Leadership Insight | Autumn 2016
Are in-house counsel ready to be business leaders? It seems a strange question to have to ask given the level of education and training of most in-house lawyers and the dramatic expansion of the size and responsibilities of legal teams over the last 15 years.
And yet, leadership remains an issue that hangs ominously over the careers of in-house counsel. As they take on work that once would have gone to law firms and deal with mounting organisational, legislative and regulatory complexity, they are often pushed towards the technically-demanding side of their legal role. Meanwhile, colleagues from finance, marketing or sales teams remain far more likely to be promoted to senior leadership roles within the company.
Nevertheless, it is clear that a growing proportion of in-house counsel, both at general counsel level and at the more junior end, are intent on assuming leadership roles once seen as well outside the remit of the humble in-house lawyer. The wider trend of embedding lawyers more deeply into the governance and business of major plcs is also giving counsel a taste of what leadership looks like, and in-house lawyers increasingly find themselves working in legal teams that rival the size of major international law firms while embracing wider commercial roles. Tougher compliance and increased dispute risk are bringing lawyers closer to the heart and head of major corporates at key moments, and for many in-house counsel, this is an opportunity they intend to seize.
‘General strategic and management skills are becoming more important as the expectations and needs of our business colleagues change,’ says Michael Coates, UK head of legal at Shell.
‘The push towards greater “business partnering” means that legal departments need to play a more strategic role in an organisation – and this will demand a broader contribution from the in-house team using a broader set of skills.’
Realistically, what it takes to be a legal leader will vary according to the state of the company a GC is advising, ie whether that company is in crisis mode, whether it is going through a restructuring or turnaround or whether it is performing well with mature policies, processes and strong growth markets.
When canvassed for this piece, in-house counsel had varying responses to what skills it takes to be a strong leader, from simply ‘knowing the business well’, to ‘not being afraid to make decisions’ and on a more personal level, the ability to ‘be a good storyteller’.
Although these are valid answers, on their own they provide little insight into the practicalities of what it takes to be a leader. Perhaps, as Philip Bramwell, group GC of BAE Systems suggests, good leadership is simply a state of mind.
‘You’ve got to have a desire to manage and ultimately lead a team or a very large group of lawyers. It’s not for everyone. If you are not a people person, if you don’t feel passionate about leading, if you don’t feel you can formulate a vision for a group of people and set values, and if you don’t want to create opportunities for other lawyers to develop and grow their own careers, then leadership may not be something for you.’
Winning friends and influencing people
Rightly or not, GCs still see gaining board access and roles as the clearest demonstration of leadership. As Suzanne Wise, group GC and company secretary at Network Rail, notes: ‘I sit on our main board as company secretary but because of my wider role and because I am a full member of the executive committee I find myself contributing more as an executive than as a lawyer, which means having a point of view, contributing and challenging. You’re there not just as a lawyer but as a member of the leadership team.’
However, to gain an invitation to the top table, a legal chief needs to demonstrate they have taken the initiative to familiarise themselves with all parts of the business, including those that have not traditionally gelled with the legal function.
Perspectives: Maria Varsellona, Nokia
Nokia’s transformation over the last few years has tested the leadership skills of all function heads. In April 2014 it completed the $7.2bn sale of its handsets business to Microsoft, and by January 2016 its $16.6bn acquisition of Alcatel-Lucent was in place, cementing its transition from a large phone producer to an even larger networking and IT business.
In spite of the changes, core elements of Nokia remain in place, including its respected learning and development centre, the Nokia Academy. A group-wide emphasis on training, says Maria Varsellona, who joined Nokia Solutions as general counsel in 2013 and was promoted to chief legal officer of the wider Nokia group a year later, is at the heart of running a successful legal function.
‘In-house organisations tend to be flat so it is very important for us to be able to give project leadership skills to our lawyers and encourage them to work out of their comfort zone. Nokia has been successful in training lawyers to be business partners and this helps us find development opportunities for our team. We want our senior lawyers to develop exactly the same leadership skills as the core business teams. Even for more junior recruits, we spend as much time teaching negotiating skills and interpersonal skills as pure legal or compliance skills. It’s a complex industry and you need to understand the products to work with them, and that calls for a broader mentality.’
Since joining Nokia, Varsellona has seen the legal team shrink to around 200 lawyers before rising back to its current size of 440 in a short period of time. This, along with the integration of Alcatel-Lucent staff, has underscored the importance of broader skills in a function leader.
‘The role calls for management and leadership skills rather than just legal skills. A leader in the legal and compliance function should be an expert lawyer, a gatekeeper and a business partner that is capable of creating a collaborative and inclusive environment. You need a very large skillset to play all of these roles and it is demanding, but you can’t lose sight of the fact that it is your job to instil the right culture to ensure lawyers have the courage to support the business’ decision-making.’
‘For many lawyers our lack of financial acumen is a huge issue in fully functioning as a leader in business,’ reflects Peter Beshar, executive vice president and GC at Marsh & McLennan.
‘Many GCs don’t have MBAs and increasingly litigators rather than finance lawyers are getting jobs in-house because of the increase in investigations. In my own case, I quietly hired an ex-Deloitte partner who came into my office at 6pm every six weeks or so. I stockpiled everything I didn’t understand and he would walk me through it. Really the issue is that there is a whole nomenclature in the business world that someone needs to decode for you.’
Wise agrees: ‘When I left law school, I wasn’t very good with numbers. I forced myself to go through a number of courses on finance for non-financial managers. I hated every one of them but made myself do it because you’ve got to understand – at a minimum – the management accounts and the company accounts if you’re going to pass comment on what the business is doing.’ The bottom line for many GCs is that, if you want to aspire to senior leadership roles across the company, plugging such skills gaps is a big step towards achieving that goal.
If you don’t want to create opportunities for other lawyers to develop, then leadership may not be for you.
Philip Bramwell, BAE Systems
Likewise, it helps if the GC has experience working outside the legal function. Wise had a three-month secondment in sales while Coates worked with Shell’s chief executive for three years before becoming UK head of legal. ‘Many organisations offer the opportunity to work in different departments and I would certainly encourage staff to consider broader roles if they are available – even if it means working outside your comfort zone,’ says Coates.
Perspectives: Clare Wardle, Coca-Cola European Partners
Recruited from FTSE 100 company Kingfisher to oversee the legal function at the newly-merged soft drink entity Coca-Cola European Partners (CCEP), Clare Wardle has plenty of leadership experience to undertake the challenge of integrating the three legal teams at Coca-Cola Enterprises, Coca-Cola Iberian Partners, and Coca-Cola Erfrischungsgetränke.
Wardle was called to the Bar in 1984 and moved to Lovells in 1986 where she worked for ten years before moving in-house – first at the Post Office, where she served as head of legal, before working as general counsel and company secretary at Tube Lines. She joined British retailer Kingfisher in 2010 as group legal director, taking over as group GC in 2012 where she became responsible for risk, governance, competition and compliance matters. Now based in Uxbridge, Wardle serves as a member of the executive leadership team at CCEP, reporting to chief executive John Brock and serving as legal adviser to company chair Sol Daurella.
At Kingfisher, Wardle played a substantive role in the DIY group’s 2013 expansion into Romania, with the acquisition of 15 Bricostore shops from French retailer Group Bresson for an undisclosed sum. Also in 2013, she established the Kingfisher Women’s Network which involved both men and women across the company helping women at Kingfisher to achieve their potential and saw an increase of senior women in the business. This led to Wardle being named as a Specsavers everywoman in their retail ambassador programme for inspiring success in others.
‘At Kingfisher the reason I started the women’s network was because it was really obvious that diversity was patchy across the group. There was no lack of goodwill about it from the leadership but there was no focus. And we needed that nudge to bring everybody up to the same level of understanding and approach that individual companies had.
[As GC] you are in a brilliant position to lead projects of that kind exactly because you see what’s going on.’
For Wardle, the most important attribute of leadership is confidence. ‘That comes in two axes – one being able to explain clearly your ideas in words that make sense to the people you are talking to, which generally means succinctly and without using long words. And secondly, in ways that appeal to the person you are talking to.’
On the other hand, Wardle disputes the frequent claim that being seen as the conscience of a company is akin to having leadership status: ‘You get a lot of people saying the company secretary or the GC is the conscience of the company. They’re not. If the company doesn’t have a conscience without you, then you can’t resonate with anything.’
Having spent much of his career living and working overseas in the US and in Brussels, Bramwell is an advocate of gaining cross-border experience as a step towards leading a global legal team.
He notes: ‘Working outside your home jurisdiction for part of your career is very important. You need to be able to see your home country as others see it – to give yourself a sense of context and a degree of humility that where you grew up is not the centre of the planet.’
Additionally, Bramwell believes that the bedrock of any legal leader is building a credible track record as a business lawyer ‘who has worked in the trenches, in an operating business alongside the people delivering in challenging conditions. Delivering profit, creating value but actually being on the front line in a business, which is a long way from the headquarters or the c-suite. I don’t believe that you can credibly organise and lead a global legal department if you haven’t been through that experience and have the scars to show it. It’s difficult to structurally organise a legal department if you don’t understand what operational businesses need in terms of legal support.’
According to Daniel Toner, GC and group company secretary at Spire Healthcare Group, GCs not only need to make an impact with the board, but also externally on the industry.
He comments: ‘That means not only plugging in to your peers but also being engaged with the regulator, the political establishment – in our case the Department of Health, NHS England, NHS Improvement – to help inform and influence legislative changes and to develop regulations that work for the taxpayer, the state and for business.’
‘It is equally critical to build relationships outside the walls of the company as there are so many stakeholders who affect the success of the modern company: regulators, rating agencies, journalists etc,’ notes Beshar, picking up the point. ‘I feel strongly that as a GC you should be out trying to build relationships and getting to know other GCs, as this can be an incredible resource.’
For Clare Wardle, the former Kingfisher group GC who was recently appointed legal head and company secretary at Coca-Cola European Partners, the most important factor is confidence. It is also, according to Wardle, the key skill many lawyers – even experienced operators – painfully lack, especially when moving beyond their narrow specialisms.
‘One aspect of that is the confidence to make decisions. One of the reasons that lawyers and GCs are not picked up to run things, whether that is projects or other businesses, is because there is a tendency for lawyers to say: “I’ve advised you – now it is your responsibility to take the decision.” As an in-house lawyer if someone asks: “Would you do this?”, you should be able to say “yes” or “no’” or “I’d do it that way”, and take responsibility for that call and realise that your decision has financial implications and implications for people. That is something lawyers find difficult – it goes against their training.’
Another aspect of confidence, asserts Wardle, is the ability to quantify the financial contribution of the legal function.
‘A lot of people say: “I’m not prepared to put my money where my mouth is and I’m not prepared to say that I will be able to get a certain outcome in litigation.” You can see why they might not – because you can’t control it. But, equally, neither can the marketing department control everything they do and they are quite happy to man up and say that they are a profit centre. It is about a positive attitude to what you do. Fundamentally if you don’t have confidence that what you do is valuable and are prepared to stand behind it then no-one else is going to.’
Another area where lawyers traditionally lack confidence is technology – a field the modern GC may be increasingly unable to avoid grasping.
Julia Chain, director of RPC Perform and previously head of legal of T-Mobile UK, says GCs often put technology in the ‘too difficult’ category, but not embracing it only means their teams end up doing mundane tasks instead of higher-value work – directly affecting their potential as business leaders. Chain believes that the best leaders and GCs are known inside a business for a focus on high-level work instead of, as one GC puts it, ‘the crap on the desk’.
‘There are so many technology products around, everyone is trying to sell GCs something and they don’t know what they want. Their IT departments are very overstretched and they don’t really want to help. And there’s probably not much of a budget anyway. It goes into the “too difficult bucket”, which is a problem because it means they are operating in this rather low-value manual environment.’
Beshar echoes this theme, noting: ‘Digital disruption is a real space for GCs to take on the strategic challenge, own it and try to use their longer view to help the organisation turn a threat into an opportunity. I have organised trips to Silicon Valley for management so we can understand the mindset and see how we can work with it.’
Large financial institutions are often ahead of the pack at deploying technology in their legal teams, partly due to the regulatory and compliance demands in the sector. Lloyds Banking Group’s legal team is currently looking at how it can use automation to create a more streamlined in-house department and give legal the opportunity to focus on high-value work. Other legal teams that have made efforts in applying advanced automation, such as document creation systems and document management systems, include RB (Reckitt Benckiser), ITV, Novartis and Bank of Montreal.
If you don’t have confidence that what you do is valuable and are prepared to stand behind it, no-one else is going to.
Clare Wardle, Coca-Cola
For Wardle, the latest technology does not fundamentally change the business model but it does provide the GC with opportunities. She argues that although external lawyers have removed themselves from the compliance and consultancy side of business as a result of technology, GCs have been pulled into such areas because they have a broader range and can be seen as an effective sounding board for a larger group of people.
‘If you integrate your technology properly into the business, then you should get a lot more data about issues. That enables you to understand what is happening in the business better and with your privileged position, sitting on the board and on the group executive or leadership team, you will be able to understand what issues need to be driven in a way that no-one else can because they don’t get the same 360-degree view of the entire business.’
Although in-house teams have grown substantially in size and stature in the post-Lehman years, perhaps the greatest indication that a GC is also a great leader will be the willingness to give some of that power away in future to technology or new law providers, while retaining only the most important mandates in-house. This may seem counter-intuitive, but essential in ensuring that a GC is seen as more of a strategic adviser, instead of another cost.
As Wardle concludes: ‘You should be – in a great measure – freed up from routine stuff. You and your team. There is this fear that lawyers will be put out of a job because their tiny little contracts or their small cases will be crunched by machines or by people who are outsourced in India and I think really if that is what you came into law to do then you should be ashamed of yourself. You have a got a very good brain, you have got a moral compass. Go and use it effectively to drive change.’
Additional reporting by Catherine McGregor and Alex Speirs.