Articles Posted in Talent

In connection with their work as lawyers, of the 235 US general counsel who responded to a recent survey 57 percent “said they would seek personal advice from outside legal counsel, and 48% from outside non-legal advisors.” This startling possibility from a survey jointly conducted by Corporate Board Magazine and FTI Consulting arises primarily in the context of mergers and acquisitions, but also as a result of compliance with Sarbanes-Oxley. But what advice might push a general counsel to hire a lawyer to protect himself or herself personally could also arise in issues of antitrust, bankruptcy, data retention, and e-discovery (See my posts of Dec. 20, 2005; Oct. 24, 2005; and April 15, 2007.).

I have previously written about Boards of Directors retaining independent counsel, but this finding puts a very different twist on an analogous role – independent, personal legal counsel for the general counsel (See my posts of July 25, 2005 about the costs of boards retaining independent counsel; Sept. 27, 2005 #3; Oct. 30, 2005 #2; Feb. 18, 2006 #2; Feb. 19, 2006 #2; and Nov. 24, 2005 #3.).

What if a law department awarded bonuses every time a patent issued speedily, a case over a certain value were resolved, an employment-discrimination charge dismissed without a factual inquiry? Good results such as those involve practice area benchmarks and risks of gaming by lawyers, but it is direct line of site between performance and reward. As to gaming (See my posts of May 15, 2005 on gaming assessments of complexity of legal services; Sept. 13 and May 16, 2006 on gaming performance metrics; and Sept. 4, 2006 on gaming fixed fees.).

During a recent webinar on talent management in law departments, Amy Gallent, deputy general counsel at Hartford Life, mentioned that in her law department, people are eligible for spot awards. If someone has worked very hard or come up with an ingenious solution, management can give them gift checks to recognize their contribution. That same department also bestows “awards of excellence” as a form of recognition.

This blog has referred frequently to a variety of psychometric instruments (See my posts of April 18, 2005 and Aug. 21, 2005 on Meyers-Briggs; April 9, 2005 on Hartman-Kinsel; Sept. 22, 2006 #3 on Birkman; Jan. 1, 2006 on various instruments; Oct. 19, 2005 #1 on five others; and Oct. 21, 2005 on psychometric instruments generally.). These paper-and-pencil inquiries into a person’s ways of reacting and thinking can uncover useful insights.

Assessment tools can be used in recruitment (See my post of April 27, 2006 on their use to screen new hires.) and to improve teams (See my post of Nov. 22, 2006 on personality styles; April 12, 2006 on risk aversion and personality styles.). They have their place in career guidance (See my post of July 31, 2005 on the predictive accuracy of Ei (emotional intelligence) instruments; Feb. 7, 2006 on values assessments such as Graves; and Jan. 1, 2006 on building on personal strengths.). Gender differences can be identified and dealt with better (See my post of Dec. 5, 2005 on men-women differences on an instrument for leadership.). A law department might even apply findings from outside counsel (See my post of Feb. 6, 2007 and reference to Caliper.).

The instruments can help people become more tolerant and understand how they and others differe on cognitive styles (See my posts of Jan. 20, 2006 on cognitive style differences; and July 18, 2006 on gender/style differences.).

New CEOs often want to shape their own team of senior executives, so the general counsel may also be a casualty of change (See my post of May 14, 2005 on the vulnerable period after a new CEO arrives; Sept. 13, 2005 on survival after a merger.). The typical tenure of a US general counsel – on the order of seven years – may be shortened if the person the GC reports to leaves (See my post of March 26, 2006 on succession compared to new blood.). I would think the odds are lower of that happening, however, if the new CEO comes from the company’s ranks of senior executives.

But promotion from within is happening less often these days. “In the 1970s, only 10 percent of new chiefs at Standard & Poor’s 500 companies came from outside” whereas now that figure is nearly thirty-three percent, according to the NY Times, Nov. 6, 2007 at C4. Strangers as new bosses ought to concern incumbent general counsel more than familiar faces.

The article also suggests that CEOs do less these days to groom successors, even going so far as to axe contenders for their position. That same fearful dynamic may be at work among general counsel who feel precarious in their position.

The law department of Rouse Company, which had 17 lawyers in 2004, didn’t do mid-year reviews. At annual reviews “the most important rule is that there can be no surprises on someone’s review. If you’ve got an employee whose attorneys are unhappy with the work all year but have not mentioned it, you are prohibited from putting it in the written review.”

As described in Rees Morrison, Law Department Administrators: Lessons from Leaders (Hildebrandt Inst. 2004) at 32, no one can put in writing “you’ve been screwing up your deals all year” when the person being evaluated hasn’t had a chance to correct the problem.

That prohibition, reportedly, has made members of the department much better at counseling and giving feedback throughout the year. This requirement pushes everybody to become more articulate and forthright.

One of the bromides of management is to “hire people smarter than you.” This ambition may be easier than it seems if, as one researcher has claimed, IQ scores are generally rising. According to a review of James R. Flynn, What Is Intelligence? Beyond the Flynn Effect, in the Am. Scholar, Vol. 76, Autumn 2007 at 133, Americans over the past few decades have become much more adept at reasoning beyond the concrete. Hence, IQ scores, which plumb abstract reasoning abilities, have risen.

Flynn claims that the direct effect of genes on a person’s IQ accounts for only 36 percent of IQ variance. The remainder results from the interaction of genes plus environmental differences. The implications of Flynn’s findings, if they turn out to be true, are enormous.

As to law departments, the conclusion would seem to be that the smarter the members of a law department the smarter the department becomes as a whole, since the environment encourages more mental acuity

Data from the most recent Hildebrandt benchmarking survey (HILDS) shows how consequential long-term incentives are to senior lawyers in law departments. As a percentage of total compensation (salary, cash bonus and value of long-term incentives), the amounts range from 51 percent for chief legal officer’s, 45 percent for general counsel, 39 percent for deputy general counsel, and 29 percent for senior counsel.

In short, options, restricted stock, and other forms of long-term incentive account at the upper reaches of law departments for one third to one half of total compensation packages (See my post of July 25, 2007 on stock options and references cited; and Aug. 23, 2005 and April 23, 2006 about restricted stock awards.).

At Cox Communications, in-house counsel in managerial roles can take part in the company’s formal mentoring program. If they do participate in the year-long program, they are never matched with other lawyers. Instead they are mentored by high-level leaders from elsewhere in the corporation.

According to the article about this program in the ACC Docket, Vol. 25, Nov. 2007 at 28, during the mentorship, pairs spend a minimum of three hours a month to face-time together. (See my posts of April 30, 2006 on the looseness of the term “mentor”; July 14, 2005 on the difference between a mentor and a coach; Nov. 25, 2006 on a program by Commerce & Industry that taps mentors outside each company; and April 30, 2006 on mentors and threatening successors.).

InsideCounsel, July 2007 at 66, mentions that the law department of Cajun Operating Co., which owns Church’s Chicken, has three lawyers and four paralegals. One of those paralegals used to spend all of his time doing trademark work. The general counsel of Cajun, Kenneth Cutshaw, outsourced some of that trademark work to a legal service provider in India and now “the paralegal only spends a third of his time on trademarks.”

Here is an instance of transferring work to lower-cost service providers overseas. It allows the freed-up time of US employees to be used in more valuable pursuits (See my post of June 11, 2007 #3 and seven references on offshoring.). My second comment has to do with the unusual ratio of more paralegals than lawyers in a law department (See my posts of March 12, 2006 and Dec. 22, 2006 about the ratio of paralegals to lawyers and the distribution of paralegals among practice areas.).

For your next retreat, give some thought to inviting the general counsel from a leading company within your industry to present to your law department. He or she need not prepare PowerPoint slides but could offer experiences and observations about either legal issues that face that company’s law department or its management issues. In fact, the more interchange there is in such a session, the better.

A session keynoted by such a speaker gives members of the law department an opportunity to hear and ask about a similarly-situated law department. If there is any exchange at all about approaches, the invited general counsel is likely to learn something new and the law department will have a method of corroborating or challenging its own practices (See my post of Sept. 22, 2005 law department retreats.).