Articles Posted in Talent

A piece in the NYSBA J., Sept. 2010 at 22, by a Dean at Pace Law School considers how well law schools prepare students for the real world of practicing law. Under the topic “Market Pressure Exposes Problems,” she asserts that corporate clients exert some pressure on law schools. “They not only pressure their outside counsel, they are mindful of law schools’ role in the legal services supply chain and have cautioned that legal educators should be thinking more about the ultimate consumer.” Her only citation is to an in-house lawyer who spoke at a recent conference on legal education.

While possibly true that those who hire lawyers into law departments regret the lack of practical education among many of those new lawyers, I doubt that general counsel lose sleep over the adequacy of law school courses and preparation. There are bigger minnows to fry.

To err is human, to forgive the divine right of blog readers. When I realize I have been wrong on something, I should admit it and take the more correct view. All managers should strive for the same humility and flexibility. Just to set the record straight, here are some of my recent retractions (See my post of Dec. 16, 2007 #3: my mistake on Lovells; July 26, 2010: malpractice issues do afflict big law departments; July 15, 2010: extranets are all over the place; and July 14, 2010: pre-retention sign off by a supervisor.).

Robert Weber, the general counsel of IBM, assumed that position in 2006 when he left his partnership at Jones Day. He commented on the adjustments he had to make to succeed in-house and pointed out three in Legal Strat. Rev., Summer 2010 at 17.

As a lawyer, you are only one member of a team when you work for a corporation. He makes the point that at a law firm, legal work counts for everything and, implicitly, lawyers run the show. Inside, “It’s no longer just about legal; instead, it’s about how the board and management work together, and how the legal department can provide support on a much broader spectrum of issues.” I would add that legal advice is only one input for senior management; it does not rule the roost like in a law firm.

A second re-orientation is that “as in-house counsel you’re in it for the long haul.” External counsel come in, do their work, collect their fees, and leave. As Weber says, “When you work in-house, you live with the consequences of that work for a long time.” That truth can lead to great satisfaction when you spend a long time and solve something. Contrariwise, some problems (legacy litigation comes to mind) are well-nigh intractable.

It seems inevitable that when a lawyer is promoted to be a direct report of the general counsel or to be the general counsel, disappointment – sometimes bitter discontent – plagues those who believed they had a shot at it but were passed over (See my post of April 16, 2007: loss of talent when a general counsel is promoted.).

A study should look at former peers of the promoted lawyer and count their departures within two years of the promotion. Such a study could quantify the likely range of loss to include the cost of morale, lower productivity, and replacement (See my post of March 8, 2009: attrition in law departments, with 16 references and one metapost.).

No palliatives can completely comfort someone wounded by not being promoted but when the full consequences are better understood and the economic loss made manifest, a well-run legal department might take steps to ease the pain and reduce the loss (See my post of May 24, 2010: shared position holders as a possible solution.).

One of the speakers at a panel at the InsideCounsel Superconference was the General Counsel of Johnson Controls. He said with evident pride that over the past 20 years seven people had left the law department and become the general counsel at a publicly traded company. He believes that departures of talented lawyers are inevitable and the step ups reflect well on the training provided the departing lawyer.

It would be an interesting benchmark to look at general counsel produced per 25 lawyers (or some other standard) during the 10 years preceding the count. Successful careers elsewhere are good indicators not just of ability and ambition but also of strong training and good preparation.

“One of the few things that management theorists agree on is that recruiting bosses from outside is something that you should avoid if you can.” This quote, from the Economist, Aug. 7, 2010 at 65, speaks to CEOs, but do general counsel escape its point? Unfortunately, we have no empirical data that allows us to take a position either way. Viewpoints, theoretical arguments, and anecdotes aplenty, but no longitudinal data to the test the effectiveness of imported legal chiefs compared to promoted ones.

Until data becomes available, speculation and reasoning is all that is left us. I have indulged copiously in both (See my post of Jan. 4, 2006: if the law department needs shaking up, hire a general counsel from outside; Feb. 19, 2006: higher pay for the external GC hire than the internal GC; April 16, 2006: when a general counsel is promoted from within; March 26, 2005: internal vs. external successors; April 16, 2007: passed-over internal candidates may lose effectiveness or leave; Nov. 17, 2008: women general counsel promoted from outside; Dec. 23, 2008: two thirds came from another law department or were promoted internally; May 15, 2009: general counsel who audition; Sept. 30, 2009: does newcomer from outside push more initiatives; and Jan. 7, 2010: better to promote from within than hire from without.).

Korn/Ferry compiles an annual Index of Global Executive Compensation. A chart in talent mgt., July 2010 at 50 shows form it “Global First-Year Executive Compensation” for the years 2005 through 2009. Four positions each start at an index score in 2005, those being the CEO, CFO, CIO (Chief Information Officer or Chief Technology Officer), and “Global Top Executives” (also defined as “C-suite/SVPs”). Chief Legal Officers (CLO) would be in the last group.

The compensation of CFOs and CIOs increased from the 2005 index more than did the compensation of the Top Executives. HR and Compliance heads, among others, are in that category, to be sure. The study does not disclose total amounts of compensation, only percentage changes from the baseline index in 2005.

Since pay clearly signals pecking order, it is sobering for general counsel to realize that those who manage the corporation’s money and technology have counted for more than those who manage its legal risks.

Being one who relishes confirmation of my own beliefs, I nodded when I read one of three recommendations to improve talent processes: “Start with the assumption of full transparency in all talent management processes.” From talent mgt., June 2010 at 14, the oblique recommendation buttressed my own opinion and set me thinking. What are some of the major talent processes and to what degree should a general counsel open the process and decision-making (See my post of June 17, 2010: procedural and distributive justice in decisions.)?

Promotions. Make clear what career paths are available and what competencies promoted workers are expected to attain.

High-potentials. Explain the basis for the selection of especially promising staff, their special treatment, and expectations. I do not think, however, that transparency goes so far as to justify disclosure of the names of high potentials (although the Rockettes are completely revealing about thigh-potentials).