delidacostin

Confessions of a General Counsel: Are You Ready For The Top Seat?

So you want to be a general counsel?

You've worked as a lawyer for some years and the top legal seat is starting to interest you. You've watched your bosses and other executives who sit in the top seats, but what does it all really mean?  

The legal department, like all enterprises, exists in a marketplace.  All market participants have a few things in common. They must develop visions that define their future goals.  They must design products and services that will appeal to customers, and then they must sell those products and services into the marketplace.  

Our technical skills as lawyers are obviously important, but in a dynamic marketplace our abilities to exercise executive discretion in the form of defining vision, negotiating against other business units for resources, handling finances, building teams, and communicating our value are equally important.  The top lawyer must respond to this reality even if her job description does not mention these requirements.  

Over time, I have developed a framework that describes the legal department's functions.  It helps me assess needs and prioritize tasks within my teams.  I have used it to help lawyers analyze what skills they may need to hone before they step into the top seat, and I've also used it to help executives decide what type of lawyer might be the best fit for the first legal hire.  

LEGAL DEPARTMENT FUNCTIONAL PYRAMID

Imagine a pyramid divided into five tiers, or functions.  

The base of the pyramid represents legal operations. The next level up is the corporate basics tier. The third tier is a transactional layer, and also the layer in which many lawyers enter the profession or in-house.  The next tier is legal design and strategy.  And the tip of the pyramid is corporate strategy.  The top lawyer, either by herself or through her team, needs to develop and advance objectives in all of these tiers.  

Legal operations tier.

  • In some ways this is the most important, but understated, tier.  The primary objective of this tier is to set up effective governance practices for the department.  The top lawyer must strive to drive more brainpower and time on high-value legal work and cut low-value repetitive tasks.  She spends time in this tier evaluating department and company wide needs, prioritizing goals and implementing solutions.  This is the tier where the department consciously plans, learns and adjusts its tactics.  
  • For instance, the legal operations team makes decisions about whether to add systems and technology to increase the efficiency of outside counsel billing, budget maintenance, filing systems, and inbound requests to the legal department.  It works with internal and external third parties for the budget and know-how to add those systems.  It develops guidelines and expectations for hiring and training internal and external legal teams; it determines which legal team members work in which tiers.  It drives the process of creating negotiation playbooks and routine task checklists, and creates metrics to track department efficiency and allocate resources.  The legal operations team makes information available through intranets, newsletters, or reports.  It develops practices around meeting frequency and management, reporting, and communication. 

Corporate basics tier.

  • The primary objective of this tier is to manage, or help manage, the corporate requirements such as corporate and board governance, regulatory requirements, risk management, compliance, executive compensation, subsidiary management.    

Transactional tier.

  • The primary objective of this tier is to give "just-in-time" subject matter advice to the company and its business units.  This is the most reactive tier where attorneys and non-legal staff spend time with things like routine contract negotiation, client training, inter-department collaboration, product development, and human resources.  In this tier legal memberstake part in the day-to-day business conversations with internal clients that often start with phrases such as  “can we . . . . ”, ”we just got served . . . . ”, "somebody complained . . . . ", or "we need a contract for . . . . ".  
  • This is the tier where many in-house lawyers begin their in-house career because this is the tier where companies often first become aware that they need legal help.  Many companies hire their first lawyer because it is no longer efficient for non-lawyers to negotiate contracts, manage employee on-boarding processes and paperwork, and handle routine litigation and regulatory compliance and other matters.   
  • Because of the "just-in-time" nature of this tier, assignments are sometimes disjointed and isolated.  There is not always a direct line of sight between the assignments and corporate strategy.  Legal team members who work in this tier spend much of their time putting out fires, answering daily requests and moving workloads through the pipeline.  
  • Finally, it is not the nature of the work that defines work as transactional; rather, it is the fact that internal clients typically need legal support on the work.  For this reason, assignments in the transactional tier can vary in sophistication depending on the company.  Some transactional tiers focus on commercial agreements and vendor relationships.  Some focus on product support.  Others focus on mergers and acquisitions, or litigation, or fianancings.   Managing class-action litigation may be transactional to one company, but more strategic to another.  

Legal design and strategy tier.  

  • The primary objective of this tier is twofold.  First, operators in this tier develop a vision for the department that facilitates top-level strategic initiatives.  For instance, when a legal team prepares a company to go public, it has some choices about the new public company compliance design.  Therefore, the right legal strategy may be an "honor code" framework where decision-making heavily vests in employees.  This decision would need the company to communicate expectations clearly, remove barriers to good decision-making and stand behind consequences for bad faith behavior.  On the other hand, the right strategy might be a permission-based structure where decisions require a gauntlet of pre-approvals.  In either case, however, the legal department must make sure that the entire executive team understands and supports the consequences of that choice -- an honor code may need extra training, and permissions may need extra time.  
  • Second, operators in this tier often address high-profile or high-impact legal matters.  The first financing, merger, international expansion, or high-stakes litigation are all examples of matters that belong in this tier because their "newness" means that they will most likely fall outside the scope of the established practices. The top lawyer and other executives will need to think through the best way to integrate these matters into the company's routine.  

Corporate strategy tier

  • This tier is not an intrinsic legal department tier, but the top lawyer needs to work in this tier to make sure that the other functions within the department are supporting the company's goals.  
  • Sometimes top-level corporate strategy may depend on legal strategy.  For instance, a litigation strategy might open a new market for the company or an intellectual property strategy might create a new revenue stream.  In other cases, the corporate strategy will seem far removed from the legal department's strategic goals.  Regardless of how connected the legal department's goals are to the corporate strategy, it is important that the top lawyer understand the company's top strategic initiatives and how the strategies that the business units will use to execute.  
SO, ARE YOU READY FOR THE TOP SEAT?  

The answer might be yes if you are able to work in all the tiers of the legal department pyramid.  The answer may also be yes even if you are not yet fluid in all tiers because the company might have identified that it needs a lawyer who can operate primarily in a tier in which you excel, but be careful.  Sometimes companies believe that they need a transactional tier attorney when they really need someone who can work in multiple tiers.  In this case, your success will depend on how well you expand your scope.  

Have you been in the top seat?  How have you organized your role?  Let me know in the comments below.  

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Delida Costin is the former general counsel of Pandora Media and lynda.com.  She is also a proud alumna of Boston University School of Law. She often speaks about leadership, legal practice and diversity.  

Learn more about Delida on her website:  www.delidacostin.com

Follow her on Twitter: www.twitter.com/delidacostin

2 Comments

Julie Cummings

Wow! I learned so much reading this article. I love the way you broke down a complicated set of layers into rather easily understood tiers. How great that you have identified the various tiers of in house counsel and shared with readers some examples to illustrate.

HNicholson

Hello,
Do you think your tiers work for small firms as well? Is it possible to operate in more than one tier?

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