Adding Value, Not an Adversary
Terry Rasmussen, senior vice president, general counsel, and secretary at Thrivent Financial for Lutherans, a fi nancial services organization in Minneapolis, says the 27 lawyers in her department are viewed as “strong partners that are able to solve very complex problems and enable the business to accomplish what it wants to accomplish.”
That’s a good position to be in. But it didn’t happen by magic. Rasmussen says that she and her colleagues have had to work for it. “I’ve been at Thrivent now for a little over six years,” she says. “When I got here, my colleagues did complain about the lawyers, principally that ‘the law department won’t let us do anything.’”
That’s not an uncommon sentiment in companies with in-house legal departments. Christy Caspers, chief legal offi cer at Alexandria-based Tastefully Simple, Inc., a food products company, says she’s heard in-house legal departments referred to as “the department of ‘no.’”
There doesn’t have to be any truth behind that perception for it to take root. Rasmussen says when she started her job, the company’s lawyers were in the habit of responding to questions with lengthy memos—essentially formal legal opinions that the nonlawyers in the organization had little hope of parsing.
“While the memo never said no, it said ‘extremely complicated and hard,’” she says. “It really acted as kind of a deterrent. The business just didn’t even know where to begin with a memo of that length. It had all of the issues, but it didn’t actually say, ‘Yup, there are a lot of issues here, but let’s work together to solve it.’”
Businesses may also view company lawyers as a money pit—a sizable expense without a tangible result. “It’s hard to show an actual dollar amount for litigation that didn’t occur,” notes Lee Pulju, general counsel for Universal Hospital Services, Inc., a medical equipment provider in Edina.
It’s also hard to quantify regulatory nightmares that never materialize. Heidi Wilson, vice president, general counsel, and corporate secretary at Tennant Company, a cleaning equipment manufacturer based in Golden Valley, says her team of four lawyers has worked hard to put processes and organizational structures in place that make it easier for regulators to confirm company compliance. But the gains aren’t obvious to the untrained eye because the regulatory landscape becomes more complicated every year.
“If R&D spends money, they develop a new product,” Wilson says. “If marketing spends money, they increase our sales. If our factory spends money, they get more efficient and reduce our margins. I’m just a straight cost. What I save is litigation that doesn’t happen, regulatory fines that don’t happen, loss of market that doesn’t happen.” She chuckles: “If I’m successful, there’s no evidence that I mattered.”
The Power of Words
Brian Lindberg is senior vice president and general counsel for the Minneapolis- based National Marrow Donor Program, which matches bone marrow donors with patients needing transplants. He’s been exempt from proving his department’s worth, only because his department didn’t exist until November 2007. His colleagues remember the bad old days, when they had to retain outside counsel (at significant expense) every time they had a legal question.
“I’m not in the uncomfortable spot of having to justify my existence here, he says. “I can still point back to 2005 and 2006 and demonstrate that the organization was paying X number of millions of dollars for outside legal fees, and I can demonstrate that that number is 75 or 80 percent less in 2011. Frankly, not only is there significant cost savings from that perspective, but I think the organization gets more thorough, up-front, affirmative, and frankly more valuable and pragmatic legal advice as a result, because we are more available.”
Ann Shaw, senior vice president, associate general counsel, and ethics officer at Ceridian Corporation, a human resources services firm in Bloomington, also doesn’t think her department has any trouble justifying itself. She says she’s never even heard the “department of no” epithet. But she does know what it’s like to have a PR problem as a corporate lawyer.
“I think in the past, I was only associated with stuff that no one wanted to deal with,” Shaw admits. “I dealt with employment issues, executive terminations, work force reductions, and litigation of all sorts. So I think in those roles, it was, ‘Oh my gosh, here she comes. It must be trouble!’” She says she addressed the issue by forging strong relationships with her colleagues, and by learning how to communicate in a way that increased others’ comfort level. She learned to start off conversations on a positive note, and to tell executives about potential problems as soon as she was aware of them.
“I remember a former CEO told me, ‘I want you to be somebody from whom I can expect no surprises,’” Shaw recalls. “For example, if you have a bad piece of litigation that’s going to cost the company a bunch, or you need to think about settlement numbers, or you have an employment relations issue that you have to resolve, even if it’s bad news, if people know it, sometimes the predictability is helpful.”
In general, the way lawyers communicate with businesspeople can have a huge impact on how the lawyers are regarded within the organization. “Instead of saying ‘No, you can’t,’ my favorite answer is ‘It depends,’” Caspers says. “In my perspective, there’s some black and white in the law, but mostly it’s gray. And it’s mostly risk tolerance. So I will outline a variety of options for whoever is asking me the questions, sort of in order of high risk to low risk. And I recognize that the decision maker often is not me.”
Indeed, says Michael Connelly, vice president and general counsel at Xcel Energy, a utility company based in Minneapolis, when it comes to commercial matters, lawyers are often far more risk-averse than their nonlawyer peers within an organization. That can lead to a perception that they say “no” a lot. The challenge, then, is communicating to the business why they are taking the position that they are taking, and what the implications are of going a different route.
“A lot of times, it’s just finding out what the actual goal is—the kind of need behind the need,” Pulju says. “We’ll have something that a client wants to do or a customer wants to do, and we say, ‘Oh, we can’t do exactly that.’ But if we find out what it is that they really need, a lot of times we can find a compromise solution.”
Plugging In and Speaking Up
If corporate lawyers are serious about being well regarded, they need to become partners in the future of their companies, Shaw says. “You have to care about it enough to know about the company,” she stresses. “I think sometimes lawyers resign themselves to go in their box and close the doors. They might attend meetings, but they don’t have anything helpful to add. I don’t think that’s very helpful to the business leaders. So I spend a lot of time and energy getting to know the company, getting to know what the future is, and being part of that future development.”
Rasmussen agrees. After she saw the alienating effect of her department’s long, difficult-to-understand legal memos, she began encouraging the lawyers to give more informal advice to their colleagues.
“We had to kind of shift our mindset a little bit,” she says. “I told them, ‘It’s okay to sit at the table for these meetings. I want you knowledgeable about your area of expertise, so you can give real-time advice.’”
Wilson meets every week with the executive team, but others in her department attend regular meetings in their respective business areas. “My legal assistant responsible for patent and trademark participates in marketing meetings and in certain R&D meetings,” she says. “My lawyer who manages the sales and marketing accounts for North America will sit in the North America monthly review meetings. [When you participate], you’re learning the business. You’ll hear things. You’ll have an opportunity to say, ‘You know, if you’re going to do that, come see me, because we’ve done that before and we can get the contract out for you really quickly.’ They may not have even known that they needed a contract. By being present and hearing what the business is going to do next, you can get out ahead and deliver your product very quickly. And now they see you add value.”
Pulju believes that there are two things that cause people in a company to avoid the legal department: fear of a “no,” and a concern that legal will take a long time to respond or bog down a project. She addresses these worries in two ways: first, by guaranteeing an initial response to any question in one business day; and second, by sitting in meetings where new ideas are being developed, so that she can answer questions as they come up.
“For example, we have a new product development group,” she says. “We try to be involved there proactively so that we’re engaged in that process all along, so it’s not a last-minute ‘Oh, we need to run this by legal,’ and it’s not a big issue and everything has to go to square one. It’s better to just be in the process the whole time so you can address issues in a way that doesn’t slow everything down.”
Of course, it’s impossible for lawyers to be everywhere at once. That’s why Caspers has built an informal group of legal helpers throughout Tastefully Simple. “Our legal department is very small: myself as the one lawyer, and then we have an administrative assistant on our team,” she explains. “I can’t be in every meeting at all times. So I try to build advocates—to build the knowledge base of others so that they can be my eyes and ears when I’m not there.”
She began by doing a bit of trademark-related training with the marketing group. Then she met with the writers’ group to train them on basic copyright law. She met with people who touched contracts to give them a little bit of contract administration training. Her concept: If people knew what might constitute a legal issue, they would be more likely to check with her before something got out of hand. So far, it seems to be working.
Even just a yearly presentation on what legal is up to can make a big difference in how the department is perceived, Pulju has found. “We do a
lot of [internal] marketing, which was actually something that was started with my predecessor,” she says. “We try to meet with our key internal clients at least once a year and give them a little presentation on what we’re doing and what we’ve done for them, so that they know that they should be contacting us and they can see what kind of value we can add. We have over 80 offices in all different states, so it’s not always possible for us to meet everybody in person. But we use Brainshark [a cloud-based presentation software] to connect with them. I think just having that kind of training is really helpful, because otherwise you’re just hearing legal say no, as opposed to understanding what the issues are and trying to find a way that both sides can win.”
Communication, whether in the form of marketing, training, or internal networking, helps take the mystery and fear out of legal. “Really, it’s conversation, conversation, conversation,” Wilson says. “You don’t want to be doing ‘the sky is falling’ all the time, because frankly, the sky hasn’t fallen, because we’ve done a pretty good job. But the sky could fall. So every time you have an event where something is a potential issue or problem, you use it as an opportunity to say, ‘This is an example of why we need to improve our processes.’”
The Proof of the Pudding
At Universal Hospital Services, Pulju’s team tracks its hours just as if its internal clients were external ones. That way, they’re able to show their colleagues exactly how they spend their time. They also track improvements in legal-related metrics such as insurance premiums and contract turnaround time, in order to demonstrate their worth to the organization.
Not all legal departments keep such close track of their hours or generate specific metrics to demonstrate their productivity. Yet many in-house legal teams create company-wide efficiencies by examining everyday processes and simplifying them. Rasmussen helped Thrivent pare down its membership application (no small feat, since the organization is a tax-exempt fraternal benefit society that must demonstrate a common bond among its members), making it less forbidding to potential members and helping the organization grow more quickly.
Similarly, Caspers streamlined Tastefully Simple’s contract administration process. “We do a huge number of contracts,” she says. “Vendor contracts, independent contractor contracts, real estate contracts, the whole gamut. When I came here, all of the contracts that were anything significant were sent out to outside counsel for review. I knew that there must be a better way. So I put together a contract administration process. We found that there were certain contracts [where] we could create templates so that those could be fast-tracked. There were certain contracts where we needed to work directly with a vendor.
“And then there were others that had to be drafted out of whole cloth,” Caspers adds. “By establishing these three ‘buckets’ of contracts, the contract turnaround time went from months down to weeks—in some cases down to hours. And our tracking of outside legal fees as it related specifically to contract review has dropped down to easily 10 percent of what it had been.”
In the end, Caspers finds the most useful metric is the legal team’s esteem in the eyes of the organization. This she measures with periodic internal surveys. She recommends that other inhouse legal departments do the same, especially if they’re not sure where they stand with their colleagues.
“Find out if you have an image problem, or if there are real issues that need to be resolved,” Caspers says. “Maybe you really are taking too long to respond to questions, or maybe you do say no all the time or most of the time. Is it image, or is it real? Either way, then you need to set a goal to resolve that.”