Articles Posted in Structure

Having just written about the ethics programs at Lockheed Martin (See my post of Oct. 3, 2008: four activities to promote ethical awareness.), I bestirred myself to sort through my posts on ethics and what’s been written here about expectations of the law department’s role.

Several posts propose that the legal group should not be responsible for a company’s ethics (See my post of Oct. 23, 2005: legal departments should pass the baton; Feb. 12, 2008: primary ethical responsibility lies outside legal department; June 22, 2008: ethics is outside core responsibilities of law departments; Dec. 22, 2005: law department relationships to ethics heads; Aug. 27, 2005: ethics not the responsibility of the law department; Sept. 10, 2005: Chief Governance Officers; Oct. 23, 2005: Krispy Kreme and ethics; July 17, 2008: remove ethics and compliance from the purview of the general counsel.).

Many general counsel, however, disagree. They believe the law department ought rightly be the company’s ethical fulcrum (See my post of Dec.19, 2005: role of BP law department in ethics training; Sept. 21, 2005: ethics responsibilities at Raytheon; Oct. 29, 2005 compliance and ethics; Aug. 27, 2005: reputational risk protector; Oct. 25, 2006: Genentech’s ethics training; Dec. 31, 2006: ethics and compliance reports to general counsel of Raytheon; and May 23, 2007: more detail on ethics structure at Raytheon.).

During a recent PLI conference, James Comey, the general counsel of Lockheed Martin, described several ways in which that company impresses on its employees, continually, the importance of ethical behavior. Comey’s law department supports each of these activities.

A monthly newsletter to all employees contains a “police blotter” on the last page. It lists the ethical infractions of the previous month, albeit with names concealed.

Every month the company circulates an “Integrity Minute,” a short video in which actors portray an ethical dilemma.

The Gucci Group law department, under general counsel Cheryl Solomon, has more than 30 lawyers and paralegals located in London, Italy, France, the United States, Tokyo, and Hong Kong. That dispersion of lawyers around the globe, described in ACC Docket, Vol. 30, Sept. 2008 at 152, underscores the trend of international companies to spread their lawyers where there operations are, even if that means some tiny legal bases (See my post of Sept. 16, 2008: foreign locations of in-house counsel with 11 references.)

Assume the total number of Gucci lawyers and paralegals is 32; further assume a typical ratio of one paralegal for every three lawyers. To those assumptions add the Docket’s statement that three lawyers and two paralegals are based in London. All that leaves something like 20 lawyers in the remaining five offices, an average of but four lawyers per office.

As demonstrated with Gucci, one of the most significant management challenges for many leaders of global law departments will be to nurture a sense of one unified law department among several small clumps of lawyers – allied closely with their local clients. An “annual face-to-face meeting of the entire legal department once a year,” which is Gucci’s tradition, is not sufficient. Constant effort to integrate lawyers in multiple countries will be the lot of the global general counsel.

Although 95 percent of the lawyers practicing in Bombarier report only indirectly to the company’s general counsel (See my post of Sept. 19, 2008: global and decentralized law department.), there are two measures of direct control exerted by that lawyer (Daniel Desjardins).

According to a special supplement to the ACC Docket, Vol. 26, Sept. 2008 after 80, there is a “guideline that no legal entities may be created at or for Bombardier without approval from Desjardins.” Furthermore, his office maintains a “database with information on the company’s more than 200 subsidiaries.” On that latter form of management, I have noted on this blog a few instances where law departments track subsidiaries and corporate affiliates (See my post of Jan. 24, 2006: Transcentive software to manage subsidiaries; Aug. 9, 2006: Bridgeway’s Secretariat; April 13, 2007: Bank of America has some 2,000 subsidiaries; Feb. 14, 2007: cottage industry of corporate secretarial packages; and March 11, 2007: online guides at Kraft for subsidiary management.).

A special supplement to the ACC Docket, Vol. 26, Sept. 2008 after 80, offers some details about the law department of the Canadian company, Bombardier. The department has “120 lawyers located in 17 jurisdictions around the world.” Bombardier has two main businesses: aerospace and transportation. Each of those two businesses has a vice president for law, who reports directly to the CEO for the business with a dotted line to the company’s senior vice president and general counsel.

Since the core group of lawyers at headquarters, consisting of finance and M&A lawyers primarily, amounts to a mere half dozen, 95 percent of Bombardier’s in-house lawyers report only indirectly – on a dotted line – to the general counsel (See my post of Jan. 1, 2006: General Electric’s decentralized reporting on the same lines.).

At companies with geographically dispersed in-house counsel, some locations have only a handful of lawyers or even just a single lawyer (See my post of Sept. 16, 2008: multiple foreign locations of lawyers and legal staff.). There are on average around five lawyers per non-headquarters office of McDonald’s. Or consider General Electric’s Asia-Pacific group, which has about 140 lawyers in 13 locations. In only three do more than 10 lawyers sit in the same building complex. Johnson & Johnson, has something like 140 lawyers in 34 locations so some of them may be solo in their location, or only one or two stationed together. British Petroleum’s legal group has many foreign offices, some as small as one lawyer.

A general counsel who tries to place local lawyers near local businesses inevitably ends up with multiple offices and sometimes with tiny legal outposts. Those general counsel confront some management challenges that geographically centralized law departments do not.

My prediction is that the large companies of the world will have decreasing percentages of their total legal headcount based in their largest (presumably headquarters) location.

The ever-thoughtful Sabine Chalmers, chief legal officer of InBev, lays out clearly the typical obligations of a company’s Corporate Secretary. Her piece in ACC Docket, Vol. 26, Sept. 2008 at 14, states that “the role requires strong organizational skills” particularly for the timely and careful production of Board of Director (BOD) materials, minutes, training, Board evaluations and governmental disclosures. Further, you need “a good grounding in the corporate governance and securities requirements of the jurisdiction where you operate.” Third, “a sound knowledge of the company’s by-laws and committee charters is a must.” Along with those requirements, a Corporate Secretary should know “the basic tenements [unusual word, Sabine!] of the listing and regulatory requirements in the country of incorporation.”

Chalmers also mentions the possibility of conflicts of interest between “advising the BOD (the role of the corporate secretary) and management (arguably the role of the general counsel who oftentimes reports to the CEO or another member of management.). In the United States, the roles are typically combined (See my post of Aug. 12, 2008: corporate secretary with 21 references.).

It is rare that a legal department has any significant say in how its physical space is laid out. It has not been rare for this blog to chip in on office configurations (See my post of March 21, 2006: hoteling at Sun Micro; June 5, 2007: office layout; Feb. 20, 2005: open cubicles; Nov. 19, 2005: open space at non-US law departments; May 7, 2006: office layout; Feb. 12, 2006: lawyers on one floor; May 4, 2007: shrinking office space; and April 23, 2008.).

Even so, the topic is far from exhausted. For example, if you have the chance to design some portion of your office space, consider guidelines for perimeter windows so that inside cubicles, offices and interior spaces are not dark. Lower workstation panels so that people in cubes do not feel walled in and isolated. Create “neighborhood” layouts, take into account the height of ceilings, arrange conference rooms productively, anticipate circulation patterns, and install ample lighting (See my post of Dec. 26, 2007: lights and energy-saving; and Aug. 4, 2008: older lawyers need more light.).

For example, Aon scatters approximately 250 legal professionals in 17 countries, McDonalds has lawyers in 19 countries, and Carrefour has lawyers in even more – 30 countries. But those aren’t the most spread out. BP operates at least 36 offices with lawyers, HSBC has some 650 lawyers worldwide in 40-some countries, and Royal Dutch Shell’s diaspora department has offices in more than 50 countries (See my post of Aug. 6, 2008: McDonalds; May 27, 2007: Carrefour; April 23, 2007: BP; March 17, 2006: HSBC; and Dec. 14, 2005: Royal Dutch Shell, approximately 650 lawyers worldwide.

Mere pikers, these, since apparently Cisco has 230 total legal staff in 72 countries (See my post of March 26, 2008: Cisco.).

That sample of legal departments represents but a portion of the geographically-dispersed legal departments. Scores of law departments likely have outpost offices of lawyers in more than ten countries. Moreover, the number of departments with multiple out-of-main-country offices is rising constantly as well as the number of their remote offices. Here are several others found on this blog (See my post of Jan. 28, 2007: JDS Uniphase had 30 lawyers in four countries; Feb. 1, 2007: Cummins had 21 in-house lawyers as well as 9 paralegals and administrative personnel in five countries; April 18, 2005: Barclay’s lawyers, based in 17 countries; Jan. 1, 2006: GE Consumer Finance in 2006 included more than 110 lawyers in 21 countries; and April 17, 2007: Johnson & Johnson had lawyers in more than 35 offices around the world.).