Articles Posted in Talent

A senior attorney with Ford Motor Credit spoke on a panel at the SuperConference. She laid out several aspects of the reduction in force recently endured by her law department. Muzette Hill Stallings said that management told the department about the downsizing one month before the layoff day. That day, managers tapped lawyers on the shoulder, went to a separate room with them, and read them a script. Along with the manager was a representative from Human Resources and a psychologist. Next door was a representative from Right Management, a specialist in helping terminated employees deal with being fired and start looking for another job. The lawyers laid off had two months of assistance from Right Management.

Stallings explained that the layoffs were basically done on a seniority basis. She closed by saying that the next day the entire law department – the survivors – took part in an “All-Clear” meeting, an emotionally important time to acknowledge the grief and wrenching pain, cope some with the guilt that survivors have, and start the process of healing and getting on with life (See my post of Feb. 5, 2009: layoffs with 7 references.).

A former Morgan, Lewis & Bockius partner, Michael Holston, now the General Counsel of Hewlett-Packard, says he has had one goal for HP’s legal department: to make it the “best legal and government affairs department in the world.” Zusha Elinson wrote this in a story for The Recorder, dated May 8, 2009.

“If you’re going to be the best legal and government affairs department in the world, then you’re going to have to hold people accountable,” he said in the article. “And reward people who are doing it.” Toward that end and soon after he arrived, Holston instituted a comprehensive review of every lawyer. He has continued the practice twice a year, and later this month he’ll once again gather his deputies for two full days of evaluating the “between 300 and 400” HP lawyers. The result? HP lawyers whose skills don’t match the current needs of the department, or whose performance is under par, are “encouraged to leave.”

“In HP’s intellectual property department, for instance, of about 70 U.S. lawyers who were there when Holston came on in 2007, only about a third are left, according to an informal survey. Some took an early retirement package in 2007; others were cut subsequently, during one of the rounds of company layoffs, pushed out, or left on their own” (See my post of Dec. 20, 2005: a general counsel sues for severance payments; Jan. 27, 2006: a law department includes severance costs in its budget; and May 4, 2009 #3: BEA severance packages.).

The thrust of several posts is that in-house career path is an oxymoron (See my post of March 28, 2006: ostensible reasons not to go in-house; June 24, 2007: the intractable problem of career paths; April 12, 2006: among least rewarding aspect of practicing in corporation is “career advancement opportunities”; April 13, 2006: advantages of working in-house: “career advancement” rated low; and June 6, 2008: career development is one of the Ten C’s of employee engagement.).

Not everyone agrees that corporate lawyers seek constantly to move up (See my post of Sept. 10, 2005: lawyers hit a plateau – so what?; and July 28, 2008: plateaus for careers.).

Quite a number of posts discuss ways to mitigate the career angst (See my post of Sept. 5, 2005: up-and-coming counsel spotlighted; July 25, 2007: better path in centralized legal departments; Jan. 30, 2006: career development through leading teams; March 6, 2006: dual-track paths; Oct. 12, 2006: low attrition rates belie criticisms; Dec. 28, 2006: few promotions but some choices; Feb. 16, 2007: rotations as a boost to career path; Jan. 8, 2008: 9 ways to minimize angst; and July 28, 2008: not everyone covets the general counsel position.).

The Advisory Panel of the CLO Programme includes nine top lawyers. Those lawyers have titles that are not run-of-the mill titles for their US counterparts (the titles I reflexively use in posts, such as general counsel and chief legal officer). I start the list with my favorite:

 Head of Legal Estates (Sharon Harris, Britvic)

 Global Head of Legal (Sandie Okoro, Baring Asset Management)

“I see an increasing desire on the part of boards to participate in the hiring of a general counsel. I think that the board needs to be more and more involved. This is in keeping with the recommendation of the ABA’s Cheek Committee which recommended more board involvement in the hiring, compensation and retention of the general counsel.” This vision of increased Board involvement comes from Met. Corp. Counsel, Vol. 17, April 2009 at 17, by Norman Veasey, the former chief justice of Delaware and now a partner at Weil Gotshal.

With all due respect to Judge Veasey, it may be that his perceptions are influenced by the focus of his legal counseling. He advises Boards, I believe, and therefore may be more likely to agree with ideas that strengthen their power.

For my part, unencumbered by facts although self-interested in a different direction (I support general counsel, in case you haven’t noticed), I feel CEOs ought to freely choose the senior lawyer they want at their helm. If they choose poorly, the Board can remedy that mistake. For Boards to intervene in bonus decisions and aspects of the general counsel’s remit is to micromanage inappropriately and to divert time from strategic issues unwisely.

The self-serving attribution bias blinkers most of us, as commonly “individuals see themselves as fully responsible for their successes yet blame external sources for their failures.” Thus, as explained in the Academy of Mgt. Perspectives, Vol. 23, Feb. 2009 at 81, a litigator’s brilliance and doggedness won at trial but a rigged jury, unscrupulous adversary, and home-town judge caused the same litigator’s next loss at trial (See my post of May 14, 2006: Fundamental Attribution Error; Aug. 30, 2006: systems cause problems more than personal shortcomings cause them; July 10, 2007: fundamental attribution bias and neuroscience; and Nov. 21, 2008: value attribution that distorts perceptions; March 15, 2009: the affect heuristic, where preconceived value-judgments interfere with our assessment of costs and benefits.).

This penchant for self-serving attribution, common to all of us, hinders our ability to learn from what happened (See my post of May 27, 2008: post mortems with 7 references.).

At a global financial firm, the tool used to evaluate the lawyers has three rows for performance and three columns for potential, a nine-box grid. As to performance, the manager assesses a lawyer as high, medium or low; as to lawyer’s potential, a similar scale holds of high, medium or low. Thus, the star lawyer beams in the upper right cell – high performer and high promise. The at-risk lower mopes in the lower left corner – doing poorly and with little expectation of improvement (See my post of Sept. 21, 2008: annual reviews and evaluations, with 12 references.).

As I heard it, managers had to complete the nine-box grid for their reports according to certain parameters for the distribution of those assessments, being a forced ranking system. No more than five percent in the top right box might have been such a parameter (See my post of Nov. 14, 2005: forced ranking has advantages; and May 4, 2005: forced ranking is problematic Dec. 1, 2006 #3 for research findings on forced ranking; Sept. 21, 2008: line managers are unwilling to differentiate among their reports on evaluations.).

According to an article in Academy of Mgt. Perspectives, Vol. 23, Feb. 2009 at 18, median CEO pay in 2006 at S&P 500 companies was just over $8 million. That figure is the “sum of the salary, bonus, stock awards, option awards, non-equity incentives, changes in pension value and nonqualified deferred compensation earnings, and other compensation.” Median total cash compensation of the general counsel in the Thomson Hildebrandt benchmark survey for 2006 was $794,000 for 56 Chief Legal Officers and $569,000 for 79 General Counsel.

Unfortunately, we cannot say that CEO compensation was ten to twelve times general counsel compensation for these large companies because the legal department figures do not include anything other than cash salary and bonus and because the Hildebrandt survey has participants that are not S&P 500 companies.

The same article notes “Executive pay studies universally control for the size of the company, which is generally taken to reflect the returns to organizational complexity.” It is quite probable that pay of general counsel correlates to size of company, which in turn correlates to size of law department.

At Silicon Valley Bank, the legal department’s 10 attorneys did not receive merit salary increases this year. Leslie A. Gordon, GC California Mag., April 16, 2009, noted this reverberation from the economic slump. Many other law departments have experienced such restrictions as company-wide holds on salary increases, bonuses, matches to 401Ks, and other cash-conserving measures. (See my post of Feb. 5, 2009: recession’s downsides.).

Even so, a pay freeze beats no pay at all (See my post of March 1, 2009: layoffs by law departments.).

For some matters, Yahoo is now bypassing conventional law firms altogether in favor of outfits such as Paragon Legal or Axiom Legal, which rent out senior lawyers to handle short-term projects. Yahoo has used such temporary attorneys to handle legal work on projects that have included building a database or reviewing open-source agreements. Ron Bell, deputy general counsel at Yahoo, explains this in Leslie A. Gordon, GC California Mag. April 16, 2009.

Bell has various duties at Yahoo including to manage the legal operations group, which supervises legal department processes. The particular examples of projects sound lower level, lower risk, so there may remain a gap between the assignments of employee attorneys and fill-in-a-gap lawyers (See my post of Sept. 9, 2008: temporary staff with 8 references.).