out what's important to him/her?
Those words "help me" are the key. They change the nature of the transaction. It's no longer you telling me what I ought to know. I've come to the meeting expecting to listen to someone trumpet their expertise and tell me why I ought to give them more work. Instead, they've made themselves vulnerable and asked for my help. Any human being will respond to that in a different way. Along similar lines, I saw a Big 4 pitch which laid out what the firm could do for us, but only on the condition that we achieved certain things for ourselves. That's also very human. The message is that we need each other. Neither of us can do this alone.
I recently saw a statement from a Big 4 partner which said simply "I'm really proud of my association with [your company]". That's a very simple and a very powerful thing to say. If you're a lawyer, ask yourself honestly whether you feel the same way about your own clients. If you do, would you tell them?
Maybe that's the real key to the success of the Big 4. They seem to believe their client isn't just another "dull company" (a comment made on this blog) that they wouldn't deign to work in. That makes them an awful lot easier to work with.
Sunday, 16 October 2011
The debate in the room at the Corporate Counsel Forum focused on the "compliance" side of ethical behaviour and on creating a culture in a company to meet the challenge of legislation like the UK's new Bribery Act. That was the subject of my own post "Ethics and the General Counsel". As he said in his post, The Bizzle didn't set out to discuss this topic (but he has promised to at a later date).
We might call the next strand "ethics as a fig-leaf for the profit motive". Companies often talk about how ethical they are because they're embarrassed to say clearly that their primary, fundamental role is to be successful and generate profits. If they cannot be financially successful, they can't employ staff, they cannot spend money, they cannot fulfil their role in our economies. If they cannot achieve high performance, there's no point debating what more they might be responsible to do. I'm a meat-eating capitalist, so I don't have any problem being clear about this. But a lot of what gets branded "corporate ethics" looks to me like people trying to hide or soften this stark but important truth.
It's sometimes difficult to separate the previous strand from the next one, which is when companies try to persuade us they are "good" in some unspecified way. Some of the thinking in this space is so confused and nebulous, it barely merits a response. I really don't know how to respond to "don't be evil" other than to remind people that the world really isn't a Manichean struggle. Even if it were, any large company is, necessarily, made up of a lot of people and a great deal of dispersed activities. I don't see how this kind of terminology can even be meaningful.
After this, we come to "Corporate Social Responsibility". In the past, some companies' communications about CSR have been muddled up with the "fig-leaf" and "goodness" strands I describe above. I have no time for that. But I do think CSR is a real and important part of what a high performance company should set out to do. This point is worth elaborating a little.
As individuals, we don't expect merely to go to work, comply with the law, pay our taxes and ask the state provide everything else. We form groups and take responsibility for all sorts of things in our communities. Now I don't want to come over all Big Society, but lots of people, whatever their politics, are engaged in activities they feel strongly about. They care and they're well placed to make a difference. They don't wait to be told what to do.
In the corporate context, it's probably best I illustrate with a real example. Recently, I went with four colleagues to visit a further education college which is five minutes walk from our office. We're in the process of establishing what we hope will be a lasting relationship. That college has 100 students studying IT. My employer is a large, British headquartered, multi-national IT company. Many of my colleagues think we might be able to help those students raise their horizons. The development staff at the college agree. We seem to be very well placed to make a difference in a targeted way. So we have a choice. We could obey the law, pay our taxes and hope someone else sorts it out. Or we can get involved. I know which makes sense to me.
Finally, The Bizzle rightly highlights the type of self-serving nonsense you see from many procurement departments, who proclaim they are "partnering" ethically with suppliers before nailing them to the wall. There's a lot of writing on the symbiotic relationship companies have with their supply chains. That's one for another post.
Thursday, 13 October 2011
This sparked a light-hearted debate on Twitter about work life balance. Workaholic lawyers are using their train journeys to finish off those crucial PowerPoint presentations. The phrase "get a life" was used. But what went through my mind was "get a grip". There are serious issues involved.
Anyone who reads my blog regularly will know I am an advocate for normalising legal services, demystifying communications between lawyers and clients and bringing the profession up to date. But there are some things that are too important to compromise. A fundamental part of what makes a lawyer special is the promise of absolute confidentiality. The public don't understand legal privilege and I'm not sure much of the legal profession do either after Three Rivers. But they know that, like a priest in a confessional, a lawyer will keep your secrets, so you can tell them everything. This is true of every branch of the profession, from criminal briefs to in-house lawyers. In my own job, the ability to keep confidences, not most of the time but every single time, is a critical part of the role I perform. To operate effectively as a lawyer, you need to be unimpeachable when it comes to keeping secrets.
Let's just remind ourselves of some black letter rules here. SRA O4.1 states: "You must achieve these outcomes: you keep the affairs of clients confidential unless disclosure is required or permitted by law or the client consents". SRA IB4.2 states "you comply with the law in respect of your fiduciary duties in relation to confidentiality and disclosure".
If your client is a company listed in London, like my own employer, and the matter you're working on is inside information, then there's more. Section 52(2) (b) in Part V of the Criminal Justice Act 1993 states that an individual commits an offence if "he discloses the [inside] information, otherwise than in the proper performance of the functions of his employment, office or profession, to another person." The maximum penalty for a violation is seven years in prison.
If a firm I instructed was to allow my company's confidential information to be seen on trains, I would disinstruct the firm, blacklist them and report them to the SRA. If an individual lawyer in my team did the same, I would fire them summarily for gross misconduct.
If you think that a secret is something you tell one person at a time, you're in the wrong job. If you've got work life problems, resolve them. If you're on the train working on my file on your laptop, you're a criminal and you're fired.
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