Articles Posted in Talent

One of the breakthrough ideas for 2006, as selected and described in the Harvard Bus. Rev., Vol. 84, Feb. 2006 at 56, could penetrate law departments. Devised and tested by the US Army, the idea encourages peers to share their experiences as leaders. Large law departments could look into this idea, and consortia of law departments might also test the waters.

Rather than informal social networks or structured training programs, the peer leadership development challenges notions of venerable elders and adds collegial emotional support. It also focuses on context-specific advice rather than on broadly applicable wisdom. It relies on exchanges of guidance rather than lectures – “the pour and snore approach.” The piece offers a website.

An interesting article, Corp. Counsel, Vol. 12, Feb. 2006 at 24, explores the mini-controversy at BASF’s New Jersey law department following its general counsel’s requested that in-house lawyers sign non-compete agreements.

Not so fast, some of them demurred, because a professional practice rule in New Jersey prohibits “an employment agreement that restricts the rights of a lawyer to practice after termination of the relationship.” The New Jersey Supreme Court’s Advisory Committee on Professional Ethics is expected to consider the issue early this year and rule on it.

Lawyers who are intimately involved with their company and familiar with strategic decisions do represent a risk, if they decamp, but there may need to be other solutions than non-compete provisions.

The average profit per equity partner of AMLAW 200 firms in 2004 was approximately $830,000. Let’s take that figure as roughly compensation per partner.

Executive Legal Adviser, Nov./Dec. 2005 at 6 lists the compensation of 38 general counsel of publicly-traded Texas-based companies. Adding in the value of the stock options those general counsel received, 26 of them received compensation in 2004 of more than the law firm partners’ figure. (See my post of June 15, 2005 about compensation of GCs in Asia.)

Sure, there’s only one GC per company while there are hundreds of equity partners in the huge firms, and sure options can sink underwater, but still the metrics seem worth comparing.

Heinrich von Pierer joined the German industrial giant Siemens in 1969 as a lawyer. Promoted to chief executive in 1992, he retired 13 years later from the helm of the €75 billion (about $82 billion) conglomerate (Fin. Times, Nov. 18, 2005 at Spec. Rep. 4).

Charles O. Prince, III, formerly the General Counsel, and now the CEO of Citigroup, rivals von Pierer as one of the most powerful ex-general counsel.

Going back several years, Sol Linowitz was the general counsel of Xerox and then became its CEO. Hank Barnette followed the same path at Bethlehem Steel (and attended executive education courses at Harvard Business School to hone his general management skills).

An article, Fin. Times, Nov. 2, 2005 at 8, describes how you can have a recording done of yourself speaking two minutes on four topics, and then a psychologist who specializes in linguistics uses software to compare your voice against an “ideal” voice. That comparison looks at pitch, articulation and fluency, and five other measures such as loudness, modulation (how much your pitch goes up and down), and “disfluencies” you let creep in such as “um” and “er.”.

A general counsel or senior lawyer who speaks frequently at public presentations might look into voice coaching. A coach, for example, might improve speed and clarity, or teach you about posture and breathing.

I think that it is best for law departments to use the evaluation form that prevails throughout their company. Yes, it does not apply in many respects to evaluations of professionals, but it is better to stay in sync. Consistency allows HR to evaluate the pay and grades of the law department against the same distributions in other staff units (See my post of Jan. 23, 2006 about matching lawyers to their clients by grade.)

Some law departments prepare a supplemental page that has space for evaluations and considerations that are unique to the law department.

In-house lawyers at any grade/title may well be the counselor to clients who have higher grades/titles. Rank disparity makes no difference to most clients but a few may exclude their “lower ranking” lawyer, especially if they invite only a certain level of employees to limited-attendance meetings or communicate confidential information only to a certain level of employee.

This mismatch is not a function of pay inequity, but a perception imbalance. No pat solution exists, but the alert general counsel should quash such misbehaving clients.

A study by John Villa, a partner at Williams & Connolly, finds that during the four years from 1998 to 2001 there were about 12 SEC actions against general counsel; during the next four years (through Sept. 2005), there were about 20. As to criminal prosecutions, the numbers for the same years rose from approximately 5 to approximately 8. Corp. Counsel, Jan. 2006 at 16.

The summary I read did not state which of these proceedings ended with a conviction or a civil penalty. Still, given the knowledge of general counsel, their supposed professional ethics, and the gravity of these charges, to have a half dozen of them on average during each of these six years confesses a disappointing collapse of professionalism.

The term “salary compression” refers to the common problem that arises when a law department hires a new lawyer from a law firm. Often, the department must pay that new lawyer at a rate that is relatively high compared to lawyers who have been in the law department for years. Sometimes an incoming specialist, in fact, might make more than a veteran in the same pay-grade.

If so, another principle of compensation comes to the fore: equity. If a new hire compresses pay, should you raise the pay of the other lawyers?

Shearman & Sterling studied the annual reports of the 100 largest US companies in 2004 for how those companies compensate and operate their Boards of Directors. Noting that being listed on the NYSE requires a company’s audit committee to oversee compliance and legal, the law firm reported that 60 of the companies “have attempted to limit the scope of this responsibility to material legal and regulatory issues” (at 20, as reproduced in PLI’s conference proceeding, Corporate Governance 2005 at 11). Those companies adopted three principle methods, and sometimes more than one method.

A. Discuss legal issues with material or significant impact on company or its financial statements – 51 companies

B. Discuss correspondence or report that raises issues that may have significant impact on company’s financial statements – 28 companies