delidacostin

Confessions of a General Counsel:  IRAC as a Management Tool; Start with the Problem

This is the first post in a four-part series about IRAC as a useful management tool for the new general counsel and explores ways to identify issues.  

 

This is the time of year when friends reach out to me as they join new companies. The advice that I wish someone had shared with me when I joined my first executive team is this: IRAC is for more than memo writing. Embrace it and let it pave the way for you.  

IRAC. It is the framework that every law student uses to write her first legal memo. The first section of the memo states the issue, the second section recites the rule of law, the third section applies the rule of law to the particular facts and the last section is the conclusion. We look for it in court opinions and in advice that we receive from our outside counsel. Over time, we learn other legal analysis frameworks, but IRAC is dependable. It is universal. Sometimes it is even magical, as it can transform a mocking blank page or a disorganized written brainstorm into crisp analysis.    

I wish someone had reminded me of IRAC's magic when I first joined the management team. In this, and the next three posts, I will share how IRAC is a great framework to lead the legal function.  

**I stands for Issue**  What problem were you hired to solve?  

When companies hire a general counsel, they do so because they have a particular issue or problem. The most important thing you can do is identify that problem. Be careful. The problem may not always be obvious, so take the time to define it correctly. Then take the time to define ancillary problems. How do you do that?  

Here is a hypothetical:     

In the past twelve months, your new company has increased sales revenue by X%. It has accomplished this by selling more volume to its core customer base which has been with the company since its early years. In addition, it has launched a new product to a group of new customers. The new product was built to count online advertising inventory based on ads actually displayed on a user's computer. The problem is that in the industry some online advertising inventory is counted based on ads served from the company's servers. There is no standard in the industry and advertisers and media companies are tripping over what ads trigger a customer payment: does it count when the ad is served or when it is displayed? The company's existing sales contracts do not adequately address this issue. It takes three times as long to negotiate a contract for the new product, and when combined with the increased number of contracts with your core customers, the company is facing a serious commercial contract backlog. The company can't get deals negotiated and signed quickly enough. The sales teams are spending too much time making changes to the paper instead of selling, and not all of their changes are approved for revenue recognition. The finance team wants more input into the negotiations. Customers are requesting features that the product team has not built. Everyone in your company is communicating about every contract by email. Your legal team is swamped and using several different outside lawyers to help negotiate. 

The first Days 
  1. Go on a "listening tour". Go back to the people you interviewed when you were considering the position, ask them what they need from the legal department, and then listen. Ask them what concerns keep them up at night, and then listen. Expand the tour to your direct reports, your peers on the executive team, outside counsel, and if appropriate members of the board of directors. Ask the same questions, then listen.  
  2. Put it all together. You may find someone who can summarize the current landscape in the form of the hypothetical, but it is more likely that you will get isolated pieces from different stakeholders. You will hear many different problems and possible solutions. That's okay; identify what groups surfaced which problems and their proposed solutions. Then write your own hypothetical. Make it as robust as you can.  
  3. Keep your main client, the company, in perspective. Don't lose sight of the top-level corporate problem: the commercial contracting quagmire is a threat to future revenue growth. Every other stakeholder concern is important, but the corporate problem is paramount.  
  4. Tease it apart. Tease the actual problems from the causes of the problems, the impact of the problems and possible solutions. Be careful to incorporate as many themes as possible from your listening tour. For instance, someone on the legal team might insist that you need to hire more lawyers to negotiate. Ask yourself, would this solve the real problem? Or would it be better to spend a week or two drafting a new contract template specifically designed for the new product, explore a technological solution to allow people to share information about a contract more efficiently than through email, and join an industry group focused on standardizing how an ad is counted?
  5. Prioritize. Sometimes, the right short-term solution is to tackle the impact of a problem and not worry about its cause. In that case, you should roll up your sleeves and start negotiating, but work in parallel towards a longer-term vision. Start talking to others in the company about the requirements necessary for more streamlined communication, find those industry groups, start learning the revenue recognition rules and product roadmaps.  
  6. Communicate and test a summary of your analysis. Do others agree that you are focused on the right problems?  
  7. The legal team is a stakeholder too. Next think about the legal team as a stakeholder. Take a look at the legal department functional pyramid. What tiers will you need to introduce and strengthen in order to be effective?  

Everything starts with the issue in IRAC. It is important to solve the right problems. They will not be neatly packaged as they are in hypotheticals or legal writing assignments, but you will be able to find them and refine them so that you can move forward to rule of law, application, and analysis.  

A bonus tip

If you are a new general counsel, consider joining the Womens' General Counsel Network, founded by Jan Kang.  

 

What process do you use to identify and refine problems?  Do you still use IRAC?

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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

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