In-house counsel face increasing pressure to step up as executives. Their input in the company’s policies and functions is essential to business success. Corporate legal departments are having to balance complying with rapidly evolving regulations, managing internal issues, and overall business goals.
On June 27, Bloomberg Law convened legal industry leaders in San Francisco to discuss the key challenges facing corporate counsel.
Big Law Business covered the In-House Forum West. Read more below for highlights, quotes, and recaps of interviews and panel discussions.
Chief Legal Officer Tony West Weighs in on Uber’s Legal Battles
Uber has been facing a slew of legal issues around the world, including multiple criminal investigations right here in the U.S. But the company has pledged a new modus operandi under new leadership including Chief Legal Officer Tony West, who was recruited by Uber CEO Dara Khosrowshahi. At the In-House Forum in San Francisco, West was asked about the company finally getting its 15-month license to operate in London.
— Tony West (@tonywest) June 27, 2018
— Bloomberg Law (@BloombergLaw) June 28, 2018
The Future of the In-House Team
At “Legal Industry Innovators,” three forward-thinking attorneys discussed the future of the practice of law. While it can be tempting to feel threatened by younger, hungrier talent, Conor French, general counsel, U.S. for Funding Circle, believes it’s important to learn from your younger team members. “The expectation that you put on yourself is that you need to be smarter than everyone you’re managing, but that’s impossible to scale,” he said.
It’s important to make sure “that you surround yourself with passionate people,” said Mary Jummati, director of legal business solutions at UnitedLex. A benefit of experience, she said, is “seeing the evolution of legal, and working with people who have the same passion that you can consistently learn from. You’re never too old to learn new things, and as you bring on new people,it’s really important to have those relationships.”
For Sheryl Savage, general counsel at NEXTracker, it’s not just important to embrace new perspectives, but to embrace new technology. “Innovation through technology is the way for the legal department to meet those advanced turnaround times,” that more and more companies are expecting. “Innovation comes with automation,” she said. “Automation and machine learning are going to change the way we practice law.” The way forward, Savage believes, is to “focus on smart contracts, and automation within your department.”
Jummati agrees. “I continue to learn from our younger associates,” she said. “They’re crazy smart. It’s a great way to foster the innovation of knowledge. The in-house corporate legal departments are really challenging themselves to be more engaged and swifter when working with new technology.”
One thing that’s becoming increasingly outdated: the idea of billable hours. “There’s a partner that you work with somewhere that’s tired of the old precedent of billable hours,” Savage said. “What really matters is realization rates. Adapt to technology that helps you achieve your realization rates, not your billable hours.”
She has that expectation for her outside partners. “If they’re using this technology I know that their judgement has improved, and they’re using AI. I encourage you to push this on your outside counsel.”
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A Holistic View of the Role of In-House Counsel
Throughout the day at the Bloomberg Law In-House Forum, one of the recurrent themes has been how energizing in-house counsel find it to be at the forefront of a company’s work, and to be shaping a company’s culture and core values. In “Fostering Relationships with Internal Leadership,” four attorneys discussed ways that attorneys can have not just a seat at the table in a company, but become an essential voice in daily business.
“The big joy of practicing in house is integrating into the company function, really understanding what the objectives are and rendering advice that’s really valuable to the company,” said Alicia Moore, chief legal and administration officer, senior vice president and secretary at Echelon. “If you start with the philosophy of the value add, an in-house team is really useful to a company.
“You make it easier and faster for sales to reach volume very quickly. There are opportunities to build the IP portfolio, build return on investments, and add certainty to a business.”
“It’s a great role for a legal team to get in early, when the product sounds really crazy, because some of those become great products,” said Sivan Whiteley, general counsel at Square. “You’re building that credibility, and you’re equally excited about what they want to do, and that really makes you a partner.”
In her view, that means shifting perception from counsel being someone who always says no to someone, who explains “what you know so the product engineers see what you see,” Sivan said. “We do a lot of educating folks on the legal issues and implications of doing it this way. Most exciting things carry some risk. It’s more about how to mitigate them properly.”
“When I think about how you become that trusted adviser, I think it’s about establishing personal relationships,” said Marie Oh Huber, senior vice president, general counsel, and secretary at eBay. “It’s not always easy. I find it really hard when you’re in the office to find any meaningful time because everybody is so jammed with meetings. When you’re in a tough situation or everybody’s running really fast … it’s just asking if there’s anything you can do to help. Make sure that you’re reaching employees not just at the most senior levels. Think about the new employees coming in.”
Because in-house counsel is becoming increasingly valuable for broader company vision, the role of outside counsel is changing, said Ed Batts, partner at Orrick, Herrington & Sutcliffe. “The roles of outside counsel have evolved,” he said. “We will continue to become specialized. It goes to metrics on a spend versus results.” He believes it’s of vital importance to keep clients updates on the status of projects. When you’re reporting, he said, “they’ve seen the evolution, they’ve seen the progress, they understand where you’re coming from. It reflects a segmentation in the market.”
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Reframing the Thinking Around Workplace Harassment
When speaking about the legal department’s role in preventing workplace harassment, panelists said that even though there has been a lot more conversation around the topic in light of recent high-profile harassment claims and the #metoo movement, there haven’t been significantly more cases brought to their legal teams.
“Even with the #metoo moment, I don’t think it’s any easier for women to come forward with complaints,” said Theodore Borromeo, assistant general counsel, employment, and benefits law at McKesson Corporation.
What has changed, according to the panel, is that companies are taking a proactive stance on making sure they have effective policies in place, and thinking more broadly about how to prevent workplace harassment before it happens.
“The types of issues that I’ve seen come up the most are employers getting ahead of these suits, making sure they’re checking their policies and that they’re adequately [given] to employees,” said Lisa C. Hamasaki, partner at Ogletree, Deakins, Nash, Smoak & Stewart, P.C. “There is a real effort to jump on a complaint and do thorough work as quickly as possible.”
“There’s definitely increased awareness,” said Kimberly King Webb, deputy general counsel at CHRISTUS Health. “I have seen an uptick in the number of claims that reach the legal department, that go through and sometimes bypass HR. There’s a healthy awareness now. To deal with all that, my company, like others, is being very proactive, looking at our policies, reviewing our training, making tweaks as necessary, and holding investigations.”
Roberta Steele, a regional attorney at the San Francisco District Office of Equal Employment Opportunity Commission, works to be proactive on a higher level. She said, “Our work comes under three prongs in this area: interpreting the laws and working with Congress and the Judiciary Committee to develop policies and procedures, educating employers, and enforcing the law, with charges and litigation if necessary.” Since November, the EEOC has gotten 16 settlements, many on behalf of what she described as “vulnerable workers.”
However, all of the panelists agreed that despite recent advances, there is a long way to go in educating employers and employees about harassment, sexual or otherwise, and how to address it. “We really have taken away the focus on what’s legal, and focused on what’s acceptable,” Webb said. “We’ve gotten away from the law and focused on our core values.”
It comes down to, Steele said, “civility training and bystander training. If there are problematic behaviors going on within the workforce, there [need to be] steps to address that behavior before it becomes an EEOC lawsuit.” She said that 85 percent of all harassment is still unreported, and 70 percent isn’t even complained about internally.
“Socially and professionally, it means being shunned by coworkers as well as taking adverse action,” Steele added. About 40 percent of claims include a retaliation claim, where a worker feels they’re being penalized for speaking out. “An unintended consequence [of these conversations] is company policies that say we have zero tolerance, and everyone thinking that means you fire for the first offense,” Borromeo said. “What the law requires is that you take corrective action to stop the behavior, which could be less than termination.”
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PayPal’s Wanji Walcott Believes In-House Counsel Are Modern Changemakers
Even before recent instances of family separation at the country’s southern border, PayPal’s senior vice president and general counsel Wanji Walcott was deeply invested in using her position, and the power of her fellow legal community, to effect positive change. She started a pro bono program at American Express, her previous employer, and did the same when she started at PayPal three years ago.
“A lot of this is natural to who we are, which makes it really exciting and really great,” she said. Not only have she and her team become “very adept at filling out DACA applications,” the company has a PayPal Giving Fund, which matches donors with charities doing work they want their dollars to support. For example, “there are a number of organizations that work to unite children with their families,” Walcott said. “We’re helping match the donors with charities who work in those efforts.”
PayPal’s work to effect change, she believes, is not unique to that company’s culture. In-house counsel, in hiring outside firms, have a real opportunity to make a difference in social accountability, namely with diversity in the workplace. “We have a real opportunity to move the needle at a majority of law firms,” Walcott said. “It’s not going to be a business imperative for law firms [to employ a diverse workforce] unless in-house counsel makes it a priority and demands that.”
“We have a real opportunity to move the needle at a majority of law firms,” says Wanji Walcott of @PayPal. “[Diversity is] not going to be a business imperative for law firms unless in-house counsel demands that.” #LegalForum pic.twitter.com/lveAnKNeyw
— Bloomberg Law (@BloombergLaw) June 27, 2018
She does that at PayPal by demanding that the firms they hire bring them a diverse team, and by focusing on minority- and women-owned firms. “We really try to be objective in who we use,” she said. “If you’re not deliberate with something, inertia sets in. Ten years go by and you’ve really missed opportunities to make an impact.”
“I’m aware of many major law firms where in 2018, there’s one black partner. That concerns me. It’s important for us to play a role in advancing diversity at law firms,” and at her own company, Walcott said. “We are looking for the best and brightest to join our legal team, and in order to do that we need to look far and wide.”
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The Importance of Protecting Your IP, and Your Brand
The more that we live our lives online, the more we need internet tools that protect intellectual property. In “Safeguarding Your Intellectual Property in a Changing Landscape,” three attorneys at high-profile internet-based companies discussed their unique strategies for preventing intellectual property infringement, both for their companies and for their users.
Medium, a website where users upload their own writing, music, and other creative properties, faces a unique challenge in ensuring that its mostly hobbyist users don’t infringe on other people’s copyrights. “A lot of folks, they don’t necessarily know they’re infringing,” said Alex Feerst, head of legal at Medium.
He’s an advocate of sending a nice letter first, in keeping with Medium’s image. “I try to harmonize our public-facing legal voice with our branding: thoughtful, approachable, cerebral, civil,” he said. “If the first letter that goes out the door is scathing and that goes out to someone who isn’t a scofflaw,” that experience is at odds with Medium’s values, and can also be broadcast widely on social media.
Feerst’s main goal is to “foster good copyright hygiene,” like changing the user interface so that the first photo option that comes up on a user’s post is one in the public domain. In short, helping people avoid copyright infringement in the first place.
Whitney Hudak of @lyft on the challenges of brand management: “We’re giving our drivers a license to use our logo, but they have to do that in alignment with our brand standards… but with millions of drivers, that doesn’t always happen.” #LegalForum
— Bloomberg Law (@BloombergLaw) June 27, 2018
For Whitney Hudak, corporate and commercial counsel at Lyft, the priority is brand management. That task is vast with so many riders and independent contractor drivers, who are all incentivized to share their experiences and codes on social media and spread discounts to potential new customers. “We’re giving our drivers a license to use our logo, but they have to do that in alignment with brand guidelines,” she said.
“With millions of drivers, that doesn’t always happen.” With industries like ride sharing, where another choice is an app away, people want to do business with companies they feel good about. Managing misuse of their intellectual property, Hudak said, requires a branding element. “It’s important to leverage those marketing and branding teams so that it’s not just coming from the legal department. You have another internal stakeholder to communicate that message.”
Relativity is an e-discovery company that handles sensitive work for attorneys as a third-party vendor, so they’re tasked not only with protecting their own trade secrets, but also with intellectual property from firms and their clients. Evan McAlpine, intellectual property counsel at Relativity, handles two kinds of trade secret threats: those from outside attackers stealing information, and those from employees compromising that information, intentionally or unintentionally.
“We have a three-pronged approach: we focus on internal education on teaching employees on what is a trade secret, on employees being able to detect what is an incoming threat, and understanding the various actions that we have to either prevent this stuff or respond,” he said.
Clear and consistent messaging about cybersecurity is effective, but so is maintaining a positive company culture. Relativity’s legal department collaborates with other departments to prevent problems before they happen, namely with security.
“We place a lot of emphasis on having a really great culture, because we want to enjoy work, and because employees who are actively engaged aren’t looking to sell information to outside sources,” Hudak said.
“If we don’t do the absolute best we can, a judge is going to say it’s not a trade secret because we didn’t exercise reasonable efforts to keep this a trade secret. If we have a data breach, that’s an existential crisis for us. Thankfully we’ve never had to go through that exercise, but we plan and think about all the ways [it could] happen.”
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When to Expand Your In-House Team, and When to Use Outside Counsel
In the panel “Building a Litigation Team to Mitigate Risk and Promote Success,” four industry leaders debated the merits of expanding the role of a company’s in-house counsel team, and whether that can save money and reap long-term benefits.
Klinton Miyao, assistant general counsel and head of litigation for Sunrun, Inc, believes that the more you can handle in-house, the better, especially because of year-over-year cost increases with law firms. “The benefit some companies are seeing from very long term relationships with firms are not worth it to continue working with industries that are basically built on turnover,” he said.
He also believes it’s important to keep perspective on your professional relationship. “You’ll hear legal service providers refer to themselves as partners, but really they’re vendors,” Miyao said. “That’s not to say that I don’t believe in long term relationships, but I do think it’s important that it not be a one-sided conversation. Firms are looking at you as a company as a source of revenue.”
“We’re aware of these issues, and we want to be responsive to our clients in this regard,” said Joshua A. Jessen, a partner at Gibson, Dunn & Crutcher. “The market always goes up over time. We’re all competing to retain the best talent so we can be the best lawyers and provide the best legal services to you.”
He believes that long-term relationships mean more efficient use of time and a more holistic understanding of a company’s goals. “Our rates can be higher,” Jessen said, “but in the end the goal is to get you the best possible result at a reasonable cost.”
At T-Mobile, senior litigation counsel Katherine McDaniel uses specific data tracking in to make decisions about the size of their litigation team. She and her team ask outside counsel to use cost data codes when they bill. “It’s hard to see where you’re getting value and how many hours things should cost,” she said. “Those little cases may not be appropriate for a firm. We look at every penny of our spending and ask our outside counsel to partner with us” on counting those costs and deciding how much to handle within the company.
“One thing that our company is really trying to do is look at where we can make strategic investment in bringing some of that cost in-house. If you bring in certain discovery functions, that can really translate in long-term savings.”
Jamie Berry, managing director of litigation services for Integreon, a company that provides research and discovery assistance to firms, believes there are ways to do that that still use outside law firms. “We constantly see corporations bringing back some of the things we used to do as an industry. If you have the resources to run those things in house, it makes things more efficient and keeps costs down,” he said.
“We try to use lower rates than we did last year. I’m a firm believer that technology should be looked at as an enabler to people and progress. It really is process and technology, and the cohesion between those things, that really drives efficiency.”
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Addressing Cybersecurity Threats of Today, and Looking to the Future
With privacy breaches and data misuse in the news every day, one of the biggest challenges for general counsel today is managing cybersecurity. But, today’s experts believe that it’s not just today’s data concerns that are pressing problems, but the data concerns that will come up in the future. “We’re watching around corners,” said Michelle Dennedy, vice president and chief privacy officer at Cisco. “We’re giving [CEOs] scary metrics, and we project where the world is going.”
One of the major concerns: California’s proposed legislation that will regulate what it means to “monitor” and “sell” data, which all three panelists expect will set the standard for the rest of the country. “It’s not that we can’t live with a framework. We like the clarity of a framework,” Dennedy said. “But we want something that’s in favor of the consumer, and something we can actually do.”
Michael Gelles, managing director of Deloitte Consulting, looks at cybersecurity as a people problem. “When I think about internal risk,” he said, “I think about it from the standpoint of a couple of perspectives: employee, contractor, vendor. While we do business in a virtual and global space, it’s a problem driven by people.”
Kalinda Raina, head of global policy for LinkedIn, believes that the key to having secure data is by having policies that are easily understandable, and deliverable to employees across the globe. “You’re only as strong as your weakest link, and often that link will be employees,” she said.
“It’s often where we don’t look because we don’t think about it. Employees not following protocol can lead to hacker access. They don’t realize in the shortcuts they’re taking they’re actually harming the company.” Transparency from the company about clear rules creates transparency when working within them, she said.
Policies are key, according to Michelle Dennedy. “Policies for me define behavior. This is where the biggest gap lies.”
Most people don’t read policies, she said, because they’re “written in such a way that they’re very difficult to assimilate. They need to be accompanied by a very strong communications campaign: what the policies are, what people should and shouldn’t be doing, and that those policies will be enforced.”
.@mdennedy many insider threats are people just trying to get a job done. But this is why it’s a significant threat because they may not take privacy or security into account. #legalforum @BloombergLaw pic.twitter.com/qOuv0TqaK6
— Daniel Stoller (@realdanstoller) June 27, 2018
The biggest role of general counsel today, Raina said, is balancing the perspectives of different departments’ priorities, and making sure all of those priorities are being met in a way that’s keeping data, both of employees and customers, safe. “General counsel has to explain why it’s necessary to monitor and how you think that will prevent a future threat,” she said.
Dennedy added, “In areas of law as rapidly evolving as this, when you come in and say what the legal position is, the pushback is ‘what does the law say.’ The answer in many cases is the law doesn’t say anything yet, but this is where we’re going.”
“What becomes key is the partnership between stakeholders,” Gelles said. “The general counsel becomes critical in many instances. You’re trying to align your business strategy to avoid risks.”
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Uber’s Tony West on the Changing Role of Corporations in American Culture
Between international investigations, questions over their handling of customers’ data, and concerns over the safety of passengers, Uber has had its share of PR issues in the last few years. When Tony West decided to join the company, he said, “This was a challenge not only worth engaging, but could be the ride of my professional life.”
The senior vice president, chief legal officer and corporate secretary of Uber started working on the day that the company announced its data breach. His hire, West said, “was part of this idea that we are serious about doing the right thing.”
In his keynote address for Bloomberg Law’s In-House Forum, West spoke about the recent challenges Uber has faced, but spoke more broadly about how his role as chief legal officer is helping to shape the culture of the company going forward. “There are things that we continue to do to always improve the safety and the culture of our community,” he said, but more broadly, when a company is making cultural change, the most important factor is “the recognition and the embrace that change is necessary.
— Lori Lorenzo (@Lori_L_Lorenzo) June 27, 2018
“One of the amazing things I saw was how hungry people were for change,” West said. But “it’s not helpful to say that everything that happened before was not good and everything now is good.”
One of the major changes in the role of large companies, West said, is helping to renew the public trust in major institutions as a whole by speaking out against larger problems in American society. Surprisingly, he believes it’s effective because public trust in CEOs is starting to go up.
“It seems to signal a hunger and an expectation for companies to step in on certain issues that are fundamental to how we are,” West said. “There are some issues that are fundamental to the values that we’ve all collectively agreed on historically: the value of liberty, of freedom, of allowing people to pursue their own potential. We’ve agreed on decency and compassion. It’s what has made the country great and allows for great opportunity. When we act in ways that are inconsistent with these values it creates a real disconnect, and that’s where it may be appropriate for the private sector to speak out.”