Rebels with a clause

For classists, the word ‘disruptive’ still carries negative connotations of damage, chaos and disarray. But these days in corporate circles it has become the phrase of the day – a complimentary shorthand to describe tech-driven innovators remaking all manner of industries. But the cult of disruption – birthed in Clayton Christensen’s hugely influential 1997 book The Innovator’s Dilemma – has truly come of age when it has reached not only the legal profession, but its in-house branch.

Lisa, Gan Tomlins, Made.comLisa Gan Tomlins,

Yet meeting the Disruptive GC network of UK-based general counsel or heads of legal working in companies intent on reshaping their respective industries, it soon becomes apparent that this 40-member club means to live up to the aspirational, Palo Alto-infused rhetoric.

‘The thing that ties us together is that we all work in very high-growth, very agile, very demanding and very commercial environments,’ says Neil Murrin, GC and director of regulatory affairs of online train ticket retailer Trainline. ‘There is not much in the way of bureaucracy or hierarchy. The majority of us will day-to-day be talking to the chief executive officer or members of the board, or senior managers. Expectations are very high.’

A wide range of industries are represented in the group, including retail, transportation, tech, travel, food, financial services and well-known entrepreneurial brand names such as globe-trotting taxi-platform Uber, online fashion and beauty store ASOS and food delivery service Just Eat.

And like the companies it represents, the group is growing fast. Established a year ago, with the first informal drinks event in June 2016, the group now has an executive committee that meets once a month and plans to branch out into formal, sponsored events with law firms and third parties.

‘When I joined Made as the first and the sole GC I thought: “This is a lonely existence,”’ recalls Lisa Gan Tomlins, GC of UK-based furniture retailer and co-founder of the Disruptive GC group along with Matthew Wilson, legal director, Northern and Eastern Europe at Uber.

‘When I went to conferences there were particular types of lawyers that I found particularly helpful to speak to – people in very similar situations as me working in disruptive environments – generally very young, fast-growing, and backed by venture capitalists. I thought it would be great to create a network and I met Matt, who was very supportive. I co-opted people in as and when.’

The four-person executive committee is rounded out by Christine Cordon, GC of British travel business Secret Escapes, and Karen Kerrigan, chief legal officer of European crowdfunding outfit Seedrs. ‘Lisa was looking for people who were prepared to put in the time and support her personally but who were also representative of different sectors,’ observes Kerrigan. ‘The executive committee has been running for about three or four months and in that time we have launched a mandate, a website and organised a load of events.’

Ruth Pearson, LendInvest

Ruth Pearson, LendInvest

The current executive line-up is in place for the next year but Kerrigan insists this is a trial run, and if it is successful, others can put themselves forward for the roles on revolving terms. ‘If we want to continue the executive after the year then we can run hustings and people can put themselves forward to be the next members and we can pass it on and consider the next stage of our growth.’

The executive committee is also responsible for deciding which new members come into the group. Potential new joiners need to apply using a standard Google document on the just-launched Disruptive GC website.

Compared to the bumbling logistics of the typical in-house counsel group, the slick website has borrowed some lessons from consumer websites, while the process of adding new GCs has a dash of the private member club about it. As in-house talking shops go, this is very much the 2.0 version.

‘When I first joined I introduced people to Lisa by email,’ says Kerrigan. ‘It became more formalised late last year. We need to make sure the types of people that are applying are the types of businesses that are helpful to keep the spirit of the network. When we do reject people, there has to be an objective reason why and doing it through a form where everyone submits the same information is the fairest way.’ (See ‘In the club’, below)

In the club – are you disruptive enough?

matthew-wilsonMatthew Wilson, Uber

A more formal process to join the Disruptive GC group was set up late last year to regulate the criteria for new joiners. ‘We are reviewing applications quite carefully now to make sure that we can maintain that commonality of characteristics across our members,’ says Lisa Gan Tomlins, general counsel of and co-founder of the group. In other words, it is a club, and a pretty selective one at that.

Gan Tomlins, along with the three other members of the executive committee: Matthew Wilson, legal director, Northern and Eastern Europe at Uber; Karen Kerrigan, chief legal officer at Seedrs; and Christine Cordon, GC at Secret Escapes, review applications for potential members, with the network now invitation-only. The application form is available on the Disruptive GC group’s website.

The discretionary criteria for new joiners includes:

  • GCs or heads of legal/lead counsel to either the entire business, or for larger businesses, a geographic region or a key business area.
  • Working in a high-growth early-stage business that is ‘disrupting’ an industry.
  • Being personally based in the UK.

Questions on the Google document include: ‘What year was the company established?’; ‘How many employees does it have?’ and ‘How is your company a disruptive business?’

‘Our discretionary criteria means you are more likely to be a disruptive business,’ observes Gan Tomlins. ‘You will be a member of a small legal team, often the first or sole GC or lawyer. If you have a team it will be small. The business would have to be relatively young. We would say you would be under ten years old as a business, growing very rapidly and backed by a venture capital firm or venture capital investors. In some cases our members are part of a listed company. We look at everything in totality.’

Ironically, because of the nature of fast-growth companies, there is the possibility that current members may have to leave the group as their company becomes too large, mature and less, well, disruptive.

‘I’m sure we are going to have to deal with that at some point,’ says Wilson, who works for a company that generates booking revenues of more than $11bn globally.

Adds Wilson: ‘We haven’t worked that out yet. And for a lot of the group’s members we hope we will have to deal with that because it means our companies will have been successful. One day, I might get kicked out. That is one that I will have to take on the chin if and when that happens.’

There are 40 members of the group at present. Although the entirety of the list is confidential, some of the companies in the group include: ASOS, Farfetch, Funding Circle, GoCardless, Graze, Just Eat, LendInvest, MarketInovice, Monzo, Notonthehighstreet, Passion Capital, Property Planner, RateSetter, StubHub, Trainline and WorldRemit.

TripAdvisor for lawyers

The digitally-literate vibe is carried on through the group’s activities. Communication between members is carried out on Slack – a secure cloud-based team collaboration tool. Within that, members can have individual conversations with other members of the group, share documents or contribute to different ‘streams’. There are currently a range of streams, one covering general issues, a dedicated fintech industry stream, referrals for job vacancies and/or law firm recommendations and a stream for useful events and seminars.

The approach allows the group to easily tap into tailored and responsive note-swapping. Ruth Pearson, GC at property finance marketplace LendInvest, describes the communication style: ‘In the fintech stream there is a lot more discussion around the compliance function, anti-money laundering – the sort of things that wouldn’t be relevant to someone in fashion or travel. A couple of new members joined recently and everyone gets notified. You know who is joining.’

‘Slack allows you to set up notifications on specific words and works across all platforms – for example, both mobile and desktop,’ notes Simon Coles, GC and company secretary at cashflow finance provider MarketInvoice. ‘There is a full list available with everyone’s contact details.’

Pearson maintains that the messaging service is secure and there is no risk of conflict or privilege issues, despite the fact that some members are competitors. ‘Everybody in the group is a lawyer so we know what the lines are in terms of what we can discuss and how far we are willing to go with confidentiality. There is no real difference with having an offline networking system. It has just moved online so it is more convenient.’

Of the GC members canvassed for this piece, a majority use the group at least once a week, with some using Slack on a daily basis. Additionally, most GCs are engaged in all of the different streams, and use the group for general questions as well as specific-sector questions – both legal and non-legal.

‘I use the general stream,’ says Wilson. ‘It has helped me think about how I build my team and the skillsets required for young, growing teams. I haven’t hired anyone through the group but I have made a number of referrals to other GCs in the group.’

‘I have found the adviser referral bit very helpful,’ notes Ahmed Badr, head of legal at online payment service GoCardless. ‘It is hard to find someone you get along with and who provides correct, concise advice that a lot of people in the group are looking for.’

One non-sector-specifc issue often flagged up within the group is the upcoming General Data Protection Regulation (GDPR), the EU’s new data protection regime. Murrin says the group has helped him and other members find the best external specialists in this rapidly emerging field, which has a huge impact on tech-driven businesses.

‘No-one is an expert in GDPR no matter what they say,’ says Murrin. ‘Trying to find external advisers on it – you can share the benefit. You have your own filter or it’s like TripAdvisor for lawyers – who is good, who is not so good. From people you know and judgement you trust.’

With members of fast-growing companies at widely varying stages of development, but still part of the Disruptive GC group – Uber, for example, generated global booking revenues of nearly $11bn in 2015 – a useful part of the conversation concerns the challenges for a previously UK-based company which is expanding into Europe or has plans to go global.

Adding new GCs has a dash of the private member club about it. As talking shops go, this is very much the 2.0 version.

‘We are starting to do a lot more work in Europe and further afield,’ says GoCardless’ Badr. ‘That is something I asked these guys the other day: “Does anyone have any experience of a firm that is good at co-ordinating that type of international work, such as translation work?” It doesn’t have to be pure legal. There are a lot of conversations that are focused more on operational issues.’

‘Every company at some point is beginning to expand internationally,’ adds Murrin. ‘From the most simple question like, “Does anyone know a good lawyer in Spain?” because you want to do some commercial contracts through to, “Have you seen particular issues in this way?” It is not sector-relevant but relevant to issues we face collectively.’

And sometimes, the group is useful for offering the kind of support that GCs struggle to find internally – with many the sole GC in a company which lacks any sort of formal infrastructure or defined role for its lawyers.

‘I find it helpful in the softer area of being able to talk to others about some of the challenges of working in a disruptive environment,’ says Gan Tomlins. ‘To share experiences of what it is like to work with entrepreneurs and deal with a business that is growing at double or triple rates without having a team growing anywhere along the same lines. I have had chats with members of the group who have managed to grow their team to three, four lawyers. And it is about understanding what kind of business case you put forward [to hire more lawyers].’

Neil Murrin, Trainline

Neil Murrin, Trainline

Additionally, often being the sole lawyer in a fast-growth company means many of the Disruptive GCs are dealing with a host of general enquiries or operational issues outside their core remit or skillset.

‘My primary focus is obviously legal and regulatory affairs but we don’t have the infrastructure of a large company,’ says Martin Cook, GC at peer-to-peer lender Funding Circle. ‘That means you have to take roles in other parts of the business. Recently, I’ve taken a role in government and corporate affairs looking at Brexit. In a large business you’d most likely have a full-time person dedicated to that role, whereas here it was a case of asking: “Who can do this?” Because we have fewer staff and end up interacting with a lot of people, we as lawyers understand the whole business and can take advisory roles on different parts of it.’

‘And then there are the day-to-day queries that people in businesses like this will get coming across their desk all the time,’ adds Coles. ‘Most people in your business assume that because you are a lawyer you know everything about all laws that could possibly apply to any situation. We all have our contacts at law firms who we can phone up and get a quick view on something at no cost but sometimes they will give you a strict legal answer when you want a business slant.’

Although five broad sectors are represented in the group, fintech companies make up half the membership. It is also the only subdivision to have its own industry stream. E-commerce, covering roughly a quarter of the membership, is the next largest industry sector.

With fewer staff we interact with a lot of people, we understand the whole business and can take roles on different parts of it.
Martin Cook – Funding Circle

According to Kerrigan, who set up the group’s fintech stream, GCs are generally more prevalent in fintech because the regulatory demands mean there is a responsibility for companies to hire a lawyer earlier on. ‘You will find there are more really early stage businesses in fintech that have lawyers.’

‘The likes of Uber and Just Eat – there are regulations that affect them and will affect their everyday business, but there is that one extra layer in finance because it involves credit, it involves finance, it involves trusting other people with your money,’ adds Coles.

Developing disruptively

Unsurprisingly, a group of agile, fast-growth companies has attracted the attention of law firms, with Gan Tomlins and the other Disruptive GCs moving to harness that interest to drive the group’s development.

The group currently meets informally every quarter, but interest from law firms and others is handled by the executive committee, who plan to change the schedule to monthly formal, sponsored events with law firms. The group has tendered these out to a pre-selected list of around 15 to 20 advisers so far.

Turning the traditional concept of tendering on its head – where candidates pitch to sell their services – to get law firms to pitch for the privilege of paying to produce the entire event is a statement of confidence. It also reflects the entrepreneurial hustle in the group that is absent from most in-house talking shops, which are typically focused on lawyers at large and mature companies.

‘We have specifically asked for proposals from law firms for the subjects that we think are particularly useful and are collating them right now,’ says Gan Tomlins. ‘We have given them a little bit of guidance but at the same time said: “You impress us!” We have had some more creative suggestions than others. We have seen some law firms that have come back and haven’t just said: “We’ll do a talk followed by drinks.”’

Ahmend Badr, GoCardless

Ahmed Badr, GoCardless

Each of the four executive members has taken a particular area – one legal and one business – for the sponsored events. ‘Being a GC at one of these businesses isn’t just about learning data protection law or the requirements for listing in the UK,’ says Kerrigan, who drafted the request for proposals (RFP). ‘It is also about understanding how management decisions are made. Or learning how to be a leader of a business that comes with founders that are ambitious and want to move very quickly. It is a lot about expectation management as well. This isn’t your average in-house role.’

The executive committee took feedback from members and put together a shortlist of law firms for each future event. Kerrigan’s RFP for all events stated the group ‘did not want drinks and PowerPoints’, leaving requirements deliberately vague to ensure law firms come up with eye-catching ideas.

The first event is being organised by Wilson with Baker McKenzie to address ‘international consumer terms across borders’. Described as a ‘breakfast huddle’, it will be a debate format with a mixture of Baker McKenzie lawyers and some members of the Disruptive GC group debating two sides of a question.

Notes Wilson: ‘We have done four or five tenders now and the response has been overwhelming. We had four really strong proposals for the consumer event. And all of the firms that responded are interested in maybe two or three other events.’ Other topics coming up include ‘Initial Public Offering (IPO) readiness’ and ‘Doing business in the USA’.

Relying on law firm sponsors who are only too happy to provide events free of charge in order to gain access to the group has allowed the Disruptive GC group to remain self-funded, with members only required to pay limited costs. However, according to Wilson, changing the funding structure and making the group into more of an official company is something that is now being discussed by the executive committee.

‘We tentatively decided that for the first year we will keep things relatively informal on the funding side and we won’t charge subscriptions or anything like that, but we will keep an open mind for the future.’

Karen Kerrigan, Seedrs

Karen Kerrigan, Seedrs

Such an attitude would be unlikely in law firms, or even in larger, more bureaucratic in-house organisations focused on areas like banking and insurance. However, this flexibility and commercial drive is an indication that the Disruptive GC tag is not entirely marketing – these lawyers are marching to a different tune to their equivalents in plcs land. As Gan Tomlins concludes: ‘The events are the main focus. We are talking one step at a time. But we are a group of Disruptive GCs so we will continue evolving.’
Additional reporting by James Wood

Case study: Benchmarking disruptively

The Disruptive GC group has used both formal and informal benchmarking since its launch last year. Informal benchmarking usually concerns debates in the group around queries such as acceptable rates for a particular adviser or service and can also extend to salaries for new in-house lawyer recruits.

Says Neil Murrin, general counsel and director of regulatory affairs at Trainline: ‘All of us as GCs have to sit day-in, day-out with our commercial counterparts and it is great to be able to benchmark yourself and your team against others more regularly. The group gives us the ability to say: “Look, generally in high-tech growth companies, this is the approach that’s taken.” That is a powerful thing for me.’

So far, the group has undertaken one formal benchmarking exercise on salaries in conjunction with the recruitment firm Kinsella Legal, which worked free of charge. Gauging compensation is particularly relevant in fast-growth companies thanks to expectations of share options or similar equity benefits.

‘The salary and benchmarking exercise was really insightful,’ says Ahmed Badr, head of legal at GoCardless.

‘We were all asking about pay, salaries or option grants because we had typically moved from a law firm or from a much larger corporate to these smaller, young companies and when it came to salary negotiation or benefits, there was no clear guide what you should be aiming for. We worked with Kinsella on that because we thought people would be more open and honest if a third party was conducting that. They put together the report and came and presented it back to us. It was fed back to the group on an anonymous basis.’

There’s a huge breadth of experience. That makes drawing salary compensations more difficult.
Paul Massey – Crowdcube

According to Paul Massey, GC of crowdfunding platform Crowdcube, the salary survey was specifically helpful because there are different levels of qualification across the group. ‘Some of the disruptive GCs are two to three years’ PQE and this is their first job in-house whereas I’m going on 12 years’ PQE. There’s a huge breadth of experience and looking at the group as a whole it covers people who have been appointed GC as relative juniors to those who are 20 years’ PQE. That makes drawing salary compensations more difficult than in a bank where more or less every GC will have a similar length of experience. It also depends on the size and the maturity of the company. And salary is just one of the things you get at a fast-growth company – there’s also share options and things like that.’