Louise Pentland holds an expansive view on how a top in-house lawyer should contribute to the company.
“As an in-house lawyer, the best you can get is when you’re integrated with the business team,” said PayPal’s Chief Business Affairs and Legal Officer.
But that’s far from how Pentland said PayPal’s legal team operated before she joined in April 2015.
“It was almost like a law firm inside the company,” said Pentland. “People didn’t go to the business team meetings. They weren’t on the leadership teams. It was a very strange structure, in many ways.”
So, over the past two years, Pentland said she has made a point to integrate the lawyers in her 200-person law department into specific business units as she oversaw PayPal’s spinoff from eBay, which happened shortly after she joined.
The deal was completed in July 2015, and PayPal, now an independent company, was valued at $46.6 billion in its second public offering.
“It’s easy for lawyers to sit in the background and say, ‘Here’s the risk, you decide,'” said Pentland. “But that resulted in what was sometimes, in the worst case, people lawyer-shopping because they didn’t like an answer. There was no accountability.”
Outside of addressing that problem, she also took a hard look at how the company engaged with outside counsel, striking up new relationships with firms that didn’t necessarily adopt the traditional Big Law model, and promoted diverse legal talent.
“These are big firms who are really starting to think like corporations,” said Pentland. “I have not used some of these firms throughout my career and now I’m using them left and right because those firms are the ones I want to be associated with.”
Earlier this month, Big Law Business caught up with Pentland to discuss these efforts at PayPal, right around the two-year mark of her arrival. We also asked her about her views on the role of the chief legal officer, diversity and inclusion and an in-house pro bono program she created. The following interview has been lightly edited for clarity and brevity.
Big Law Business: What work did you take on when you joined PayPal from Nokia?
Pentland: I joined at the end of April of 2015. I had the last aspects of the split [between eBay and PayPal] and to stand PayPal up as a public company. I would say that was one of the first challenges I faced. It was a hybrid because it was an established company and we were the spinoff entity and I think that was quite challenging. That takes a lot of work. This included building a team in my organization and also with the leadership team, who had not been operating, for the most part, at a public company level. That was a bit of a sprint to get people ready for the public company aspects of PayPal. Once we got past that, we were in a new door. We were a financial services company and that really put us in the spotlight in many ways, more so as a regulated finance company. Even before we split we got ourselves into a few pickles.
Very early on we realized we really need to… build the compliance function. We hired a chief compliance officer who reported to the CEO, which I was super excited about. I don’t think many financial services companies do that. We really think that compliance is an advantage in financial services. Doing the right thing means being in line with your regulators. Doing that and building that, it was a lot of work.
Then, my legal team was used to being a subsidiary legal team and we had to step up and elevate our focus of being a $50 billion market cap company. You have to think differently and collaborate differently and focus on paying for good risk-based legal advice. Doing that was challenging and making sure the team develops and becomes business-focused lawyers [were things] I spent time on.
Big Law Business: You mentioned the rise in compliance.
Pentland: I think these things are cyclical… My view was very strongly that if we really want to set the tone, that compliance is a competitive advantage and an enabler, then it should report to the CEO. So I think in some ways, we are a little progressive and I think other companies will start to follow that model. Compliance in regulated industries, it’s truly about business enablement, not just checking the boxes.
It was almost like a law firm inside the company.
Big Law Business: We’ve seen the general counsel role shift into more of a chief legal officer role that interfaces more seamlessly with the business side. Can you speak to that shift?
Pentland: As an in-house lawyer, the best you can get is when you’re integrated with the business team and you’re part of the team making it happen.
I think with PayPal, it was different. It was almost like a law firm inside the company. People didn’t go to the business team meetings. They weren’t on the leadership teams. It was a very strange structure in many ways. People weren’t assigned or aligned by business initiatives. It’s a team of 200 people, so it’s not a small team. I immediately aligned people with their primary responsibility, dedicated to their teams and the businesses they supported. It was so welcome; businesses were crying out for it.
It’s easy for lawyers to sit in the background and say, ‘Here’s the risk, you decide.’ Then you think about how to litigate. But that resulted in what was sometimes, in the worst case, people were lawyer-shopping because they didn’t like an answer. There was no accountability. So bringing that in didn’t just improve the quality of the work, but a sense of pride. You worked harder when we launched a new product. You were part of the team that made that happen and you feel good about that.
Big Law Business: How do you use outside firms?
Pentland: When I talk about law firms, they have to know my business. I don’t want you just sitting there, writing memos, telling me things I knew from law school. Everything I do has a risk base to it. How do I mitigate that, and think this through strategically? The only way you are going to know that is if you know who I am and what I do and where I’m going. Law firms are a true extension of my team, which is why I became so adamant that any law firm we were bringing on needs to be complementary to the culture — not just in their work product, but [in] who they were. We want diversity in our lawyers, and people who are innovative, and that led me to really drive down the focus of which law firms we want to work with.
Big Law Business: Top law firms?
Pentland: I don’t have top firms. We really select based on need and what the issue is. I don’t do panels, or anything like that. You earn a seat at my table.
I honestly was a little shocked because people would show up and it would be a room full of white men.
Big Law Business: How important is diversity?
Pentland: We surveyed all the firms we inherited from eBay and looked at their diversity and their statistics. Diversity statistics don’t really tell you the real story so we started to look behind that. What is the succession planning? How do they incentivize their lawyers and who gets the benefit of the relationship and who were diverse and not? I’ll go through a lot of these new pitch meetings myself and I honestly was a little shocked because people would show up and it would be a room full of white men. And I’m public about my views about the lack of diversity and it’s always a little surprising that people don’t do their homework. I have no problem calling people out in meetings. It’s so bizarre, the excuses people give me why there are not more women in the room, never mind diversity of gender, race or religion. They say, ‘It was only going to be a 30-minute meeting,’ was one of the excuses. It’s bizarre experiences like that… I don’t care how good you are, you aren’t going to get my business. Then, over time, what we’ve done is we’ve weeded out those firms who just don’t get it.
On the other hand, there are firms that I use here that are cutting edge. One firm we work with, they really don’t have the incentive models that some of the firms do, where only the relationship partner gets credit for the work that’s brought there. They have a junior partner track. Women who want to have a family or parents who want to step back a while [can do so] without necessarily losing out. These are big firms who are really starting to think like corporations. I have not used some of these firms throughout my career and now I’m using them left and right because those firms are the ones I want to be associated with. Those are the role model-type firms that we will continue to gravitate to, and my hope is that everyone else will wake up.
If you help someone, they’ll help you.
Big Law Business: You’ve risen the ranks in the legal profession and are now the top lawyer of the company. Can you share advice for more junior lawyers?
Pentland: I joined as general counsel and now I’m chief of business affairs. The CEO expanded my role. I have a pretty expansive arrangement now. One of the things I did was I promoted Wanji Walcott to be the general counsel so now I am chief of business affairs and the legal office. Wanji is a very good lawyer and she and I now have managed to get a big public company that has a woman CLO and a woman GC in the Fortune rankings. One of the things I always say to people who are just coming into the profession and evolving in their career is, pay it forward. We always need to look out for the next generation. If you can approach your career like that… if you help someone, they’ll help you.
I felt very strongly that diversity in the legal profession is quite frankly outrageous. I thought people like me can use my position to really help people and break through those barriers that exist. So what I would say to people who are junior in the organization, is that you have to find what you are passionate about. What is it you want? You have to make it happen. You have to find people who will help you make it happen. It’s often a female trait, to wait to be told you’re ready. You’re never ready for that next move. To the extent you get pushback, whether it’s a salary raise or promotion, you have to say, ‘Tell me what it is I need to get ready,’ in a constructive fashion. ‘How do I get there?’ It’s not being obnoxious; it’s about controlling your direction. If I tell you why you aren’t ready for that promotion, make sure you do the things I need you to do and then some. When I’m tapped on the shoulder for the next thing, it’s because everything I do in a given day is what I needed to do and also the extra mile.
Big Law Business: Talk to me about the in-house pro bono program you created at PayPal?
Pentland: When I got here, we didn’t have anything. I don’t think eBay had a program either. What I did was, I basically asked people who were volunteers vaguely interested in it, and I looked around at other people’s pro bono programs and talked to the Department of Justice, which has a really interesting pro bono programs. The government has more limitations than corporations and they had a really exciting pro bono program in the government. I was inspired about what they were doing. They couldn’t really spend any money; it’s the government. And they had to be thoughtful about what they picked [to represent]. It wasn’t political. They were winning awards through their pro bono program.
I thought, ‘We have resources, we have money and we can do these things.’ At the same time, I had just hired Wanji Walcott on the product engineering legal team. She had run the U.S. legal team’s pro bono program and I asked her if she would be interested in starting ours. We went around the world and… instead of saying our pro bono program is going to be about this [one thing], we said if you want to do pro bono in your local community, you decide what you’re interested in. For me, it was immigration. But we let people direct their passion and interest. Lawyers came to me and said, ‘I was skeptical about doing this because it took time away from my family, and now it’s the most enriching part of my week.’ We have come up with this community around the world and let them regulate.
We are expected to be cyber experts and litigators and understand public company financials.
Big Law Business: How have you seen the role of the general counsel change?
Pentland: One of the things that has changed since I became an in-house lawyer is the role of the chief legal officer… and the exposure this role has gotten. It’s really changed the paradigm with what this role is. Microsoft, Salesforce and Google have this model. When we get to this C-level point from general counsel, we are involved in every aspect of the company and we are expected to be cyber experts and litigators and understand public company financials. There are so many aspects to what we do. I think in the older days, the more traditional general counsel roles, they kept to their box of being a general counsel. I think especially in the technology space, the world is so dynamic and fast moving and the CEOs depend on the CLOs in a very strategic way.
One of the big frustrations I have when I’m called to give recommendations as general counsel, there are people I know who can do the job, but they don’t have the title. Like my general counsel, if I had thrown her name in the mix for another GC position, they will say she has not been the public company GC when really they are doing this stuff as much, if not better, than we are. What we do as CLOs and what our deputies are doing as general counsels are the same thing. It’s created a barrier because the pool is so small. This is a great way to open up more opportunity for diverse candidates to break through.
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