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THE

role of the corporate attorney has evolved. In-house counsel must be versatile and provide nonlinear solutions.

TRACY PRESTON Neiman Marcus Group

W O M E N 'S strengths in multitasking, consensusbuilding, and creative thinking make their diverse perspective in legal invaluable. Critics may take

ISSUE

with “bossy” or ambitious females, but women’s voices are undeniably valuable, and their worth is proven as they take the helm at:

VOYA | BRIGHTSTAR FACTSET RESEARCH SYSTEMS KATE SPADE | LEGO | NASCAR NEIMAN MARCUS GROUP PUBLIC STORAGE | YAZAKI TEVA PHARMACEUTICALS


Congratulations to all of those profiled, including our friends: Rachel R. Stern FactSet Research Systems William B. Sailer Qualcomm Matthew P. Blischak Teva Pharmaceuticals


IN THIS ISSUE

CONNECT

46 GUITAR CENTER

Legal helps the big-box store prove bricks and mortar are still viable

68

VULCAN MATERIALS

How one legal team changed e-discovery from a liability to standard procedure

80 TARGET

The retailer makes an all-encompassing commitment to diversity, and legal answers the call

110 MEDLINE

The private sector is poised to strike in health care’s consolidating market

118

TEVA PHARMACEUTICALS

The pharma leader won the first battle, but challenges still lie ahead in IP protection photo: cover: Trevor TKTKTKTK Paulhus; this page: Caleb Fox

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CONTENTS

24 APPEAR

IMPLEMENT

12 NEIMAN MARCUS

WORLD VIEW

M&A

34 KATE SPADE

46 GUITAR CENTER

Climbing to the top with a combination of grit and grace

19 NASCAR

The difficult truth about achieving your dreams

22 JUST MARKETING INTERNATIONAL

Uncle knows best: familial wisdom guides one attorney’s tough calls Made in the military: an attorney’s path is defined by service of country

26 PUBLIC STORAGE

An immigrant’s tale of hardship to high-powered attorney

38 HTC

Reflections on a momentous career

IP 41 EHARMONY.COM

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OCT/NOV/DEC 2015

The site’s patented algorithm isn’t its only asset under fire from infringement

44 COMCAST

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Perfection is the enemy of good counsel. How legal responds to the fast-paced company

How a former Naval officer approaches the battle for IP

Creative growth keeps brick-and-mortar shops alive and thriving

50 TRINITY INDUSTRIES

PROCESS

30 RAYTHEON

24 NORTHROP GRUMMAN

How one attorney leverages friends in farflung places to defend high fashion

An acquisitive company diversifies its portfolio

COLLABORATION 53 LEGO SYSTEMS, INC.

How the legal department is building bridges with the business functions

62 SEQUA CORPORATION

Building out an archetypal compliance policy

STEWARDSHIP 66 CNH GLOBAL

Legal brings value by recovering losses

68 VULCAN MATERIALS

Demystifying e-discovery with a crossfunctional team

COMPLIANCE 56 RMG NETWORKS

Encouraging ethics through empowerment

60 QUALCOMM

The wireless company plays to its own hand, creating a compliance application

pictured, left to right: Doug DeMoss, Geri Lynn Elias, Catherine Smith, and Eric Tower


TABLE OF CONTENTS

99

82 EVALUATE

LEAD 74 BUFFALO BILLS

How the team’s first GC embraced the challenges in his rookie season

79 SPLUNK

Building institutional maturity at a young company

80 TARGET

Legal’s role in an all-hands diversity commitment

82 BRIGHTSTAR CORP.

Setting the tone for diversity from the top

86 LENOVO

96 VOYA

Setting standards with newfound independence

99 ADVOCATE HEALTH CARE

A growth mind-set guides lawyers in a rapidly changing industry

102 FACTSET RESEARCH SYSTEMS

How automation serves attorneys and their clients

TECHNOLOGY

110 MEDLINE

128 PALO ALTO NETWORKS

How to have the best of both worlds: lower costs and better service

How to communicate your case for investment to leadership

Interdepartmental relationships are built through trust 92 US FOODS

How to maintain focus in the face of acquisition

photos by: Northrop Grumman, Caleb Fox, Brightstar Corp., and Caleb Fox

Why a private company is well-positioned in the Affordable Care Act era

115 NEXION HEALTH

Risk mitigation in a highly regulated industry

118 TEVA PHARMACEUTICALS

105 YAZAKI

88 ABERCROMBIE & FITCH

HEALTH CARE

Winning a single battle isn’t enough—even in the US Supreme Court

122 ERICKSON LIVING

Applying compliance and coordination to lower costs and improve well-being

125 AVAMERE FAMILY OF COMPANIES

Why the long-term-care provider signed up to send its patients home

Information sharing for the common good

130 MICRON TECHNOLOGY

How to withstand global industry consolidation

133 THE SUN PRODUCTS CORPORATION

Patent reform’s impact on household products

CONNECT 136 Modern Counsel is a

networking platform, creating a space for you to reach out to other lawyers featured in this issue to make real-world connections.

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MODERN COUNSEL

Q&A WITH GUEST EDITOR

Courtney VanLonkhuyzen Courtney VanLonkhuyzen is an accomplished attorney working for the global Fortune 500 company Lenovo. She was chosen to guest edit this issue of Modern Counsel for her unique perspective as former outside counsel and committed supporter of women’s and minority initiatives. Courtney is excited about the evolution of the in-house counsel role and women’s compatibility with it, as are we. Look for her commentary throughout the issue. And see our conversation with her about the themes we’re addressing in this edition and the state of women in the legal profession. – MICHELLE MARKELZ, MANAGING EDITOR

Michelle Markelz: It’s been nearly 150 years since an American female attorney was admitted to a state bar for the first time. Men still outnumber them 2:1 in the legal profession. In the C-suite, the disparity is even greater: 4:1. Yet women are earning almost as many JDs as men. Where’s the disconnect? Courtney VanLonkhuyzen: There isn’t one reason; there are multiple reasons that come together, and they’re systemic issues. The first—and probably biggest— is that we need to overcome the role of unconscious bias. The bottom line is, we’re humans. With every interaction, we come to the table with biases. That’s OK. That’s normal. That’s what makes us diverse in thought. But if that’s what’s stopping people from moving up, then we 6

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need to become aware of it and change it. For females, unconscious bias labels ambitious women who speak up as “overly assertive,” “bossy,” and “aggressive;” whereas, the same type of man is seen as “a leader” and “motivated.” It really infiltrates every aspect of women’s lives. To me, the only way to stop it is to continue to bring transparency and awareness to it, because most of the time, I don’t think people are being biased intentionally; it’s because they have a blind spot. MM: What are the ramifications of that bias? What is it about being “bossy” that impacts women’s ability to advance? CV: Promotions are made around a collective decision of the people above you, which takes into account all of the formal

and informal channels from which they receive feedback about you. If people are unfairly viewing a female as bossy or overly ambitious, then it does affect her pay and promotions. But what I think is equally damaging is that it quiets an important, diverse voice in decision-making for a company. If women know they’re viewed that way, they’re not going to speak up, or they’re going to change what they say so that it’s less straightforward and, therefore, less helpful for the company to make a better decision. MM: What other challenges do women face in the legal profession today? CV: Another issue is the huge pool of women who are highly educated, who’ve had careers in law and business and then in the home, whom we haven’t figured out how to reincorporate into the workforce. It’s an incredible talent pool that’s gone out of the workforce for a period to raise their children, and we’re not tapping into them. And there are challenges to that, especially in law firms, because the partnership track is all about the billable hours you produce and the amount of money you bring into the firm—some of which coincides with being there over a period of time to demonstrate those metrics. The standard objection is that it’s hard to say that women who come back should make partner when their male peers never left to have children. I think women have realized there’s a big glass ceiling, and they can march through it or go around it. Many are happier going around it, and I think that’s what successful women are starting to do by starting their own businesses and finding more flexible careers. MM: Like many corporate counselors, you began your legal career in private practice. There’s been talk of an “exodus” of women from private practice because of the glass ceiling. Does the corporate environment have more to offer a female attorney? CV: I would say no. Perhaps in the past the in-house world looked like that, but now it’s equally as competitive as private practice. I don’t think it’s always about the workplace you’re in with respect to private practice or a corporation; it’s more about what you want as a professional. If you’re interested in moving up, and you want a leadership role, in my opinion, you’re going to work just as hard in both environments. I also think the main driver


FROM THE EDITOR

“The role of the lawyer has evolved from staying in a box giving legal advice to being a strong, trusted strategic advisor and businessperson. My belief is that women are very well-suited to fit that role.” – COURTNEY VANLONKHUYZEN

COURTNEY VANLONKHUYZEN Supply Chain, Procurement, and China/Asia Pacific Lead Counsel Lenovo

Courtney VanLonkhuyzen is supply chain, procurement, and China/Asia Pacific lead counsel for Lenovo’s mobile business group. She serves as executive director, vice president, and corporate secretary for the Motorola Mobility Foundation, the company’s philanthropy arm that she helped relaunch to reflect the brand, engage employees, and give back to the community. Her dual role allows her to operate at the nexus of technology, business, law, and community outreach. Prior to joining Motorola, VanLonkhuyzen clerked for the Honorable David McKeague on the US Court of Appeals for the Sixth Circuit. When she was in private practice, she was a litigator at the Chicago office of Skadden, Arps, Slate, Meagher & Flom, where she represented public and private companies in high-profile disputes and provided extensive pro bono representation in immigration and criminal and civil appeals. Before pursuing her law career, VanLonkhuyzen was an administrator of a large for-profit nursing home on Chicago’s north side, where she transformed the business to reach profitability. VanLonkhuyzen is passionate about the application of business principles and discipline to nonprofit organizations. She was instrumental in helping structure a multimilliondollar strategic alliance between the Eleanor Foundation and Chicago Foundation for Women (CFW) to maximize donor dollars during difficult economic times and preserve the Eleanor Foundation’s mission to promote women’s economic security. She continues to serve on CFW’s board of directors. VanLonkhuyzen also helped Motorola relaunch its diversity and inclusion efforts last year. VanLonkhuyzen received her bachelor’s degree magna cum laude from Hope College and her juris doctorate cum laude from the Northwestern University School of Law, where she served on the executive board of the NU Law Review. She was recently named to Crain’s Chicago Business 40 under 40 list.

photo: Caleb Fox

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“Unconscious bias labels ambitious women who speak up as ‘overly assertive,’ ‘bossy,’ and ‘aggressive;’ whereas, the same type of man is seen as ‘a leader’ and ‘motivated.’ It really infiltrates every aspect of women’s lives. [...] But what I think is equally damaging is that it quiets an important, diverse voice in decision-making for a company.” – COURTNEY VANLONKHUYZEN

of the intensity of a company’s environment is the type of industry it operates in. If the industry itself is fast-moving or heavily regulated, it will likely result in a more demanding schedule for corporate counsel. MM: In her feature, Karen Leetzow of NASCAR (p. 19) talks about making compromises between work and life. Do you think the compromises are the same for men and women who want to advance in the legal field? CV: I do. I think being a professional in today’s world and wanting to advance require a lot of sacrifices. If we think of it as a daily balance or a weekly balance, it doesn’t work, because we’ll pretty much fail at all the hats that we wear. We need to figure out how to juggle those priorities over a period of time and find the right fit for our families, our companies, and ourselves. Everyone will make different choices at different times. But I see less of a difference between men and women with respect to that—and maybe even some bias against men who make the decision to prioritize family. I do think women are seeking out more flexible options like consulting and small businesses. They can’t necessarily have a perfect balance, but they want the flexibility to manage it themselves. MM: Catherine Smith, GC of Brightstar (p. 82), says in this issue that “diversity of thought” was a critical criterion in hiring 8

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a new CEO. If women are leaving private practice, is diversity of thought decreasing, and is that affecting the value of outside counsel? CV: It’s a long-standing challenge for outside firms to figure out how they can truly relate to the businesses they serve. It’s probably exacerbated by the exodus of women. MM: We’ve reached a point in which diversity is an understood necessity in business, but how would you describe the value a woman brings to the corporate counsel role? CV: There is no one answer. It can be diversity of almost anything that helps vet out a different perspective, such as past work experience, schooling, cultural background and ties, technical skills, gender, sexual orientation, and regional experiences. As humans, we have blind spots. We have things we just do not see and tendencies and biases we don’t know we have. Getting others to vet those blind spots helps reduce them and leads to better decisions more often. If we can identify those, we can lead to a meritocracy—a place where the best path is what we execute on. MM: We spoke with the GC of the LEGO Group, Robin Smith (p. 53), who participated in a reverse-mentoring program with CEO Jørgen Vig Knudstorp. How can both men and women have honest,

no-holds-barred conversations about unconscious bias and its impact? CV: One of the biggest challenges for a company is creating a great culture with transparency, diversity, and inclusion so that the environment is a trusted place for employees to flourish and drive the company to success. Our parent company, Lenovo, has an incredible chief diversity officer, Yolanda Conyers. She’s measuring the senior leaders and holding our entire company to a very high standard. And our president, Rick Osterloh, has reprioritized diversity and inclusion for us. I think it definitely has to be people like Rick and Yolanda who set the standard at the highest level. You also need grassroots employee support for a positive culture. I’ve seen firsthand, despite Motorola’s many changes in the last few years, employees who feel extremely proud to work at Motorola and live Motorola values internally and externally each day. But you also can’t create an eggshell environment in your company. You don’t want people so nervous about stepping on toes that you can’t get anything done. I think we have to have a little sense of humor about the fact that, as humans, we misstep, we miscommunicate, and we have to give each other a break. If your leadership team and your employees are committed to creating a culture, the company will achieve and maintain it, even when there are a few bumps in the road. MM: What are you most excited about for the future of women in corporate law? CV: The most exciting thing for me, hands down, is that the role of the lawyer has evolved from staying in a box giving legal advice to being a strong, trusted strategic advisor and businessperson. My belief is that women are very well-suited to fit that role. We tend to have strong emotional intelligence; we have good listening skills; we have the ability to think flexibly; we can multitask well; and we are able to build consensus and collaborate well. You’re not working with a few big clients (as in a big law firm); you’re working with 20 or 30 clients, all with competing priorities. I think women tend to handle that very well. And I think the solutions that we come up with tend to be less linear. We come up with very creative solutions, and in the in-house environment, that is key to accommodating the business objectives and adding value for the company.


MASTHEAD

EDITORIAL

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“It’s not always easy to be the good guy in this profession [...] Civility, especially in contentious situations, takes effort.” – WES ZIRKLE, JUST MARKETING INTERNATIONAL

10

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APPEAR There is no typical path to general counsel, partner, or associate. Each new position, case, and initiative is both a test and a risk. Many of the lawyers who go in-house—typically viewed as a safer, more stable position—only got there because they took a gamble in leaving their law firm careers behind. But even the most successful in the field know that nothing comes without sacrifice, either personal or professional. Speaking candidly about the paths we have taken is the only way to address the obstacles and make inroads for rising lawyers.

INQUIRY What risks did you take to get to where you are in your career? Would you take them again, knowing what you know now? Do you have a personal moral code that guides you, outside of the ethical requirements of an attorney? Where does that code come from?

For more on professional risk-taking, see the American Bar Association’s article “Learning to lead, taking risks well worth the effort,” which summarizes the philosophy of Gindi Eckel Vincent, author of Learning to Lead: What Really Works for Women in Law.

JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.

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photo: Trevor Paulhus


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Warrior Mentality -&Southern Charm Tracy Preston has reached professional heights by never being afraid to take a risk. Her journey to general counsel of Neiman Marcus is defined by activism, tenacity, and defying the odds BY URMILA RAMAKRISHNAN

OCT/NOV/DEC 2015

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T

racy Preston remembers watching Perry Mason with her babysitter. Though she didn’t have a full appreciation for what Mason did at such a young age, she found the show fascinating. She followed that fascination to Neiman Marcus, where today she is senior vice president and general counsel. Her unique perspective as a woman of color and her diverse legal background give her an edge in the industry. It all started with her Southern upbringing in Virginia. As she was growing up, Preston’s family instilled in her the values of teamwork and leadership. Her parents were both teachers with strong work ethics, so Preston always pushed herself. She challenged herself throughout high school in tennis, cheerleading, basketball, honors programs, student government, and academics. She was valedictorian of her class. She remembers spending summers with her grandparents and watching them support voting rights by working the precincts. Her grandfather was a stalwart

champion of representation and one of her earliest mentors. Following in the footsteps of her grandparents, Preston involved herself in civil rights and pro bono work after studying law and moving to San Francisco. It was her way to give back to the community. She worked in pro bono clinics on cases ranging from landlord issues to child custody concerns. Additionally, she volunteered at a program for at-risk children and assisted the homeless in finding shelter. “At its best, the law provides protection to the innocent and can be a powerful platform to help people,” she says. “I enjoy helping and giving back to others and giving them a voice.” She recalls a taxi driver she encountered through the program who became homeless. Preston worked with him to complete his requirements and paperwork and obtain the funds to get his license back, giving him the opportunity to take care of his family. As a member of more than one minority group, Preston values diversity. For her,

motivations can go a long way to crafting an amenable solution. MC: What does a typical day look like for you? Modern Counsel: What effect do you hope your presence and perspective has on Neiman Marcus? Tracy Preston: I try to create workability. What I mean by that is, people often evaluate something as good or bad, pass or fail. Workability is more inclusive. It’s a broader perspective. It’s choosing from what works and altering what doesn’t. Given my experience working at different law firms and in house, I have been involved in broad spectra of the law, including employment, litigation, governance, and compliance. I think I’m quite tenacious, and I like to assume positive intent and take in all viewpoints. I think generally in any litigation, negotiation or proposal, people are doing their best to get some need met. While there may be disagreement on the strategy, seeking to understand the underlying 14

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TP: I’m often quickly moving around from one business issue and legal discipline to the other and playing in numerous “sandboxes.” I enjoy working for Neiman Marcus because no two days are the same. Even planned days don’t necessarily go the way you could hope. I have a litigation background, and I think people who have that in their background tend to like the adrenaline kick you get when your day isn’t planned. It keeps you on your toes. In my role, I have to be a chief issue-spotter and know where to go to get the information. Adaptability and flexibility are a huge part of my role, but that’s exciting for me. MC: In your first nine months with Neiman Marcus, you worked on an IPO that ended up being a private equity sale of the company. What perspective did you bring to that process?


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“Everyone has a story. That story will often inspire someone else. It gives permission to the next generation to express their talent in a productive way.” – TRACY PRESTON

any underrepresented individual brings dimensionality to a professional team. She sees this as reflective and necessary in the multicultural, global landscape. “Educational expertise is one thing you bring to the table, but your life story and experiences are just as important,” says Preston. “I think it’s relevant that the next generation has a broader scope of role models.” She hopes to inspire other women of color in roles like hers, as well as young

TP: It was a combination of things: the immediacy of the project, a forward-thinking company, being blessed with a diverse group of incredibly talented leaders at Neiman Marcus—plus working with a fantastic team. I love a challenge, new things, and being fully engaged. I think all those things occurred in the first nine months. It really pushed me and required immediate engagement with my new colleagues from my team and others. It was not only about taking the leadership role and doing good work, but really hitting the ground running. I didn’t have the time to learn the nuances. I had to integrate. I love working in the paradigm of defying the odds. At that time, it was all about learning many things at once and just diving in. MC: What’s your strategy for finding and handling new legal issues? TP: I’m not in the practice of forging new ground or creating new law. I try to understand and manage the nuances and react to change. Unfortunately, the law hasn’t caught up in a lot of areas—for

girls. “You can’t be what you can’t see,” she adds. “Everyone has a story. That story will often inspire someone else. It gives permission to the next generation to express their talent in a productive way.” Preston tells other women to experience life outside of the office. Personal passions and relationships add to success because they add dimension and value to contributions and leadership. This is where her love for travel, interest in other cultures, and passion for dance and the arts has contributed to her professional success. Whether going on a safari, training for a half marathon, or performing in a dance recital, each personal interest has also provided opportunities to strengthen her discipline, teamwork, leadership, and flexibility, as well as discover new insights about her profession. When asked if she has any advice for other women aspiring in her industry, Preston insists, “Don’t be discouraged by the setbacks, and don’t take things or feedback personally.”

example, in the area of technology. We have to figure out how to stay ahead and understand in those areas where the law isn’t defined. You must be a strategic business advisor who has a legal background, but not a legal predisposition. You have to analyze the law, try to figure out how it is evolving, and engage in risk management and allocation on the particular business issue. It’s not always black or white. Most of the time, you’re navigating the gray. MC: How does your perspective as a woman of color impact a company? TP: Let me give you an example from my past. Two employees who were close friends were sending e-mails back and forth. The conversation was pulled and reported to their entire company, which led to their suspension. The two employees were talking about things within their own culture, but people who were not of that minority group read it and took it out of context and found it inappropriate and offensive. After an investigation into the matter, they were eventually “rehired”

It’s important to learn from failures and quickly reengage. In time, patterns emerge, and it’s valuable to listen to what people are saying about you and your team, she says—not only in the areas that resonate, but also where you may feel uncomfortable. “Feedback is the breakfast of champions,” Preston adds. “It shines a light on blind spots, corrects technique, and can immeasurably improve performance.”

— CLIENT CONNECTION —

> BRYAN CAVE LLP: “Bryan Cave is proud to partner with Tracy Preston and her team at Neiman Marcus. Since joining Neiman Marcus in 2013, Tracy has demonstrated her ability to manage complex legal and business matters in a collaborative and strategic manner. Tracy’s integrity, humor, and vision have a significant influence on all who have an opportunity to work with her.” – Mark B. Leadlove and Daniel A. Crowe, Partners

“I have a litigation background, and I think people who have that in their background tend to like the adrenaline kick you get when your day isn’t planned. […] Adaptability and flexibility are a huge part of my role, but that’s exciting for me.” – TRACY PRESTON

into the company, given that the facts were not as had been portrayed. I think in that instance, without my background or experience, it may have gone differently. OCT/NOV/DEC 2015

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The Making of a Tenacious Counsel

2

3

4

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1966–71 – EARLY CHILDHOOD

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1972 – FIRST GRADE

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1980–84 – HIGH SCHOOL

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1983 – APPLYING FOR COLLEGE

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1984 – VALEDICTORIAN

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1984–88 – COLLEGE

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A high school guidance counselor discouraged Preston from applying to top-tier schools. Though she became the valedictorian, the counselor thought she might be overreaching. Despite the advice, Preston sent in her applications and was accepted into all of the top-tier schools to which she applied. Preston graduated from high school with many accolades, including valedictorian of her class. She saw it as one of her first major accomplishments and a testament to the hard work ethic she applies today. Preston solidified her interest in the law and her desire to learn about new cultures and interests. From the classroom to the dorm room, she took the curriculum beyond the lecture hall at Georgetown by meeting new people and learning new things.

1988 – APPLICATION ACCEPTED

Getting into law school at the University of Virginia School of Law was Preston’s first step. “Once I was there, I realized I made the right decision,” she says.

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1996 – MID-CAREER

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1999 – MAKING PARTNER

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2002–2013 – THE MOVE IN-HOUSE

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2013 – THE TOP OF THE HOUSE

4. Preston in her office as a summer associate at her first firm in San Francisco.

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Preston continued to listen to her grandfather’s advice and was involved in many activities, from cheerleading to student government. “It wasn’t necessarily a turning point, but an approach I follow even today,” says Preston. “My grandfather’s advice was, ‘Don’t outline.’ Meaning that if you get focused on only the proper order of things, you often miss out on opportunities to either grow, or learn, or appreciate other perspectives.”

1991 – WEST COAST

2. Preston cheerleading at her high school.

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Preston’s first-grade teacher, Mrs. Kitchell, encouraged her curiosity. “Looking back, her classroom was the perfect place to experiment,” says Preston. “She allowed that and encouraged it.”

••

1. Preston (right) and her grandfather Henry S. “Mickey” Creamer, who helped her develop confidence in her ability. 3. Father Davis, then dean of the college of arts and sciences at Georgetown, stands left of Preston as she completes her undergraduate studies.

Preston’s family stressed hard work and giving back to the community, which eventually led Preston to provide civil rights legal aid. “My grandfather was one of my early mentors,” says Preston. “He enjoyed learning new things, dreaming big, and thinking outside the box. He gave me the foundation of believing I could do whatever I wanted to do.”

After law school, Preston decided to leave her East Coast roots and move to California. Still following her grandfather’s advice of dreaming big, she followed her intuition and never looked back. She spent more than 20 years there practicing law. Preston found her first mentor as a sixth-year associate at Latham & Watkins. “My mentor really gave me the confidence to be myself and to approach law on my own terms,” says Preston. “She told me that my warrior mentality, combined with my Southern charm and integrity, were acceptable and admirable.” Preston was one of the youngest partners in her division at the time she made partner at Orrick, Herrington & Sutcliffe, LLP. “I didn’t necessarily aspire to become partner,” she says. “What I wanted to be was a good lawyer. I wanted to provide quality work to my clients, and the hope was to be recognized for that.” During her time in the partnership, she ran the summer associate program and headed the diversity committee in the firm’s San Francisco office. Preston’s first international business trip for Levi Strauss & Co. taught her about cultural differences and values. “You may all be speaking the same language, but the definitions are different, and having a full appreciation of that influences how you communicate, work together, and how you draft things,” says Preston. In her first nine months with Neiman Marcus, Preston handled an IPO and a data security incident, two challenges she says allowed her to hit the ground running. More recently, she’s been involved in the onboarding of a German e-commerce company acquired in 2014.

photo: TKTKTKTK


We are honored to work with

TRACY PRESTON and congratulate her on being recognized for outstanding integrity, insight and leadership.

TALENT. TEAMWORK. RESULTS.

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In Conversation

Courtney VanLonkhuyzen & Tracy Preston COURTNEY VANLONKHUYZEN: I loved your philosophy that feedback is the breakfast of champions. Not everyone responds to feedback with that outlook—especially when it’s negative. How did you develop that mind-set? TRACY PRESTON: It’s an ongoing process. I experienced that concept through competitive athletics, academics— even in litigation, when you receive feedback from the judge, jurors, and opposing counsel. You have to be able to respond rather than react. It can be uncomfortable, but focusing on mechanics and perfecting technique help us grow into new levels of competency. It’s an ongoing process that begins anew with each transition. You must reset and begin again. CV: How do you create a constructive environment in which people are comfortable giving and responding to feedback? TP: I try to create a safe, positive environment and have an open-door policy. I do my best to be transparent. The biggest challenge is overcoming the acculturated negative association and fear of feedback. Being attuned to how others might receive feedback and the best manner in which to provide it can help overcome that negative perception and the uncomfortable nature of the process. CV: You spoke about defying the odds. Tenacious women are often denigrated as “bossy.” How do you defy both the odds and this stereotype? TP: Early on, I learned to value failure and to take the feedback I was given to hone competency. I try to minimize the time gap between failing and trying a new or different approach. When you’re not attached personally, but only professionally, to the outcome, it frees you up to experiment and try new things. You have to be able to pick yourself up, regroup, and go back in and try again. Being resilient is the answer. A good sense of humor also helps. On defying stereotypes, I don’t think anybody really defies those biases. You end up working with or around them. Individuals will believe what they want to believe, and you have to try not to assign anything more to it and just shake it off. Biases say more about the other person than you. CV: What has been one of the biggest professional challenges you’ve faced, and how did you overcome it? TP: I would say that one of my biggest challenges was achieving my goal of becoming a general counsel of a company. I began with the end in mind. I had a three-tofive-year vision, and I remained open to opportunities. Whenever I could, I sought out individuals and information to prepare myself. I positioned myself for the opportunity and waited. (Knowing what you want and that you’re ready doesn’t mean the opportunity is immediately there.) Patience is crucial.

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photo: Caleb Fox (VanLonkhuyzen)


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- On the Record -

Karen Leetzow The accomplished attorney doesn’t back away from a challenge, but success comes at a price. She explains how she’s learned to balance the pursuit of profession and the pursuit of happiness AS TOLD TO KELLI LAWRENCE

When you’re a military child like I was, and your family moves around a lot, you learn to become extremely adaptable— that chameleon who figures out how to fit in and, at the very least, not rock the boat. I think my adaptability taught me how to be a people person: how to listen to people, hear what was important to them, photo: NASCAR

interesting to them, and then sort of feed on that, so I could be a part of whatever the organization was. I went in-house as NASCAR’s first trademark lawyer in 1999 and worked on several big trademark initiatives that it had going. I ultimately transferred to OCT/NOV/DEC 2015

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“For me and my generation, we’re learning that you can have it all—you just can’t have it all at the same time.” – KAREN LEETZOW

Daytona, Florida, to take over a massive antitrust lawsuit that had been filed against the sport. Being a trademark lawyer doesn’t really lend itself to antitrust cases, but I think my boss’s thinking was, “If anyone has the personality to go and make people feel okay about this very volatile process, it’s Karen. She’ll be able to go in there and explain what they need to do, minimize its effect on them— basically, get in and get out.” I didn’t know anything going in. I called up the counsel and said, “Do you have an antitrust nutshell?” Basically, CliffNotes for lawyers. I was as vulnerable as I could be, saying, “Hey, I’m in charge of this, but I know next to nothing; please teach me. I’ll start with this book, and I’ll ask a lot of questions. But I do know this business, so I can help you get what you need; I just need to know what it is we’re facing.” So they helped teach me the law; I helped teach them the business. We were ultimately pretty successful together in that way. It wasn’t an unusual case for professional sports, but it was the first of its kind in race car driving. It was very unnerving for the family that owns the company to, 60 years in, take

— CLIENT CONNECTION —

> ALSTON & BIRD: “Karen’s a fabulous lawyer and a

‘road scholar.’ Her work ethic and deep knowledge of NASCAR’s business drive her success and make those in the sport listen when she speaks.” – Chris Marquardt, Partner

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such a potentially game-changing lawsuit. The issue was a conspiracy between the two family-owned companies. One company is public, and one is private. They’re both run by the same family, and the family owns the majority of the shares in the public company, and obviously owns 100 percent of the private company. And, because of the conspiracy allegation, it meant that all of the records of both companies, including any private family records, would be subject to discovery. And that was just a massive undertaking.

Off the Cuff

I paid the price, as the case definitely took its toll on my marriage. My first husband and I divorced in 2009, around the same time I was promoted to vice president within the company. It was a little bit of a “can’t have it all” moment. But I wouldn’t change a thing because ultimately, I think my three girls and I were better off for it.

MC: Which words define you?

I grew up in that “sandwich generation,” where the women before me had to be men to succeed (as attorneys)—hard-charging, putting people through their paces because that’s what was done to them. And behind me, I see a generation coming for my daughters in which it is as likely a woman will be their provider as it will be a man. There will be flexibility, taking turns, and the roles people play will be destigmatized from who’s parenting to who’s running the corporations. For me and my generation, we’re learning that you can have it all—you just can’t have it all at the same time. At the first law firm I ever worked in, I was sent to court to argue a motion. I appeared before a judge, an older gentleman, who did not appreciate that I showed up in a pantsuit and felt like I should be in a skirt. That was relatively shocking to me. But there’s not really much you can do—he’s a judge, and you’re a lawyer—so I just nodded and smiled and went on with my case. There have been many meetings in which I’m the only woman in the room and the language gets salty, immediately followed by an apology—to me. Which is exactly, in my mind, the wrong thing to do if you want women to feel like part of a team. I never take it as an insult but use it as my tiny, little platform to educate them. And I just swear right back at them.

WITH KAREN LEETZOW

MODERN COUNSEL: What’s your definition of success? KAREN LEETZOW: Balance. I’m very lucky. I’ve remarried— he works for the sister company to NASCAR, and we love to travel. I’ve learned my lesson from that first experience. It’s all about balance.

KL: Friendly, intellectual, kind. MC: What was the most educational mistake you’ve ever made? KL: Just coming out of law school, I got an offer in which the salary was so low that I would have had to take a second job just to make ends meet. I turned it down, thinking, “If I got one job offer of this kind, I’ll get another one.” But it never came. I eventually took a job at a law firm and didn’t enjoy the work. I stayed there almost 18 months and hated every second of it. I learned to seize opportunities when they’re presented. I don’t think I’d stay in a job I hated for 18 months again. Ever. MC: What do you believe is possible that others don’t? KL: World peace. MC: If you could give your younger self one piece of advice, what would it be? KL: Worry less; have more fun. I spent so much time worrying about finding that perfect job. I had six weeks off between leaving Washington, DC, and getting a job in North Carolina—that’s ridiculous. Six weeks is nothing to land a job. But I didn’t enjoy a single second of it. MC: What is your motto? KL: Remember that what I do matters.


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Holland & Knight congratulates “Karen’s transparency is powerful and admirable. It takes a lot of selfawareness and humility to admit that we don’t always find the perfect work-life balance and that we may not be able to have it all at the very same time.” – Courtney VanLonkhuyzen, Guest Editor

Karen Leetzow Senior Vice President and Deputy General Counsel, NASCAR

on being recognized for her outstanding

Someone drops an f-bomb, and I say, “If you ever f---in’ apologize to me again, that’s not going to be good because it says that somehow my ears are more sensitive than yours.” People are still shocked when I tell them NASCAR is one of the most progressive environments for women that I’ve worked in. By that I mean that Bill France, Sr., who founded the company, and Bill France, Jr., who was running it when that lawsuit came in, were both married to extraordinarily strong women, who they stayed married to their whole lives and who were completely involved in the company and these businesses. The France brothers had an incredible respect for women. And it was never an issue that I was in a meeting in which I was participating strategically—they actively sought my advice. Yes, they can be roughand-tumble, at times, but it’s never ever an issue that I’m a woman in the building.

achievements. We are proud of our partnership with Karen and NASCAR.

We celebrate

Karen Leetzow www.hklaw.com

for achievements in her role

Judith M. “Judy” Mercier Orlando, FL | 407.425.8500

as Senior Vice President and Deputy General Counsel at NASCAR

— CLIENT CONNECTION —

> HOLLAND & KNIGHT LLP: “Karen

has a keen intellect and a practical approach to problem solving that makes her extraordinarily effective, whether she is advising on strategy or tackling complex legal issues. I enjoy working with her.” – Judy Mercier, Partner

photo: Caleb Fox (VanLonkhuyzen)

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Insights from

A Career-Defining Letter When Wes Zirkle received a four-page letter from his Uncle Jack that espoused advice on being a lawyer, he had no idea the effect it would have on his career. In his words, Zirkle, now general counsel at Just Marketing International, remembers the takeaways from that letter and connects them to moments in his career AS TOLD TO JAYLYN CARLYLE

“Stand Up for What’s Right ” It’s not always easy to be the good guy in this profession. Frankly, it’s easier to be a dickhead. Civility, especially in contentious situations, takes effort. As I’ve matured in my career, I have started to appreciate the individual my uncle is, the way he conducts himself as a professional, and the great deal of effort it must take 22

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him. He had an important influence on the way I think professionals ought to behave and how people should treat other people. When my uncle was a young attorney, a superior asked him to do something that was legal but not right, in his opinion. My uncle thought about it and made the decision not to do it, knowing it could

mean losing his job. He wrote a memo to his superior and copied the superior’s superior, explaining what he was asked to do, and why he didn’t feel it was right. Eventually, my uncle got promoted, and the other guy didn’t stay with the company. It was an example, to me, that there will be moments at crossroads, and that doing the right thing is worth personal risk but is usually rewarded. photo: Michael Nelson


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“I was sitting in my car at the office, and I was finally like, ‘OK, let’s just go get fired.’ And it was terrifying.” – WES ZIRKLE

I had that crossroad moment as a new attorney. It was a moment when I thought the way something was going down wasn’t right. Uncle Jack’s letter was in my mind. I decided that I had to say “No.” First thing in the morning, I was sitting in my car at the office, and I was finally like, “OK, let’s just go get fired.” And it was terrifying because I needed that job. But I stood my ground, and from that moment on, that person respected me and treated me better. I remember thinking, “Huh, that actually worked.” People respect those who have integrity. You have to stand up for what is right. You have to stand up for the truth. When you have a moment in which there is clearly a right way and a maybe-notso-right way to do something, and you’re standing your ground over ethical reasons, other people will respect that. They may not like you, but they will respect you. It adds another dimension to your character as a professional. There are a lot of lawyers who can do the same thing and do it very well, but what sets people apart is the person they are. “Always Be Fair” Be an advocate, but always be fair. Especially in transactional practice, if you screw somebody, they will figure it out, and it will damage the relationship between the parties. I once heard a prominent attorney speak at a conference about putting their best case forward in a document and making the other side fight for every point. What crap! Not only does that waste valuable time for everybody— because non-issues become issues—it is disrespectful to the other side. Don’t make the other side ask for what you should already have given them. Almost as a rule, I don’t believe in standard terms and conditions. I hate them. To use them is to basically say, “I don’t

have the time to care how this deal really impacts you. I don’t care. I have to get this off my desk so I can do something else. Standard terms are easier for me and my client, which is more important than the needs of you and your client.” If the first impression you make on the other party is a disregard for their needs, that’s the wrong tone. Especially at the beginning of a new deal, if you as a lawyer are not respectful, and you don’t treat the other side with respect and don’t listen to their concerns, the business relationship starts off in the wrong place. I believe that everybody is fundamentally good, but it’s all about how they work through adversity and how they interact with other people that makes the difference. It’s something you have to be conscious of every day. Some interactions are very easy. Some take thought. You have to think very deliberately about other people. You have to be very aware that how you carry yourself affects other people. I don’t think it’s necessarily difficult to do, but it isn’t natural. It is natural to go to work and want to complain about the commute, whatever. But the person you are talking to has his own problems. Focus on lifting him up. Lawyers get a bad rap—but clichés exist for a reason. I think a lot of lawyers are too competitive. They think of the profession as a series of win-lose scenarios. I think a lot of lawyers look at the practice of law like it’s just a game. I hate the phrase, “It’s just business.” That’s supposed justification for being a jerk. You can be an advocate and be civil. I suppose there are situations in which there really should be a winner and a loser, but I think the majority of legal practice is about finding solutions. That’s what we’re trying to do. We’re trying to find solutions, even in litigation.

— CLIENT CONNECTION —

> BARNES & THORNBURG LLP: “Wes is always moving at warp speed—not hard to do in the motor-sports industry. Wes is smart, strategic, and a consummate visionary, and it’s been thrilling to advise Just Marketing Inc. through its growth and innovation.” – Mark R. Owens, Partner

Open and shut. When it comes to safeguarding your interests, you can trust the law yer s at Barnes & Thornburg. We combine deep legal experience, practical know-how and keen insight to deliver workable solutions to your toughest challenges. Helping you unlock your business’ true potential.

Uncommon Value

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- On the Record -

Doug DeMoss Going in-house at Northrop Grumman was a natural progression for the US Army attorney. He reflects on his transition to the corporate world and how his tenure as a serviceman influences his civilian life AS TOLD TO JULIE SCHAEFFER

My family moved around quite a bit when I was a child. My dad was in corporate America at a time when companies did that. I lived in Illinois, Indiana, Missouri, Pennsylvania, Colorado, Virginia, and Florida. That primed me, in a way, for a military career.

Engineers. I was doing a lot of construction management—learning not only about the engineering side of building, but also the administrative side. I began considering law again after working with corps lawyers, whose work was an interesting blend of both disciplines.

I’ve always had an interest in military history. When I was in elementary and high school, World War II was a little more recent than it is today, so kids played soldier games. And a lot of my role models growing up were in the military—like Presidents Dwight D. Eisenhower and John F. Kennedy. That sparked my interest in military biographies. In high school, I looked into going to West Point or the Air Force Academy. I met some cadets and was really impressed with them. And the price was certainly right; they actually pay you to go there. I ended up at West Point, where I learned a lot about leadership and how to align and motivate people.

The Army sends up to 25 people a year to law school. They do that so there are attorneys who know what it’s like to be in a troop unit, which most Judge Advocates (JAGs) don’t. I applied and was accepted into the program and attended law school at the College of William & Mary.

I thought about going to law school, but it seemed far away, inaccessible. So I studied engineering, and after college spent five years in the Army Corps of 24

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My initial assignment out of law school was criminal defense. That’s fairly typical. When the Army sends you to law school, you’re more senior than those who were commissioned right into the JAG Corps. It gives you trial experience right away, which is needed to be eligible for the next rank. It was really interesting work, in part because it’s one of the most autonomous jobs you can have in the Army: you have to be able to represent your clients and try your cases the way you think is appropriate, and, in a way, you’re working against

the Army. It also taught me to work with lots of different types of people, from those who are younger and do stupid things, to those who are older and should know better. Because of that experience, today, a lot of the outside counsel I work with have less court experience than I do. My wife says I must be the dumbest guy in the world, because the Army kept sending me back to school. After three years in the JAG Corps, the Army sent me to get a [Master of Laws] degree in military law with a concentration in government contracts, after which I worked with the Army Missile Command in Huntsville, Alabama, which managed everything from shoulder-launch missiles to Patriot missiles. Then the Army sent me to the Army Command and General Staff School. That’s where it sends regular officers who are usually at the rank of major, to learn how to be commanders or staff officers of large organizations like brigades (3,000 or 4,000 people) or divisions (12,000 to 14,000 people). Most lawyers don’t go there, but the Army wants some attorneys to understand Army operations in more depth. I learned how to run programs with very complicated requirements, but more importantly, I formed relationships. The program helped me relate to line officers, and it helped line officers learn that JAGs are part of the team, too. Twenty years into my Army career, I was ready to move into the private sector. After finishing the Army Command and General Staff School in Kansas, I moved my family to the Washington, DC, area to work in the Army General Counsel’s office at the Pentagon. It was interesting work: I was the legal advisor to the people who were acquiring C4 (command, control, communication, and computers) systems and IEW (intelligence and electronic warfare) systems. But I’d moved three times in the last five years, and with four children who’d attended multiple schools, it was time to stop moving around. Working in a legal role in the defense industry is unique. Defense contractors have incredibly complex businesses. For example, my first job out of the Army was at Newport News Shipbuilding, a Navy contractor that makes aircraft carriers and nuclear submarines. What goes into those is incredibly complicated—everything from a dental clinic to a nuclear


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Ingrassia Fisher & Lorenz is honored to recognize the leadership and innovation of Doug DeMoss, Lead Counsel of the Command and Control Division and Communications Division for Northrop Grumman Corporation.

propulsion plant—and all of that stuff has to be procured. Your customer has law enforcement authority and subpoena power, and it dictates how you run your workforce with statutes such as the Service Contract Act. One thing I’ve learned is that you have to look beyond the horizon. For many years I sat on the board of the World Affairs Council of Charlotte, an educational organization that exposes people to things going on in the world around them. We brought in ambassadors from different countries and chairmen of different companies for events such as lunchtime lectures. We offered scholarships for teachers to study abroad in the summer, so they could bring what they learned back to their schools. We’re a big, interconnected world these days, and helping people understand that is important to me. photo: Northrop Grumman

It’s nice to know you’re making an impact every day. I started at Northrop Grumman in 2001, when it acquired Newport News Shipbuilding, but I took an eight-year hiatus to work as general counsel at a General Dynamics business unit. That was an incredible challenge because I had to learn a lot about environmental and labor law, which I hadn’t had much exposure to. But in 2013, General Dynamics decided to merge business lines and close the office I was working in. I wanted to stay on the East Coast, so I came back to Northrop Grumman in 2013. I like the fact that I’m working for a company that makes technologies that are used by people who make important decisions protecting our country every day—and that’s even more meaningful to me because I have two sons who are on active duty in the Army.

Scottsdale, AZ San Diego, CA Troy, MI Minneapolis, MN

www.ifllaw.com

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Made in the USA How a cobbler’s daughter became a high-powered attorney and chief legal officer BY MATT ALDERTON

Lily Hughes sits at the desk in her father’s Hong Kong shoe shop, where she studied every day from kindergarten through fifth grade.

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T

he tallest building in Hong Kong, the 118-story International Commerce Centre in West Kowloon, reaches 1,588 feet. Inside: a 360-degree observation deck, a five-star Ritz-Carlton hotel, the world’s highest swimming pool and bar, and 2.5 million square feet of class-A office space occupied by the likes of Morgan Stanley, Deutsche Bank, and Credit Suisse. Literally and figuratively, it’s a long way from the streets of Kowloon City, where Lily Yan Hughes was born and raised. “I spent the first years of my life living behind a store that was half shoe shop and half tailor shop,” recalls Hughes, whose father was a Chinese-Filipino immigrant who sold and repaired shoes in his half of the store. “My father, my mother, myself, and my two siblings lived in one room—it couldn’t have been more than eight-byten or eight-by-eight—with no hot water, and behind us were multiple other rooms that other families rented.” Though the International Commerce Centre hadn’t yet been built, the chasm between Hong Kong’s highest and lowest socioeconomic points was as large then as it is now. So large, in fact, that Hughes’s parents dreamed of moving to the United States, where they hoped their children would be able to not only look upward, but also move upward. “Shortly after I was born, my parents applied for a visa to come to the United States, because they knew that would be a ticket that allowed their children to succeed,” says Hughes. Her parents waited

“I am nine feet tall because I have been lifted onto the shoulders of giants.” – LILY HUGHES

photo: Bruce Hershey (Hughes), Caleb Fox (VanLonkhuyzen)

more than a decade to obtain the visa they so desperately sought. “When I was 11, we finally did immigrate.” It wasn’t an easy choice, but it was the right one: Today, Hughes is at the pinnacle of her profession as senior vice president, chief legal officer, and corporate secretary for Glendale, California-based Public Storage, an S&P 500/Global FT 500 company with nearly $34 billion in market capitalization. Public Storage operates 2,200 self-storage facilities across the United States. “Growing up the way I grew up wasn’t strange to me at the time—it’s all I knew— but looking back, it definitely gave me grit and persistence in life, which has certainly helped me succeed,” says Hughes, who attributes her success not only to her own hard work, but also to the sacrifices and support of others. “How I arrived where I am today is through lots of people lifting me up on their shoulders. I am nine feet tall because I have been lifted onto the shoulders of giants.” “A Difficult Time for Everyone” Immigration was only the first leg of Hughes’s journey. After that came an even greater challenge: integration. Her family settled in the Lincoln Heights area of Los Angeles. After coming to the United States, Hughes grew up fast; she had to translate everything for her parents. Lincoln Heights was at the time a predominantly Latino neighborhood, and very poor. “I remember hearing lots of comments like, ‘Go back on your boat,’” Hughes says. “People were not kind, which was hard for a child to experience.” Hughes’s father repaired shoes during the day, and at night he was a bus boy. She would accompany her mother on the bus to downtown Los Angeles, where they would pick up packs of clothing from sweatshops for Hughes and her sister to assemble and her mother to sew. The work paid pennies for many pieces of clothing. Every night and every morning, Hughes’s parents made a ritual of counting out their pennies and rolling up the coins from tips her father received as a bus boy. “Every cent was important.”

LILY HUGHES Senior Vice President, Chief Legal Officer, and Corporate Secretary Public Storage

One of the things Hughes remembers most were the long lines. “We didn’t have insurance, so there were long lines in the emergency room to get medical care, and more long lines in the immigration office dealing with things like green cards,” she says. “It was a difficult time for everyone.” Compassionate adults gave Hughes the strength she needed to overcome those hardships. Her seventh-grade English teacher, for instance, helped her work through her painful shyness by appointing her as class secretary. Her high school guidance counselor gave her the confidence to apply to college. At Williams College, one professor went out of his way to encourage and inspire her. “Cumulatively, all the little acts of kindness from adults who took a special interest in me made a huge difference in my life,” Hughes says. “They equipped me with the confidence and optimism I needed to succeed, despite the obstacles I faced. Their voices, along with those of my hard-working parents, are still in the back of my mind sometimes, saying, ‘You can do it, Lily.’” OCT/NOV/DEC 2015

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Davis Polk congratulates Lily Yan Hughes on her new role as Senior Vice President, Chief Legal Officer and Corporate Secretary of Public Storage.

Hughes’s father, Antonio Foo Yan (back), her sister, Mimi Yan (front left), and Hughes (front right) stand in the shoe shop adjoined to their home in Hong Kong.

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Paris Madrid Tokyo Beijing Hong Kong

© 2015 Davis Polk & Wardwell llp

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Putting Down Ladders Watching her father run his own business instilled in Hughes an entrepreneurial interest, which ultimately inspired her to pursue a career in corporate law. That career has been the perfect platform from which to help others, the way others helped her. For the last several years, she’s proud to have been part of the Association of Corporate Counsel in Southern California. The organization supports a partnership program with law students to speak at schools where the students have backgrounds similar to that of Hughes. “They don’t have role models, so we teach them that anything is possible—that they can be anything and do anything if they work hard for it,” says Hughes. “It’s something I think really makes a difference, because it did for me.” Hughes wants to help not only young people, but also female lawyers, who she advocates for by supporting initiatives such as Project 5/165, which backs programs that support, accelerate, and give visibility to the advancement of in-house female attorneys. “Unfortunately, there are women who do pull up the ladder when they get to the top,” Hughes admits. “I’m part of a great network of women in-house counsel who are working to put more ladders down,

to help lift more women and diverse candidates up in our profession.” Hughes teaches aspiring women and diverse lawyers to not just earn the positions they covet, but to ask for them. “Women are not as open as men about their desire to go to the next level,” she says, “so women who aspire to advance their careers need to make themselves heard.” Sharing her story is how Hughes makes sure she’s heard. “No matter what our background is, at the end of the day, we’re all people who relate to people,” she concludes. “If you peel back the onion, we all have a personal story that motivates and inspires what we do. Telling my story and listening to yours helps me understand what each of us needs, so that we can work together to build something great.”

“Lily makes an important point that our success as women is not a pursuit at the expense of others. We have a responsibility to make inroads to leadership and keep them clear for those who come after us.” – Courtney VanLonkhuyzen, Guest Editor


Irell & Manella salutes Senior Vice President, Chief Legal Officer and Corporate Secretary

Lily Yan Hughes for her inspirational leadership and dedication. We are proud and honored to work with Ms. Hughes and Public Storage.

LOS ANGELES

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- On the Record -

Jay B. Stephens The retiring attorney reflects on the milestones of a momentous career, both in government and the private sector, more than 40 years in the making AS TOLD TO BRIAN BARTH

I grew up in northwest Iowa on a livestock and grain farm. From the time I was a teenager, I knew I wanted to be a trial lawyer. Maybe I watched a little too much Perry Mason, but at the time, that show was my sense of who lawyers were. I imagined how I could have an impact on the world. I wanted to be engaged, to be a leader, so when I was 17, I got on the Illinois Central train that came through my little town, and headed off to Boston to attend Harvard.

“From where I’ve sat, it’s clear to me that leadership matters. Working together allows people to achieve great things. And character does make a difference.” – JAY B. STEPHENS

The time I spent at the White House was intense and fascinating. In my first month there—this was in 1986—a nightclub in Germany was bombed by a group of Libyans. President [Ronald] Reagan then bombed Libya, and that triggered issues of war powers, which are still relevant today. I worked on developing the concept of undercover operations and the burgeoning field of new federal law enforcement techniques. We handled a couple of very significant cases, such as one involving the state judiciary in Chicago and one involving hightech theft in Silicon Valley. I’ve always appreciated the platform that law has provided me to be an advocate, right wrongs, deliver justice, and make a difference. Early in my career I had the opportunity to be an assistant special Watergate prosecutor. I was a young lawyer, so I had only a small part to play in the puzzle, but it was in an interesting and wonderful opportunity to combine some of the threads of what it is that brought me into law and public policy. When I became the assistant US attorney, I developed a sense of justice and

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fairness in the legal process. This was in the late ’80s, early ’90s. We were facing huge challenges with violent crime, drugs, and gangs. There were hundreds of homicides a year, and I tried a whole raft of cases. The experience of vindicating the rights of victims and being an advocate for those who needed an advocate brought to fruition why I had gone to law school. It was a chance to learn the meaning of justice and understand the importance of the legal process in reaching fair and balanced judgments. I believe very strongly in maintaining your roots. I’ve worked for six attorneys general, three presidents, and several CEOs. Staying grounded and keeping your ego in check are important values for providing steady, strong advice and calm execution—especially when you’re engaged with senior people making sometimes-contentious decisions that impact our country. I’ve used my leadership to develop a culture of integrity. My more than 15 years in private business have given me a platform to help shape the direction and reputation of large public companies. Cultivating sound business conduct and meeting the responsibilities of corporate governance is something that I’ve found to be quite rewarding and, in many ways, has pulled together my experiences in national security and international affairs. In private practice, I worked much more in the arenas of prevention and compliance. At Raytheon, a considerable amount of my focus was on corporate governance.

photo: Raytheon Company


APPEAR Stephens (center) celebrates a successful outcome as the leader of the Marion Barry prosecution team in 1991.

Stephens was deputy White House counsel to President Ronald Reagan.

Stephens grew up on his family farm in Le Mars, Iowa. “While I did not return to Iowa to practice law or get involved in politics, I still own the family farm where I grew up,” he says.

The good thing about litigation is it helps you synthesize a broad set of facts to get to the nub of the issue. It’s great training for understanding human behavior and human conduct. Understanding how people work together, what they do and why they do it, and where there can be dysfunction is very important. My mantra has been to help others succeed, to always act with integrity, and to demonstrate courage. I’ve leveraged the impact I’ve made as an individual to extend on an organizational scale by developing a team of capable and talented people who are committed to a mission. I feel that part of my legacy is creating that cadre of talented, motivated professionals. Looking back, one of the joys I recall is having had the opportunity to hire several hundred professionals over the course of my career and seeing many of them go on to do terrific work. From where I’ve sat, it’s clear to me that leadership matters. Working together allows people to achieve great things. And character does make a difference. When I was at the White House, President Reagan had a little plaque on his desk that said, “There is no limit to how much a person can achieve if he doesn’t care who gets the credit.” Likewise, Teddy Roosevelt said, “The credit belongs to the man who is in the arena.” We all make mistakes; we all do things that don’t come out 100 percent the way we like every time. But it’s important to always be engaged, to make an impact, to make a difference in a positive way. OCT/NOV/DEC 2015

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“We can’t say, ‘No, that’s not how we do it.’ Let the other guys say ‘no.’ Sharpen your pencils, and get to work. ” – BROOKS LARSEN, HTC CORPORATION

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IMPLEMENT In 2009, CNN asked, “Can the law keep up with technology?” in response to a libel suit filed against Courtney Love for comments on Twitter. The 1,200word article can be neatly summarized by its closing quote by law professor Jeffrey Rosen: “We should never expect that the judges are going to save us from our own worst impulses.” Five years later, MIT followed up with less ambiguity: “Laws and Ethics Can’t Keep Pace with Technology.” Attorneys at HTC, Kate Spade, and other companies in this section beg to differ. It’s possible to keep up—as long as you’re willing to let go of the traditional way of doing things.

INQUIRY Has your legal team updated its procedures to keep up with technology, and how can it do better? Does your team work with other departments within your company to ensure compliance is robust and consistent? To read CNN’s take, go to CNN.com and search for Manav Tanneeru’s article: “Can the law keep up with technology?” See MIT’s more recent assessment at MIT Technology Review, “Laws and Ethics Can’t Keep Pace with Technology.”

JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.

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IMPLEMENT WORLD VIEW

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IMPLEMENT

WELL-CONNECTED

COUNSEL Kate Spade’s Geri Lynn Elias on building a global network and leveraging it in defense of fashion’s biggest brands By Mary Kenney and Mary Beth Rohde // Photos by Caleb Fox

Geri Lynn Elias is a relatively new name in a relatively old organization. The International Trademark Association (INTA) was established in 1878 by 17 businesspeople and merchants. Though it has existed for more than a century, it is increasingly relevant in a creative and interconnected world. Today, INTA’s membership consists of more than 6,500 organizations in 190 countries. Elias joined INTA’s board of directors in 2014 with the promise to serve a three-year term. She attended her first INTA meeting in 2000 and knew the organization’s voice was one she wanted to amplify. She was drawn not only to its strong stance on global trademark policy, but to its ability to connect IP attorneys with one another around the world. One of INTA’s greatest appeals, Elias says, is its network. Before she joined Kate Spade and Company in 2011, Elias was the vice president and general counsel of IP and licensing at Perry Ellis International for more than 11 years. While there, Elias learned that counterfeit merchandise was being sold in South America by a local licensee and contacted a fellow INTA member in the region, who worked with her to shut down the counterfeiter within a matter of days. Elias established that relationship, and many others with counsel around the world, through meetings at INTA. “Putting a face with a name photo: Caleb Fox (VanLonkhuyzen)

and building relationships through INTA promotes the ability to better serve your clients because people are more likely to help someone they know and have met personally,” she adds. Elias has participated in several of INTA’s committees, including anticounterfeiting and in-house counsel. “My first year attending the annual conference, I was so enthusiastic,” she says. “I arranged meetings every half hour with foreign counsel from all over the world. The next day I could barely talk,” she admits with a laugh. “I truly value the relationships I’ve built with my foreign counsel in each country around the world,” she says, “Not only would I consider many of my colleagues also my friends after all of these years, but these relationships help me serve my company to the best of my best ability.”

“Attorneys can have an impact beyond their own offices and companies. Many, like Geri, extend their expertise to organizations such as INTA to promote ethics, collaboration, and stewardship across their specializations. That’s how what we do becomes more than a job.” – Courtney VanLonkhuyzen, Guest Editor

An Informal Meeting When it came time for INTA’s 2013 annual meet-up, INTA staff asked Elias to help organize and lead an open meeting with fellow fashion industry professionals. Many had already been meeting informally in New York City, so Elias says formalizing those meetings through INTA seemed only natural. “We had a significant turnout of in-house counsel from different fashion OCT/NOV/DEC 2015

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IMPLEMENT WORLD VIEW

DWT is pleased to recognize

Geri Lynn Elias for her outstanding service to Kate Spade & Company and the fashion industry at large. It is our privilege to work with Geri and the team at Kate Spade.

© 2015 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

dwt.com

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companies,” she says. “We had an engaging conversation about current issues we all were facing and best practices across numerous aspects of matters that we all face as in-house counsel in the fashion industry.” Elias adds that there was an understanding among the attendees that, though they were competitors in the industry, they could help their companies by building relationships with one another. This would benefit each of them because they were not only sharing and learning best practices, but also laying the groundwork for amicable resolution of matters that would otherwise pit them against one another. At the end of the meeting, everyone told Elias it was very valuable, and they conferred about how they could form a group within INTA to continue having regular meetings. Elias asked the INTA staff at the meeting to communicate this to INTA’S CEO and president and requested that INTA form a new fashion industry committee or group. Shortly after, Kathryn Badura, the INTA coordinator who had helped establish and facilitate the Dallas fashion industry group meeting, submitted a proposal to form the fashion industry group. The proposal was approved in June 2013, and INTA asked Elias to chair the group. From there, Elias and Badura created guidelines and qualifications to become a member. In October 2013, INTA sent invitations to fashion industry members inviting them to apply for membership. A group of approximately 20 qualifying members met shortly after at the INTA headquarters in New York City. “It is important to us to keep the group small so that we can have productive discussions and it can be more manageable and intimate,” Elias says. “We want members to bring their experience and knowledge to the table.” The fashion industry group meets in-person or via conference call several times each year to discuss issues in intellectual property. The group is currently accepting in-house counsel with five

years of experience practicing within the industry. “Ideally, everyone comes to the table already understanding industry best practices and relevant issues,” says Elias. “We are still working out the bumps, but my hope is that it will give the fashion industry a voice through INTA to further IP issues, policy, and laws as they relate to fashion.” Next Steps Though Elias dedicates a significant amount of time to INTA, it is not her fulltime job. She chairs the fashion group, is on the planning and leadership development committees, and cochairs another industry-related group outside of INTA. With all of this and her full-time job at Kate Spade, as well as caring for her family, Elias is considering bringing in a cochair to help her organize the group and create short- and long-term plans for the committee’s agenda. Elias wants a member who works in a company outside of the United States to take on the position of cochair, so the group has representation domestically and internationally. “It is important that all members feel that group is valuable and worth their time, since we are all extremely busy, and each one of us really wants to see this initiative thrive and be successful.” Not only will this assist members in their industry, she adds, but it will serve as an example for INTA to consider developing other industry breakout groups.

— CLIENT CONNECTION —

> DAVIS WRIGHT TREMAINE: “Geri is a dedicated attorney who understands the business of fashion and whose enjoyment of what she does is revealed in her proven track record of bringing the right team and creative solutions to a range of legal challenges.” – Roxanne Elings, Partner


IMPLEMENT “My hope is that [the fashion industry group] will give the fashion industry a voice through INTA to further IP issues, policy, and laws as they relate to fashion.” – GERI LYNN ELIAS

FASHION IN THE FAMILY Elias describes how her family’s involvement in fashion helped pave the way for her career in fashion IP. “My mom was a clothing designer. My dad began his career in the fashion industry and worked in all divisions until he became a president and partner in a women’s clothing company. Growing up, I often went to fashion shows with my mom and worked in my dad’s office. When I graduated law school in 1998, I knew I wanted to practice IP law. Though it was not easy to find, I later accepted an offer from an IP boutique firm, and right away, I was representing companies like Tommy Hilfiger and FUBU in anticounterfeiting cases. I am very grateful to Steve Gursky for that job and for serving as my mentor. Gursky opened the door for me to practice fashion law, and I have never looked back. From there, I went to Perry Ellis. My family history in the fashion industry has been a benefit in dealing with both designers and business teams, because I understand what they are dealing with and can help them conduct business in ways that are lowrisk to the company. I am often asked what motivates me. I am truly passionate about my job and working with the business teams. I love the substance of the law I practice, and that drives my passion every day.”

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IMPLEMENT PROCESS

LEGAL HAD TO BECOME AN INNOVATOR TO MATCH THE SPEED OF HTC. By training his lawyers to let small issues go, deputy general counsel Brooks Larsen is keeping HTC Corporation’s legal department quick and efficient As told to Zach Baliva 38

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photo: HTC Corporation


IMPLEMENT

Before I started at HTC, I worked for T-Mobile when it was known as Voicestream, and that time helped me figure out who I am as a lawyer. I had previously rolled around a bit and hadn’t stayed anywhere for a long time. I wanted to find the part of the law I enjoyed and commit to a company. I was around great people and in a fast-moving company with cutting-edge technology. I dug in and got a broad range of responsibilities from product development to marketing to mergers. But it was managing outside lawyers that really opened my eyes to just how well an in-house attorney has to align to his business. I could throw a rock and hit a talented high-tech lawyer, but wireless is its own beast. When I came to HTC in 2007, I knew my time at T-Mobile had prepared me well, though HTC is different in many ways. We’re not a cell phone carrier; we develop, make, market, and sell phones. I knew my success would live and die with my ability to match my team to what the company actually needs. Legal had to become an innovator to match the speed of HTC. My department has to be lean and efficient. As in-house counsel, we’re just cost. We don’t have a billion-dollar legal budget. We’re not a huge corporation with a thousand lawyers who can afford to work in very narrow specialties. I wouldn’t want that anyway, because it doesn’t match the needs of HTC— and it’s boring. We’re almost 50 lawyers worldwide in a $7 billion company that innovates faster than all of our competition, and we bring devices to market faster. Every lawyer at every level in every country for HTC is empowered to be the legal decision-maker. They should be able to negotiate an entire deal even if they have to do that without a business leader. They don’t have to, but they should be capable of doing so. A lawyer who supports sales should also be deep in marketing and product development or other unique services. I want my team to know the business as well as—and sometimes better than—the people they’re supporting. We’re in a very dynamic space, and my job is to lead a legal department that can keep up with the company and never slow it down. I do that by using what I call a “triage” approach to issues that arise. Like in an emergency room, we’ll mentally assign degrees of urgency to matters at hand and work accordingly. I hire lawyers who are patient with chaos. They’re flexible, they have good judgment, and they can tell the difference between what’s important and what’s not. We run and run—and sometimes we stop and dig when we need to—but most of the time, we’re just running, because we know where the business is going. We can see all of the issues that might affect a product’s launch or increase risk of litigation or draw government investigations. My lawyers know how to take a deep breath and let things go when they can just let things go. If a possible issue doesn’t pertain to the integrity of our devices or getting them launched and sold quickly, we’re probably going to let it go. We focus more on actual or probable risk, not remote or theoretical risk. I’ve hired some very sharp lawyers from blue-chip companies. Some have been successful here, and some have not. The ones who haven’t want to turn over every rock and draft and negotiate the magical and elusive perfect contract.

Larsen says HTC used to be hampered by frivolous bureaucracy that created a barrier to innovation. “There were literally two people in the company who could sign and approve a contract,” he says. After revamping the process, a streamlined plan has shortened final contract approval and signature time lines from two months to two days.

Munger Tolles is proud to recognize

Brooks Larsen for his accomplishments with HTC.

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IMPLEMENT PROCESS COMMITMENT TO EXCELLENCE

What Makes a Great Company Great? COMMITMENT TO CUSTOMERS, CONSTANT INNOVATION AND COLLABORATION.

Perkins Coie salutes Brooks Larsen and HTC on their commitment to their customers and on the innovation that is the hallmark of HTC. We are honored to have collaborated with Brooks and his team over the past eight years and we look forward to working with them for many more.

A Very Good Year 2015 was an important year for HTC. The company brought three new technologies to market: In partnership with Under Armour, HTC made its debut in wearable technology with the HTC GRIP, a high-tech fitness tracker worn on the wrist. The band, released in the spring, monitors athletic activities and has capabilities linked to other devices. For example, a user can receive notifications and control music-playing devices with gestures on the band’s touchscreen. HTC joined forces with video game developer Valve to create the HTC VIVE, a virtual reality system that was lauded by reviewers for its advances in movement tracking, body awareness, and high-definition graphics and audio, which creates an immersive experience. HTC plans to have the consumer version of the technology available before the end of the year. HTC’s new smartphone, the HTC ONE M9, launched in April with improvements over its predecessor. The M9 features a 20 megapixel camera and industry-leading speed.

But there’s a huge volume of work, and we don’t have the luxury of needlessly going deep. My team closes deals and supports commercialization. We have to enable speed and match the creativity of our designers and engineers. Continued success will only come if we can stay nimble and innovate faster than anyone else. We have to know who we are and be creative. We can’t say, “No, that’s not how we do it.” Let the other guys say “no.” Sharpen your pencils, and get to work.

— CLIENT CONNECTION —

> MUNGER, TOLLES & OLSON: “Brooks is a

PerkinsCoie.com Perkins Coie LLP ATTORNEY ADVERTISING

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big-picture thinker who combines legal skill and business savvy in approaching every litigation matter and transaction. As a result, his judgment consistently produces results that serve HTC’s best interests. For those of us fortunate enough to work with him, he makes it a true pleasure to do the hard work it takes to solve the complex legal issues and needs of a global business.” – Rosemarie T. Ring, Partner


IMPLEMENT IP

A LOT OF UNSAVORY DATING SITES WILL TRY TO CAPITALIZE ON OUR BRAND, AND THAT’S NOT OK WITH US. How Ron Sarian defends matchmaker eHarmony’s trade secrets in the expanding field of online dating By Julie Schaeffer When online match-making came into existence, it was all about the ability to search for other singles by location, age, appearance, interests, and other criteria. That changed in 2000 with the launch of eHarmony, which sought to remove the trial-and-error inherent in searching for matches. Instead, it used proprietary algorithms to suggest the most compatible couples. The service is the brainchild of Neil Clark Warren, a marriage and family counselor with a PhD in clinical psychology from the University of Chicago. After surveying 800 couples, he identified the 200 happiest and the 200 least happy, and he looked at the factors that came into play. The result was what eHarmony calls “29 Dimensions of Compatibility.” “Matching on these dimensions creates couples with fundamental things in common, from intelligence to sense of humor, and that helps create long-lasting relationships that hopefully end up in marriage,

which is our mission,” says Ronald Sarian, the company’s general counsel since 2013. Married for 30 years, Saraian has never used an online match-making site, but that doesn’t diminish his passion for eHarmony. The advent of online dating was significant because it began the age of the algorithm—and the algorithms have only become smarter. Recently, a professor at the University of Iowa led a team to develop an algorithm that uses a person’s contact history to recommend partners with whom they might be compatible, much like Netflix recommends movies that users might like by tracking their viewing history. “I think online match-making is the single greatest resource out there for meeting partners,” says Sarian. “When I got married in 1985, there was no such thing as online dating; there wasn’t even any such thing as online. You can look at [other users’] pictures to determine if there’s OCT/NOV/DEC 2015

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IMPLEMENT IP dlapiper.com

GIVE HIM A HAND. DLA Piper congratulates our friend and client, Ron Sarian, Vice President and General Counsel of eHarmony, on his recognition by Modern Counsel magazine as a leader in his field. Ron does an outstanding job supporting eHarmony’s mission to become the #1 Trusted Relationship Services Provider.

chemistry, but at least you know that science has taken care of the foundations.” Today, online match-making might seem simple—especially with the advent of swipe-and-click approach services like Tinder. Even as much of the market gravitates toward instant-gratification services like Tinder, Sarian says there is a demand for what eHarmony has to offer. “[Tinder’s] users tend to be younger and want a quick and easy match for free. It’s really a different demographic,” Sarian says. “In fact, I think they help us, because as people mature and want to get serious, they come to eHarmony, spend the time it takes to complete our questionnaire, and hopefully find a good match.” Those good matches are generated beneath the surface of eHarmony through a complex apparatus, the stewardship of which Sarian takes seriously. He is responsible for compliance with privacy, data protection, and advertising laws in the United States and multiple foreign jurisdictions. Often, the stakes are enormous. Under Canada’s antispam legislation, for example, a company could be penalized up to $1 million for each unsolicited e-mail it sends into the country. Intellectual property is essential to eHarmony’s business. The company holds multiple patents, including those for its matching algorithms, which have proven tremendously successful. “We did a study, and our divorce rate over a seven-year period was 3.86 percent—well below the average for that period of time,” says Sarian. “We’re really proud of that and want to protect it. We’d like to get it as close to zero as possible.” The company’s trademark is valuable and, therefore, requires additional

A Perfect Match Ronald Sarian on what makes eHarmony an exciting place to work Becoming general counsel of eHarmony wasn’t a predictable outcome for Sarian—by any algorithm. He had been a business litigator for 28 years when the general manager of eHarmony, a friend, asked him if he’d ever thought about being a general counsel. “I said, ‘Honestly, no. I’m 55 years old, and I’m not looking for a job.’” But Sarian kept an open mind, and many months and interviews later—including several with Warren, whom he found inspiring—Sarian took the job. “It’s the most exciting job a lawyer could ever have,” he says. “I’ve been with a number of conservative firms that have austere offices with woodpaneled walls, and this is just a whole different world.” Sarian works with creative and talented young adults. He views the dot-com’s Santa Monica, California, campus like a classroom, with colors, posters, and beanbag couches, and everyone wearing T-shirts and jeans. “And we’re doing great work!” he insists. “It’s not just a technology company; it’s a love company.”

— CLIENT CONNECTION —

> DLA PIPER LLP: “Ron is a brilliant,

Perrie Michael Weiner, perrie.weiner@dlapiper.com, 2000 Avenue of the Stars, Suite 400, North Tower, Los Angeles, CA 90067 | DLA Piper LLP (US) is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com. Attorney Advertising

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multifaceted lawyer. I enjoy sharing our passions that coalesce law, charitable work, and music. As lead guitarist of our firm’s band, Run DLA, he helps raise money for disadvantaged children.” — Perrie M. Weiner, Managing Partner

photo: Cameron Compton/eHarmony


IMPLEMENT

“If they’re a matching site of any kind and have ‘harmony’ in their name, we may go after them.”

A History of Computer-Assisted Dating People were looking for love with technology long before eHarmony came online. We take a look back at the evolution of match-making with the help of machines. ••

– RONALD SARIAN

••

protection. “If you walk up to anyone in the country and ask for the name of an online dating company, more than 90 percent say eHarmony unaided, and if you aid them, it goes even higher,” says Sarian. He adds that brand recognition didn’t come by luck; marketers worked diligently on eHarmony’s branding. The return on that investment is good for eHarmony, but it also presents a constant threat. “New companies that do matching sometimes want to rip off our brand and put ‘harmony’ somewhere in their name,” says Sarian. He says that practice not only creates confusion, but dilutes the original brand. “We’re in the long-term matching and relationship business, and a lot of unsavory dating sites will try to capitalize on our brand, and that’s not ok with us,” he explains. The company is active in policing its trademark. It does so not only among up-and-coming dating sites, which have saturated the market, but among other matching companies, such as those that match car-buyers with cars or pet-seekers with animals. “If they’re a matching site of any kind and have ‘harmony’ in their name, we may go after them, because they’re very likely trying to take advantage of the good will we’ve worked so hard to establish,” Sarian says.

••

••

••

••

••

1959

Two Stanford students organize a match-making experiment for their final project. Using an early IBM computer, they analyze responses to the “Happy Families Planning Service” questionnaire to pair surveyed students.

1985

Jon Boede and Scott Smith launch MatchMaker, a penpal network operated on a bulletin-board system. Users correspond by dialing in to the network and posting messages in either “platonic” or “romantic” mode.

1995

Match.com launches as the brainchild of Gary Kremen. After searching for his own romantic match via dial-in dating services, he envisions an online classified ad forum that is cheaper, faster, and anonymous.

Congratulations to

Ron Sarian A Leader Who Makes Everyone Around Him Better From Your Team at Orrick

2000

Dr. Neil Clark Warren, a clinical psychologist and marriage counselor for 35 years, founds eHarmony on the theory that more successful relationships could be established if online matches are based on compatibility.

2004

OKCupid launches as a free alternative to subscriptionbased matching sites. Rather than using an algorithm, the site predicts satisfactory matches by comparing answers to survey questions and the level of importance users place on questions.

2009

Grindr launches as an app for gay, bisexual, and curious men looking for friends or dates nearby using the location data on their mobile phone.

2012

Tinder shows users photos of available matches within their vicinity and is popular with the 18-to-32 demographic.

www.orrick.com

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IMPLEMENT IP

“IF THERE IS ONE IMPORTANT LESSON I’VE LEARNED, IT IS NOT TO BE SINGLE-MINDED.” Comcast’s deputy general counsel, David Marcus, talks through how a nontraditional path in-house, including time in the US Navy, informs how he defends intellectual property As told to Brian Barth

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photo: Comcast


IMPLEMENT

In the late ’80s and early ’90s, patent litigation, including litigation by nonpracticing entities (NPEs), really started to explode. And the truth of the matter is, I largely fell into it. I never thought about being a lawyer growing up. My undergraduate degree from a small liberal arts college was in mathematics with a minor in physics. I joined the Navy two days after graduating, in 1988. After six years as a submarine warfare officer, I decided to go to law school and began working in Reed Smith’s IP group during my third year. I naturally ended up joining that group after graduating. A few years later, I moved over to an IP boutique firm, where I devoted most of my time to patent infringement litigation. When I first started practicing, there were just a few well-known (or infamous, depending on one’s point of view) NPEs. The patent litigation landscape was largely dominated by competitors suing each other. I, therefore, ended up representing operating companies, both as plaintiffs and defendants, in competitor-versus-competitor litigations. And strangely, even though the number of NPEs and NPE-initiated patent cases began to explode and dominate many IP lawyers’ practices, prior to joining Comcast I had never been involved in an NPE suit; the entire time I had been doing competitor suits. It was a real shock when I came to Comcast, where the legal team was facing 16 or 17 patent cases, all brought by NPEs and mostly in places that I had only heard about. The people who had been handling NPE matters exclusively could hardly understand what the patent system was really about—or at least what it was intended to be—so my experience on both sides of competitor cases definitely gave me a leg up in thinking about arguments to craft and defenses to pursue. It gave me a different perspective. My liberal arts education ended up paying huge dividends for me in the US Navy and as a lawyer. People who have solely technical backgrounds are often not good writers, and my background helped me think about things more creatively. If there is one important lesson I’ve

learned, it is not to be single-minded. There is a lot of specializing in law school these days, but I don’t think that’s always a good idea. It’s important to get exposure to many areas of law. You get to bring that to bear once you start specializing, once you start practicing. It allows you to think about issues that confront you in whatever you choose to specialize in. You can know the principles of contract law or tort law and apply them elsewhere. You can make better and more creative arguments. Though law is very different than being in the Navy, coming to it with naval experience and background provided a leg up, in my view. I had a different way—often more mature and experienced—of thinking about things than my peers who did not have the same life experiences and training. The training and rigor of the Navy translates well in the corporate world—the way you attack challenges and your stamina are transferable. Often, people assume that simply because they are facing a big company and high-priced law firms that those people will be sophisticated and know what they’re talking about. But the thing that never ceases to surprise me is that when you really push a lot of these people to defend the positions they’re taking—give me a rational argument, not just “this is what we want; this is what we always get”—many of those people cannot articulate in a principled and rational way why it is they should get what they’re asking for or purportedly always get. If you’re able to provide a principled defense of what you’re asking for and why it is they should accept it, it can be quite powerful and disarming. It makes it harder for them to hold their position, and it almost always puts you in a better position.

— CLIENT CONNECTION —

> BAKER HOSTETLER: “David Marcus

continues to shape Comcast’s intellectual property portfolio and its licensing and litigation strategy. Smart, savvy, and unflappable, David is a pleasure to work with and learn from.” – Dan Goettle, Partner and Colead of Patent Litigation

Businesses today operate in a global marketplace of ideas in which intellectual property is a vital component of strategy. BakerHostetler has the hands-on knowledge and experience necessary to help clients secure and use IP assets for maximum competitive advantage.

Business Employment Intellectual Property Litigation Tax

bakerlaw.com © 2015

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SECTION IMPLEMENT M&A

“We want to reach fans of all genres to increase the overall health of the industry.” – MIKE PENDLETON

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IMPLEMENT

ALL THE RIGHT NOTES As Guitar Center adapts to the future of big-box retail, legal orchestrates the critical transactions By Zach Baliva

t’s no secret that many national retailers are hurting. Staples, Radio Shack, Macy’s, and Best Buy are all reducing employees or closing stores. In April 2014, Sears closed its flagship Chicago store and reinvested in online sales. Since 2010, the company has closed around 300 locations in the United States. Just four months after Sears shuttered its State Street store, another retailer—Guitar Center—opened a 28,000-square-foot flagship in New York City’s Times Square. With other national chains reeling, Guitar Center entered a new era by opening the largest of its 267 US stores. The building at 44th and Broadway includes a Platinum Club, recording studios, interactive elements, and a Fender custom shop showroom. Guitar Center’s senior vice president and general counsel, Mike Pendleton, joined the company in 2005 after starting his career in M&A and securities work at three private firms. He says the rise in online shopping and the financial crisis of 2008 have forced changes in retail. “There’s been a dramatic shake-up in how retailers approach customers, and the whole face of retail has photo: Guitar Center

changed since I came to Guitar Center,” he explains. Guitar Center’s bold decision to open new stores may signal a continued shift from the norm in the retail industry, but the brand is no stranger to change. The company was born in 1955 when Wayne Mitchell started the Organ Center in Hollywood. Five years later, after selling Vox products, it became the Vox Center and finally took the name Guitar Center by 1970. Mitchell opened stores across the state before selling the company to Ray Scherr, who ran the organization until the mid-1990s. Since then, Guitar Center has been part of many deals, taking the group from private to public and back again. In the 1980s and ’90s, Guitar Center prospered as private equity firm Weston Presidio helped the growing organization achieve national reach. As the twentieth century ended, Guitar Center went public and became the dominant player in the musical instrument retail industry. But in the private equity boom of the era, Guitar Center was taken private by Bain Capital. It was done through a Goldman Sachs deal of cash and debt

worth $2.1 billion, with $1.56 billion borrowed. “In the mid-2000s, it was typical for a private equity company to acquire a company using a high-debt load, and then to take it public and receive a big return,” Pendleton says. Bain’s acquisition went heavy on debt through high-interest bonds. However, because a single holder purchased all of the bonds, Guitar Center was able to negotiate not having to file reports with the Securities and Exchange Commission, and it became truly private. And while earlier, similar deals took three to five years to mature and bring profits, Guitar Center’s deal hit an unexpected obstacle—the financial crisis of 2008. Retailers were hit hard, but Guitar Center was in a unique position to weather the storm. In 2000, the company bought the online outlet, Musician’s Friend and, as a result, operated the largest online retailer in the industry. By refusing to abandon brick-and-mortar stores, the company has maintained its ability to allow customers to see and feel the products. Throughout its history, Guitar Center has earned a reputation among musicians as a place where they OCT/NOV/DEC 2015

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can take the time to test their instruments. “People know they can come in and try out the products,” says Pendleton. “We’re in a passion retail industry, where people often prefer to touch and feel the instruments and shop where they can ask expert salespeople for advice instead of relying on online reviews alone.” In spring of 2014, Guitar Center had three years left until its debt was due. It had issued $830 million in bonds, a secured term loan of $616 million, and $100 million in revolving debt. Its chief financial officer, Tim Martin, told Music Inc. magazine that, despite appearances, company bonds were trading “above par” and were an “attractive investment.” All Guitar Center and affiliated Music & Arts stores were cash-flow-positive. Together, the stores were generating good income, and Guitar Center was spending just greater than $60 million per year in capital expenditures. “Our single largest debt holder wants us to grow the business,” said Martin. In April 2014, Guitar Center’s largest bondholder, Ares Management, agreed to swap $535 million in debt for equity to free up additional cash for growth, resulting in a drop in annual interest expense by about $70 million. That maneuver, Pendleton says, puts Guitar Center on solid ground for the future. “It was a major transaction, and now we can focus heavily on business operations instead of worrying so much about the capital structure. We are focused on marketing and operations to get the business where we want it to be.” This year, Pendleton celebrates 10 years on the job, and he has already led the organization through three significant and complex transactions. He’s pulled it off with a small team ranging between just three and six attorneys. “We have success here because we are involved in every aspect of the business. We answer legal questions, advise on strategic direction, and talk about risk management. Everyone on the team is trusted to speak on any issue that might affect Guitar Center,” he says. Today, Guitar Center is still the largest retailer of musical instruments and related products. The company is several times larger than its next-biggest direct competitor, Sam Ash Music. In addition to Guitar Center stores, the company includes the largest school music dealer in the United States (Music & Arts) and some of the largest online retailers in the industry (Musician’s Friend, Woodwind & Brasswind, and Music123). In November 2014, the board of directors announced the hiring of former Jo-Ann Fabric and Sports Authority CEO Darrell Webb, who has placed Guitar Center on an aggressive growth track. Despite increased competition from online 48

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giants, Webb believes the company’s overall position is on strong enough ground to prove that brick-and-mortar music retail is alive and well. Webb has the company poised to open as many as a dozen new stores each year. To do that, Webb, Martin, Pendleton, and their peers are taking a new approach. About one-third of the stores have lesson space, and they believe most stores should. They also want more recording studios, financing options, and rental programs. Many of the older locations will be retrofitted and remodeled. “We want our stores and businesses to run in a more efficient and profitable manner, and we want to make sure we are providing our customers with ancillary services beyond just instrument sales,” Pendleton says. “These services enhance both the customer experience and store traffic.” A win-win. “We also are taking steps to appeal to a wider customer base by providing a more open and less intimidating environment from the historical ‘hard rocker’ shop reputation,” he says. If the plan works, the company sees significant growth potential over the remainder of the decade. Pendleton, who also plays guitar and bass for TV, commercial, and film scores, says he and his peers know what kind of experience musicians are looking for. “People want to come in, hold and feel an instrument, make comparisons, and talk to other passionate music-lovers,” he says. That’s why Guitar Center is focused on physical stores combined with a strong online presence. Additionally, it’s working with recording artists, labels, and content providers to develop contest, promotional, and sweepstakes deals, including the award-winning GC Sessions program on DirecTV. “We want to reach fans of all genres to increase the overall health of the industry,” says Pendleton. “We’re increasing the whole pie, not just our piece of it.” As the face of retail continues to change and many big brands are closing locations nationwide, Guitar Center is playing a different tune.

The Case for Complimentary Mike Pendleton on why free music lessons make good business sense for Guitar Center Modern Counsel: Guitar Center offers on-site workshops and lessons at no charge. What’s the strategy behind these free offerings? Mike Pendleton: It’s part of our growth strategy because it helps us increase our customer base as we increase the number of musicians and increase the passion of existing ones. MC:Why not charge for the classes? MP: The workshops and lessons get people in the stores more frequently. It gives our associates more opportunity to interact and engage the customer. They can answer questions, suggest products and accessories, and build real relationships that keep the consumer coming back. MC: Is it working? MP: We’re having a lot of success with it, in part, because we’re making music fun again for people. Many times, people are forced into music lessons by well-meaning parents. They grow up hating it, and they stop playing altogether. We want people to engage, or reengage, and these workshops and lessons give them a place to do just that.

— CLIENT CONNECTION —

> REED SMITH LLP: “Guitar Center is a long-standing and highly valued client of the firm.

Mike is the cornerstone of that relationship and a strategic player in the industry. We work closely with Mike on a variety of complex matters, and he demonstrates a razor-sharp legal mind allied to a highly practical, commercial perspective in response to every challenge. In addition, he leads a first-class team of collaborative and creative thinkers and problem solvers. Working with Mike is a pleasure and an inspiration.” – Kate O’Brien, Partner, Reed Smith LLP Entertainment, Media and Intellectual Property


Mike Pendleton is being recognized for his amazing career.

(We sure like the sound of that.)

and honored to work with Mike and Guitar Center, and we look forward

ReedSmith

to continuing to serve their most critical legal and business needs.

The business of relationships.

We salute Mike Pendleton for his leadership and vision. Reed Smith is proud

SM


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ESTABLISHING A TRANSMISSION TRINITY Since 1933, Trinity Industries has grown from two struggling propane tank companies into a multibillion-dollar diversified manufacturing company. Early in its history, it acquired some of the most illustrious names in American industry: Mosher Steel Company, Equitable Shipyards, and railcar designs from the Pullman Standard Company, to name a few. Today, being in the rail transport and inland barge businesses provides considerable diversity for Trinity’s portfolio; railcars and barges move many different things, such as cars, petrochemicals, agricultural products, and construction components and supplies. But in September 2014, the company acquired the Meyer Steel Structures business for $600 million, its biggest dollar acquisition ever, establishing for Trinity a leadership position in the electricity transmission business. Jared Richardson, associate general counsel of Trinity, explains what prompted the move and how the legal team helped it happen. By Bridgett Novak

Modern Counsel: Some companies go years, or even their entire life cycle, without making an acquisition. But Trinity has been purchasing other companies since its inception. What did the company hope to gain from the Meyer purchase? Jared Richardson: There are a lot of different ways to describe what we do, but we are essentially a manufacturing 50

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company, or, as I like to tell people, “We build big steel stuff.” Meyer Steel, a leading North American electric-tower manufacturer, also builds big, heavy steel products. We already had a small business in electric transmission towers, and we like that industry. When Meyer was put on the market, we saw it as an opportunity that doesn’t come along very often. It enabled us to expand an existing business line and step into a leadership

position in an industry we view as solid and long-term. Even though we’re bestknown for railcar manufacturing, we want to strengthen our presence in less cyclical businesses. Meyer will help us do that.

photo: Alayna MacPherson

MC: In his book about Warren Buffet, Lawrence A. Cunningham says two of his management maxims are to “stick to your knitting” and “commit to the long


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“It was a very strategic transaction for us, a long-term play, and a big part of our diversification efforts.” – JARED RICHARDSON

TRINITY INDUSTRIES AT A GLANCE

1933 established

Dallas, TX

22,070 $6.2 B 12 M+ employees (after the Meyer Steel acquisition)

2014 revenue (after the Meyer Steel acquisition)

Memphis, TN

1,100

$600 M

headquarters

MEYER STEEL STRUCTURES AT A GLANCE

1929 established

employees

facility space (in sq ft)

acquisition price

headquarters

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term.” It sounds like this deal scored on both those points. JR: Yes. Meyer was a great fit. It was a very strategic transaction for us, a long-term play and a big part of our diversification efforts. Another thing we look for is operational leverage. Trinity was already building large steel products, so combining with Meyer enabled us to become even more productive and efficient. MC: What were some of the steps involved in making the deal happen? JR: To pull a deal like this off requires early identification of the internal team—which includes people from HR, IT, payroll and accounting, facilities management, manufacturing, marketing, sales, and legal—and a very clear assignment of tasks. You have to be organized, focused, and not take your foot off the pedal. Legal’s role was to oversee and conduct due diligence; help prepare and file all of the required documents in connection with the Hart-Scott-Rodino Act (due to the size of the transaction); draft the purchase and transition services agreements; and spend two weeks in face-to-face meetings. Our outside counsel, K&L Gates, provided invaluable service. They were responsive and thorough throughout the entire process. MC: You’ve been through many acquisitions—both as a law firm associate and in-house at TXU Energy, which went through a $45 million leveraged buyout by private equity firms in your tenure. How did this one compare? JR: It went very quickly—just seven months from start to finish. We decided to make the move in February 2014, and the deal closed in September. It was an auction process, which helped accelerate the time frame. There were very few stumbling blocks. I’ve worked on some acquisitions that required inordinate 52

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amounts of paperwork. One deal I did years ago required 250 documents for just three bullet points on the closing checklist. MC: What did you learn from working on this deal? JR: One of the perspectives you get in-house that you don’t being part of the outside counsel team is that you are there to see what happens after the deal is done—after everybody shakes hands and pats each other on the back. As outside counsel, you move on to the next deal almost immediately. You hope that you’ve structured a deal that will be good for both sides, that you’ve minimized the likelihood of post-closing disputes, and that you’ve put the company in a position to move forward and be successful, but you’re not actually involved in the integration phase. You care much more about those things going well when you’re directly involved, have a vested interest in the company’s success, and work with the affected employees every day.

— CLIENT CONNECTION —

> LOCKE LORD: “Working with our former

colleague is truly a pleasure. Jared is incredibly bright, insightful, thoughtful, and efficient. His calm demeanor, intuitive sense, and sound judgment permit him to offer practical counsel, solutions, and advice. Jared has done a tremendous job at Trinity, and Trinity has greatly benefited from his counsel. I am not at all surprised by his success and would have expected nothing less.” – Don Glendenning, Partner


IMPLEMENT COLLABORATION

CASE STUDY

The

LEGO BUSINESSPARTNERING program By Mary Beth Rohde

ROBIN SMITH Vice President and General Counsel LEGO Systems, Inc.

photo: LEGO Systems, Inc.

In 2014, LEGO was named the world’s largest toy company in terms of revenue—just shy of $4.05 billion that year. For Robin Smith, general counsel of the Danish toy company’s American subsidiary, LEGO Systems, Inc., 13 percent growth in 2014 prompted a creative look at the structure of the legal department. Last year, Smith and the rest of the legal leadership team introduced the legal-business partnering concept. The arrangement assigns one lawyer to each business function as a designated legal counterpart for collaborative decision-making and input beyond the usual “yes” or “no” answers. The initiative was backed by internal data. A survey of leadership at the LEGO Group a few years ago indicated that business leaders wanted a single point of contact within the legal team. “We had people in various areas of the legal department handling a variety of legal matters for our corporate groups,” Smith

says. Pairing attorneys with functions was an unusual model, she admits, but it has been well-received. “Everyone really seems to like having one attorney in their specific area.” Now, with a designated legal point person for each business function, such as marketing or operations, one lawyer handles all legal issues for that area of the company as a legal business partner (LBP). Whether it is contracts, competition, employment, immigration, finance, or IP issues that emerge for that department, the LBP is tasked with figuring out how to handle it. The LBPs aren’t completely cut off from the legal team, though; they can seek assistance from other attorneys or support staff, and they can call in outside counsel, if needed. Due to staffing needs, a few lawyers cover two corporate areas. Specific attorneys who focus only on contract work also help the LBPs manage standard contract and negotiations work. Since the program’s debut in 2013, the business groups have reported satisfaction. “They are getting the type of attention they need,” Smith says. “Having the lawyers participating also seems to provide security that someone is at the table who can comment on legal issues as they arise.” The concept has been mutually beneficial for the 18 participants. They are no longer isolated “lawyers-in-a-box,” says Smith, but have regular meetings with the leadership teams for various business functions. “If they are the LBP for the Asia-Pacific group, that meeting might be in China,” Smith explains. “They learn a lot about the business very quickly, because they are at the table. It’s a leadership opportunity they might not get in the traditional legal department set-up.” Lawyers also benefit from being among the first to know about projects in the pipeline, allowing them to better prioritize their workload, suggest ideas, and discuss strategic planning. “They may not be making the actual decisions, but they can contribute to the process in a more valuable way,” says Smith. OCT/NOV/DEC 2015

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We congratulate our friend and client

Robin Smith for her long and distinguished legal career.

In Conversation

Courtney VanLonkhuyzen & Robin Smith Smith was paired with LEGO CEO Jørgen Vig Knudstorp in the LEGO Group’s reverse-mentoring program, aimed at giving top management a better understanding of gender diversity challenges. The experience gave her access to the company’s highest executive and the opportunity to offer leadership a female perspective. She talks with our guest editor about the mutual benefits of the experience. COURTNEY VANLONKHUYZEN: What did your mentoring relationship with Jørgen Vig Knudstorp look like? ROBIN SMITH: We met face-to-face for informal dialogue, exchanged many e-mails, and had phone discussions about my experiences as a female attorney before coming to work for the LEGO Group and while working here, as well as my outlook on business and my experiences in the world as a woman. We discussed all kinds of relevant reading materials, including articles about the accomplishments and challenges of female executives, and books like Lean In by Sheryl Sandberg and Nell Scovell. We would have wide-ranging conversations about how to increase opportunities in the company for female leadership. CV: What were some of the topics you discussed regarding female leaders at the LEGO Group?

The learning curve has been steeper than originally expected, Smith admits. With lawyers expected to be generalists rather than specialists, most of the attorneys need to broaden their expertise; no lawyer handles only IP or immigration but must be able to answer those questions as well as concerns about procurement. “Through our human resources partner and other company programs, we are offering training to fill in the knowledge gaps,” Smith says. Attorneys can also consult colleagues identified as experts in a particular legal area, which has fostered greater information sharing. Working in different time zones also presents a challenge, since the vice president who oversees some of the LBPs could be based in one country, but the LBPs who report to her may be worldwide. This requires employees to work globally and maximize opportunities for virtual meetings. The legal department has instituted an annual LBP summit in which lawyers can meet to discuss how the model is working. Smith also brings her practice group together monthly, either in-person or virtually. While the legal-business partner model is intended to be a rotational

RS: Where I see specific training needs, the ways of recognizing female talent, how to develop an appreciation for different ways of thinking and expressing concepts, and what diversity brings to the leadership table. CV: What was the biggest takeaway of the program for you? RS: The strength of the commitment being made by the company to have a better understanding of diversity, a plan for how to grow female leadership, and pride in the fact that the company wants to do things differently.

Intellectual Property Law www.frosszelnick.com 212-813-5900

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CV: After completing the program, what advice would you offer other professionals who want to advocate for women to executive leadership? RS: Don’t be afraid to suggest this type of program at your own workplace. There are lots of lessons that come out of these important face-to-face discussions that can be translated into valuable action.

— CLIENT CONNECTION —

> SHIPMAN & GOODWIN LLP: “Robin Smith is not only an exemplary attorney; she is an innovative and passionate leader who has helped develop a successful legalbusiness partnership at LEGO that we are privileged to support.” – Alan E. Lieberman, Partner photo: Caleb Fox (VanLonkhuyzen)


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Shipman & Goodwin llp congratulates

LEGO Looks East $4.05 B

generated in annual global sales in 2014

15%

INCREASE 2014 global revenue represented a nearly 15 percent increase from the previous year and the seventh consecutive year of doubledigit revenue growth for the company.

50%

INCREASE On the heels of a 50 percent increase in Chinese sales in 2013, 2014 was marked by the start of construction on LEGO’s third-largest production facility in Jiaxing, China, which will supply all of the Asian market, as well as a new office in Shanghai.

ROBIN SMITH LEGO Vice President & General Counsel

Robin richly deserves recognition as a strategic and inspirational leader. We are proud to be

85 M

1,500+

The group estimates more than 85 million children played with LEGO products last year, a testament to its effort to grow in new markets, such as the Asia-Pacific region.

EMPLOYEES The Shanghai office expects to house 100 employees. Once completed in 2017, the factory anticipates a workforce of 1,500+ employees.

approach, attorneys thus far have stuck with their original groups. “As lawyers strengthen their expertise in all the focus areas, we envision rotating them,” Smith explains. For example, the person handling all legal issues for the Americas might rotate to cover the AsiaPacific group. Right now, she notes, the LBPs need a chance to develop their current roles. Smith’s focus has shifted now that she has reports in several countries. She has had to learn about the European and

Asian markets so she can support the LBPs in those areas. “It will definitely help me with my leadership going forward,” she says of the experience. Though the LBP program has not come without challenges, Smith says they’ve been worth it, and the new model is a good fit for the LEGO Group. Smith says LEGO’s philosophy is to try creative solutions, and she plans to continue implementing it with positive results for the legal department.

referred to as one of Robin and LEGO’s “core outside counsel.”

Alan E. Lieberman, Partner (860) 251-5000 shipmangoodwin.com Facebook “f ” Logo

CMYK / .eps

OCT/NOV/DEC 2015

Facebook “f ” Logo

CMYK / .eps

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IMPLEMENT COMPLIANCE

ENCOURAGING COMPLIANCE WITH EMPOWERMENT Using best practices and lessons learned from his extensive experience as chief compliance officer, David Mace Roberts is creating a comprehensive compliance program at RMG Networks. Roberts doesn’t come from an enforcement background, such as the SEC; rather, he promotes ethics through empowerment. He shares his process for building the function and championing compliance for a global company. By Jaylyn Carlyle

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photo: RMG Networks


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1800 ATTORNEYS | 37 LOCATIONS˚

Modern Counsel: You came to RMG Networks in June 2014. How was the company functioning without a formal compliance structure up to that point? David Mace Roberts: I joined after the company became public. RMG had a basic foundation for a compliance regime, but it was in its infancy. RMG had an insider trading policy, disclosure policy, and a code of conduct, which is required. But it didn’t have a full-blown, enhanced global compliance program, which is one of the reasons the board of directors decided to bring me in. MC: Why did you make it a priority to define compliance globally? DMR: There are many reasons having a global compliance program is important. Number one, we are a public company. We’re now going through our SarbanesOxley Act Section 404 certification, including top and bottom review of our internal controls. Also, 70 of the Fortune 100 companies are our customers. Many of them are financial and health-care institutions, as well as federal and state agencies, so having a robust compliance program is critical to making those customers happy and is a requisite for doing business with them. Additionally, we operate worldwide in areas such as the United Arab Emirates, China, Singapore, and Europe. For us, complying with all the anticorruption regimes, such as the Foreign Corrupt Practices Act and the UK Bribery Act, are all critically important. MC: You handled compliance in each of your past roles, so you have a good idea of what structured compliance looks like. What elements of your experience are you employing to guide this project? DMR: Doing the right thing really needs to be ingrained into an organization’s DNA. It requires a multifaceted approach. There are a number of elements I’m employing today gleaned from past experience, including internal audits, open-line communications, internal accounting and control systems, periodic certifications

by employees and third parties, and due diligence regarding third parties and business partners. MC: How did you get support from RMG leadership? DMR: For our organization, it came naturally. There was absolutely no reluctance at all. When I provided my very long list of things to do regarding our CFO, COO, and CEO positions, everyone was very positive. Our auditors were excited to see that we crafted a best-in-class set of policies and procedures, such as anticorruption, record retention and destruction, whistle-blower, and signature authority. Everyone bought into why we would want to do this. There’s so much good that can come out of it. It makes customers, especially in highly regulated industries, more comfortable and more willing to do business with you. Doing the right thing increases stockholder value, as well. MC: What did your road map for this project look like? DMR: We’re a small company, so it’s me, myself, and I, with the help of the other senior executives. My first year, it was getting the policies and procedures up and running; getting the anonymous, third-party, whistle-blower hotline up; and starting our training, which is now live. Next year we will be setting up the internal controls, moving forward with employee training, and inserting the appropriate ethics and compliance provisions into our third-party contracts, such as anticorruption provisions, compliance

We are proud to recognize the accomplishments and career of David Roberts of RMG Networks. Greenberg Traurig, LLP is an international, multi-practice law firm with approximately 1800 attorneys serving clients from 37 offices in the United States, Latin America, Europe, Asia, and the Middle East. We provide strategic advice and legal services with the dedication and responsiveness of a boutique firm and the breadth, depth, resources and operating efficiencies of one of the largest firms in the world.

— CLIENT CONNECTION —

> GREENBERG TRAURIG, LLP: “Greenberg

Traurig is proud of its seamless collaboration with RMG Networks and David Roberts. We congratulate David on all of his achievements and look forward to working with him in the coming years.” – Ameer Ahmad, Shareholder

W W W . G T L A W . C O M Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2015 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Ameer I. Ahmad in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 24983

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The law firm of Dykema congratulates David Mace Roberts, SeniorVice President and General Counsel of RMG Networks, on being featured in this special issue of Modern Counsel Magazine.

“Doing the right thing really needs to be ingrained into an organization’s DNA.” – DAVID MACE ROBERTS

with hazardous materials prohibitions, and child labor laws. Moving forward, we want to develop a best-in-breed code of conduct. We also want to enhance our training program with real-time, Web-based training modules.

polices or other business conduct and ethics resources.

MC: How are you measuring progress?

DMR: The first year, either I or our senior vice president of people and culture will be conducting live training. As we roll into 2016, we will look to enhance our training program with Web-based training to supplement and enhance the live training.

DMR: We need to set up our checks and balances to monitor how the organization is doing. For example, we’ll be conducting periodic audits on various ethics and business-conduct initiatives regarding areas such as gifts, meals and entertainment, conflicts of interests, anticorruption, and transaction approval, as well as signatory authority. We are also looking to implement a process for providing disciplinary measures and incentives for employees. MC: Such a big and new initiative hinges on clear and consistent communication. How did you formulate a strategy to keep the rest of RMG informed?

Exceptional service. Dykema delivers.

www.dykema.com Law offices in California, Illinois, Michigan Minnesota, Texas and Washington, D.C.

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DMR: We have something called RMG University, which is a site available to all employees worldwide. That is where our anonymous whistle-blower hotline and governance policies are posted, among other things. When I rolled out the program, I did a formal announcement to all of the employees letting them know all of the new elements and resources that we were making available to them. Every month, I send out an e-mail to all employees giving some hypotheticals, updates on something new happening in the world, an industry, or the law. I’ll also be rolling out periodical “Do you know” announcements, such as “Do you know what is the maximum allowable dollar amount to receive or provide a gift?” We also send out quarterly reminders of where employees can find our code of conduct governance

MC: How hands-on were you during the on-the-ground work of building out the function?

MC: Going forward, how do you plan to maintain the compliance function so it is reflective of changing laws and regulations? DMR: It’s ongoing. That could be a full-time job for someone at a larger company—keeping up with all the changes and the laws that affect the business, the organization, the employees, and the customers. I rely on updates from outside counsel, various organizations, and my search engines. I also subscribe to various periodicals. It’s always changing. As a best practice, I think a company’s employee manual, governance policies, and code of conduct should be scrubbed on a regular cadence—whether it’s once a year, twice a year, or quarterly—to make sure that employees are given the resources they need to do the right thing.

— CLIENT CONNECTION —

> DYKEMA: “David Mace Roberts is not afraid

to make the tough decisions, having chauffeured innovative legal advances that shape today’s communications industry. It has been a privilege to be his partner on this journey for the past 10 years.” – Brian R. Forbes, Member


RECOGNIZING OUR VALUED CLIENT

What Makes a Great Company Great? AN UNWAVERING COMMITMENT TO EXCELLENCE

Perkins Coie salutes our client, RMG Networks, and its Senior Vice President and General Counsel David Roberts, on their vision and commitment to building a best-in-class global compliance program. We are honored to partner with David and the RMG team, and we look forward to many more years of collaboration.

PerkinsCoie.com Perkins Coie LLP ATTORNEY ADVERTISING

OCT/NOV/DEC 2015

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IMPLEMENT COMPLIANCE

THERE’S AN APP FOR THAT Qualcomm turns its innovation inward, making compliance interactive with a mobile app

By Jessica Montoya Coggins

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One of the leading wireless communication technology companies in the world, Qualcomm, is a global beacon for success and innovation. In its pursuit of the ethical practice of business, the company is demonstrating that technology and ingenuity can enable compliance as well as communication. Bill Sailer, senior vice president of legal counsel, is the force behind Qualcomm’s legal expertise. Sailer’s role with the company has changed as compliance law has undergone a radical transformation over the last couple of years. This is in large part due to the increased criminalization of conduct and enforcement initiatives. “You’ve got to know the law,” Sailer says, “and if you don’t know it, you have got to learn it.” While his role has evolved and changed during his 18 years with the company, one thing has remained constant: the focus on compliance. Compliance is not a single legal issue. Legal governance, risk management, and compliance have increasingly become critical initiatives within multinational corporations. Qualcomm has

always taken its compliance obligations seriously, especially as it has grown in size and scope. For the last 15 years, anticorruption law has become a particular specialty for Sailer. Though a chief compliance officer was hired last year to directly oversee those efforts for Qualcomm, Sailer works closely with him and his team to provide strategic advice to address key areas of risk. Like any global company, Qualcomm devotes substantial resources toward these compliance issues. When it comes to educating employees at Qualcomm about compliance, Sailer and the team rely upon several technology-based strategies to leverage the available resources. In addition to performing training online and in-person, Sailer’s team also created a six-minute animated video that gives an overview of the Foreign Corrupt Practices Act (FCPA). There are still many questions that surround the FCPA, and Sailer acknowledges the murkiness of the law. “The challenge of FCPA and anticorruption laws is that the things that you are not allowed to do are not always intuitively known,” he says. Sailer and his team work daily to make sure everyone at Qualcomm treats anticorruption compliance as a priority. The training video was a natural progression of many of Qualcomm’s technological achievements.


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“While you obviously want to have appropriate policies, as well as a mechanism to determine if people are following rules, the most important thing is to create an environment in which people want to follow the rules.”

“It provides the context of compliance and a framework for people understanding what their obligations are in a quick way,” Sailer says. That animated video was well-received within the company and ushered in several other initiatives. A fitting next move for a mobile technology company was to create a mobile-centered app for employees to use as a tool to help them comply with the company’s FCPA and anticorruption policies. The app provides policy, a training video, and common scenarios with processes to follow for each. Since the app is easily accessible through any mobile device, any employee can have a question answered almost immediately without having to reach out to human resources or anther colleague. For example, if a Qualcomm employee is having dinner with a foreign official, he or she can consult the app for the proper protocol, such as whether it’s appropriate to pay for the dinner or to give a gift. The app provides numerous scenarios that easily help employees learn what type of behavior is appropriate. Sailer emphasizes that another important factor for compliance comes from companies themselves. “You have to have a culture that encourages [compliance],” he says. Qualcomm’s leadership is committed to ensuring ethical behavior throughout the company. A company that actively commits to engaging in business with honesty and integrity will see that reflected in its employees and their conduct. Qualcomm represents what it takes to become a leader in ensuring compliance, since the company has found many new and innovative ways for employees to navigate an often tough legal maze. Sailer stresses that when it comes to compliance, Qualcomm can’t simply “steer” employees to behave by constantly looking over their shoulders. “The goal is to create an environment where people know what their responsibilities are and to give them the tools to comply,” he says. According to Sailer, there are three main things that Qualcomm endeavors to provide when it comes to compliance: “While you obviously want to have appropriate policies, as well as a mechanism to determine if people are following rules, the most important thing is to create an environment in which people want to follow the rules.”

– BILL SAILER

photo: Qualcomm

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PLAYBOOK

COMPLIANCE BUILD OUT When Steven Lowson joined Sequa Corporation 20 years ago, the company was public, and the general counsel and CEO were business partners. When both passed away in their 90s, Sequa was sold and taken private by the Carlyle Group, a new CEO was hired, and Lowson was appointed general counsel—and tasked with building a global compliance function from the ground up By Julie Schaeffer

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photo: Sequa Corporation


Modern Counsel: What did Sequa’s compliance function look like when you became general counsel in 2008? Steven Lowson: It was essentially nonexistent. In fact, I recently gave a presentation that had a slide for the compliance programs in 2008, and the slide was blank. There were a number of people doing things around compliance, but there was no centralized compliance function and no policies or programs being adhered to and audited. For example, one of our major companies, Chromalloy, had someone who was “in charge” of compliance, but he wasn’t a compliance professional in the sense that he had the necessary background, and he wore about six different hats. So they were doing things on an ad-hoc basis. They had training programs—an ethics program, a code of business conduct—and if there was a fire, they were putting it out. But they didn’t have uniform processes in place around how they approached compliance, and it wasn’t clear to each and every employee how to go about the whole compliance function. MC: What risks was the company facing by not having formal compliance policy? SL: Compliance is critical to our business. Chromalloy, for example, is international, which means it faces many issues in regard to export control, transfer of technology, and foreign nationals. Before we formalized compliance, we were facing significant risk of a government agency coming in, auditing us, and finding violations that could lead to a number of problems—significant monetary fines

among them. More importantly, we do a lot of work with the US government, and if we were found to be in violation of compliance statutes, we were looking at being prohibited from doing such business, which would have been devastating. Moreover, a lot of our larger joint-venture partners and customers have really buttressed their compliance programs and are requiring in their contracts that the companies they do business with have significant compliance initiatives in place. MC: Is compliance different in a private company versus a public company? SL: We were public before the Carlyle Group bought us, though we had a majority shareholder who owned 53 percent of the stock, so we weren’t run in the manner of a typical public company. That said, being public versus private, there are differences in terms of Sarbanes Oxley financial reporting and all of that. At the same time, when you’re owned by a private equity company like the Carlyle Group, which itself is public, you end up going down that path anyway. We do a lot of things here that are very similar to what public companies do, such a SEC Form 10-Q and 10-K equivalents. We don’t file them with the Securities and Exchange Commission, but we still create the documents and audit our finances.

SEQUA CORPORATION by the numbers

5

companies merged to form Sequa Corporation

6,500 17 employees

countries in which the company operates

$1.4 B 194

2014 annual revenue

rank on Forbes’s 2014 list of America’s largest private companies

MC: What was your process for building a compliance program from the ground up? SL: There were three immediate steps: I hired someone who had spent her life in another corporation living, eating, and OCT/NOV/DEC 2015

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IMPLEMENT COMPLIANCE

“As long as you have people thinking about compliance from a cultural perspective, you’ve won the war.”

Attorneys who serve clients not only as counselors but also as valued partners. We congratulate Steve Lowson of Sequa Corporation on his numerous professional accomplishments and welldeserved recognition. Chuhak & Tecson is a Chicagobased, midsized firm providing clients with both the individual attention and reliable counsel they require. Whether the issue is straightforward, routine, intricate or novel, we work to devise strategies that offer timely, cost-effective solutions for our clients.

A Civil Litigation Law Firm At Hennelly & Grossfeld, we are not just litigators, we are trial lawyers. Our attorneys have successfully tried dozens of cases in state and federal courts throughout California and the nation. This experience permits us to analyze and prepare cases efficiently with an understanding of how the jury will perceive the evidence. We prepare every case from the outset as if it were going to be tried to a jury.

Real Estate Title Insurance Breach of Contract Unfair Competition Intellectual Property Disputes Copyright and Trademark Enforcement Trade Secret Misappropriation

Chuhak & Tecson, P.C. 30 South Wacker Drive Suite 2600 Chicago, IL 60606 312 444 9300 chuhak.com

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Products Liability Personal Injury

Offices in Los Angeles & San Francisco

hennellygrossfeld.com

– STEVEN LOWSON

breathing compliance; I went to a number of seminars to get up to speed on the key compliance statutes and processes I needed to implement; and I tapped the right outside counsel to help me pull this all together. MC: What challenges did you face? SL: I already had so much on my plate in terms of leading the company in a new direction from a legal standpoint and putting out the fires of the everyday business. We had some monumental issues come up in 2008, 2009, and 2010 around contracts that the previous administration had entered that were not favorable to the company and had to be arbitrated. While I was doing that, it was hard to get management to approve programs that weren’t really visible. Additionally, a lot of the compliance world is about taking preventative measures, and I had to convince the company to spend its limited resources to prevent something that wasn’t occurring instead of implementing programs that generate revenue. But I will say, I had the support of senior management and our owners, the Carlyle Group, in embarking on this. I went to board meetings and explained the issues, and they recognized that we needed to come at this with a robust compliance process.


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Troutman Sanders MC: How long did the process take? SL: It took a good two to three years to really get all of the processes in place, but it’s not enough to have written policies and procedures; you have to implement them and audit them, and more importantly, you have to get people to think about them on a daily basis and integrate them into the business practices. Every day it’s evolving. Now we’re refining it and developing the right organization to ensure that it’s ingrained. We’re building out the compliance organization to create regional leaders who live and breathe compliance every day and ensure the people on the ground in each unit are doing what they need to do. Some of our units are there; some aren’t. But I’m proud to say that when the Carlyle Group, which has hundreds of companies in its portfolio, needs a model for a compliance program, we’re one of the companies it taps. MC: You said you had the support of senior management. Does that mean there wasn’t tension between compliance and the business side? SL: There are challenges every day. People want to sell products and raise revenues. But the point companies really need to strive to reach, which we have, is fostering a culture of compliance, a culture in which people are thinking about it. It’s okay to expand in other parts of the world in places that don’t do business exactly like the Western world does. You’re going to lose some individual battles because people are always going to make mistakes, but as long as you have people thinking about compliance from a cultural perspective, you’ve won the war. Essentially, we’re ingraining this culture of compliance in our business management operating system. If you don’t do that, people are not going to be constantly reminded of it, and you’re going to have a lot more opportunity for people to not follow the rules.

Together, as one team. Every day, every case. Pashman Stein PC congratulates Steve Lowson, of Sequa Corporation for his recognition in Modern Counsel. We are honored to work with such a leader in the field.

congratulates

Steven Lowson of Sequa Corporation for his many accomplishments.

Pashman Stein, a full service business law firm headquartered in Hackensack, NJ, offers a full range of corporate and personal legal services to business entities and individuals. Having vast experience in many different industries, Pashman Stein is able to understand its clients' needs and objectives across multiple practice areas and provide the best legal strategy for their particular matters. www.pashmanstein.com (201) 488-8200

troutmansanders.com ATLANTA BEIJING CHARLOTTE CHICAGO HONG KONG NEW YORK ORANGE COUNTY PORTLAND RALEIGH RICHMOND SAN DIEGO SAN FRANCISCO SHANGHAI TYSONS CORNER VIRGINIA BEACH WASHINGTON, DC

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hen Rich Konrath arrived at CNH Industrial, he wanted to prove a long-held belief about the management and strategic impact potential of legal teams. Konrath joined the global company that manufactures agricultural and construction equipment after stints at Caterpillar and the SEC. He was named vice president and general counsel of CNH’s North America region. He created an affirmative recovery initiative to prove his belief that legal could be a strategic partner. The initiative empowers the legal team to take a proactive, systematic approach to recovering revenues owed to CNH that would otherwise be lost.

The Impetus In the past, Konrath had seen legal teams viewed as cost centers. “Legal was the place in the corner where you didn’t want to go,” he says. The function’s performance was evaluated on conventional terms like spend versus budget, head count, and outside counsel expenditures. “What I saw missing was the revenue that could be attributed to what legal departments do.” Lost revenue represented an opportunity to flip the traditional view of a legal team. Konrath wanted to take a group that had typically been seen as a cost of doing business and turn it into a strategic asset, a partner in the company’s business objectives. Changing that perception and recovering revenue meant complementing the traditional role of the legal team—risk protection—by going on the offensive and acting proactively in ways that would bring value to the 66

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recover lost revenue in a proactive, systematic way that partners the legal team with leaders across the company.

CARPE DIEM, CARPE REVENUE How Rich Konrath elevated CNH’s legal team through revenue recovery By Topher Bordeau

company and make legal a strategic partner of the business leaders. “It’s often difficult to measure the value of risk avoidance, even if we know the value is there,” says Konrath. “Businesspeople measure numbers. I asked myself how we could do that as a legal team to measure

our value.” Konrath knew lost revenue was a common problem among larger companies like CNH. He decided to devise a system that would recover it. Recovering lost revenue isn’t a novel idea, nor is it what affirmative recovery is all about. Affirmative recovery is the idea of seeking to

The Plan Konrath saw several areas at CNH in which his team could add value by being proactive in recovering revenues. The key to the plan’s success was to approach those areas in ways that amounted to more than just fishing for money owed to the company. He examined each area of CNH’s operations and engineered systems to recover lost revenue based on the way each area operated. For example, Konrath recognized early in his tenure that aggressively pursuing component suppliers for defective products and unpaid warranty claims could recover a lot of revenue for CNH, but he also knew that reacting to reports of unpaid claims wouldn’t get him what he wanted. Partnering with the procurement and purchasing teams allowed Konrath’s legal teams to proactively unearth situations in which CNH wasn’t getting the value it was owed as those situations happened. After identifying key areas that could yield recoveries and putting his plans in place in each area, Konrath’s team educated the people working in those areas on what affirmative recovery was and how they could be involved. Konrath made a broad pitch to the company’s top managers in North America, including the CFO, COO, and all of the brand leaders. He gave presentations so that they could trickle that down to their teams. A senior managing attorney on Konrath’s team serves as the program’s point person. The attorney and her photo: CNH Industrial


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AFFIRMATIVE RECOVERY BY THE NUMBERS An itemized look at the revenue recovered by CNH’s legal team

$13M

from insurance companies for underpayment on claims

$5M

from suppliers for warranty and recall issues, as well as defective products

$2M

from cargo and logistics companies for damaged products/delays

$2M

in over-payment of customs duties

$2M

in supplier or customer bankruptcies in negotiations with bankruptcy trustees

$800K in IP licensing fees pursued

$500K

for class actions for overpayment of items such as credit card or other banking-related fees

team periodically meet with leaders in key areas of CNH to discover potential cases for recovery. After collecting reports from collaborating departments, they bring potential claims to Konrath. The group then weighs the potential investment of time and resources needed against the likely amount of recovered revenue to decide which claims to pursue.

The Results The results of the affirmative recovery program speak for themselves: nearly $20 million in recovered revenue in four years of operation. Just as important as the number, says Konrath, is the ability for that number to be measured in a systematic way. “The key is really having a process that allows you to do more than just pursue these recoveries with your business partners,” says Konrath. “Measuring the recoveries that you get, tracking them year over year, and setting annual goals against the previous year’s performance is critical. That’s where you really demonstrate your value.” Those goals are so fundamental to the affirmative recovery program that they have become part of Konrath’s performance review. The goal and the expectation it creates drive him and his team to pursue recoveries intelligently and aggressively. “It adds a quantitative aspect that legal teams haven’t really measured in the past,” says Konrath. “Sometimes I have to tell our management that this growth isn’t a hockey stick. Our performance goals are always a stretch beyond what we know might be coming, but we’ve had enough success to

“It’s often difficult to measure the value of risk avoidance, even if we know the value is there. Businesspeople measure numbers. I asked myself how we could do that as a legal team to measure our value.” – RICH KONRATH

A relationship is an investment, and Quarles & Brady is a law f irm that understands the enduring rewards of a solid collaboration. We strive to learn your business from the inside — to see goals and benchmarks through your eyes, and then use our experience and insight to best position you to achieve them. Your challenges are our challenges; your successes are our successes.

have to manage some of the expectations a bit.” That success has earned Konrath and his team an additional reward: the wide-ranging impact he sought when he arrived at CNH, along with the change in perception of the legal department from a cost center that played defense to a strategic asset in CNH’s operation. “I think CEOs and boards of directors everywhere are realizing that legal can partner with them to achieve their company objectives. There has been a definite culture shift here at CNH about our role, and that has lead to an increase in credibility for the team.”

With Quarles & Brady, you’re not just a client — you’re a valued business partner.

quarles.com

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CASE STUDY

How

VULCAN MATERIALS GOT E-DISCOVERY UNDER CONTROL By Michelle Markelz

On average, e-discovery costs $1,332 per gigabyte to collect, $2,793 per gigabyte to process, and $22,480 per gigabyte to review, according to a 2012 study by the Rand Institute for Civil Justice. Given the increasingly digital nature of business, those costs add up fast in litigation—so quickly that they can outweigh the merits of a case, forcing parties with solid defenses to settle. These implications were apparent to Norman Jetmundsen, vice president and associate GC of Vulcan Materials, so he decided to do something about it.

NORMAN JETMUNDSEN Vice President and Associate GC Vulcan Materials

The Impetus In the span of legal history, e-discovery is a fairly recent phenomenon. Fifteen to 20 years ago, you wouldn’t have heard the term. It came on the scene as advances in computer technology exploded, and while the cost to review and produce electronic documents has skyrocketed, many of its stewards (particularly, companies with ever-increasing caches of data) have been slower to respond. 68

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photos: Vulcan Materials


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Magnetic tape was first used to record computer data in the 1950s. When Vulcan made its initial e-mail record-keeping assessment around 2007, it discovered thousands of backup tapes across the company, which were being kept as an additional and unnecessary filing system. Jetmundsen had heard horror stories of companies mandated by courts to maintain such tapes, even when the technology was so outdated that companies no longer had the ability to utilize them. Originally intended as a disaster recovery solution, the tapes had become a liability. With no formal e-mail-retention policy, the company was also vulnerable in litigation because of the potentially huge expense to retrieve, review, and produce a voluminous amount of e-mails. The costliest process in e-discovery is document review. Even at average contract attorney staffing rates of $42 per hour, review of 3.9 million documents (the average number of pages in an e-discovery review database according to Kroll Ontrack) could cost upward of $2 million. In addition, there were concerns about having an adequate litigation-hold process in place to avoid spoliation issues. “If a lawsuit came in,” says Jetmundsen, “we’d try to find the employees involved and send them an e-mail, but we had no way to track the hold.” Further complicating the matter, files and e-mails saved by employees in business records folders in Microsoft Outlook were being saved as locally stored personal storage table files or PSTs. “We had hundreds of employees with their own PST files, which would require us to go to each individual computer in order to review e-mails,” says Jetmundsen. The inefficiency of having to review the e-mails locally was exacerbated by the fact that Vulcan’s e-mail data set was difficult to search, which created litigation discovery issues. Because of the way the system was set up, after the legal department retrieved all the information, it had to review the data manually in order to find relevant material, as well as to segregate any privileged communications. Jetmundsen went to Vulcan leadership with a hypothetical situation:

From left to right: Robin Nix (director if IT), Trudy Woods (paralegal), Norman Jetmundsen, David Deusner (Bradley Arant Boult Cummings e-discovery expert), and Brad Graham (systems integrator).

Suppose the company got a broad document request requiring companywide e-discovery retrieval, review, and production. “The cost could be astronomical,” said Jetmundsen. Senior management’s reply: “Fix it.” The Plan Jetmundsen admits that when he set out on this project, e-discovery was all new to him, so his first move to rein in e-discovery was to create a task force. He assembled a small in-house group consisting of his paralegal, Trudy Woods, and IT employees Robin Nix and Brad Graham. Before coming to Vulcan, Jetmundsen had been a partner for Bradley Arant Rose & White (now Bradley Arant Boult Cummings). The full-service Birmingham law firm provided him outside counsel, first in Paul Sykes and later in e-discovery expert, David Deusner, who brought a critical combination of legal expertise and technical knowledge—a valuable asset for collaborating with Nix, Vulcan’s director of IT. “Because our outside counsel could speak IT’s language, they could translate the legal needs to our IT people,” says Jetmundsen. “If you don’t have that ability in-house, I think you should consider bringing in someone with that expertise. It’s critical to dealing with e-discovery.” The team quickly began updating Vulcan’s systems and procedures. Their first policy was an absolute: no more PST files. IT got to work collecting the existing PSTs, moving the data to the mail

The IT Point of View Vulcan’s director of IT, Robin Nix, was an integral partner in getting e-discovery under control. He describes how legal and IT teams can work together to solve business challenges. Modern Counsel: What was the key to success in this cross-functional initiative? Robin Nix: Part of what made this project successful was that legal took ownership of the policy and behavioral changes that needed to occur in our company. It wasn’t so much an IT project as it was a business project. MC: Did you face any barriers communicating between the legal and IT functions? RN: IT and legal partnered closely to make sure the policy was possible based on the technology we deployed. Sometimes those two things don’t marry. There were some things Norman and his colleagues wanted to do that we couldn’t accomplish with the technology we had at the time, so we found a middle ground. It was helpful to have an intercessor in the outside counsel to help position ourselves in case we had to defend our decisions. Partnership is so important. If either side doesn’t understand the other, you need to keep asking questions until everyone is truly on the same page. MC: Is e-discovery completely solved for Vulcan? RN: Since 2007, we’ve gone through multiple technologies to arrive where we are today. We’re not done. This is a continuous effort to try to configure solutions that meet changing business needs.

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The Bottom Line

A breakdown of the average first-pass review cost for 3.9 million documents (by skill level, at a rate of 50 documents/hr)

total documents

overtime or straight time

working days to complete project

average documents coded per day per reviewer

project manager billing rate

cost per day per reviewer

number of reviewers

average daily PM hours required

total cost of reviewer time

hours per day

total PM hours required

total cost including PM time

3.9M 500 20 8

Straight $125 2

780

390

$336

$2,620,800 $2,718,300

The above scenario contemplates the use of lower-cost contract attorneys performing a first-pass review—a common approach in litigation wherein the entire corpus of documents is reviewed for general relevancy to the issues in the matter. A second-pass review of the resulting relevant documents is almost always necessary. This is typically performed by law firm associates, who are billed at higher rates, thus adding significantly to the overall e-discovery costs.

servers, and then putting in place the appropriate controls so that employees could no longer create them. Next, the team agreed that e-mail needed a formal retention policy within the greater document retention policy. It was decided that all e-mails would be deleted after one year unless they were put into a business records folder (or subject to a legal preservation), which meant the e-mail was designated as a business record of the company. Jetmundsen sent a memo to all of Vulcan’s employees informing them of the policy, and IT stepped up as auditor to ensure compliance. Later, the e-mail retention period was shortened. Though the e-mail policy could potentially remove material relevant to future litigation, Jetmundsen says the pros of the deletion policy outweigh the cons. “The excessive cost of reviewing those e-mails, had we kept them, plus the chance that 70

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they might hurt us more than help us, was enough for us to make that call,” he says. The company converted its several computer systems over to one central server in the interim before its final leap to cloud-based storage. The data that makes it there is cleaner than ever, thanks to a robust antispam capability built in by the IT team. In addition, all backup tapes were gradually eliminated, and the company went to a true disaster-recovery-only system, which did not require the use and retention of backup tapes. Finally, Vulcan implemented an automated litigation-hold system with vendor Jordan Lawrence. Now, when the legal department needs to conduct document preservation and retrieval, a targeted e-mail is sent to the employees who may have pertinent files, and they must respond “yes” or “no” if they have relevant documents. Then the legal department


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can pull and hold e-mails from “yes” respondents without employees having to do anything. While e-mails continue to constitute the bulk of data preserved by Vulcan, working with Deusner, the team has added further refinements to its legal-hold process to ensure a holistic approach to data preservation, not just e-mail. The next step is to engage e-discovery vendor Kroll Ontrack to allow Vulcan to gather, store, and utilize advanced searches for relevant e-mails, which will allow for an even more efficient and cost-effective approach to e-discovery. The Results Although Jetmundsen has not yet quantified the savings, other outside attorneys he’s spoken to say Vulcan is ahead of the curve while many other companies continue to struggle with a solution to e-discovery. The procedures he and the task force have implemented have cut costs by bringing back in-house parts of the process that once had to be outsourced to private firms. Looking back on litigation the company faced four to five years ago, he says the difference in cost of data production is significant. “We have a documented, consistent system that provides us the ability to describe how we preserve and produce information in court, which is comforting,” says Jetmundsen. “I don’t wake up at night nearly as much as I used to worrying about e-discovery.”

We are proud to recognize Norman Jetmundsen Vice President and Associate General Counsel at Vulcan Materials

Baker Donelson congratulates Norman Jetmundsen, Associate General Counsel, Vulcan Materials, for his recognition in Modern Counsel. We commend Norman for his accomplishments and contributions to the success of Vulcan Materials.

Company

— CLIENT CONNECTION —

> BAKER DONELSON: “In our years of

working together, Norman has consistently demonstrated a deft strategic touch informed by his many years as a trial attorney and superior knowledge of his industry. Norman is easy to work with and has made this a truly enjoyable and effective partnership.” – Roy Cheatwood, Managing Shareholder

for his outstanding achievements.

ALABAMA • FLORIDA • GEORGIA LOUISIANA • MISSISSIPPI TENNESSEE • TEXAS WASHINGTON, D.C.

www.bakerdonelson.com

www.hunton.com ©2015 Hunton & Williams LLP

THIS IS AN ADVERTISEMENT. Roy C. Cheatwood is managing shareholder of the New Orleans office of Baker Donelson and is located at 201 St. Charles Avenue, Suite 3600, New Orleans, LA 70170. © 2015 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC

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“Rather than test diversity in the entire workforce, you need to look at who is on the senior management team, who makes the key decisions. If you see greater diversity at the top, we’re making headway.” – CATHERINE SMITH, BRIGHTSTAR

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LEAD Leadership is more than management of available resources: it’s looking holistically at an organization and formulating a long-term plan for human capital and development. Diversity is a crucial part of this plan, and it goes far beyond ethnicity and gender. Achieving diversity of thought takes more than one initiative or round of hiring. It’s a necessary element of business in this era of global commerce and shifting demographics.

INQUIRY Does your company qualify as an “equal opportunity employer,” and how does the legal department define that classification? Is your talent acquisition guided by a strategic diversity initiative? What are the key criteria you would or already use to articulate your diversity initiative?

See the National Bureau of Economic Research (NBER) study, “Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination” at nber.org. Another NBER paper, “The causes and consequences of distinctively black names,” takes a different approach and finds different results. Read it at nber.org.

JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.

OCT/NOV/DEC 2015

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LEAD

ROOKIE OF THE YEAR How Gregg Brandon, the Buffalo Bills’ first in-house general counsel, survived his first two seasons in the big leagues BY JEFF SILVER

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photo: SB Photography


LEAD

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LEAD

magine joining a company just as it enters its busiest season. Within the first two months, you handle two separate catastrophes at major events hosted by your company. Three months after the busy season ends, the owner passes away, forcing a sale of the company for more than $1 billion, which you have to help manage over the course of only eight months. Then—a little more than two months into the busy season of your second year—an unprecedented snow storm forces the last-minute relocation of one of your major events, which is typically attended by 70,000 people. All of this is in addition to your normal responsibilities: following up on agreements related to a $130 million renovation project, negotiating a settlement in a class-action lawsuit you inherited, and whatever other items happen to come across your desk. Welcome to the NFL. Gregg Brandon became the Buffalo Bills’ first general counsel in August 2013. He faced every one of the issues outlined above during his first 14 months on the job. Specifics included: a sewer backup during his second game, which forced the closure of part of Ralph Wilson Stadium; a fan falling from the upper deck of the stadium, injuring a second man in the deck below; and the death of Ralph Wilson, owner of the Bills since 1959. His death prompted the team’s sale to Terry and Kim Pegula, which was approved by the NFL in October 2014. Two weeks after the approval of the sale, seven feet of snow forced the last-minute relocation of a game against the New York Jets from Buffalo, New York, to Detroit. Brandon worked on the associated insurance claim and related matters by phone from his home, where he was trapped for five days. Local snowmobile owners transported players to pick-up locations for the relocated game. In addition to managing crises as they arise, Brandon monitors and manages compliance with contractual arrangements, including those related to recent stadium renovations. When asked how he survived his first 14 months with the Bills, he says, “I asked a lot of questions when I didn’t know the answers and asked for help when I 76

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Wojcik v. Buffalo Bills, Inc. The class-action lawsuit alleged that fans who had subscribed to team alerts received excessive text messages. ACT REFERENCED: Telephone Consumer Protection Act of 1991, which includes restrictions on automated text messages STEPS TO RESOLUTION: Prior to Brandon’s appointment as GC, mediation was unsuccessful. After joining the Bills, Brandon continued settlement discussions with assistance from a court-appointed mediator. OUTCOME: Plaintiffs were eligible to receive debit cards (preloaded with amounts based on the number of texts received) for use at the Bills store or on the Bills website.

was outside my areas of expertise. When I look back on everything that had to be addressed during my ‘rookie year,’ I have a great deal of pride and a little bit of heartburn, all at the same time.” Despite the legal and business complexities of running an NFL team, the Bills had always gone without in-house counsel—until Brandon stepped into the position. For many years prior to his arrival, Mike Schiavone at Lipsitz Green Scime Cambria LLP provided legal advice. Aside from the nuts and bolts of instituting new processes and procedures, Brandon also had to help nurture the idea throughout the organization of consulting with legal on major initiatives. As part of that effort, Jeffrey Littmann, the team’s former CFO, encouraged Brandon to set up a “shadow program.” That meant spending game day, as well as much of the prior week while preparations were underway, with each department and outside agency, such as the local police. Not only did this give Brandon intimate knowledge of operations; it helped establish relationships with the individuals responsible for every aspect of managing the team and game-day operations. “A major benefit of the shadow program was making sure the entire staff was comfortable with me and my role,” Brandon explains. “It also gave me the chance to better understand the details of what everyone does, to get to know them personally, and to assure them I was here to help, not to make their jobs more difficult.” Other unintended benefits of shadowing were that Brandon was on the scene with the senior director of stadium operations during the sewer backup. He was there with Andy Major, vice president of operations and guest experience, to help provide first aid and obtain police statements after the fan fell from the upper deck. This gave Brandon firsthand views of both incidents, which was helpful when he needed to follow up with related insurance matters. As part of his on-the-ground approach, Brandon instituted monthly meetings with senior executives. “I want to ensure that when they come to me, I have a clear perspective of their ongoing issues and can respond quickly and effectively,” he says. “This


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When he came to the Bills in 2013, Brandon brought with him experience as GC of XOS Digital, a tech company serving the sports industry, as well as a law clerk for the NFL.

photo: SB Photography

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“When I look back on everything that had to be addressed during my ‘rookie year,’ I have a great deal of pride and a little bit of heartburn, all at the same time.” – GREGG BRANDON

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helps them see me as a trusted advisor and encourages them to come back for counsel in the future.” There are ongoing challenges as the Bills adapt to having an in-house attorney. One example was realizing the day before a game that Brandon had not had an opportunity to review the contract for skydivers scheduled to perform at halftime. Brandon spent the rest of the day making sure all of the appropriate insurance coverage was in place. Brandon believes this reflects a natural learning curve—for both himself and the organization—that will ultimately enable the Bills to be better prepared and more proactive in identifying issues and risk in the future. For him, part of that process has been to learn the breadth of issues that go into running an NFL franchise. “There are legal matters related to security; compliance with federal, state, and local ordinances; personnel; environmental concerns; marketing and promotions; insurance; and even HIPAA guidelines for the league’s electronic medical records system,” Brandon says. “So ‘sports law’ is a misnomer. It’s taking everything I’ve learned about a broad range of issues and applying that knowledge to a sports organization.”

— CLIENT CONNECTION —

> LIPSITZ GREEN SCIME CAMBRIA LLP

“Within 18 months of joining the Bills organization, Gregg coordinated the defense of two class-action lawsuits and steered the team through a change of ownership. His professionalism and command of the issues belie his brief tenure.” – Michael Schiavone, Senior Partner


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How do you develop institutional maturity? Veteran counsel Lenny Stein recently stepped into the top job at Splunk. Before landing at the software producer, he handled Overture’s sale to Yahoo, the merger of Preview Travel with Travelocity, and the sale of Buzzsaw to Autodesk. He brings that experience to bear as he builds institutional maturity in the legal department of a still-young company. AS TOLD TO JOHN LARRABEE

LENNY STEIN Senior Vice President and General Counsel Splunk

Institutional maturity is a journey—not a destination. Process, training, and counseling must evolve with a company as it grows. Despite the dramatic growth of Splunk’s international business, it still comprises only 25 percent of our total business. Quite frankly, it has had a hard time growing its share because our US business continues to grow so rapidly. We photo: Splunk

are becoming the go-to, next-generation security solution for government agencies, universities, and businesses of all sizes. We help organizations run their data centers, networks, applications, and devices more efficiently. We’re now increasingly helping organizations gain real-time insight into massive quantities of data to help them provide more value to their customers. To support continuing rapid growth, it is critical to put in place efficient, repeatable processes that assure compliance with laws, prudent management of enterprise risk, ease of execution, and fulfillment of customer expectations and legal commitments. Our senior management provides a strong tone from the top: that we will win based on the quality of our products, the integrity of our employees, and our adherence to the highest standards of legal and ethical conduct. We consistently look several years ahead as we consider the appropriate level of controls and institutional maturity. For example, even when we were a private company, we held ourselves to public

company standards. We instituted comprehensive policies, contract provisions, due diligence, technological controls, and training to assure compliance with international anticorruption and export control laws long before most companies did so. We continuously revisit and improve those programs as we grow. We spend a lot of time thinking about how we secure customer data and our products against the new world of advanced persistent threats. We put in place contract management software early on to ensure we had visibility into our contracting process. We’ve built a world-class patent portfolio of more than 47 issued patents and 100plus pending patent applications in less than two years. I’ve been fortunate to serve as both an operating executive and general counsel for private and public companies—from start-up to more than $1 billion in revenue—for an early leader in the online travel business and for the inventor of paid search on the Internet. Those experiences were not only great fun but taught me the importance of a proactive, nimble legal function to manage risk while helping to accelerate the growth of the business. Focus on hiring the best attorneys who live your mantra; ours is: “Work hard, have fun, and make history.” Splunk is filled with smart people running full speed to capture an enormous market opportunity that also promises great social good. At the same time, it’s important to bring in professionals with expertise in critical domains, such as securities law, licensing, product, privacy, and intellectual property. Hire great people, point them in the right direction, and get out of the way. Be there always as a mentor, sounding board, and unqualified supporter. Trust and verify. OCT/NOV/DEC 2015

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Hitting the Target Long known for leading the way in diversity and inclusion, Target is expanding those efforts into its legal and labor relations teams BY ZACH BALIVA

What does it look like when a leading retailer commits to diversity and applies that value to every department within? Take one look at Target to find out. The company has a long-standing reputation for its recruitment and development of minority talent and is known for its strong cross-cultural mentorship program, measured diversity goals, supplier diversity, and related requirements for recruiters. But behind the scenes, Target has extended the practice beyond its retail locations and into its Minneapolis headquarters. Jim Rowader, vice president and general counsel of employee and labor relations, joined the company 20 years ago and has a strong commitment to building diversity in his growing legal team. That’s because he has a personal stake in the issue. Rowader—who is half Puerto Rican and married to an African-American woman—says he sees inclusion as a measurable asset. “Legal teams can benefit from having as many points of view as possible,” he explains. “That way, we can tackle issues better and bring better results to the company.” The employee and labor relations department has several functions. First, the group serves all employment legal needs for a network of more than 1,800 retail locations spread over four regions. One division focuses on all headquartered groups in finance, merchandise, marketing, technology, and other areas. Another division handles complex litigation matters with government agencies. That team also collects and provides complex 80

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diversity-related analytics provided to HR, so company leaders can develop meaningful programs and relevant strategies. Finally, the labor relations group concentrates on internal workforce matters and other issues that arise. When Rowader joined Target in 1994, his department, which provides all labor and employment legal services to Target, was relatively small. The employee and labor relations department is part of Target’s human resources group; Rowader reports to the chief human resources officer, with a dotted line to Target’s GC. Still, when he moved into a leadership role 10 years ago, the group was growing fast. “I knew we’d be hiring a lot of people, and I saw it as a great opportunity to build a diverse team of legal talent,” he says. Today, the 80-person department has 20 lawyers. More than 40 percent are minorities, and nearly two-thirds are women. A strategy of diversification is important because a diverse employee and labor relations team more accurately reflects Target’s more than 365,000 employees around the world. Rowader has pursued diversity goals for more than 10 years, but he says obstacles still exist. “The legal community in the Twin Cities struggles with these issues, and there’s not always a lot of diverse legal talent to draw from.” Rowader learned early that he would have to extend searches beyond a typical 50- or 100-mile radius, and he adjusted his hiring strategies accordingly. First, Rowader’s job openings would stay open

“When people see that you’re serious [about diversity], progress becomes easier. This is a way of life for us, and our partners know that.” – JIM ROWADER

for up to six months, but he worked to keep recruiters on board. “We put a stake in the ground and decided not to hire anyone unless we at least interviewed a diverse candidate,” he says. As Target grew as a national brand, lawyers started to see the corporation as an employer of choice, and good lawyers from other parts of the country started coming to Minneapolis. This geographic diversity has been a factor in the strength of employee and labor relations at Target. To ensure diversity commitments remain strong, Target’s employee and labor relations department runs holistic metrics. Additionally, Rowader and photo: Anna Eveslage


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A Legal Defense for LGBT Rights A look at lesbian, gay, bisexual, and transgender (LGBT) rights in corporate America

3.4%

of Americans (9 million) identify as LGBT.

94%

of Fortune 100 companies have nondiscrimination policies that include sexual orientation.

TOP

10

87%

of Fortune 500 companies have nondiscrimination policies based on sexual orientation.

62%

of Fortune 500 companies offer domestic partner health insurance benefits.

DiversityInc rates Target in its top 10 companies for LGBT employees. The ranking is based on many factors, including support for same-sex marriage, LGBT employee resource groups, charitable efforts, and LGBT vendor activity.

PERFECT

100

Target received a perfect score of 100 on the Human Rights Campaign’s Corporate Equality Index in 2013, 2014, and 2015.

SCORE

Target is public about its support of LGBT employees and has signed several amicus briefs to support same-sex marriage. “We care about LGBT issues as a company, and signing the amicus briefs has been a great opportunity for Target lawyers to work with outside firms to get Fortune 50 and 100 companies on board,” says Rowader.

Source: Catalyst

his peers have turned their attention to monitoring outside firms. In 2008, the company started an initiative to drive supplier diversity and find certified diverse suppliers. In legal, leaders measure and score outside law firms on their diversity performance. Firms that fail to meet certain benchmarks receive less of Target’s business. “When people see that you’re serious, progress becomes easier. This is a way of life for us, and our partners know that,” Rowader says. While many companies talk about the business case for diversity, Rowader says Target sets the bar. “Diversity is Target’s secret advantage that differentiates us

in the retail space,” he says. “People talk about diversity all the time, but we are a company heavily loaded with hundreds of thousands of employees from every walk of life.” Employee and labor relations is built to protect and enhance Target’s employment brand and operate as a strategic partner to human resources. Target has seen fewer lawsuits and had fewer employment issues play out in the national press than many of its competitors—and Rowader says diversity within the company, and within legal, has been a major reason why.

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A Different Kind of Diversity Standards are set at the top of the house. Catherine Smith and the CEO-search team found that standard-bearer for Brightstar by searching for diversity of thought BY JULIE SCHAEFFER

When Brightstar Corp. was in the market for a new CEO, Catherine Smith, chief administrative officer and general counsel, helped select him. It was no small task, given the emphasis the company places on diversity of thought. “It’s important to get away from the idea that there’s only one way to approach things, by seeking a different understanding,” Smith says, “and you get that understanding by having people in your workforce, up through the highest levels, who have different backgrounds and experiences.” Smith came to Miami, Florida-based Brightstar after 13 years at Motorola in positions of increasing responsibility, including head of global strategic relationships. One of those relationships was with Brightstar, the world’s largest specialized wireless distributor. Brightstar has nearly 9,000 employees, offices in more than 50 countries, and $10.6 billion in gross revenues. Bringing different backgrounds and experiences to leadership teams has been a challenge for the telecommunications industry. According to “Accelerating the Digital Economy: Gender Diversity in the Telecommunications Sector,” a February 2015 report by mobile trade association GSMA and A.T. Kearney, while there have been some advances in women’s representation in the workplace, significant steps still need to be taken to bridge the gender gap in the telecom industry. 82

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In three-quarters of telecommunications companies surveyed, women accounted for less than 40 percent of the workforce, and the gender gap becomes more pronounced with seniority: women hold just 32 percent of senior leadership positions (including executive directors and their direct reports) in North America, 20 percent in Europe, 15 percent in the AsiaPacific region, and 13 percent in the Middle East. That’s not ideal, Smith says, because decision-making by consumers in the telecommunications industry is heavily dominated by women. “They have the real purchasing power,” Smith says. “You grow your business by growing your customer base, by appealing to your market, and that requires having a complete understanding of a very diversified demographic.” But that’s hard to achieve, she explains, when the companies in the industry are not diversified by gender or ethnicity. Increasing not just diversity of ethnicity and gender, but “diversity of thought,” Smith adds, will allow companies to be more reactive to customers. “Diversity of thought refers to a concept that all of us know intuitively and experience throughout our lives,” reports “Diversity’s New Frontier,” a July 2013 Deloitte University Press article. “Each human being has a unique blend of identities, cultures, and experiences that inform how he or she thinks, interprets, negotiates, and accomplishes a task. Diversity of


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CATHERINE SMITH Chief Administrative Officer and General Counsel Brightstar

photo: Brightstar Corp.

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In Conversation

Courtney VanLonkhuyzen & Catherine Smith COURTNEY VANLONKHUYZEN: What are your best practices for attracting and retaining diversity of thought? CATHERINE SMITH: You will be successful more often than not when you align your diversity objectives with your market or customer objectives. For example, as a segment, women are the largest purchaser in mobile and overall retail, yet in our industry—wireless—women are underrepresented. In Brightstar’s quest to meet that market need, it becomes easy to make the case that we should hire more women, rather than adding the cost of a consultant to relate to our female consumers and risking a “lost in translation” result. CV: How does diversity enhance a company’s approach to innovation? CS: Diversity of thought is a 360-degree approach to problem solving. By taking advantage of different backgrounds, cultures, and belief systems, you can spark creativity, which leads to innovation and improves efficiency. Meeting our ultimate goal of getting closer to our customers. While we won’t always get everything right, if diverse thoughts inform our decisions, we increase our chances of getting it right. If we, as a company, invest in areas like diversity as we should, the return will be better, more informed decisions, more often. CV: How can employees—in particular, in-house legal departments—foster diversity and inclusion? CS: Law departments can be leaders by being transparent about diversity metrics and encouraging other departments to do the same. Awareness is a first step, and metrics drive an eyes-wide-open culture. We can also be role models: supporting our employees, treating them equitably, educating them about the topic, incorporating efforts to increase inclusiveness in our overall strategy, and motivating them to act inclusively. This creates a positive culture with higher loyalty and productivity for the organization. CV: Having worked with you at Motorola, I’ve seen firsthand your strong ability to speak up in meetings and articulate your position in front of an audience. How critical are those formal communication and informal meeting skills, particularly for diverse employees to be heard? CS: Communication skills are critical. I can’t overstate how important it is to be articulate, know your audience, and feel comfortable with what you know and don’t know so that you can show confidence in what you are doing and build credibility with your audience. CV: How can allies, managers, and colleagues help ensure others are heard and/or develop those skills? CS: In the hiring process, managers need to carefully consider their company’s culture and whether a candidate is likely to succeed in that environment. The work does not end after hiring a strong candidate. Good communication skills take practice. Managers need to mentor everyone on how to operate or otherwise communicate in boardrooms, meetings, and in less formal settings.

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In three-quarters of telecommunications companies surveyed, women accounted for less than 40 percent of the workforce, and the gender gap becomes more pronounced with seniority.

thought goes beyond the affirmation of equality ... Instead, the focus is on realizing the full potential of people, and in turn the organization, by acknowledging and appreciating the potential promise of each person’s unique perspective and different way of thinking.” Substantial research has corroborated that idea, showing that companies with gender-diverse workforces are better able to innovate and outperform. Harvard Business Review reports that gender-diverse organizations are 45 percent more likely to improve market share, achieve 53 percent higher returns on equity, and 70 percent more likely to report successfully capturing new markets. Brightstar, driven by the need to connect with customers, has pushed to increase diversity of thought by bringing individuals with different backgrounds to its C-suite. That goal manifested in its search for a CEO in early 2015. The selection committee’s intent was to find a candidate focused on customers, as Brightstar’s former CEO, Marcelo Claure, had been. Claure, who left the company for Sprint, “grew this company not only with a very entrepreneurial approach, but with one that was built on relationships, on understanding the needs of customers,” says Smith. “We wanted that continuity.” The search team looked for someone who could take Brightstar to the next level of innovation. Simultaneously, the company sought someone who could maintain diversity of thought at the top level of the company. “You need input from other people, but companies typically hire consultants to tell them things that their own workforce would probably be able to tell them,” Smith says. “Why not simply say, ‘Here’s my view; do you see things differently? If so, why?’ And the best way to do that is to have people who are different from you. You may not end up with a different conclusion, but you’ll have different inputs to ensure your conclusion best reflects the markets you serve.” Smith and the chairman of Brightstar’s board worked with a search firm to find a pool of candidates who

photo: Caleb Fox


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met those needs. The firm wrote a description of the company and role for Brightstar to review before sourcing candidates it believed not only had the requisite experience, but would add a level of leadership the company was looking for. After the final stage of the screening process, which included one woman and three men of different backgrounds as candidates, Brightstar chose Jaymin B. Patel, former president and CEO of GTECH Americas. GTECH is the largest lottery and gaming company in the regulated gaming industry and provides technology and services to customers in approximately 100 countries. “When you think about diversity of thought, Jaymin is really someone who represents that,” Smith says. “Although he came from outside telecommunications, he has great familiarity with distribution, which is our core, and has experience in the global marketplace, including Latin America, which was essential to us.” Patel is of Indian descent, was born in Kenya, and was raised in London, so he met the company’s need for someone who could bring a different perspective. Smith says Brightstar is fortunate to have an overall diverse workforce because of the many countries in which it operates, and it is looking to expand in a purposeful, efficient way in China, Indonesia, India, and Cuba. “We want to evolve the telecommunications market in these countries, providing consumers with services and solutions otherwise unavailable—be that buyback and trading of used products, financial solutions, or handset protection services,” Smith says. That said, Smith thinks there is room for improvement, and she hopes the company’s diversity-of-thought approach will continue to filter down through the organization. To achieve that, Smith says Brightstar will continue to build infrastructure that’s responsive to the changing needs of its markets. “Companies that do so will be the best, but it’s a matter of timing,” she says. “You have pioneers, the leaders who create the trend, then other companies that follow the trend.” The key measurement of success, Smith says, will be its C-suite. “Rather than test diversity in the entire workforce, you need to look at who is on the senior management team, who makes the key decisions. If you see greater diversity at the top, we’re making headway.” Another challenge is that change has to start early. Smith has seen an increase in workforce diversity over the years, but it’s insufficient, which she attributes to the pool of candidates. In Organisation for Economic Co-operation and Development countries, the share of science and engineering degrees held by women is only 38 percent and 25 percent, respectively. “The effort to drive a pool of diverse students has to begin earlier: in the colleges, and law schools, and business schools,” says Smith.

Opening Cuba Among Brightstar’s global expansion efforts is a push to establish a market in Cuba. Smith discusses the strategy and challenges of the initiative amid newly normalized international relations with the island. MODERN COUNSEL: Why is Cuba’s a market worth pursuing? CATHERINE SMITH: Our headquarters are in Miami, where there’s a significant Cuban population, and we have always been the first to respond to the needs of Latin America, so it was natural for us to want to understand how we could expand into Cuba, in particular. MC: What are the challenges? CS: The first is that the regulations overall haven’t changed; what has changed is there’s no longer a per-se embargo. That means there are opportunities to figure out how we might begin to open up channels to the commercial marketplace. MC: Do you have a sense of how difficult that will be? CS: We have to do work to understand what has to happen. There’s no commercial mechanism; everything is owned by the government. There’s no “employable” workforce, no ability to get credit. It will take a while to figure it out. MC: What’s the plan? CS: The impediments are there. It’s just a matter of how long they’ll stay and how we can help change them in a positive fashion. We’re hoping we can begin to open up dialogues about how this might happen, be it through the Obama administration or the Cuban administration.

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Beauty Is in the Eye of the Patent Holder Lenovo is on the verge of expansion into the smartphone marketplace. The Chinese PC company made a major stride toward that goal with the acquisition of Motorola Mobility in 2014. Not long after, Ira Blumberg, vice president of intellectual property, convinced the company’s leadership to undertake an extensive patent acquisition strategy that included 3,800 patent families from Japanese NEC Corporation. He shares how he made his case and what he sees in Lenovo’s future.

The Making of a Subject-Matter Specialist Ira Blumberg ••

1993

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BY JEFF SILVER

Modern Counsel: How would you describe Lenovo’s patent strategy? Ira Blumberg: In the short run, purchasing patents fills holes in the portfolio, which I found to be a bit smaller and older than I expected when I joined Lenovo. In the long run, we still plan to focus on our own innovations and patent filings, but acquiring existing portfolios gives us more immediate protection, opportunity for potential revenue streams, and better strategic positioning in a highly competitive market. MC: Are there risks associated with that strategy? IB: Filing is always a bit of a gamble since you never know if a new patent will be something that is ultimately used by other companies and therefore has real value. In the high-tech industry, conventional wisdom says only 5 percent 86

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of filed patents turn out to be useful. So, we decided to shop for lottery tickets that were already winners. For the short term, that’s more effective than trying to predict the future. MC: How did you create that plan? IB: Aside from developing strategies for monetization, I wanted to be sure we were protected from other companies and any claims they might make. In other words, if we have patents that cover only our own products, we have no leverage. But if we have assets that cover competitors’ products, I can negotiate cross-licensing agreements or work out trades so we don’t fall victim to another large company’s portfolio. It’s somewhat of a defensive position, but it protects us. MC: What steps did you take to make the strategy a reality?

Blumberg takes a job at Hughes Hubbard & Reed and discovers his passion for technology transactions.

He works at Wilson Sonsini Goodrich & Rosati for two years as an associate attorney but decides life in a law firm is too chaotic.

Blumberg moves in-house. He joins Intel Corporation as a senior licensing attorney and negotiates the agreement that becomes the basis for the US Supreme Court case Quanta Computer, Inc. v. LG Electronics.

Blumberg takes a job with Rambus, a technology licensor, where he learns strategies for defending against patent assertions.

Blumberg moves to Lenovo and initiates a patent portfolio strategy to support the company’s expansion into mature and highly competitive technology markets, including mobile phones.

photo: Lenovo


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“In the high-tech industry, conventional wisdom says only 5 percent of filed patents turn out to be useful. So, we decided to shop for lottery tickets that were already winners.” – IRA BLUMBERG

IB: Lenovo had announced its intent to expand from computers into tablets, phones, and servers. That gave me the opportunity to go to management with an approach that would help support just such an expansion. Getting positioned as a reputable patent purchasing entity was a little tricky, at first. But after we announced our first big purchase with Unwired Planet, which generated a lot of publicity, we were flooded with offerings of additional beneficial opportunities. MC: This strategy involved a huge investment. How did you foster senior-level support? IB: I showed them how having patents would positively impact business and help our expansion into mobile devices. Being able to lower royalty payments, which can run as high as 25 percent, or eliminating them through cross-licensing, also provided a clear economic incentive. So they took a pragmatic and unemotional approach and made it happen within nine months of my joining the company. MC: Did you have to make any concessions? IB: No. I made commitments, not concessions. I had staked my argument to an economic analysis, which included added expenses and substantial investments. I showed how those actions would ultimately result in reducing our overall economic burdens, so I knew I’d be measured down the road on whether my analysis and forecasts were accurate. MC: Did you partner with other business functions to help bolster support for the strategy? IB: I had a business analyst who helped with market research and detailed statistics as

part of the presentation. In addition, I had two patent specialists who assessed what specific assets our competitors’ portfolios contained that could impact our business. I also worked with Jay Clemens, our GC, who had a lot of experience with senior management and provided advice on which details and arguments would be most effective in making my case. MC: What are Lenovo’s plans for continued growth in the smartphone market? IB: The Motorola acquisition plays a very distinct role because of the associated patents and our gaining a significant portion of their legal department. That brings added experience, focus, and a budget dedicated to generating patents in the mobile space. As we continue to look for other beneficial portfolios, they also give us added capacity and expertise for handling more of the initial diligence work in-house, which will reduce the time and expenses related to potential purchases.

Acquisition Report A look at Lenovo’s inorganic growth in 2014 UNWIRED PLANET PATENTS Cost: $100 million Assets gained: 100+ patents NEC CORPORATION PATENTS Cost: $80 million Assets gained: 6,000+ patents IBM X86 SERVER BUSINESS Cost: $2.1 billion Assets gained: 1,000+ patents MOTOROLA MOBILITY Cost: $2.9 billion Assets gained: 2,000+ patents

MC: Where do you see Lenovo in five to 10 years? What kind of IP strategy and protections will be necessary to get there? IB: It will be a continuation of what we’re doing now, including ongoing research into companies that are aggressive with their patents and can impact us. We’ll refine our strategy in response, which will guide our future portfolio purchases and patent filings. I expect we will also develop a framework for collecting our own royalties and other monetizing activities. But overall, our primary focus will stay on ensuring that nothing interferes with our ongoing product expansion and sales worldwide. OCT/NOV/DEC 2015

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REID WILSON Vice President and Associate General Counsel for Global Intellectual Property Abercrombie & Fitch

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The In-House Department that Relationships Built How the Abercrombie & Fitch legal department came into its own as a partner of the business BY BRIAN BARTH

Abercrombie & Fitch is a brand-centric company; its name is central to its product. Logic follows that it needs a robust defense team protecting its intellectual property, but that team didn’t always exist in-house. Reid Wilson, the company’s associate GC of global intellectual property for the last decade, helped A&F’s first general counsel build the in-house legal department from the ground up. That department’s success, he insists, hinged on collaboration. Wilson’s involvement with A&F goes back to 2001, when he joined Vorys, an Ohio-based law firm acting as outside counsel for A&F at the time. What started with a few urgent clearance matters led to a full-time job when A&F decided to create its first ever in-house legal department. “I found the A&F work to be fun and exciting and imagined what it might be like to practice trademark law on the inside,” Wilson says. “I was especially drawn to the idea of being part of the team, rather than an outside advisor, and came to believe that the corporate counsel role might just be my calling.” photo: Michael LaNasa

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“The heart and soul of a corporate legal team is the network of internal relationships developed over time and built on trust.” – REID WILSON

In-house legal departments require a sophisticated level of finesse with interdepartmental collaboration—a skill not always taught in law schools, but one at which Wilson excels. To succeed in his role as IP counsel, he quickly realized the need to convince his business partners of two facts: first, that he was genuinely on their team and fighting for the same causes; and second, that incorporating his advice into their decisions would benefit them individually and to the corporation in the long run. A&F’s design, merchandising, and marketing units, for example, needed to be confident that Wilson and his team are fighting for every inch of content that can be cleared. Wilson invested time working through various issues and brainstorming creative strategies to overcome obstacles and reduce risk and saw real returns: not only were potential liabilities preemptively resolved, but strong partnerships were forged between the fledgling legal department and the rest of the company in the process. “The heart and soul of a corporate legal team is the network of internal relationships developed over time and built on trust,” says Wilson. In the beginning, he was the only member of the IP group, allowing him plenty of opportunity for one-on-one collaboration with key staff members, which cemented relationships that continue to bear fruit. As an example, Wilson put in place a mechanism for A&F’s real estate team, which regularly updates a document identifying their evolving plans for 90

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brick-and-mortar stores within a five-year horizon. “If you have a close relationship with real estate,” he says, “you are more likely to learn of the surprising, off-calendar addition to the chart through a courtesy phone call. As we know, the only constant is change, particularly in retail.” These internal relationships keep the IP team’s information as current and comprehensive as possible, making it easier to adapt to unforeseen changes when they occur. Wilson is grateful he had the opportunity to cultivate those relationships early on, but he says the opportunity to handpick and develop his own IP team was equally, if not more, gratifying. “I performed most of the functions myself that I would later ask others to take over,” he says, “which provided an incredibly valuable perspective that I try to utilize daily in delegating, managing, and leading the team.” Wilson spent his first two years at A&F as the only IP attorney on staff, which required heavy reliance on outside counsel and “a lot of time in the weeds while trying to develop and maintain a big-picture strategy.” He says that phase wasn’t cost-effective, which made a compelling case for creating an internal team. Senior management eventually endorsed having an in-house IP team. In Wilson’s mind, the key to selecting staff was to find not only people who would excel individually, but those who would “blow the roof off as a synergistic team.” The A&F IP group is a team of nine internal staff: five attorneys, three paralegals, and an intern. Wilson says it is, “in my humble view, the best IP group anywhere.” He adds that it’s the best team to carry the IP load for A&F as the company continues to evolve and enters the next chapter of its storied history.

— CLIENT CONNECTION —

> K&L GATES: “Reid is a very skilled lawyer

who understands the intricacies of building and protecting a brand in the global marketplace. He is smart, efficient, and open-minded on ways to continuously improve.” – Jason L. Richey, Partner

Classroom Crossover Wilson began teaching the trademarks class at the Ohio State University Moritz College of Law in 2009, an experience he says has interesting corollaries with his professional work. Teaching as an adjunct in his field of practice not only forces him to stay current on legal developments, but it allows him the pleasure of sharing his passion with bright, young students and provides an amazing field of intern candidates and future lawyers to build into his network of professional relationships. Teaching trademarks at Moritz has been the realization of a dream for Wilson, but it has also taught him skills that have proved invaluable in his role at A&F. Being able to break down a subject and explain it in a manner tailored for an individual, for example, has helped him work with his team and his business partners.


WELL DONE! We are pleased to salute the accomplishments of Reid Wilson.

HYLANDS LAW FIRM – China AISON IP is proud and honored to work with

REID WILSON,

Vice President & Associate General Counsel for Global Intellectual Property

at Abercrombie & Fitch • Law firm: 300 people

Our lawyers help clients navigate the legal challenges of the ever-changing global marketplace. We collaborate across offices and practices to provide seamless service throughout a wide range of industries. K&L Gates LLP. Global legal counsel across five continents. Learn more at klgates.com.

• IP Group: 120 people • Leading IP firm ranked by Legal 500 Chambers Asia Pacific Managing IP BEIJING | SHANGHAI | GUANGZHOU | NANJING | HONG KONG

ip@hylandslaw.com | www.hylandslaw.com

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How to be the

ACQUIRED COMPANY Sysco Corporation and US Foods are, respectively, the nation’s largest and second-largest food service companies. When Sysco proposed a $3.5 billion acquisition of US Foods, the Federal Trade Commission challenged it for fear of a monopoly. As the fate of the transaction plays out, US Foods associate general counsel James Pyle outlines the challenges of being the acquired company and how his team continues to do good work amid the uncertainty. BY BRIDGETT NOVAK // PHOTOS BY CALEB FOX

Modern Counsel: As the two largest food service companies, US Foods and Sysco are natural competitors. What has it been like to work with your former competitor? James Pyle: From the legal perspective, all of the lawyers are working toward the same goal, to facilitate the merger, so that fosters teamwork and collaboration. Because there is so much work involved in just closing a transaction, sometimes you aren’t sensitive enough to the fact that the employees are facing some really tough issues, like the fear of losing their jobs or other opportunities, moving to a new city, or adjusting to a new culture or way of doing things. And these are the very people you are asking for help— help that is most likely outside of their normal duties. Even if it ends up being a good opportunity for them, change is scary, and people will remain nervous until everything is settled. MC: As the company being acquired, are you dealing with uncertainty about how the merged legal department will look? JP: If the transaction goes through, it’s likely that the corporate attorneys will move to Sysco’s headquarters in Houston from our current location in Rosemont, Illinois. Some attorneys have left. Some didn’t like that prospect, didn’t like the uncertainty. Some looked at the structure of Sysco’s legal department and thought they would become redundant. That could happen for me, too. Sysco has attorneys who

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What I’ve Learned

How running his own Allstate franchise has served Pyle as a corporate attorney

“When I owned my own franchise, I learned how to run an office and manage projects—skills most lawyers who join firms straight out of law school have to acquire on the job. I understood the perspective, the vocabulary, and the concerns of business owners. I bought two other agencies when I was with Allstate, so I also learned firsthand what’s important when you’re involved in an acquisition, which helped immensely when I was handling M&A for my law firm clients, and it has continued to be useful here at US Foods.”

work on some of the things I work on, like Securities and Exchange Commission issues, mergers and acquisitions, and corporate debt, so my role would likely have to change for me to have a position in a merged company. Sysco uses a lot of outside counsel, and the plan is to combine the two legal teams and bring much more work in-house, so it is likely there will be an increase in the number of lawyers, which means there may be new opportunities. MC: How do you motivate your team to continue performing at their best in the interim? JP: It hasn’t been easy. Everyone who has left continued to do an incredible job up to their last day. Everyone is very engaged; no one is dialing it down. I think that’s a compliment to the team we’ve assembled and to our general counsel, Juliette Pryor. She is a really good leader and has been a great mentor—and you don’t want to disappoint your mentor. The legal market is small. You want to do a good job for yourself and your company (or law firm) and keep your network strong. MC: How has management handled the fear of uncertainty? JP: I think it is extremely important, especially during times of transition like 94

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this, to be totally transparent. And [Pryor] has been. When someone is honest with you about what is going on, you respect that person and want to do a good job for them. In fact, since the merger plans were first announced, one could say there has been too much transparency. We’ve had meetings when there wasn’t anything new to report. But people appreciate communication, and it makes them feel they’re being told everything. Overcommunication is definitely better than under-communication. MC: What has working on this deal taught you? JP: I acquired two businesses when I was with Allstate, worked on many M&A deals when I was a law firm associate, and helped negotiate the purchase of 14 other food companies since joining US Foods, but this is the first time I’ve been part of the acquired company. Going

“I think it is extremely important, especially during times of transition like this, to be totally transparent.” – JAMES PYLE

through this has definitely made me more empathetic to all of the affected parties and more aware that the people helping to close the transaction may be uneasy about the effects the closing may have on them. Editor’s Note: At the time of press, US Foods had agreed to divest 11 distribution centers to Performance Food Group, the nation’s third-largest food service company, but the acquisition by Sysco had not been approved by the FTC.


Jenner & Block salutes Jim Pyle for his master team-building skills and exceptional leadership at US Foods.

We are proud to support

Jean Weng Senior Vice President, Deputy General Counsel and Corporate Secretary

for her extraordinary contribution to

Voya Financial and the legal profession

CHICAGO LOS ANGELES NEW YORK WASHINGTON, DC JENNER.COM

www.sullcrom.com

353 N. CLARK STREET CHICAGO, IL 60654-3456 312 222-9350

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Voyage Anew After a pivotal year, Voya Financial has come into its own. With a new name and independence comes the opportunity to set standards high. Jean Weng plans to start with corporate governance. BY BRIAN BARTH // PHOTO BY CALEB FOX

At some point in their careers, many lawyers have the urge to switch from private practice to an in-house team. For Jean Weng, the opportunity came just after she helped Voya Financial become a standalone company. She was part of Voya’s outside legal team at Davis Polk and Wardwell (DPW) and worked closely with Voya as it emerged, but her perspective was always that of an outsider. Toward the end of her tenure at DPW, she represented such high-profile clients as Morgan Stanley and Ally Financial, which gave her the experience she needed to make the move in-house. She was the lead attorney to the underwriters for Voya’s 2013 IPO in which Voya, then known as ING U.S., separated from its Amsterdam-based parent, ING Group, as its own corporate entity. 96

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Weng got to know the company in 2012, when she focused on corporate governance and capital markets transactions at DPW. The majority of her time was spent on transactions representing underwriters. As a subsidiary, Voya didn’t have any capital resources of its own, and Weng was involved in the company’s first debt offering before the IPO to raise independent funding. Weng was instrumental in describing the three-year trajectory of the IPO and the return on investment, which Voya achieved this year. “It’s unusual to put forth such forward-looking statements in an offering document,” says Weng, but the company wanted to be clear about its plans to improve value and drive greater profitability in its businesses. The IPO was successful, and Voya’s new management


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Davis Polk proudly recognizes our alumna Jean Weng

“We’ve experienced a lot of firsts. We’ve had our first shareholders meeting, our first shareholder’s proposal, first proxy season. [...] With a newly public company, there are a lot of opportunities to institute best practices.” – JEAN WENG

New York Menlo Park Washington DC São Paulo London

Paris Madrid Tokyo Beijing Hong Kong

davispolk.com © 2015 Davis Polk & Wardwell llp

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had enjoyed working with Weng throughout the process. Shortly after the transaction, Voya successfully recruited her to join its newly expanded legal team. “I developed very deep relationships with a lot of the folks here,” says Weng. In February 2015, Weng was named senior vice president, deputy general counsel, and corporate secretary. One month later, she advised the board on the repurchase of ING’s remaining 19 percent stake in the company—the final sale by ING of Voya common stock, which marked Voya’s transformation from a fully owned European subsidiary to a fully independent US company. One of Weng’s many roles in Voya’s journey and transformation was to help prepare the company for its new brand identity. She helped broker the agreement with ING to establish an image that would be distinct. The name Voya was introduced just before the IPO, when the company established its NYSE ticker as “VOYA.” ING has been known by its orange lion for decades, and while Voya uses orange in its new logo, there is no imagery; the logo is the company’s name. Voya was founded to help Americans ready themselves for retirement, which the company believes is

both an emotional and financial journey. The name and logo are intended to invoke the idea of the journey that all Americans take to and through retirement. Now that the dust has settled, Weng’s focus has shifted from a transactional emphasis to an organizational one. It’s been an opportunity for Voya to assert its identity both to the public and internally. As corporate secretary, Weng helps set the tone of Voya’s company culture. Her first responsibility is to support the board by preparing materials and setting the agenda for their meetings, keeping them abreast of strategic decisions made by senior management, and making them aware of emerging trends in corporate governance. With ING’s divestment, Voya’s board is fully independent with no director designated by ING, making Weng’s role even more essential. “We’ve experienced a lot of firsts,” she says. “We’ve had our first shareholders meeting, our first shareholder’s proposal, first proxy season.” Already, cutting-edge practices have been implemented. For example, Voya held its annual shareholders meeting virtually to allow more shareholders to participate. Weng worked extensively in the realm of corporate governance during her years at DPW but continues to update her knowledge and transmit those ideas to the board. She has attended corporate governance seminars and courses to absorb as much information and insight as possible. “Now is the best time to do it, since the company is fairly new as a publicly listed entity,” she says. “With a newly public company, there are a lot of opportunities to institute best practices.”

“While outside counsel face challenges in providing advice when they aren’t embedded in the business, the best often end up joining the companies they serve. It usually ends up a win-win for the law firm and the company and can provide a diverse voice for the in-house attorneys.” – Courtney VanLonkhuyzen, Guest Editor


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We can’t view what we do as what we did yesterday. At Advocate Health Care, legal adapts to an evolving industry with a mind-set for growth BY MELISSA ANDERS PHOTOS BY CALEB FOX

As Eric Tower’s oldest daughter gets ready to go to school, he asks her what she’s going to do that day. “Try my hardest,” she says. And after school, he asks about the mistakes she’s made. Sometimes, he even shares mistakes of his own. “If you sit down and think about your day but can’t come up with 20 things that you might have done a little differently, maybe you’re not thinking hard enough,” says Tower. Tower doesn’t blame his daughter if she doesn’t get a perfect score on a test, and he’s even okay with her getting a bad grade, as long as she learns from her mistakes and strives to do better. He takes a similar approach to his professional life, utilizing a growth mind-set as he oversees transactions and legal matters for Advocate Health Care’s ambulatory division. Tower has helped transform the Downers Grove, Illinois-based health system into a more

ERIC TOWER Associate General Counsel Advocate Health Care

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“We have to accept that, especially in health services, the world is changing. The demand is changing.” – ERIC TOWER

patient-centric organization that is focused on keeping patients healthy, rather than racking up hospital bills. He shares the advice and insights he acquired while building the legal department’s infrastructure to serve changing needs. “A fixed mind-set will sink your business—fast.” Many health-care systems prefer the old way of doing things—they’re stuck in a fixed mind-set. While they may be making money at the moment, Tower expects many of them will find they’re no longer viable within a few years. That’s why he’s adopted the growth mentality set, based on the book Mindset by psychologist Carol Dweck. The idea is that qualities like intelligence and talent don’t automatically equate to success. Instead, Dweck teaches that people must continuously learn and work to develop their abilities. “As a department, we can’t view what we do as what we did yesterday,” Tower says. “We 100

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have to accept that, especially in health services, the world is changing. The demand is changing.” Patients are becoming more aware of what they’re spending, Tower adds, and they’re demanding convenience. The traditional hub-and-spoke model of acute-care hospitals is starting to be replaced with systems focused on population wellness and keeping patients healthy in a variety of settings. “Take initiative in-house.” The industry’s evolving strategies translate into new challenges for the legal department. Contracting practices are different; provider payment is evolving; and typical hospital legal issues are less important when care is moved to patients’ homes or other care settings. “You can sit there and say, ‘Well, we don’t do that,’ and you can try to find outside counsel to do it, or you can roll up your sleeves and say, ‘Hey, we’re at the cutting edge, and we’re going to do this ourselves,’” says Tower. That attitude results in employees who

are increasingly invested and enjoy their work, Tower says. “If you’re simply the air traffic controller giving stuff to outside counsel, I don’t see how you get much job satisfaction out of that, to be candid. You have to understand that no one’s perfect, nothing is going to be absolutely pristine, and we’re going to learn with the organization.” Tower says he has no problem if members of his transaction group come to him and say they don’t have everything on point yet, but that they’re trying something new. He knows that at some point the team members will have questions, but he resists completing the task for them. They’d never learn that way, and he’d never get anything done for himself. It’s a matter of having a little bit of patience and making people take the extra step, he says. “The rule is: don’t come to Eric unless you’ve done your homework,” he says. “Be more than just box-checkers.” Tower rejects the notion that legal departments are there to file paperwork or funnel work to outside counsel. He rarely hires outside legal help. Internal legal departments need to understand their client’s business, its strategic direction, and what it’s trying to accomplish. Tower hosts a monthly team meeting and invites Advocate executives to share where the organization is headed and how the legal department can improve. He says he’s received positive feedback from his team members. “We tend to do a lot of things in our system in-house that other systems might do externally,” he says, “because if you really understand your business, you have a huge advantage on anyone outside the company.”


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Collaborating Across the Great Divide How Rachel Stern worked with IT and business functions to successfully automate requests for legal service at FactSet Research Systems BY JEFF SILVER

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photo: FactSet Research Systems


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Modern Counsel: What was the impetus behind automating requests for legal service, and what inefficiencies did you hope to remedy? Rachel Stern: I never want the legal department to be the logjam in any process or have people avoid us because they can’t get answers or solutions fast enough. Requests for legal service used to be submitted via e-mail. With 7,000 employees, that was hard to manage manually. Sometimes two people might respond to the same request, and other times a response might take too long. I want us to be value-added in everything we do. To really be effective, we needed a system that was more efficient and that enabled us to respond quickly and set expectations about when the work would get done.

“[It] was an interesting marriage of legal knowledge and the geekiness of a software company.” – RACHEL STERN

get self-service results without having to wait for us to respond.

MC: What does the new process look like?

MC: How was the new system received?

RS: The new system grew out of proprietary software that was created internally to deal with client requests for product development (RPD). It occurred to us that the process to ask for help with a systems bug or fixing code should be the same as asking for legal help. We customized and integrated the software with several other back-end systems, so employees can access it through our internal portal. We also created an automated “contract wizard” with customizable templates. So, where it’s appropriate, our salespeople can

RS: Honestly, people weren’t happy with the change in the beginning. But once they use the portal and discover things like the drop-down list of various topics, they see how much more efficient and simple it is.

“Legal is often seen as the ‘no’ department—it’s not shocking that our coworkers tend to avoid us. Rachel outlines methods to increase efficiency internally, which helps us give more immediate answers to our clients. That increases the likelihood that they’ll seek us out for help and treat us like business partners—rather than just lawyers.” – Courtney VanLonkhuyzen, Guest Editor

MC: What do you think the greatest benefits of the new system are? RS: The portal makes it easier for us to add value by providing help more promptly and efficiently. On the administrative side, being able to quickly see who’s working on a matter and its status is terrific. In the future, we’ll also be able to automatically generate metrics on our performance. We’ll not only be able to optimize how we operate, but track the legal department’s performance in the same ways as the rest of the company: by measuring how responsive and productive we are.

MC: Did you have to collaborate with the other business functions to develop a proprietary solution? RS: The system is tied into a number of the company’s systems, including OCT/NOV/DEC 2015

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WE HELP OUR CLIENTS CHANGE THE WORLD, ONE LEADERSHIP TEAM AT A TIME TM

Heidrick & Struggles is the premier professional services firm focused on serving the leadership needs of top organizations globally. For more than 60 years, we have helped our clients address strategic leadership talent issues that range from acquiring, retaining and developing human capital solutions in times of growth, turnaround, acquisition, and integration.

document management and billing. That required a tremendous amount of collaboration and cooperation with our knowledge-management team, with finance to make sure the right billing information is imported, and with our engineers and information-systems team to make it all work together within the RPD architecture. MC: How would you characterize that process? RS: Part of the ease of cooperation that we experienced may have come out of equal departments collaborating toward a shared goal of making the business more efficient and integrating us even more closely with the rest of the company. Plus, FactSet’s deputy general counsel, Alexandra Dolger, did an excellent job as liaison with the other teams. MC: Beyond improving the logistics of the request process, what part of this project are you most proud of? RS: Lawyers and engineers don’t always speak the same language or understand each other’s reasoning. And that can be true with other departments, as well. For us, it was an interesting marriage of legal knowledge and the geekiness of a software company. But, regardless of the particular department, you really have to bridge that gap. I think we did that well on this project.

— CLIENT CONNECTION —

> HEIDRICK & STRUGGLES: “Heidrick &

www.heidrick.com EXECUTIVE SEARCH CULTURE SHAPING LEADERSHIP CONSULTING SERVICES

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Struggles considers Rachel to be a strategic partner. Rachel’s expansive role reflects a trend where companies are broadening general counsel responsibilities to include other functions, such as communications, human resources, and strategic partnerships.” – Victoria Reese, Global Head of Legal, Risk, Compliance & Government Affairs Practice

Culture Playbook Rachel Stern’s advice for creating an approachable, responsive legal department “The legal department isn’t an island here. We’re very much part of the strategic resources team and integrally related to various parts of the business. Our staff is viewed as savvy businesspeople who also happen to be lawyers. We work closely with sales, product development teams, and other partners on a regular basis. It’s also my belief that we’re a service function, and we’re only as valuable as people’s willingness to come to us for help. We have to make ourselves as accessible, responsive, and welcoming as possible.”


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The Law of Increasing Returns How Lois Bingham’s three-year strategic plan reduced the budget of Yazaki’s legal department and simultaneously improved customer service and alignment with company priorities BY JEFF SILVER

Just weeks after Lois Bingham assumed her role as Yazaki North America’s general counsel, the CEO posed a question: Is our legal department efficiently and effectively handling the most strategic and important tasks to maximize opportunity and minimize risk for the company? In response, Bingham undertook an exhaustive three-year strategic overhaul of her office—one that has transformed it into a department that better fits both her vision and the business needs of the company. Bingham began her assessment by engaging Lumen Legal to conduct a survey that asked legal’s clients from five countries in North and Central America to rate their opinions of the department. The results surprised her. “We found that they respected us but didn’t really know how to use our services,” she says. “They didn’t understand our processes and wondered why they couldn’t speak directly to an outside lawyer when they had an issue.” In hindsight, those responses appear reasonable, since company attorneys weren’t consistently using the department’s existing matter-management system. Service requests were being submitted by e-mail with no way to track metrics such as the number of requests, photo: Yazaki North America

which business units they came from, or how quickly they were being handled. Five different value sets were identified from the survey: exemplary customer service, operational excellence, profit focus, employee enrichment, and regional corporate governance. To address the first two, Bingham implemented two key changes for better customer engagement and satisfaction. First, attorneys were assigned to work with specific regional business and functional groups. This helped streamline workflow, strengthen attorney-client relationships, and increase attorneys’ expertise about their customers’ businesses. Second, a bilingual legal service request (LSR) system was created that tracks the number of requests received, routes them to the appropriate attorney, and responds with an acknowledgment of receipt. It also provides a dashboard that shows employees the status of their requests. The first available key-performance indicator from the new system is that 98 percent of the time, high-volume, repetitive contract requests are successfully addressed within 48 hours. “Since we’ve changed how we work with customers, they have been very happy with the transparency and feedback they receive

Words of Wisdom from Lois Bingham

YOU’RE ONLY IN COMPETITION WITH YOURSELF. Don’t compare your professional progress to others’ or to a predetermined time line. HONESTLY ASSESS YOUR STRENGTHS AND WEAKNESSES. Include areas outside of your legal expertise, such as management skills or how well you work with others. AS IN-HOUSE COUNSEL, KNOW YOUR COMPANY’S BUSINESS. Your advice should be practical and match the realities of your industry and your company. SPEAK IN PLAIN ENGLISH. Your business clients need to understand your advice the first time they read it. The way you learned to write in law school is not necessarily appropriate for your specific business environment.

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1800 ATTORNEYS | 37 LOCATIONS˚

Greenberg Traurig, LLP proudly supports Lois Bingham – Vice President, General Counsel, Secretary and Chief Compliance Officer with Yazaki North America – in her recognition by Modern Counsel magazine.

W W W . G T L A W . C O M Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2015 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Johnine P. Barnes in Washington, D.C. at 202.331.3100. °These numbers are subject to fluctuation. 25071

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about their requests,” Bingham says. “Previously, we only knew when there were complaints.” With new LSR data from the automated system, Bingham discovered another surprise: the answer to the question that launched the department’s restructuring. Many requests were related to procurement issues that she characterizes as “low-risk, low-value contracts that don’t really need legal review.” That finding has prompted an ongoing evaluation of a wide range of contracts. “We’ve proposed that certain ‘buys’ do not really require legal review,” Bingham says. For such transactions, the legal team proposed that the use of a purchase order or approved contract template is sufficient, thus freeing the legal resources to focus on issues with more strategic value. “We’re currently confirming the risk appetite with the internal stakeholders and the proposed solution,” she adds. Adapting for Growth When Bingham joined the legal department, it covered Yazaki’s US and Canadian operations and a portion of Mexico. That has expanded to cover 20 different legal entities and 74,000 employees across five continents. The strategic overhaul has allowed the office to better accommodate the increased scope of its responsibilities. “The survey was just the start,” says Bingham. After she shared the results, the executive management team agreed with her proposed action plan, which included adding staff to provide more extensive in-house expertise. The general counsel’s office previously consisted of Bingham, another attorney, a paralegal, and an assistant. Today, it is made up of seven lawyers plus support staff. That includes a newly created three-person department specializing in the company’s Mexican business, as well as additional expertise in regulatory litigation and compliance. The new structure and added personnel have done more than increase the department’s capacity; they have improved the company’s bottom line. The GC office now handles 80 percent of the business that

80%

the amount of business that once required outside counsel at Yazaki but is now handled in-house

19%

the amount Bingham has reduced the legal budget

Keeping the employee enrichment value set in mind, Bingham makes a point of helping her colleagues grow professionally. For example, one staff member has become certified as a project management professional since coming to Yazaki, and Bingham encourages attorneys to become active in outside associations. “I don’t want them to still be here in 15 years doing the same things as when they started,” she says. “I want them to be ready to move on and, if they want, to be able to do bigger things.”


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PROFILE THE VOICE OF THE MODERN EXECUTIVE.

“From the best legal departments, like those run by leaders such as Lois, companies now get more than just risk management; they also get an actionable commitment to bring strong legal resources to bear to help the bottom line in the most efficient way.” – Courtney VanLonkhuyzen, Guest Editor

used to require outside counsel, and Bingham has been able to reduce her budget by 19 percent. Positioning for the Future The final steps of Bingham’s strategic plan are underway. The first is the implementation of e-billing to automate the department’s invoice processing and management. The goal is to ensure all billing guidelines are followed and to make the process—which is now manual—more accurate and efficient. She is also focusing on regional corporate governance. This includes ensuring that all software, employee training, policies, and procedures are positioned to adequately protect partner companies’ proprietary information. “Business today requires global information sharing,” Bingham says. “So even though we have all of the necessary elements in place, we want to review and enhance them to be sure they are all aligned with the highest standards possible.” With all she has accomplished within her department in the last three years, Bingham is quick to point out how much she has continued to learn. In addition to learning to balance her legal practice with management responsibilities, she now understands how to be successful in a traditional Japanese company. “I’m a direct, outspoken woman, and even though this is the most diverse group of people I’ve ever worked with, that isn’t always the right approach,” she admits. “I’ve learned to take the time to develop relationships, get to know my colleagues as individuals, and then choose the most appropriate path.”

Protecting that which sustains us At Yazaki, we believe we have a responsibility to do the right thing for our customers, our communities, and for the world at large. As a privatelyowned company led by a family with a passion for corporate citizenship, we have the freedom to make that responsibility a reality, and it’s a big part of what drives actions and decisions throughout our organization.

PRINT & DIGITAL EDITIONS FIND US IN THE APP STORE OR AT PROFILEMAGAZINE.COM

www.yazaki-na.com

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EVALUATE

“There is a greater common good at stake, which is more important than any individual security company’s interests.” ­– JEFF TRUE, PALO ALTO NETWORKS

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EVALUATE Whether it’s law, technology, or health care, one theme arises from some of the most tumultuous professional sectors: collaboration is key. In an interconnected world, competition can’t stand in the way of teamwork, even among professional rivals. To protect clients and even business secrets, some initiatives, such as cybersecurity and integrated health care, must be undertaken by an entire industry rather than individual companies.

INQUIRY What is the role of M&A in a collaborative environment like health care or cybersecurity? Does your company work with competitors? If not, will such collaboration ever be possible?

On page 128, we talk to Palo Alto Networks about cybersecurity. To read Executive Order 13636, “Improving Critical Infrastructure Cybersecurity,” visit whitehouse.gov’s Foreign Policy page. For more about an inclusive approach to health care that promotes overall wellbeing, such as the methods discussed by Medline on page 110, see Rebecca Onie’s TEDMED Talk “What if our healthcare system kept us healthy?”

JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.

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EVALUATE HEALTH CARE

KEEP IT PRIVATE In response to the Affordable Care Act, businesses are consolidating across the health-care sector—a trend that private companies like Medline are poised to benefit from as leaders rise to the top of the consolidating industry BY RUSS KLETTKE // PHOTO BY CALEB FOX

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Alex Liberman is responsible for due diligence for Medline’s inorganic growth opportunities.

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It would be hard to envision a more complicated and regulated sector of the US economy than health care. With the rollout of the Affordable Care Act (ACA), all related industries are experiencing far-reaching changes to their business models—all driven by the federal mandate to deliver better care at a lower cost. Alex Liberman is on the front line of this change as general counsel for Medline Industries, the largest privately owned manufacturer and distributor of health-care products in the country. He’s quick to point out that the ACA isn’t the only thing affecting business. Medline is a manufacturer and distributor of more than 350,000 products and clinical solutions. The Mundelein, Illinoisbased company’s size has increased by a factor of 10 since Liberman started working there in 1999—a trajectory that started long before anyone thought the degree of reform instituted by the ACA could be attempted, let alone passed and implemented. Some of that growth has been organic, a result of increased market share in an aging country. Much of Medline’s growth has been through acquisitions undertaken to better meet customers’ current and future needs, a function in which Liberman bears heavy 112

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involvement. Medline is well-positioned to be a buyer, as it is free of certain hindrances that publicly owned companies face. Just as hospitals buy physician groups and multibillion-dollar deals characterize pharmaceutical company mergers, the medical supply industry’s shift toward safer, more cost-effective care has been coupled with M&A. The industry trade publication Medical Device and Diagnostic Industry (MD+DI) analyzed research done in 2011 by Ducker Worldwide, a consulting firm, which accurately predicted, “The ACA will increase industry consolidation and favor larger, innovative companies with high installation bases by 2015.” That day has arrived, and so has Medline. Liberman says acquisitions are among his major responsibilities and come with advantages. Liberman doesn’t have to worry about Securities and Exchange Commission requirements, nor the regulations imposed a dozen years ago by the Sarbanes-Oxley Act. When a good opportunity presents itself, Medline can move quickly to bring new products and distribution networks into the fold. “We are more nimble,” says Liberman. “We have less formality to deal with. We can focus on due diligence and move quickly through the transaction.” In 2014, Medline purchased Professional Hospital Supply, a West Coast company that sells products similar to those already in Medline’s catalog. Most acquisitions by Medline continue to operate under their established names and brands. The art of these mergers is to successfully integrate staff, operations, and systems. Medline’s acquisitions aren’t only domestic, though. The company’s footprint in other countries exploded in


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Pattishall is honored to partner with Alex Liberman and

Medline Industries, Inc. 2011 with the acquisition of CareFusion Corporation International Surgical Products, a medical technology company with operations in 16 European and AsianPacific countries. CareFusion distributed many of the same consumable products already made and sold by Medline (drapes and gowns, custom procedure trays, surgeon and exam gloves, and fluid management products). It was the company’s network and sales force that made the opportunity to acquire it attractive to Medline. Working in countries outside of the United States presents different kinds of challenges. Privacy laws, for example, are more stringent in Europe. “Laws there that pertain to how we handle, store, and treat data go far beyond what we deal with domestically, particularly HIPAA,” Liberman says, referring to the US Health Insurance Portability and Accountability Act of 1996, which was written to protect patient confidentiality. While some of the consolidations in the health-care sector tempt antitrust challenges, this seems not to be the case for Medline or the devices and supply industry. “While there are a lot of assets for sale, we carefully select only those that are the best fit for our business and our customers,” explains Liberman.

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> FELLOWS LABRIOLA LLP: “Alex is energetic, efficient, versatile, and decisive. He is a pleasure to work with and promptly provides input necessary to move forward with a matter.” – Henry D. Fellows, Jr. and Kevin P. Weimer, Partners

“We have to be more of a business partner to providers. That means we teach our customers how to use products to consistently achieve optimum clinical and financial outcomes.” – ALEX LIBERMAN

CONGRATULATIONS Alex Liberman on your accomplishments on behalf of the company.

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There are many possibilities that could explain this: First, those assets are on the block. MD+DI predicted four years ago that “losers” in the health reform era would be comparatively small companies (less than $150 million in annual revenues) in the lower-end commodity segments that largely serves Medicaid patients. Price and profitability pressures have forced some into acquisitions, while companies like Medline ideally integrate them into more efficient business models. The much-discussed 2.3 percent medical device excise tax is also a determining factor for smaller firms. This applies to some, but not all, of Medline’s products. No company wants that much subtracted from its net revenues, but larger companies see increased volumes from the millions of newly insured patients as a compensatory factor. Another consideration that could be averse to medical supply companies is the overall push to wrest waste from the

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Congratulations, Alex We’re proud to share your commitment to professional excellence and to serve as Medline’s outside counsel.

Much Shelist is a full-service law firm where the law is practiced with passion and pragmatism. We believe in big ideas, not big law; high-touch service, not high cost; and innovation, not same old, same old. We are a law firm that does things differently – and that’s a firm that gets your business.

Fellows LaBriola is an Atlanta-based litigation boutique devoted to complex business litigation.

We congratulate Alex Liberman on his well-deserved recognition and are privileged to work closely with him and Medline Industries.

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“We are more nimble. We have less formality to deal with. We can focus on due diligence and move quickly through the transaction.” – ALEX LIBERMAN

system. Medline is all in on that: “We have to be more of a business partner to providers,” Liberman says. “For example, that means we teach our customers how to use products to consistently achieve optimum clinical and financial outcomes.” Does that mean Medline and its customer providers will achieve the holy grail of health-care reform: to bend the cost curve? “It’s a subjective call,” Liberman cautions. “Medline is committed to helping our customers meet the demands of better outcomes and lower costs.” He says the first challenge is to prepare providers to handle an influx of new patients. Which is a simple goal, even if the path there is anything but.

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> MUCH SHELIST: “Alex manages his

highly diverse responsibilities with grace and professionalism. He handles complex corporate, IP, and health-care issues with incredible skill and instincts, and I learn something new whenever I have the good fortune to work with him.” – Mitchell Roth, Managing Partner


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CARE AT ALL COSTS Nursing homes are the second-most regulated industry in the United States, and they serve a population at risk. Nursing-home operator Nexion Health is finding ways to mitigate risk while managing cost as mandated by the Affordable Care Act, all while keeping care its focus BY JULIE SCHAEFFER

The year after Brian Lee graduated from college, he taught high school in Central America. Later, in law school, he spent a semester providing family law services to low-caste Indians. His desire then was to serve, and it hasn’t waned since. “I knew I would have a hard time working for a traditional widget company,” he recalls. “I looked for a role where I had the ability to affect people’s lives.” The role that suited him was in the health-care industry. Lee serves as general counsel for Nexion Health, which operates 37 nursing homes with 3,000 residents and 4,000 employees. It’s a satisfying role but not without challenges, given the everchanging nature of the medical landscape. The long-term-care field is a difficult environment and has the lowest margins in health care, says Lee. Nexion is heavily dependent on federal and state reimbursements through Medicare and Medicaid, which have taken hits over the last several years as reimbursements have been reduced and inflationary adjustments have failed to keep up with increases in costs. For example, Texas, where most of Nexion’s facilities are located, pays less than $6 an hour for a nursing home to provide around-the-clock nursing care, meals, and activities for a Medicaid

BRIAN LEE Vice President and General Counsel Nexion Health

photo: Nexion Health

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Greg Ziegler and Macdonald Devin, PC congratulate

Brian Lee on his accomplishments in stellar service to Nexion Health.

AT T O R N E Y S

Gziegler@macdonalddevin.com 214.744.3300

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“We have to do a lot with a little, but as a result, we’re the most cost-effective segment of the health-care industry.” – BRIAN LEE

patient. The US Department of Health and Human Services estimates that the same amount of care could cost an average of more than $20 per hour. Rather than react by increasing funding, many states are searching for ways to pay less. Lee says Texas is seeking to control its health-care costs by moving Medicaid enrollees into privately run managed-care plans. That’s changing the way providers are compensated; it’s no longer fee-for-service. “We have to do a lot with a little, but as a result, we’re the most cost-effective segment of the health-care industry,” says Lee, whose team is so lean it consists of just two people: a paralegal and him. “We’re the second-most regulated industry in the country, after nuclear power,” he says, “and the regulations keep increasing because they don’t get rid of the old ones when they create new ones.” The company is surveyed by the states in which it operates at least annually, and any violations of compliance are reported. Many times, they’re based not on quality of care, but on a paper trail.

“From the surveyors’ perspective, the facility staff doesn’t just have to turn (as in physically move, in order to prevent sores) a resident every two hours; we have to document it,” says Lee. Perhaps his most memorable citation was for a deficiency in which the facility served the wrong kind of French fries at dinner. “The menu said we’d have steak-cut fries, and instead we provided shoestring fries,” says Lee. “The surveyor took the time to write that up because there was, in his opinion, a potential of harm to a resident who might have eagerly anticipated steak-cut fries.” Long-term care is a tough business for caregivers, says Lee. It’s very physical, as certified nursing assistants (CNAs) are regularly transferring patients from beds to wheelchairs, helping them walk down halls, and engaging in activities with them. As a result, there are numerous opportunities for injuries to occur. “Health care, and long-term care in particular, have high rates of occupational injuries,” says Lee. “A lot of times, the cause is an employee trying to do too much, maybe because of the resident’s size, maybe because the resident fidgets a lot. In those cases, a two-person assist may be required, but the CNA who’s dealing with a hungry resident who wants his lunch may try to move him herself and strain her back.” To mitigate such injuries, Lee is working on an initiative to be more proactive. In compliance with Occupational Safety and Health Administration regulations, he’s assembled safety committees to look at the causes of injuries that have occurred and develop a plan for mitigating them. He’s also created a committee tasked with working closely with nursing-home staff to highlight and repair building hazards. Litigation is another area of focus for

Lee. “We believe we provide quality services, but in the United States, all too often the belief is that if there is a negative outcome, someone must have done something wrong,” he says, “and when something bad happens to a resident, many families blame the facility.” The company seeks to manage litigation in a cost-effective manner, but Nexion is willing to go to the mat when necessary. There’s no sign that the health-care landscape will stop changing anytime soon, says Lee. For example, the move to electronic health records and their interoperability have been and will continue to be time-consuming. Still, other changes are developing that could change the industry for the better. Lee believes the government’s increased emphasis on outcomes versus paper trails could be a good thing. “Properly implemented, outcomes-based reimbursement allows our caregivers to focus less on fulfilling sometimes arbitrary documentation requirements, and more on caring for our residents.”

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> MACDONALD DEVIN, PC: “Brian Lee and Macdonald Devin have implemented a proactive yet efficient team approach to meeting Nexion Health’s legal needs that maximizes the value of legal services yet imposes the least possible burden on the operations of the company and its health-care providers.” – Greg Ziegler, Shareholder OCT/NOV/DEC 2015

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A DOSE OF RX FOR PATENT LAW Teva Pharmaceuticals may have won in the nation’s highest court, but there’s no end to the litigation or the fight for IP in this global company BY RUSS KLETTKE

If an attorney wants to work in a static, predictable area of law, pharmaceutical intellectual property is not an ideal venue. Pharmaceutical IP lawyers deal with a slew of dynamics—which all carry expensive implications. This year, a decision by the US Supreme Court threw another curve ball at them. In January, Teva Pharmaceuticals was written into patent law history with the Supreme Court decision in Teva v. Sandoz. The court raised the standard of appellate review with the decision, saying the federal circuit court must review claim construction rulings with greater deference to the lower court, particularly if fact-finding is involved. The court reversed and remanded an unfavorable decision against Teva regarding its protection of a drug, Copaxone, used to treat multiple sclerosis. The ruling rejected the federal circuit court’s standard of review for patent claim constructions from the trial courts. The pharmaceutical industry is one of innovation. Analysts constantly talk about the pipeline of new drugs and the multibillion-dollar stakes in developments to address disease and injury. These are lifesaving and life-enhancing medicines used by 70 percent of the American population. A single blockbuster medication— think Abilify (psychosis and depression), Nexium (gastrointestinal disorders), Humira (Crohn’s disease and rheumatoid arthritis), Crestor 118

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Questions of Law Prior to the Teva v. Sandoz ruling, the federal circuit court reviewed every issue of claim construction de novo, which gave that court more control over patent case outcomes. Supreme Court Justice Elena Kagan questioned the absent application of Rule 52, which orders appeals courts to defer to trial judges’ factual conclusions. Dissatisfied with the plaintiff’s response, which was that the court should treat the issue of patent claims as “purely legal,” Justice Steven Breyer remarked, “Are we going to carve out one part of the patent law [for an exemption to Rule 52]? I’m nervous about it.” Seven of the nine justices agreed.

(cholesterol), or Advair (asthma)—can be worth billions of dollars. Those profits are accrued mostly before patent expiration. That said, for the companies that create new drugs, patent expiration and successful patent challenges reduce profitability—the revenue stream that funds new research and development. As Matthew P. Blischak, associate general counsel of global branded IP litigation for Teva Pharmaceuticals, explains, “Some of these drugs are worth hundreds of millions if not billions of dollars. If generic entry happens earlier than the patent expiration, it can be a $2 or $3 billion loss to the company.” Other significant variables include generic manufacturers, global trade agreements, and the fact that many pharmaceutical companies, Teva included, sell both their own innovative drugs and generics that eat into the market share of other companies’ innovations. It’s a maelstrom. Blischak was the lead internal attorney working with outside counsel on Teva v. Sandoz while it was being decided by the Supreme Court. The implications of some decisions can be overblown or misinterpreted by the press, he notes, but in the lead-up to the decision in early 2015, he worked with the company’s external communications strategists to discuss the case background with the media in advance of the ruling. “I was pleasantly surprised,” he says. “It was reported everywhere, and the quality of the analysis was good.” The Court of Appeals for the Federal Circuit has historically reversed a high percentage of claim construction decisions, making it obvious why the Supreme Court decided to hear the case. Still, in the long term, the decision may not have a huge effect on companies such as Teva, says Blischak, a comment echoed by colleagues Staci Julie, senior vice president and chief IP counsel, and Lauren Rabinovic, associate general counsel of North American generic IP. All concur that the decision places more pressure on fact-gathering and presenting convincing evidence related to claim construction at trial, and there may be a higher investment in expert testimony. Net-net, they say the decision will have, at most, a nominal financial impact on the litigation processes on both the branded and generic sides of the company. Legal journals have suggested that Teva v. Sandoz will have a greater impact on other industries, such as the technology sector, which


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is beleaguered with patent trolling that can cost up to $1 million per challenge to defend. A long-standing dispute—which doesn’t involve patent trolls—exists between Apple and Samsung, and it may find clarification in the federal circuit court as a result of Teva. According to the Columbia Science and Technology Law Review: “There could be an incentive for litigants to create factual issues in claim construction. This could increase the cost of claim construction because litigants are encouraged to introduce extrinsic evidence, such as expert testimony. Additionally, in light of the heightened deference, district court judges may rely more heavily on factual issues in writing their opinions in order to reduce the probability of being reversed on appeal.” In agreement with Teva attorneys, the journal acknowledges that factual findings in claim constructions may be limited, adding, “Only time will tell whether or not this is actually the case.” In the pharmaceutical sector, the case was closely watched and yet not the subject of industry advocacy. Blischak notes that in the Supreme Court proceedings, neither the trade associations representing the branded interests (Pharmaceutical Research and Manufacturers of America) nor the generics (Generic Pharmaceutical Association) filed an amicus brief. This may be due to the nature of many companies having both branded (Rx) business and generic (Gx) businesses—an interesting crosscurrent, given the chronic nature of litigation between these interests. Or, as Blischak notes, because “neither the brand nor the generic sides really knew what outcome would serve their interests long-term. Only time will tell.” “It puts us in an unusual position,” says Rabinovic, whose primary responsibilities are in the Gx business. “In fact, most people identify Teva as a generics company, but half our revenue comes from the specialty (also known as the branded) side.” She clarifies that the substantive law ultimately determines whether a patent challenge will or will not succeed. “At the end of the day, patent claims, prior art, etc., are what matters.” Rabinovic acknowledges that internal communications are critical to ensuring they “don’t make arguments that undermine each other.” This is possible because, unlike most companies that have both Rx and Gx products, Teva’s IP function is administered under one department, which is headed up by Julie. In her position, Julie interfaces frequently with the business side of the company, photos: Greg Benson

MATTHEW P. BLISCHAK Associate General Counsel of Global Branded IP Litigation Teva Pharmaceuticals

STACI JULIE Senior Vice President and Chief IP Counsel Teva Pharmaceuticals

LAUREN RABINOVIC Associate General Counsel, North American Generic IP Teva Pharmaceuticals

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“Some of these drugs are worth hundreds of millions if not billions of dollars. If generic entry happens earlier than the patent expiration, it can be a $2 or $3 billion loss to the company.” – MATTHEW P. BLISCHAK

both in terms of product strategy and in balancing the interests of the Rx and Gx businesses. “I feel strongly that it should be a combined function,” Julie says. “This leverages our experience, expertise, and perspectives on both sides. For both the brand and the generic side, we can approach the situation from the vantage point of knowing the opposition’s weaknesses.” Julie notes that firms increasingly have this same dual personality as a result of mergers and acquisitions. Examples include Pfizer purchasing Hospira and Actavis buying Allergan, among others, both within the last year. Industry analysts predict more mergers in 2015 as businesses seek to balance their portfolios to mitigate the boom-bust nature of pipelines and patent expirations. There are many offshore companies in that mix, which is the current trend. Teva Pharmaceutical Industries is an Israeli company with North American headquarters in North Wales, Pennsylvania. The United States may be a large consumer market, but health-care systems around the globe foster extensive, well-regulated care and access to drugs, medical devices, and other therapies. Another dynamic in the worldwide pharmaceutical industry is trade and lower-cost manufacturing in such places as India, Taiwan, Thailand, and China. Companies based there are almost never innovators 120

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but instead produce generic drugs that copy other patented drugs on a massive scale. While important for making much-needed medications available at affordable costs in disease-ravaged Third World countries, these companies are also among the major challengers to patents belonging to companies, including Teva, that invest heavily in research and development. According to John R. Graham, a senior fellow at the National Center for Policy Analysis and co-organizer of the Health Technology Forum DC, average drug research costs have increased by a factor of 2.5 since 2003. He cites research from the Tufts Center for the Study of Drug Development, which found that research and development for a new drug averaged $802 million about a decade ago, and by 2014 that average had risen to $2.5 billion. Tufts includes dollars spent by companies on the more than 80 percent of projects that are abandoned before getting to market. Upstart companies overseas have contributed significantly to increased patent challenges in recent years. Blischak says in years past, there would typically be three to six challengers to a patent. Today, that number ranges between 10 and 20; Teva’s own drug Treanda, used to treat cancer, is currently under attack from 18 generic manufacturers. “Every drug is vulnerable to challenge,” he says. It takes time for challengers to work through the courts. The Hatch-Waxman Act (also known as the Drug Price Competition and Patent Term Restoration Act of 1984) is the defining regulation of generic drugs in the United States. The intent of the law is to protect innovative companies, which it does through a 30-month stay on challengers and the ability to extend the terms of patents. The first generic company to file a patent challenge is potentially given 180-day exclusivity in the generics market, a leg up on the other dozen or more companies hoping to capture market share. “Teva helped create today’s generic drug industry and so has been heavily involved in patent litigation,” explains Rabinovic. Whatever its application and eventual impact on the world of intellectual property, Blischak values the experience of seeing the Sandoz case work its way up to the US Supreme Court. “The odds are very low that the Court will take any case,” he says. The Supreme Court reports that it hears about 100–150 of the more than 7,000 appealed to it each year. “It was my first time there,” Blischak says, “perhaps the only time. It was an incredible intellectual challenge working out strategies with our counsel. It felt like climbing Mount Everest.”

“Most lawyers don’t work alone—at least not the successful ones. The attorneys at Teva demonstrated the power of teamwork in their recent victory at the US Supreme Court in Teva v. Sandoz.” – Courtney VanLonkhuyzen, Guest Editor

photos: Caleb Fox (VanLonkhuyzen)


Business Solutions. Accomplished. North America Europe Asia winston.com

Teva for your whole life. A Unique Synergy between Specialty and Generic Medicines that Results in Better Healthcare Our story is one of leadership in global healthcare. With synergistic strengths and unique innovation, we offer better healthcare and accessible treatment options to millions worldwide.

Congratulations to Staci, Matt, and Lauren on their well deserved recognition in Modern Counsel.

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JOHN LESSNER Associate General Counsel Erickson Living

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LOWERING HOSPITAL READMISSION WITH COORDINATED CARE As hospitals look to curb rates of readmission, Erickson Living has some practical solutions BY JESSICA MONTOYA COGGINS

Certain clichés abound about post-retirement life: there isn’t a lot to do; it’s lonely; it takes a while to seek proper medical care. Erickson Living is a stark contrast to that outdated image. At one of its many retirement communities, it’s not uncommon to see a group of seniors swimming, enjoying a stroll outdoors, or taking a yoga class. You might find a resident using a tablet or cellphone to access the company’s recently launched app. Erickson Living manages 18 senior living communities around the country. The company opened its first property in Catonsville, Massachusetts, in 1983. Its properties range in capacity from about 400 residents to 2,200. Currently, there are 23,000 residents across 10 states. It has 8,500 full-time employees and partners with numerous physicians, nutritionists, and specialists to attend to the needs of residents. John Lessner is the vice president and associate general counsel of Erickson. In addition to overseeing compliance with photo: John J. Coyle Jr.

the various regulated health-care entities Erickson manages, Lessner is also responsible for managing the contracting process with third-party vendors. On any given day, he is working on issues involving state and local health licensure, Medicare compliance, and privacy issues connected to the federal Health Insurance Portability and Accountability Act of 1996. Risk management is also a major focus for Lessner and his team. Lessner previously worked as assistant attorney general for the State of Maryland and counsel to the Department of Health and Mental Hygiene. While there, he realized long-term care would become a major growth area for the country. As the current baby boom generation approaches retirement, facilities like Erickson’s are becoming increasingly popular for senior citizens. Though he acknowledges there will always be seniors who prefer to live independently, he believes many in retirement would like to keep an active lifestyle but deal with less upkeep in taking care

“[Preventative care] not only provides a better quality of life for our residents; it’s more costeffective in the long run to prevent problems than to pay for them after they happen.” – JOHN LESSNER

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Ward & Herzog, LLC congratulates John Lessner on his exceptional leadership at Erickson Living

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of a home. He cites the particularly harsh winter of 2014–15 as a likely factor for some seniors to seek out communities like Erickson Living. One of Lessner’s initiatives with Erickson has been to work with company leadership and local hospitals to comply with the Affordable Care Act (ACA), which recently celebrated its fifth anniversary. When the ACA was enacted, one of its goals was to reduce the rate of hospital readmissions for Medicare beneficiaries because readmissions had become a strain on Medicare expenditures. Readmission refers to when a patient treated for one medical issue later seeks further medical attention due to an infection, improper care, or stagnated healing process. The ACA looked to curb readmissions and to penalize hospitals for not working with long-term-care facilities. Several policies and expected readmission algorithms were applied to effectively outline the ACA’s goal of reducing the readmission. Hospital readmission rates drop when care coordination becomes a priority. According to Lessner, Erickson Living has enjoyed “good relationships” with local hospitals, and the readmission rates for its residents are much lower than the national average. Lessner says Erickson Living is focused on medical monitoring, physician and nurse practitioner oversight, and providing appropriate therapy and ancillary services to help reduce readmissions. Erickson Living communities are unique in that each has an on-site medical center with geriatricians and internists who practice solely at their communities and care only for community residents. These

Risk Management — CLIENT CONNECTION —

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John means having clear goals and cooperative leadership. Solving a problem always includes his strong legal insight, respect for opinions, and meaningful consideration of the impact decisions will have on the whole company.” – Margaret Fonshell Ward, Principal

Medicare’s Hospital Readmissions Reduction Program WHAT IS IT? Readmission occurs when a patient receives treatment for a problem, such as a fractured bone, and must return for further treatment of an infection or other complication. WHAT ARE THE PENALTIES? The Centers for Medicare and Medicaid Services estimates that during 2014, 2,225 hospitals accumulated penalties of about $227 million. HOW IS IT PREVENTED? Hospital readmission rates decrease through the use of coordinated care and preventative services.

Erickson physicians devote more time to each patient than the norm, at about 25 minutes per appointment; the national average is just nine. Compliance goes beyond coordinated care, though, and Erickson Living works to reduce readmission by ensuring preventive services are provided. These include nutrition, exercise, wellness, and memory fitness options. In a cost-benefit model, preventive care is not only ethically advantageous; it makes obvious financial sense. “It not only provides a better quality of life for our residents; it’s more cost-effective in the long run to prevent problems than to pay for them after they happen,” says Lessner. Lessner believes residents of Erickson Living are benefiting immensely from this enhanced care coordination. Naturally, this translates to a healthier and more fulfilled life for these residents. As the ACA continues to affect long-term-care options for seniors, Lessner believes more places like Erickson Living communities will become attractive postretirement homes for many.


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A BOLD EXPERIMENT The shifting face of health care is evident in its most expensive phase: senior and chronic care. The Avamere Family of Companies is pioneering a program that cuts both cost and the time patients spend in its facilities. How could such an experiment pay off? General counsel Larry Lopardo explains. BY RUSS KLETTKE

It seems counterintuitive that an industry would seek to reduce the services its customers consume. Yet that’s exactly where much of the health-care system is headed, largely as a result of the Affordable Care Act. The law is reordering health care from floor to ceiling, and the care provided to seniors on Medicare will photo: Avamere Family of Companies

be no exception. Reducing the time that patients spend in hospitals and long-termcare facilities—as well as the number of procedures undertaken while in care—is a fundamental way in which the system is dramatically changing. The intention is not heartless cost-cutting to the detriment of patients. A OCT/NOV/DEC 2015

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significant amount of research shows that speedier, longer-lasting recoveries are possible with rational, coordinated care that also eliminates waste. Longer stays in hospitals do not translate to better care; in fact, under some circumstances, they can make patients sicker and introduce complications. The Avamere Family of Companies, based in Wilsonville, Oregon, is on the vanguard of these changes. The group is among the first wave of providers to participate in the rollout of a program called the Bundled Payments for Care Improvement initiative. In short, the program incentivizes health-care providers to cut costs by various means, including by enabling patients to recover more quickly and spend fewer nights in transitional or skilled-nursing care. While that may seem counterintuitive, many organizations like Avamere are jumping in to become the first adopters in what is essentially a bold experiment. This doesn’t worry Larry Lopardo, secretary and general counsel for the company. “Quality providers will benefit in this system,” he says. He is confident in Avamere’s years of research that indicate this. “Good medicine can be consistent with lower costs.” This is the ultimate goal: to lower health-care expenditures in the behemoth Medicare system while patients become healthier. Bundled care incentivizes groups of providers—hospitals, post-acute-care providers such as Avamere, physicians, and other practitioners such as nurse practitioners and therapists—to approach an illness or condition holistically and in coordination, and be compensated according to a single Medicare-determined payment schedule. One member of the mix of providers, called a convener, manages the patient throughout the course of treatment, working in a unified fashion with all other providers on the “team.” Lopardo plays a key role in this. These arrangements require contracts between providers; they are all in it together. When a Medicare patient has an acute episode, such as a broken hip or emergency bypass 126

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Regulations Cheat Sheet A guide to the critical policies regulating health care STARK LAW Three provisions of this federal law are meant to block physicians from referring patients covered by Medicare and Medicaid to a medical facility in which the physician has a financial interest (ownership, investment, or a structured compensation arrangement). ANTIKICKBACK STATUTE This prohibits any party from offering financial incentives to physicians to prescribe treatment of a Medicare patient (and those under all other federal health-care programs) offered by the referring party. Knowing and willful intent must be proven. CIVIL MONETARY PENALTIES LAW This prohibits violation of myriad health-care laws. This includes requiring that charges for an item not used or not warranted and which the doctor would or should know is unwarranted can result in heavy penalties and fines. FEE-SPLITTING PROHIBITIONS These prohibitions vary by state and discourage sharing revenues between health-care providers that are based on provider A sending a patient to provider B. This does not prohibit fair-market remuneration based on shared administrative services.

surgery, a diagnosis-related group (DRG) payment schedule establishes a marketplace-adjusted price for that patient’s treatment. If net costs come in below the amount set by Medicare, the providers divide up the savings, which is called “gain sharing.” Conversely, if costs go above the DRG target, those organizations eat the loss in a “loss apportionment.” About 90 percent of people receiving health care over the age of 65 are on the popular program; when those benefits are depleted, they are enrolled in Medicaid. One of the quickest ways to go over the target is if the patient has a setback that requires a rehospitalization. A recent report from the Robert Wood Johnson Foundation found that Medicare pays for the one in five elderly patients who return to the hospital within 30 days of leaving from a prior stay, which costs about $26 billion annually. The Centers for Medicare and Medicaid Services reports that $17 billion of those costs could be saved; causes of rehospitalization are numerous, but they include patients being poorly informed at discharge, noncompliance with medication orders, or lack of necessary follow-up care. Lopardo says Avamere clinicians and administrators have been working for two decades to cut down on these types of problems and that, in his job, it’s important that he be included in the discussion. “We have spent a lot of time designing systems to prevent rehospitalizations,” he says. In Avamere’s lower-cost settings (home-health care, assisted living, and transitional living), discharged patients can receive appropriate care to put them on the road to improved health. Lopardo has, over the course of his 16 years at Avamere, helped the company build these capabilities through acquisitions of various types of nonhospital caregiving facilities. The transactions require legal guidance, and so does helping those existing facilities adopt Avamere protocols. “When we buy a facility or a company,” Lopardo explains, “we have to transition them to our standards of compliance with such things as protected health information within the dictates of HIPAA.”


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Lane Powell values its partnership with

“Our employees say it’s a happier place to work when they are helping people to get better. This is a rational design.” – LARRY LOPARDO

Those acquisitions have built Avamere into a 40-plus-facility organization in four states: Oregon, Washington, Idaho, and Colorado. The family of companies also performs contract therapy in five additional states and home health and hospice in Utah. Size is an advantage in modernizing and economizing, but crossing state lines adds regulatory complexity. Electronic medical records systems—replacing paper and error-prone handwritten notes and instructions—are critical to making bundled care initiatives work. Digital capabilities are also integral to attracting provider cooperation. “The impact of this is huge,” says Lopardo. “Not all post-acute-care providers have this capability. Our own IT department is several times bigger than it was just a few years ago.” All of this leads to consolidations in the industry. And while smaller players fall out and larger companies absorb them, Lopardo says there isn’t any danger of antitrust issues—yet. Other laws and regulations, such as HIPAA, occupy the legal department’s time. This includes the mix of state laws regarding fraud, abuse, and antitrust. Regarding HIPAA, Avamere has a dedicated staff member who ensures privacy

regulations are maintained, even through the challenges of multiple caregivers in the bundled care regime. “HIPAA creates an information privacy culture,” says Lopardo. “It’s part of how we evaluate our partners. They have to get it.” He also mentions qui tam whistle-blower provisions, the spirit of which is important but can lead to frivolous litigation and expensive nuisance settlements. State laws are trickier, according to Lopardo. “We have very progressive regulators in Oregon,” he says, “but other states take different approaches.” What changes noticeably between states is the extent to which nurse practitioners play a role in patient care, though the laws are fairly consistent in the states where Avamere operates. “There’s a great deal of interest in what nurse practitioners can do in health care,” says Lopardo. “From our perspective, the rest of the country should allow nurse practitioners the broader scope of practice that we have here.” Lopardo acknowledges that there are reasons for the fears that many have concerning bundle care and health-care reform overall. “We ask, ‘is there a dark side where there will be skimping on care?’ But we crunch the data to see our outcomes,” he says. “Most patients prefer to go home. And our employees say it’s a happier place to work when they are helping people to get better. This is a rational design.”

and

Larry Lopardo, Secretary and General Counsel, Avamere Family of Companies. We look forward to many years of continued success. 

The Avamere Family of Companies’ Commitment, Strive for Amazing Senior Services.

— CLIENT CONNECTION —

> LANE POWELL: “Avamere is a valued client. Lane Powell has had the privilege of assisting Larry on the complex needs of his organization. Larry’s impressive knowledge and tireless commitment to long-term care is admirable.” — Barb Duffy, Lane Powell Shareholder and Chair of the firm’s Long Term Care and Seniors Housing Client Service Team

Visit us at lanepowell.com. OCT/NOV/DEC 2015

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UNSEEN ARMOR How Palo Alto Networks is working with leaders on Capitol Hill to shape the future of cybersecurity BY TOPHER BORDEAU

With society come criminals, and with technology come criminals seeking to exploit it with malicious intent. Cybersecurity has risen to the top of the agenda for CEOs, government agencies, and service providers, all of which work to keep companies, countries, citizens, and data safe. It’s as much about protecting networks and exchanges of information as it is about protecting data, and recent attacks against major companies like Target, Anthem, and Sony keep personal data protection in the national conversation. One of the people working at the forefront of cybersecurity and its surrounding issues is Jeff True, senior vice president and general counsel for Palo Alto Networks. The company’s mission is to be the top provider of cybersecurity solutions for enterprises, government agencies, and service providers and to serve as a thought leader in the prevention of cyber attacks. When the aforementioned attacks brought cybersecurity to the attention of Congress and President Barack Obama, Palo Alto Networks decided to bring into the company an expert with direct experience in the Washington, DC, cybersecurity conversation, a person who would serve as government affairs liaison and operate within the legal department. As such, that person will report to True. 128

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The government affairs position is new and reflects Palo Alto Networks’ commitment to evolving with the speed of the cybersecurity space. True sees the role as specializing in three main priorities: First, the person will capitalize on his or her connections and experience in Washington to establish visibility and thought leadership for Palo Alto Networks. Communication must be established with Congress and its committees, the executive branch, and industry associations that work in and around cybersecurity policy. Second, the person will ensure Palo Alto Networks is both aware of and in a position to influence new legislation that could affect the business of the company, as well as the industry as a whole. Finally, the new hire will assist in the company’s public sector sales efforts. The vision for success in the government affairs positions speaks to the company’s focus. “Our priority is to prevent cyber attacks from being successful,” says True. “In order to do that, we think it is incredibly helpful if we can share our wide knowledge of cyber threat information.” To that end, Palo Alto Networks recently launched an initiative called the Cyber Threat Alliance, which partners Palo Alto Networks with other companies in the security industry to share

threat information. This will foster better protection for all customers from cyber attacks. True believes that if his company and the Cyber Threat Alliance can include the government in this practice of information sharing, both the government and companies like those already in the Cyber Threat Alliance can be more successful in preventing future attacks. True’s belief is shared in lofty places. In February, President Obama signed an executive order that promoted cybersecurity information sharing within the private sector, supporting the pioneering efforts of Palo Alto Networks and the other members of the Cyber Threat Alliance. The order called the role played by organizations sharing cybersecurity information “invaluable;” recognized the importance of sharing information to respond to threats in as-close-to-real time as possible; and encouraged easier partnership between organizations such as the Cyber Threat Alliance and the federal government. But that’s not enough for True, his government affairs report, and Palo Alto Networks. Maintaining the company’s position in both cyber-threat information sharing and thought leadership in the cybersecurity space means figuring out exactly what partnership between the government and private sector entails.

“Sharing the knowledge that we’ve gained is instrumental in combating today’s most sophisticated cyber attacks.” – JEFF TRUE

photo: Palo Alto Networks


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“The conversation now in Congress is about finding the best way for the private sector to share information with the government,” says True. That conversation revolves around a number of potentially thorny and controversial legal policy concerns. Among them: whether the practice of information sharing from the private sector with the government is voluntary or mandatory; how to handle liability protections for organizations sharing and receiving information; protections of individual privacy while also preserving commitments made to customers and other third parties; and whether or not the practice of sharing encouraged by the executive order will be a two-way relationship—that is, whether the government will share its information with the private sector. Fortunately for members of the Cyber Threat Alliance, the House of Representatives and the Senate seem inclined to put partisanship aside as they develop legislation intended to prevent cyber attacks on both government agencies and commercial interests. True believes information sharing between the government and the private sector is an opportunity to build greater trust between the two. All of this—the new government affairs position, the focus on the cybersecurity conversation in Washington, and the intent to shape new legislation in accordance with the best interests of those who keep networks secure—is an extension of the overall goal of Palo Alto Networks: preventing cyber criminals from being successful. True doesn’t make a distinction between public and private when he considers his company’s clients. “I don’t think we’re doing anything different when working with government agencies versus commercial entities,” he says. “Our goal from the beginning was to develop innovative technologies to combat the ever-evolving threat landscape. Sharing the knowledge that we’ve gained is instrumental in combating today’s most sophisticated cyber attacks. We want all companies and government agencies to be as well-protected as possible from cyber attacks, regardless of whose technology they choose to use. There is a greater common good at stake, which is more important than any individual security company’s interests.”

Milestones in Cybersecurity ••

JANUARY 1988

••

MAY 1998

••

FEBRUARY 2000

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DECEMBER 2002

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MAY 2003

••

FEBRUARY 2015

The Computer Security Act of 1987 is passed to protect federal computer systems by setting minimum security standards developed by the National Bureau of Standards. President Bill Clinton orders the government to work with the private sector to secure the nation’s important information networks, the majority of which are privately owned. Distributed denial-of-service attacks crash popular e-commerce sites. The attacks prompt congressional hearings and legislation aimed to strengthen cybersecurity. The Computer Security Act is repealed by the Federal Information Security Management Act of 2002, which recognizes the importance of information security. The US Department of Homeland Security announces intentions to create an office to implement the White House’s cybersecurity strategy. President Barack Obama signs an executive order, Promoting Cyber Security Information Sharing, which encourages sharing of cybersecurity threat information within the private sector and between the private sector and the government.

The scope of True’s statement, what’s at stake in his company’s work, and the attention it’s getting in American society illustrate the asymmetrical perception of success and failure in the cybersecurity space: the public hears only about failures. “We and our customers are able to tell if a particular attack has been attempted,” says True. “And if it is prevented, then we’ve been successful.” How could Palo Alto Networks define long-term success in a public way? As he works to catalyze the technologies and legislation that ensure we can exchange ideas and transact business safely and freely, True unwittingly hints at a definition: occasionally, he uses security and cybersecurity interchangeably. Eventually, we’ll all stop making the distinction.

OUR CLIENTS’ NEEDS DON’T EASILY FIT INTO A BOX. At Morrison & Foerster, our commitment to excellence begins with the understanding that our clients’ needs are unique. That’s why we are dedicated to finding creative solutions that ensure our clients achieve their business goals. mofo.com

©2015 Morrison & Foerster LLP

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AND THEN THERE WERE FOUR While the working parts on semiconductors have continuously shrunk over the last two decades, the demand for semiconductors has simultaneously grown. Through extensive consolidation, the number of industry players has shrunk to four major memory chip manufacturers; Micron Technology is the only remaining US company. Jeff Moss discusses how Micron withstood the consolidation and outlines legal’s role in maintaining the company’s dominance. BY JEFF SILVER

Modern Counsel: Micron has been around for almost four decades and survived the whittling of the semiconductor market. What allowed it to come out on top of the pile in the United States? Jeff Moss : Our former CEO, Steve Appleton, knew that the industry had to consolidate. And he had the vision that Micron would be the driving force in that effort. When I joined Micron in 1995, there were 30 to 40 memory chip suppliers worldwide. This included Motorola, IBM, and many foreign companies. Intel, AT&T, and others had already exited the industry due to its high volatility. It was very fragmented, with everyone competing for market share. Beginning in the late 1990s and during subsequent industry “down” periods, Micron was willing to take risks on various timely opportunities. It began acquiring major manufacturing facilities, or “fabs,” from companies that either wanted to get out of the memory industry or were struggling financially. It was much less expensive to acquire those production capabilities than to create them from scratch. MC: Your first major transaction was to acquire assets from Texas Instruments in 1998. As the first, did it present any unique challenges? 130

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photo: Chad Case


JM: Our entire legal department worked nearly full-time on the transaction for months. Even for our very experienced outside counsel, I believe it remains one of the most challenging transactions they have ever worked on due to: the number of countries in which the assets were located; the number of parties involved; and a couple of foreign, joint ventures that were part of the transaction. We had simultaneous negotiations not only with Texas Instruments, but also with Canon, HP, Kobe Steel, and the Economic Development Board of Singapore—all extraordinarily sophisticated parties. That meant coordinating multiple complex negotiations around the world. We had 30 to 40 in-house and outside attorneys from multiple firms working almost around-the-clock for weeks at a time. Keep in mind, too, that Micron didn’t have a separate M&A team then but did nearly all of the due diligence in-house. All of the Micron attorneys had our “normal” responsibilities (which for me was sales and much of our procurement work) in addition to whatever was required for the deal. Now we have a dedicated group of attorneys and business counterparts who focus exclusively on M&A, joint ventures, and investment matters. MC: What were some of the more challenging deals? JM: Besides being challenging because it is very rare for a Japanese company to go through formal bankruptcy and to be acquired by a US company, our most recent major acquisition in 2013, Elpida, also marked a major transition for the legal department. Until then we were primarily a US-based group supporting worldwide functions. But now we have many attorneys located around the world, so we can address issues in real time wherever they occur. We don’t have the

“Our former CEO, Steve Appleton, knew that the industry had to consolidate. And he had the vision that Micron would be the driving force in that effort. ” – JEFF MOSS

CONGRATULATIONS

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Micron’s world-class legal team embodies the values

of excellence, integrity,

teamwork, and innovation. Holland & Hart is proud to have partnered with

Jeff Moss and Micron and looks forward to future

collaborations together.

luxury of taking a few days to analyze and respond anymore. MC: How has Micron’s legal department played a significant part in the ongoing consolidation initiative overall? JM: We don’t just come in during the final stages to document what’s been agreed to. We’re included from transaction inception, and that enables us to influence not just the legal structure, but also the business strategy of these transactions. Valuing our input has always been part of the culture here. Even when I was in a much more junior position, I was part of many negotiating and strategy sessions with the CEO and other senior leaders. MC: Does Micron have plans for any more M&A? JM: There should be many opportunities for future M&A that enables us to provide

Brian Hansen, Administrative Partner 800 W. Main Street, Suite 1750 Boise, ID 83702 208.342.5000 bthansen@hollandhart.com Eric Maxfield, Administrative Partner 222 S. Main Street, Suite 2200 Salt Lake City, UT 84101 801.799.5800 egmaxfield@hollandhart.com

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Mori Hamada & Matsumoto is one of the largest full-service law firms based in Japan, offering legal expertise in a comprehensive range of practice areas.

We congratulate Jeff Moss of Micron Technology on all of his outstanding accomplishments. His Friends at MHM

Tokyo • Osaka • Fukuoka Beijing • Shanghai • Singapore Yangon • Bangkok

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Departmental Technology To help streamline Micron’s contract work, Moss works with a cross-functional team to identify and implement automated solutions to help support contract life cycle management. This solution will, ideally, streamline the contract negotiation process, help automate the internal approval process, and serve as an aid in monitoring post-signing, contract dates, milestones, and compliance. Micron’s lawyers, legal staff, and their business counterparts negotiate and sign contracts all over the world. “Not only do we need to make sure that we adhere to what we agreed to do,” says Moss, “we also need to aid the business in ensuring the other party to the contract does, too. The more we can automate all that, the more we can be sure that we reap the benefits we negotiated so hard to get.”

more specialized, value-added products that use our memory chips. In addition to computers and servers, our memory products are now in all kinds of applications, including mobile devices, cars, TVs, and other household appliances, medical devices, and industrial applications. And much of the information from these devices and other sources needs to be stored in gigantic data centers that also use our memory products. These applications demand more customized memory solutions. MC: Is the semiconductor market still consolidating, or do you see an end in sight? JM: Though opportunities for further large-scale consolidation may be limited, as memory manufacturing companies look to develop and bring specialized solutions for their customers in-house, there will still be plenty of opportunity for challenging transactions that further consolidate and enhance the industry, including M&A, complex joint ventures, and other strategic alliances. Many of the incredible new uses of our products are literally changing the world. I think we’re only seeing the tip of the iceberg when it comes to the true potential of Micron and the industry.

— CLIENT CONNECTION —

> HOLLAND & HART LLP: “We’ve been

fortunate to work with Jeff Moss and the Micron legal team on a variety of projects. Congratulations to Jeff and the team on their outstanding support of Micron’s business and legal objectives.” – Brian Hansen, Partner


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PATENT REFORM’S REACH Congress has attempted patent reform in the last three sessions, and it was introduced again in late April. Though electronic technology is often at the center of the debate, the impact of reform is nearly universal—and it includes the household products industry. Brian Del Buono, GC at the Sun Products Corporation, discusses how the evolution of patent law and the Toxic Substances Control Act could change the group’s technology and innovation. BY JEFF SILVER

Modern Counsel: Which legislative issues could affect the household product industry? Brian Del Buono: Sun Products has more than 300 US and Canadian patents, and we are actively involved in research and development and innovation, so the revamping of the US patent system has really changed the IP game for our company. BRIAN DEL BUONO Chief Legal Officer and Corporate Secretary The Sun Products Corporation

photo: Sun Products Corporation

through the patent office or in direct talks between competitors—to resolve patent challenges and negotiate licensing disputes. MC: What have those changes meant for your legal department? BD: Between the new filing and resolution processes, our legal department has adapted how we work with internal teams, as well as with competitors and technology partners. We’ve sped up our innovation process and pushed the legal team to move as quickly as we can to protect the results. MC: Do you think the reforms were appropriate? BD: Switching to a first-to-file system was a positive step. It puts the United States in line with the rest of the world. Since we do business internationally, dealing with just one approach simplifies things for us. Because of the speed that’s required, it’s made us more nimble and agile with our IP work than we’ve ever been, and, frankly, I think it’s stimulated our innovation pipeline. We work much more collaboratively with research and development on projects. The resolution options have been positive for us, as well; it’s a much more cost-effective approach and cuts down on uncertainty. Challenges don’t require up to five years and millions of dollars anymore, and that’s changed our risk tolerance. Innovation teams can decide to find other

MC: How so? — CLIENT CONNECTION —

BD: The United States went from a “first-toinvent” to a “first-to-file” system for awarding patents. Now it doesn’t matter if you’re the first to innovate; you have to be the first to file with the patent office. The changes provided better chances for out-of-court settlements—either

> MILBANK, TWEED HADLEY AND MCCLOY LLP:

“We always look forward to working with Brian and his staff at Sun Products. He is a solutions-oriented manager who has an excellent, intuitive understanding of complex issues.” – Errol Taylor, Partner

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solutions if we encounter a potential challenge, or we can negotiate directly—often in a matter of months—with competitors to find an equitable, mutually agreeable resolution. MC: Do you foresee any more changes to the regulatory environment in the near future? BD: There is the prospect for revisions to the Toxic Substances Control Act (TSCA), which has been in place since the 1970s. Congress has been trying for years to update the law, which provides a framework for the Environmental Protection Agency to regulate which chemicals are designated as toxic. A lot has changed since it was enacted in terms of consumer expectations and scientific knowledge. So, if and when revisions are made, it could mean extensive changes for companies in numerous industries that work with chemicals, including consumer packaged goods companies like ours. MC: What are some of the revisions being considered? BD: The hot-button discussions are about preemption—whether any state can implement more stringent regulatory requirements than the federal government. The danger is that if states act individually, we could potentially face 50 different regulatory schemes for which substances are considered toxic and what has to be disclosed on labels. Another of the issues that concerns us is the disclosure of proprietary ingredients, which some states are demanding so consumers can decide if they want to buy a product. That sounds reasonable, and we have nothing to hide, but even in the laundry detergent space, there’s a lot of technology and innovation involved. It’s not just soap in a bottle. There are fragrance developments and chemistries related to whitening, for example. MC: What could the impact of those revisions look like for Sun Products? BD: From a business standpoint, preemption could mean eliminating certain products or 134

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Blending Science and the Law Del Buono’s scientific background has benefited his legal work. He believes there is little difference between a scientific and a legal mind. “Both lawyers and scientists are skeptics. They challenge existing paradigms and pose alternate scenarios to help identify weaknesses, innovate solutions, and address challenges,” he explains. That perspective is the basis for his comfortable working relationship with Sun Products’ research and development and innovation teams. “It breaks down barriers and makes conversations easier, because they don’t feel that I’m just a lawyer telling them the rules. They see me as someone who’s going to be an ally and challenge them in constructive ways,” he says. Del Buono imparts that message to his fellow attorneys and legal staff. He stresses that they are not only experts on business and the law; they are innovative, creative people supporting others who are, too.

doing a lot of expensive research and development to find replacement ingredients, which may ultimately lead to higher consumer prices. We certainly favor reforming the act in a science-based, consumer-friendly way. Absolute ingredient disclosure raises the prospect of anyone being able to copy our trade secrets, which is, of course, a major concern for any innovative industry like ours. We need to find a balance between proper protection for confidential business information and providing consumers with the information they need to make informed buying decisions. The real challenge is finding a balance between what’s appropriate for our industry and what some nongovernmental organizations and individual states are pushing for. MC: What are your predictions for how the new IP requirements and TSCA reform will unfurl in the near future? BD: I think the new mechanisms for resolving IP challenges will help weed out low-quality patents that perhaps shouldn’t have been granted in the first place, and they will provide more certainty as we navigate through our innovation programs. That will be good for businesses and for the consumers. And for TSCA—if revisions get done before the elections next year, with a Republicancontrolled House and Senate, we have more of a chance than ever before of coming up with a scheme that industry, government, consumers, and public interest groups can all get behind. So I’m optimistic. But who knows? I said that during the last session of Congress, too.

— CLIENT CONNECTION —

> STOEL RIVES LLP: “Our work with the Sun Products Corporation has afforded me the

opportunity to work closely with Brian Del Buono. Brian brings a blend of experienced legal skills and sound business judgment to each matter and is always a pleasure to work with.” – Ervin R. Holmes, Partner


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photo: TKTKTKTK

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“The heart and soul of a corporate legal team is the network of internal relationships developed over time and built on trust.” – REID WILSON, ABERCROMBIE & FITCH

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CONNECT Read something that resonates with you? Have a question about a topic discussed in this issue? Modern Counsel is a networking platform, creating a space for you to reach out to lawyers featured in this issue and make realworld connections.

@MODERNCOUNSEL Continue the discussion by joining the Modern Counsel LinkedIn group or following us on Twitter, @moderncounsel. Share your thoughts and find out what others are saying.

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CONNECT Gregg Brandon’s first two seasons on the job with the Buffalo Bills were full of challenges, but the team’s first GC faced them with a proactive mind-set. When he looks back on the experience, he says, “I have a great deal of pride and a little bit of heartburn, all at the same time.”

DOUG DEMOSS (p24) Corporate Counsel Northrop Grumman

Before entering the private sector in 1998, DeMoss spent 20 years in the Army, eight with the Army Corps of Engineers, and 12 with the JAG Corps in roles of increasing responsibility. As lead counsel for the command and control and communications divisions of defense contractor Northrop Grumman’s information systems sector, he enjoys working on the nation’s front line.

BRIAN DEL BUONO (p133) LOIS BINGHAM (p105)

Vice President, General Counsel, Chief Compliance Officer, and Secretary Yazaki North America Bingham worked with private business clients at Butzel Long and developed relationships with global automotive equipment manufacturers as assistant GC at R.L. Polk & Company. This prepared her to expand the scope of responsibilities of Yazaki’s legal department in North and Central America.

MATTHEW BLISCHAK (p118) Associate General Counsel, Global Branded IP Litigation Teva Pharmaceuticals Before coming to Teva, Blischak worked in IP for Bristol-Myers Squibb and Sunovion Pharmaceuticals (formerly Sepracor Inc.). He earned a master’s degree in biotechnology at Johns Hopkins University and studied law at American University.

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Senior Vice President, General Counsel, and Corporate Secretary The Sun Products Corporation

IRA BLUMBERG (p86)

Vice President of Intellectual Property Lenovo Blumberg’s technical background at Bell Telephone Laboratories became important when he transitioned into technology-related transactions. He has negotiated both lucrative and groundbreaking licensing deals, including the agreement between Intel and LG Electronics that became the basis of the US Supreme Court case Quanta Computer, Inc. v. LG Electronics.

Del Buono’s professional life began as a scientist. He was senior scientist and manager of new product development at Becton Dickinson before transitioning into his legal career. This gave him a shared background and vocabulary for working with research and development and innovation teams when he joined the Sun Products Corporation in 2010.

GERI LYNN ELIAS (p34)

GREGG BRANDON (p74) Vice President and General Counsel Buffalo Bills

Vice President and Intellectual Property Counsel Kate Spade & Company

Brandon spent two summers and two Super Bowls with the NFL as a management council law clerk and NFL properties intern. After six years in private practice and another six as general counsel of a sports technology and licensing company, he returned to the league with the Buffalo Bills in August 2013.

Elias practiced intellectual property law for more than 15 years and has been involved in the International Trademark Association since 2000. The group supports trademarks and related intellectual property to protect consumers and promote fair and effective commerce.

photos: SB Photography (Brandon), Caleb Fox (Elias)


CONNECT Geri Lynn Elias has made a name for herself in fashion law. World Trademark Review shortlisted her and her team at Kate Spade two years in a row for IP Team of the Year in the fashion, cosmetic, and luxury goods category.

LILY YAN HUGHES (p26)

Senior Vice President, Chief Legal Officer, and Corporate Secretary Public Storage

Vice President and Associate General Counsel Vulcan Materials

NORMAN JETMUNDSEN, JR. (p68)

STACI JULIE (p118)

Originally from Hong Kong, Hughes attended Williams College and earned a bachelor’s degree in political science from the University of California, Berkeley, where she subsequently attended law school. After she was named partner at Manatt, Phelps & Phillips, she spent a brief period in the nonprofit sector before joining IT giant Ingram Micro. After a 17-year tenure, she joined Public Storage in January 2015.

Jetmundsen spent the first 20 years of his career with Bradley, Arant, Rose & White and was named partner before coming to Vulcan. He majored in English literature at Sewanee: the University of the South and studied at the University of Alabama School of Law. He also studied at Magdalen College in Oxford.

Julie earned a bachelor’s degree in chemistry at the University of Delaware and studied law at Georgetown University. She finds from her 11 years with Teva that it’s important to challenge dogma. “There’s never 100 percent settled law in this area.”

Senior Vice President and Chief IP Counsel Teva Pharmaceuticals

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CONNECT

Good Counsel FROM ALEX LIBERMAN

Be correct. If you don’t know the answer, don’t guess. Do everything you can to be bulletproof when rendering opinions and advice, but you can’t be afraid of being wrong. If you promise to have an answer or a deliverable by a certain date, deliver on time. If you can’t be timely, give as much notice as possible.

BRIAN LEE (p115)

Vice President and General Counsel Nexion Health

After working in private practice for several years, Lee worked for the Maryland legislature, where his work on the Senate finance committee, which had jurisdiction over most health-care bills, got him interested in long-term care. From there he went to a publicly traded, nationwide chain of nursing homes based in Baltimore, before joining Nexion.

Don’t shy away from hard topics and questions. Clients and colleagues prefer lawyers who aren’t afraid to make decisions. If someone else has a better idea than you, say so and give them credit.

KAREN LEETZOW (p19) Senior Vice President and Deputy General Counsel NASCAR Leetzow directs the legal strategy of Daytona Beach, Florida-based NASCAR and its 27 affiliates. Managing some of the highest-profile rights agreements in the company’s history, she’s been dubbed a “game changer” by Sports Business Journal. Leetzow has nearly 25 years of experience in intellectual property, litigation, antitrust, and corporate law. She studied law at American University.

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RICH KONRATH (p66) Vice President and General Counsel, North America CNH Industrial

BROOKS LARSEN (p38) Vice President and Deputy General Counsel HTC Corporation

Konrath previously held general counsel, management, and regulatory positions at Caterpillar, Inc. and the US Securities and Exchange Commission. He earned degrees at the Ohio State University, the University of Toledo College of Law, and the Georgetown University Law Center.

Larsen advises HTC’s executive leadership team on all legal issues, leveraging his experience in wireless and high-tech industries. Prior to joining HTC, he was director of legal affairs at T-Mobile. Larsen earned a degree in English from Brigham Young University and graduated from the McGeorge School of Law at the University of the Pacific in 1992.

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JOHN LESSNER (p122) Associate General Counsel Erickson Living

Before joining Erickson Living, Lessner was a principal in the health law department at Ober Kaler in Baltimore. Previously, he was an assistant attorney general and counsel to the Maryland Department of Health and Mental Hygiene. Lessner earned his bachelor’s degree at Johns Hopkins University and studied law at the University of Maryland. photo: Caleb Fox


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“My liberal arts education ended up paying huge dividends for me in the US Navy and as a lawyer. There is a lot of specializing in law school these days, but I don’t think that’s always a good idea. It’s important to get exposure to many areas of law.” — DAVID L. MARCUS

ALEX LIBERMAN (p110) General Counsel Medline Industries, Inc.

Liberman spent the first decade of his career in private practice as a litigator. He became a partner at Hedlund Hanley & John in 1997 and joined Medline two years later. He earned his bachelor’s degree at the University of Iowa and studied law at the University of Michigan.

LARRY LOPARDO (p125) Secretary and General Counsel Avamere Family of Companies Lopardo earned three degrees at the University of California, Berkeley: bachelor’s degrees in history and business and his law degree. Prior to working for Avamere, Lopardo was chief administrative officer and general counsel for Westak, a printed circuit board manufacturer. He specializes in health-care and real estate law.

STEVEN LOWSON (p62)

Vice President, Corporate Secretary, and General Counsel Sequa Corporation

Prior to joining Sequa, Lowson was at Sullivan and Cromwell LLP as a litigation associate in both New York and Washington, DC, where he specialized in complex commercial litigation and antitrust. Lowson earned his law degree with honors at Temple University and his undergraduate degree at New York University.

DAVID L. MARCUS (p44)

Senior Vice President, Deputy General Counsel, and Chief Patent Counsel Comcast Cable Communications

After he started his professional life in the Navy’s submarine service, Marcus studied law at Temple University. Following a few years with Reed Smith LLP and a six-year stint with Woodcock Washburn LLP, where he developed his expertise in IP, he joined Comcast in 2007.

JEFF MOSS (p130) Chief Corporate Counsel Micron Technology, Inc. Moss’s securities, real estate, and general corporate work as an associate at Parr, Waddoups, Brown, Gee & Loveless helped prepare him for his wide range of responsibilities as Micron’s chief corporate counsel. He earned a bachelor’s degree at Brigham Young University’s Marriott School of Management and studied at J. Reuben Clark Law School.

MIKE PENDLETON (p46)

Senior Vice President and General Counsel Guitar Center

After earning a degree in economics from Harvard University, Pendleton enrolled at the University of Wisconsin Law School. He worked as a corporate associate at several firms before joining Guitar Center in the summer of 2005.

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Off the Cuff with Tracy Preston MODERN COUNSEL: Which words define you? TRACY PRESTON: Loyal, adventurous, creative, professional, good-humored, and unstoppable. MC: What’s your motto? TP: Life begins at the edge of your comfort zone. MC: What do you believe is possible that others don’t? TP: You can achieve anything you put your mind to, despite your limitations or circumstances. I also believe there’s always a win-win situation.

TRACY PRESTON (p12)

Senior Vice President and General Counsel Neiman Marcus Group

Preston graduated cum laude from Georgetown University, attended the University of Virginia School of Law, and started her legal career as an associate at Baker & McKenzie. She later made partner at Orrick, Herrington & Sutcliffe, LLP. Her experience at this and other firms paved the way for her role as chief counsel of global HR, litigation, and supply chain; and chief compliance officer at Levi Strauss & Co. Her current role at Neiman Marcus Group melds Preston’s love of the law with the realm of retail and fashion.

JAMES PYLE (p92)

MC: What’s your favorite lawyer movie or character?

Associate General Counsel US Foods

TP: My favorite character is Perry Mason. I used to watch that show with my grandfather and babysitter. In many ways, it was the precursor for my interest in law. It’s probably why I still like mysteries and courtroom dramas today. For movies, I would say To Kill a Mockingbird. It dealt with very difficult issues—race, moral judgments, biases, and just dealing with the actual facts versus prejudices.

Pyle started at US Foods in 2009 and took on the role of associate general counsel in 2011. Prior to that, he was an insurance broker with Allstate and a corporate associate at Simpson Thacher & Bartlett LLP and Sidley Austin. He earned a bachelor’s degree in finance from Indiana University and his law degree from Georgetown University Law Center.

MC: What’s your favorite legal term? TP: Stare decisis. It’s a core legal principle, and I also happen to like the way it sounds.

LAUREN RABINOVIC (p118) Associate General Counsel, North American Generic IP Teva Pharmaceuticals

Rabinovic jokes that she spent so much time earning her doctorate before getting a law degree that her parents questioned her interest in eventually getting a job. She feels it was a good path, particularly to help bridge translational gaps that can occur between the scientific, commercial, and legal sides of the business. She studied biology at the University of Michigan and earned her doctorate in neuroscience from the University of Pittsburgh. This prepared her well, even before she attended Boston University’s law school, to pursue a career in pharmaceutical intellectual property law. 142

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JARED RICHARDSON (p50) Vice President, Associate General Counsel, and Secretary Trinity Industries Prior to joining Trinity Industries in 2010, Richardson was assistant secretary and senior counsel for TXU Corp. (now Energy Future Holdings Corp.) and was a corporate and securities associate at Locke Liddell & Sapp (now Locke Lord). He studied political science at Brigham Young University and law at Harvard.

DAVID MACE ROBERTS (p56)

Senior Vice President, Secretary, Chief Compliance Officer, and General Counsel RMG Networks

After earning degrees from New York University and Emory University, Roberts worked in private practice before going


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“I think it is extremely important, especially during times of transition ... to be totally transparent. When someone is honest with you about what is going on, you respect that person and want to do a good job for them. ” – JAMES PYLE

in house. He’s served as chief compliance officer and general counsel at several companies. In 2012, D CEO Magazine named him outstanding associate general counsel of the Fort Worth, Texas, area.

JIM ROWADER (p80)

Vice President, General Counsel, Employee and Labor Relations Target

In his two years with the National Labor Relations Board, Rowader helped prosecute unfair labor practices. In 1992, he left to join a Minneapolis firm, where he continued to develop his expertise in workplace matters before joining Target in 1994. During the last 20 years, Rowader has held positions of increasing responsibility and now leads a team that implements labor relations objectives for the entire organization.

photo: Caleb Fox

BILL SAILER (p60) Senior Vice President and Legal Counsel Qualcomm Sailer has spent the last 18 years with Qualcomm. He was a partner at Gray Cary Ware and Freidenrich, where he spent nearly 12 years, before moving in-house. Sailer majored in economics and public policy at Swarthmore College before studying law at the University of Michigan.

RON SARIAN (p41)

Vice President and General Counsel eHarmony, Inc.

After earning his bachelor’s degree in economics from the University of California, Los Angeles and his law degree from Loyola Law School, Sarian spent more than 20 years specializing in business and real estate litigation at Phillips Law Partners before joining eHarmony in 2013. Sarian’s hobbies include motocross, ice hockey, running, and snowboarding.

EXTRACURRICULAR ROCKTIVITIES Sailer believes it is important to have a life outside of work. When he is not fielding legal questions for Qualcomm, he can be found playing soccer and golf or playing with his rock and roll band, Ballast. “It’s been an absolute joy to play with these guys. We take it seriously but not solemnly,” he says. Though perhaps joining a band is not for every lawyer, it certainly provides Sailer the perfect balance to his very busy career at Qualcomm.

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“From where I have sat, it’s clear to me that leadership matters. Working together allows people to achieve great things. And character does make a difference.” – JAY B. STEPHENS

FROM THE OUTSIDE, IN-HOUSE Smith was hired in 1999 as one of only two US attorneys for the LEGO Group. She explains how she navigated her unconventional transition from IP attorney to vice president and general counsel. “I was surprised and pleased by the opportunity, but it took me a while to decide. Before accepting, I researched what the GC role entailed, where my learning curve would be, and how I could leverage my IP knowledge in this role. The LEGO Group is a very IP-focused company—our name is our brand. It’s important to understand the value of the trademark and be able to help the board and leadership teams understand the significance if we are challenged. It’s not a traditional path, or a path that is often taken or offered, but it is a move I think more companies should consider.”

CATHERINE SMITH (p82) Senior Vice President, General Counsel, and Chief Administrative Officer Brightstar Corp.

LENNY STEIN (p79) Senior Vice President, Secretary, and General Counsel Splunk

After graduating from Georgetown University Law Center, Smith worked for several law firms before going in-house at Motorola, where she was responsible for global strategic relationships, including one with Brightstar, which eventually offered her a position.

Stein earned bachelor’s and master’s degrees from Yale University before attending Harvard Law School. Since leaving private practice in 1999, he has held general counsel roles in several technology companies, concluding high-profile mergers of Preview Travel with Travelocity, Buzzsaw with Autodesk, and Overture with Yahoo.

ROBIN SMITH (p53)

Vice President and General Counsel LEGO Systems, Inc.

JAY B. STEPHENS (p30)

In her role at the American subsidiary of the Danish toy company, Smith is responsible for general corporate legal affairs in the United States, Canada, Mexico, and South America, and she assists with matters in Australia and New Zealand. She previously worked at Day, Berry & Howard LLP (now Day Pitney LLP). She studied law and graduated with honors from the Syracuse University College of Law and earned a bachelor’s degree with honors in psychology and theater from Wesleyan University.

Stephens retired in June 2015, concluding his career at Raytheon. Before counseling the defense technology company, he built an impressive career in the White House and in private practice. He earned his undergraduate and law degrees from Harvard University.

Immediate Past Senior Vice President, Secretary, and General Counsel Raytheon

RACHEL STERN (p102)

Senior Vice President, Strategic Resources and General Counsel FactSet Research Systems

Stern clerked at the Delaware Court of Chancery and was a corporate associate at Cravath, Swaine & Moore. These experiences gave her a solid foundation in both law and finance before she joined FactSet in 2001. She has since assumed roles of increasing responsibility. 144

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CONNECT Before choosing law, Weng attended the Juilliard School in New York, where she studied piano. She earned a master’s degree in musicology at Columbia University.

JEAN WENG (p96)

Senior Vice President, Deputy General Counsel, Corporate Secretary Voya Financial

Weng began her legal career in the capital markets group at Davis Polk and Wardwell. In her time there, she worked on Voya’s IPO and was recruited to her current role in 2014.

REID WILSON (p88) Vice President and Associate General Counsel for Global Intellectual Property Abercrombie & Fitch Wilson studied law at George Washington University and graduated in 1997. Following stints with a start-up software company, the US Patent and Trademark Office, and the law firm Vorys, Wilson was hired by Abercrombie & Fitch to head up the company’s first internal IP team. He is also an adjunct professor at the Ohio State University’s Moritz College of Law.

ERIC TOWER (p99) Vice President and Associate General Counsel Advocate Health Care

JEFF TRUE (p128) Senior Vice President and General Counsel Palo Alto Networks

After graduating from Loyola University with his master of laws degree in health law, Tower worked for two major Washington, DC, law firms. In 2002, he joined Advocate Health Care, where he had completed an externship during law school.

Before joining Palo Alto Networks, True served as associate general counsel at Informatica, then as vice president and general counsel at 2Wire, Inc. He earned degrees at the University of California, Los Angeles and the Santa Clara University School of Law.

photo: Caleb Fox

WES ZIRKLE (p22)

Executive Vice President and General Counsel Just Marketing International Zirkle leveraged his experience managing a friend’s band in college to land his first job with CMG Worldwide, Inc. He went on to become the first lawyer and 34th employee of Just Marketing International.

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“Unfortunately, there are women who do pull up the ladder when they get to the top. I’m part of a great network of women in-house counsel who are working to put more ladders down, to help lift more women and diverse candidates up in our profession.” – LILY HUGHES, PUBLIC STORAGE

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READ THIS ISSUE ON YOUR IPAD OCT/NOV/DEC 2015

THE

role of the corporate attorney has evolved. In-house counsel must be versatile and provide nonlinear solutions.

TRACY PRESTON Neiman Marcus Group

W O M E N 'S strengths in multitasking, consensusbuilding, and creative thinking make their diverse perspective in legal invaluable. Critics may take

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with “bossy” or ambitious females, but women’s voices are undeniably valuable, and their worth is proven as they take the helm at:

VOYA | BRIGHTSTAR FACTSET RESEARCH SYSTEMS KATE SPADE | LEGO | NASCAR NEIMAN MARCUS GROUP PUBLIC STORAGE | YAZAKI TEVA PHARMACEUTICALS

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MODERN COUNSEL serves lawyers and nonlegal professionals invested in the complexities of the industry. We explore the experience and values of the people who guide, execute, and analyze the legal profession. Their stories shape the business of law. 148

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Profile for Guerrero

Modern Counsel #4  

October/November/December 2015. Your partner in business.

Modern Counsel #4  

October/November/December 2015. Your partner in business.

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