It’s up to us. Only 5 percent of US attorneys are black. Jason Brown believes it’s our job to change that. We can start in our own cities. P22
“I went to law school because I saw it as a learning tool that would enable me to make a difference in the world.”
“Everyone lives in fear of this type of large-scale litigation, and now that we’re going through it, I’ve learned that it’s not the end of the world.”
“What separates tomorrow’s GC from a competent subject-matter expert is the ability to make strategic decisions.”
100 CRATE & BARREL
“If you are fearful or reticent to change, others will take their cue from that.”
cover and this page: Caleb Fox
How to build your personal brand
An unlikely call to action
18 GEORGETOWN UNIVERSITY
Calculated risks lead to a rewarding career
Tackling the legal field’s lack of diversity
28 CALIFORNIA STATE UNIVERSITY SYSTEM
Driven by a commitment to the underserved
52 KONE, INC.
72 ALCON LABORATORIES
32 AMERICAN CAPITAL
How a creative strategy put a defendant on the offensive
37 TEXAS ROADHOUSE
Maintaining calm amid a class action
40 NESTLÉ NUTRITION
How to use litigation as an opportunity
PROCESS 42 FLAGSTAR BANK
Finding the path of operational excellence
M&A 45 DYNEGY
How an energy company resurged with acquisition Steps for smooth transactions
Extreme department makeover: legal
How to develop an innovative legal team
POLICY 58 HUGHES MARINO
Game-changing legislation in landlordtenant law
GOVERNANCE 62 MICROSOFT
Guided by a culture of transparency
Putting a premium on partnership
86 PAPA JOHN’S
Rising to new challenges, answering the call
Efficiency in simplicity
92 HALYARD HEALTH
How a team of utility players built an independent company
STEWARDSHIP 65 COLFAX
Wrangling cost and outside counsel
Capitalizing on strengths and synergies
48 ELEMENT FINANCIAL
On the importance of integration
Building the world’s largest media platform
How reclaiming work cut legal spend in half
pictured, left to right: Angelique David, Vicki Donati, Rick Chessen
TABLE OF CONTENTS
97 SENIOR CARE CENTERS
114 NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION
132 VANCOUVER COASTAL HEALTH AUTHORITY
100 CRATE & BARREL
124 VENOR CAPITAL MANAGEMENT
Succeeding with a start-up mentality Purposeful growth yields a stronger future A GC’s role in times of leadership transition Reigniting the spark in your team
108 SANDIA NATIONAL LABS
Breaking barriers to the legal department
The art and craft of counseling the arts
Helping the law evolve at the pace of technology The rise of product liability law Alternative funds come out of the shadows
GOVERNANCE 127 SECURITIES INVESTOR PROTECTION CORPORATION
The securities industry’s hazmat crew goes to work
The intersection of data and health makes for efficiency and risk
138 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.
HEALTH CARE 134 MOLINA HEALTHCARE
Balancing business and the common good
SECURITY 136 JANNEY MONTGOMERY SCOTT LLC
How to face the unavoidable threat of cyber attack
130 MICHIGAN ECONOMIC DEVELOPMENT CORP.
photos by: Caleb Fox
Rebuilding a state through enterprise
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FROM THE EDITOR
THE BUCK STOPS HERE.
Racial disparity is everyone’s problem. Though members of minority groups may feel it more acutely, they shouldn’t be the only voices speaking about inequality. They need advocates to not only acknowledge the issue, but champion progress. It can feel disingenuous to speak didactically about diversity as a privileged white woman. But I have been privileged by more than socioeconomic means. I have the benefit of awareness, and it’s my responsibility to contribute to a solution. My moment of realization came when I reported a story for The Alumni Society, the namesake publication of a Latino professional development organization. I was exploring why diversity continues to confound corporate America. Why, I asked, despite good intentions, has diversity been so hard to achieve in corporate leadership? In my search for an explanation, I was fortunate to gain insider knowledge from the GC of MetLife, Ricardo Anzaldua, who explained this to me: Recruitment isn’t the issue. Retention is. By revealing the story behind the numbers, he made it clear why highly qualified Hispanics were absent from the ranks of leadership. They’d left their organizations before they could reach the top because the algorithm for success wasn’t written with them in mind. Last fall, Modern Counsel sponsored an event with
Intel CEO Brian Krzanich. In his keynote address, the FORTUNE 50 leader echoed the disparity. He committed his company to full representation of women and underrepresented minorities by 2020. But he also admitted that Intel still does not fully understand how to keep that talent. In this issue, Jason Brown and Paul Chadha discuss the exodus of diverse talent from the legal field for the same reason (p22). Chadha, one of our past featured attorneys (April/May/June 2015) and Brown, general counsel of Dyson’s North American operations, address one of their industry’s most glaring deficiencies: Merely 1 in 20 licensed attorneys in this country are African American. Collectively, minority attorneys make up 12 percent of the profession. Brown is of the mind that being an attorney is a form of privilege and comes with the responsibility to use your powers for good. One way he’s chosen to do that is by making inroads to his profession, so he can leave it better than he found it for the next generation. He challenges you, his peers, to find your own way to change the narrative of your profession. If we hope to make any traction on changing the makeup of the legal field, we’ll need more than 12 percent of the profession to sound the alarm. It’s up to all of us.
MICHELLE MARKELZ Managing Editor
photo: Caleb Fox
“Not everyone becomes a civil rights lawyer or argues Brown v. Board of Education, but all of us can have some impact.” – JASON BROWN, DYSON
APPEAR There is a saying about laws being set in stone, but history has proven time and again that the law is anything but changeless. In the same way that laws have evolved with our culture, so should our profession. We can start with our own practices. Through our small contributions, we can make a collective impact. The evolution of the legal field is in our hands.
INQUIRY How can you use your organization as a platform for social good? If time was no object, what cause would you dedicate your talents to? On pg 26, Paul Chadha and Jason Brown discuss ways to get involved in legal mentorship programs. Read more about Accentureâ€™s Legal Prep Charter Academies Negotiations Program with Kirkland & Ellis at kirkland.com.
JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.
Life Lessons Angelique David has a special relationship with her high school English teacher, who challenged her to pursue excellence—a lesson that has stayed with David throughout her personal and professional life. “If I would turn in something that wasn’t my best, she’d absolutely sit me down and say, ‘Angelique, I know you, I know you have good work, and I know you could do better, so redo this,’” David says. “Of course when you’re going through the process you can’t stand it, but it was one of the best things because she really taught me excellence and to do your best and to strive to always produce a great work product that you’re very proud of. A lesson that I preach to my children today.”
ON THE RECORD
Angelique David Ziegler’s general counsel shares the importance of building a personal brand AS TOLD TO MELISSA ANDERS // PHOTO BY CALEB FOX
Your brand is what you wish for people to associate with you when they think of your name. It is the expertise or the qualities that are linked to you. It’s what you start out with, and when people are working with you or getting to know you in any capacity—personal or professional— it’s what people think of you. I strive for my brand to be associated with excellence. I am by no means perfect, but people who know me would attest that I approach every situation with 100 percent effort. I give my best in hopes of achieving my excellence. Other words associated with my brand include hard-working, firm, fair, listener, problem solver, caring, integrity, bold, fun, mother, wife, and friend. As general counsel it is also important that my legal brand includes subject expertise and partnership. I try to demonstrate that in everything I do. When I’m interacting with my in-house clients, I always come to the table with a business solution, not just a legal
MODERN-COUNSEL.COM 1 1
“It is important to me that my business partners know I am not just their general counsel; I am also their business partner who happens to have a legal degree.” – ANGELIQUE DAVID
A relationship is an investment, and Quarles & Brady is a law firm that understands the enduring rewards of a solid collaboration. We strive to see goals and benchmarks through your eyes, and then use our experience and insight to best position you to exceed them.
problem. It is important to me that my business partners know I am not just their general counsel; I am also their business partner who happens to have a legal degree. I am not there solely to advise on rules and regulations, but to suggest solutions and alternatives. I’m proactively involved with the company, not passively sitting and waiting for a problem to hit my desk. I am always thinking about how I can make Ziegler better. I am just as concerned about revenue and bottom line as my business partners. Building and maintaining one’s brand never ends. All of these qualities are always with you and are what you exude when people see you. That is your brand. If you look up the definition of integrity, I think you’ll see something about the quality of having strong moral principles and moral uprightness. If you always have integrity, you will never have regrets because everything you do will come from a place in your heart that’s moral and upright. I have two little girls, a 5-year-old and an 8-year-old. They’re the absolute loves of my life. For me to be a successful general, counsel I have to be a successful mother. Being a mother and a wife and maintaining a happy, healthy, spiritually sound family is more important than anything that I could ever do in my career. Family comes first. It’s not easy, but to achieve balance, start by finding a company that respects and welcomes work-life balance. Then make sure you have open and honest conversations with your manager about the importance of family to you. Again, it goes back to your brand. If your manager knows that you’re a hard-working person, you’re dedicated, and you’re going to always strive to achieve excellence, then he or she will have confidence and trust in you and know that if you take
off a little early today or if you work from home tomorrow, the work isn’t going to fall through the cracks. With today’s technology, there are so many ways to get things done remotely. I’ve been on conference calls in Disney, at the doctor’s office, outside of dance rehearsal—you name it. You do not have to be in the office to get things done. You can get things done really from anywhere, anytime. You can always send out e-mail; you can always get back online. You had that communication, starting with the reputation that you set for yourself, so that you can have the flexibility that you need. As a leader, my job is to motivate and inspire people to achieve a common goal or execute a vision. A good leader encourages growth and creativity, and is always willing to listen. I am a firm believer that people work for people, not companies. As such, I try to lead by the example of how I would want to be led. I am supportive, always willing to listen and enjoy bringing the best out of people. I am known for challenging people to do their best, to grow, and to step out of their comfort zone.
— CLIENT CONNECTION —
> QUARLES & BRADY LLP: “In her role at
Ziegler, Angelique somehow manages not only to do 12 things at once, but do them right and do them well. She accomplishes this with an attentive and sophisticated understanding of the complex and numerous issues involved that is second to none, all while helping her management group understand alternatives and unintended consequences.” – Walt Skipper, Partner
Ulmer & Berne is a proud partner with Ziegler and Angelique David Finding innovative and creative solutions to legal and business challenges begins with listening, understanding and responding to our clientsâ€™ needs. Delivering effective solutions comes from working
Mark Goodman, Partner at Freeborn & Peters LLP, recognizes Angelique David for her leadership and excellence at Ziegler.
together. It is a pleasure to serve clients, such as Ziegler and Angelique David, and participate in their success. PRACTICE GROUPS Bankruptcy and Financial Restructuring Corporate Government and Regulatory Law Litigation Real Estate
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How an unspeakably abused child turned Shannon Couffer toward a legal career of care and advocacy, which ultimately landed her in Walgreens’s corner BY KELLI LAWRENCE // PHOTO BY CALEB FOX
Shannon Couffer came to practice law via a path headed off by a five-year-old with a five-letter name. It was the early 1990s, and Couffer herself was barely out of her teens. Fulfilling a lifelong dream to become a nurse, she was on a pediatric rotation at a hospital in northern Indiana. “My pediatric nursing professor said ‘I’ve got a very special little girl in the hospital playroom that I need you to take care of,’” Couffer recalls. “That was the moment that my direction in life changed.” The little girl was named Carli, with the emphasis on little— she was very small for her age. And when Couffer got down on
the playroom floor with her to explain who she was, one of the first things said by blonde, blue-eyed girl still strikes Couffer with as much sadness as it does amazement: “Who are all these other little people?” she asked Couffer, referring to the kids in the playroom. “I actually had to explain that they were children, just like her,” Couffer says. “She had no concept of what that word meant! It became clear she’d never had any exposure to other kids—just adults.” The initial shock of conversing with the five-year-old—“She had the mouth of a trucker!” Couffer adds with a laugh—was nothing compared to how she felt upon learning that Carli had tested HIV-positive, was suffering from gonorrhea, syphilis, and chlamydia, and had been given birth control pills, resulting in the extremely premature appearance of secondary sex characteristics. She’d arrived at the hospital with a high fever and severe upper respiratory infection. Her parents, aware she was quite ill but unwilling to answer questions, had simply dropped her off at the hospital’s emergency room entrance and driven away. “We eventually determined that they’d kept Carli in their home, never let her out, and sold her to men for drug money,” Couffer says. “Five years old, and her whole life she had been abused by who knows how many men. She broke my heart.” For the next couple months Carli stayed in the hospital as APRIL/MAY/JUNE 2016
MODERN-COUNSEL.COM 1 5
her condition slowly stabilized. Couffer visited her regularly—a mind, as well as the wealth of Chicago-based headquarters for couple times a week, at least—as she continued her training as a health-care organizations, and Walgreens came up clearly on nurse. Foster care awaited the child, and when Carli was released her radar. from the hospital, and her state-assigned caseworker took over, “Walgreens’s current slogan—‘At the corner of happy and Couffer was dismayed to discover her involvement in the case healthy’—has been the company’s mission for as long as I can had to come to an involuntary end. “I wanted the caseworker remember,” she says. “It’s a company that takes care of people, to tell me what was happening,” she says. “I wanted to go and and that’s what was really exciting to me.” participate in the courtroom process and advocate on her behalf, She still wanted to care for people, too, and was initially wary and they wouldn’t tell me anything. Not even what had happened at the thought of corporate litigation leading her to long days with trying to find the parents. They wouldn’t share any details of “defending a company against bad drug cases.” But the more with me. she became familiar with regulatory law—the area in which she “I felt like a bandage—just covering up the wound, but not has now served Walgreens for nearly a decade—the more she doing anything to fix it. I felt like I didn’t have any impact. And felt a natural progression from her days in the state’s attorney’s it frustrated me.” office. For in reviewing every priFrustration can take people in all vate label (nonbrand-name) item sorts of unexpected directions. For Walgreens carries, Couffer and her team must make sure its laCouffer, it took her to law school— specifically, the Civitas ChildLaw bel is in compliance with the law, Center of Loyola University in with clear and conspicuous warnChicago. When she applied for the ings and easy-to-find directions. program in 1995, only 10 students “We’re responsible for making were being accepted each year. sure that every aspect of that label Couffer was one of the 10. is accurate and in compliance, so “The focus of the program— people can get healthier,” she says. caring for abused children—is a “We’re impacting the population multidisciplinary effort, so they as a whole because there are so really focus on teaching people many people who shop these to look at every angle of every isstores every day.” sue from a holistic perspective,” In coming to understand the she explains. “Not just from [the importance of her new niche, she student’s] lens, or what we were found herself learning something – SHANNON COUFFER trained to do.” quite unexpected—how to see shades of gray in a world she’d Her previous line of work actually helped finance her new one. previously identified as black and Couffer did long-term-care nurswhite. Coming from a tough legal ing during one year of law school and worked as a nurse at a arena where people were either found guilty or not guilty—nothjunior high school the other two years. She also volunteered ing in between—the concept of “gray” was a challenge for Couffer whenever she could, both in medicine and in law. It was an op- (some days it still is, she admits). But the transition is what’s portunity in 1995 with the Lake County State’s Attorney’s Office, helped her to become a leader as a corporate attorney. And she in the Chicago suburb of Waukegan, Illinois, that led to her credits Garry Hodge, her Walgreens manager, for helping her first full-time job as a lawyer. Serving predominantly in cases with the adjustment. dealing with child abuse/neglect, domestic violence/homicide, “He’s really worked with me over the course of my tenure here sexual abuse, and child exploitation, Couffer found herself in to help me see that, in law, there really isn’t black and white in the kind of legal work that burns out many dedicated attorneys most situations—it’s always shades of gray,” she says of Hodge. in just two or three years. She, however, worked for six. “For “It’s about acceptable risk tolerance—really understanding the me, women and child advocacy is a vocation, not a career,” she world wasn’t as rigid as I saw it. There is much more flexibility says. “I stayed with it as long as I did because I believed it was to almost every situation.” How much of this kind of understanding is needed on a day-tomy calling to help those who couldn’t help themselves, who day basis for Couffer? It depends entirely on what is being asked of didn’t have a voice,” she says. Three years in the civil division of the state’s attorney’s of- her and her team, and how much perspective clients have, given fice came next; Couffer dealt with compliance issues related their viewpoints and experience. “It’s my job to figure out the unito new-at-the-time HIPAA (Health Insurance Portability and verse of an issue that we need to resolve and where it sits in the Accountability Act). But as preparations for a new administra- shades of gray,” she says. “It takes a lot of research, a lot of questions, tion began in her office in 2005, she decided to consider new a lot of digging, and a lot of analysis. It can’t happen in a black-anddirections for her career. She kept her medical background in white environment—it has to happen in a very flexible, fluid way.”
“I felt like a bandage— just covering up the wound, but not doing anything to fix it. I felt like I didn’t have any impact. And it frustrated me.”
Congratulations To Shannon Couffer And Walgreens. Her team of 10, which includes four regulatory law attorneys, four paralegals, and two administrative assistants, deal with the regulation needs of all nonpharmaceutical Walgreens products. This covers environmental matters, customs compliance, and most government agencies (aside from Medicaid, Medicare, and the Drug Enforcement Agency) that Walgreens interacts with on state, municipal, and federal levels. Unsurprisingly, the level of care Couffer has exhibited her entire career is also apparent when considering her role with her legal team. Communicating a purpose for the work they do is key, she says, as is connecting their everyday work to said purpose. “If you’re building widgets in a factory, and you’re not connecting with the fact that that widget will later be part of a brake system that’s going to keep somebody safe, you may not be as passionate about your job,” she points out. “The same holds true for my team as they work through their legal issues. It’s important for them to remember that everything they’re doing is going to make customers happier and healthier.” Couffer still thinks about little Carli regularly, though she hasn’t seen her since those early nursing days over two decades ago. Regardless, the five year-old has lived on through every embattled life changed due to Couffer’s decision to practice law. “I love caring for people, and I love making things better for people,” she says. “Especially in their darkest times.”
Kelley Drye is proud to recognize
Excellence Innovation Community
Shannon Couffer for her outstanding work at Walgreens.
We look forward to continuing our work with her and the Walgreens team.
Scott L. Vernick 215.299.2860 | email@example.com
— CLIENT CONNECTION —
> FOX ROTHSCHILD LLP: “It’s an honor to partner with Shannon Couffer and Walgreens. Shannon’s commitment and approach are truly best in class.” – Scott L. Vernick, Partner
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ON THE RECORD
If risk is the ultimate reward, Brown knows how to work it in her favor. The GC outlines the risks she took to promote civil rights and advocacy, and how those risks got her to the White House and, ultimately, to Georgetown University AS TOLD TO URMILA RAMAKRISHNAN // PHOTO BY CALEB FOX
I come from a family of lawyers. My dad (Philip Brown) was a lawyer. My grandfather was a lawyer, and I grew up in Washington, DC—where politics and policy were very much a part of my environment. Did I know I wanted to be a lawyer when I was five? No, but I grew up in a family where we were taught that if you’re lucky enough to have a good education, you should do something good with it. My dad died when I was in college, but it was his set of values and his deep belief in the US Constitution and in this country that made him my biggest mentor even after he died. He set a guide star for me. Seeing his passion and commitment to those values embedded them for me, too. My dad marched with Martin Luther King Jr. in the March on Washington. Civil rights were very much a part of our conversation. We are lucky to live in this country with equal rights and freedom of speech. The values that are embedded in the Constitution were values I grew up believing in, and I recognized that they mattered. If you believe in these values, and you see that people don’t have voting rights or don’t have equal rights in some way, it makes you want to go do something about it. I went to law school because I saw it as a learning tool that would enable me to make a difference in the world. I sort of joked when 18
MODERN-COUNSEL.COM 1 9
Lisa Brown The Making of Collegiate Counsel
Brown graduates magna cum laude from Princeton University with a bachelor’s degree in political economy. She moves to Singapore for a year to teach and learns the benefits of doing something she loves while gaining the perspective of other cultures. After graduating from the University of Chicago Law School in June, Brown starts a clerkship for the US Court of Appeals for the 11th Circuit in Montgomery, Alabama. She starts working at Shea & Gardner in Washington, DC. There, she delves into litigation cases, pro bono work, and brief writing. In 1993, she coedits a paper titled “Cold, Harsh, and Unending Resistance: The District of Columbia Government’s Hidden War Against Its Poor and Its Homeless.” In 1996 she makes partner at the firm. Brown leaves her position at Shea & Gardner to work for the Office of Legal Counsel at the Department of Justice. After a year at the Department of Justice, Brown becomes the deputy counsel to Vice President Al Gore. She builds the American Constitution Society for Law and Policy to a recognized organization. Brown starts working for the Obama administration as the codirector of the Agency Review Working Group.
She becomes the White House assistant to the president and staff secretary. Seeking fulfillment from the values of the university, Brown moves to Georgetown to be the vice president and general counsel. Though she didn’t come from higher education, was not raised Catholic or Jesuit, and is not an alumna, she encourages and welcomes others’ thoughts and views when she and her team wrestle with difficult issues.
I was interviewing with one New York firm when I asked them if pro bono work counted towards billable hours. They said, “No,” and I asked, “How do you expect to encourage people to do pro bono work, if you don’t let them count towards your hours?” It was no surprise that I didn’t get an offer from that firm, but it was important that I asked that question. Don’t be scared to ask questions about things you care about. For me, that question meant that I went to Shea & Gardner (now Goodwin Procter), who did care about that kind of work. I learned well from having mentors. One mentor at Shea & Gardner told me within my first couple months there that if I was serious about doing public interest work, I needed to get a case on my docket and create the space for that work when I started. He said if I didn’t do it then, I’d end up not having the time for it. He also taught me the importance of how to treat those cases. To have a mentor who supported what I wanted to do was very impactful for me.
From top to bottom and left to right, Brown with President Barrack Obama in the Oval Office during her tenure as White House assistant to the president; Brown counseling Vice President Al Gore on disability issues; and her father, Philip Brown.
One of my first cases was for the United Mine Workers of America Health and Retirement Funds. I have a very strong memory of going down to small mining towns in West Virginia and interviewing miners with serious health problems. It was a different time than it is now. I was just out of law school, and I still had to learn how to be a lawyer. I came out of those cases learning how to be an advocate and about the human side of law. It was everything from how to take a deposition to learning how to write a brief—which I learned from two lawyers at Shea & Gardner. They taught me that writing a really good brief was about telling a good story. You have the factual side, but then you have to translate that. You say, “I’ve got these facts. Now, how do I put that into a legal argument that gets the relief I want for my client?”
photo: Pete Souza (Obama)
Take educated risks. Don’t be scared to take risks in order to do what you really care about. When I left Shea & Gardner for a career position at the Office of Legal Counsel (OLC) for the Department of Justice, some of my partners thought I was absolutely out of my mind for giving up my partnership at the firm. For me, it was about taking an educated risk. Yes, it was a risk, but it was something I felt very strongly about. That doesn’t mean do something reckless. But if you have a passion, and you know you can take a chance, follow it. I went to OLC, and then nine months later I was in the White House as deputy counsel to then-Vice President Al Gore. Could I have predicted that? No, but it was about taking a risk and doing the best job that I could. My role at the White House was my first in-house position. I learned very quickly that when your client asks you to do something, you don’t say, “No.” You say, “Well, you can’t do it this way, but let’s talk about what you can do. Let’s talk about how you can accomplish your goals, even if we have to do it in a slightly different way.” It’s not that you become a “Yes” person by any means. But if you just say, “No,” people aren’t going to come to you any more. When I did say “No,” they knew I meant it because they knew that I was on their side.
— CLIENT CONNECTION —
> POTOMAC LAW GROUP, PLLC:
“Potomac Law Group is honored to work with Lisa Brown, an outstanding lawyer and leader in higher education. Potomac Law Group: a modern twist on the traditional law firm.” – Catherine Guttman-McCabe, Partner — CLIENT CONNECTION —
> SAUL EWING LLP: “Lisa is wonderful to work with. She is knowledgeable and thoughtful and has great instincts about how things should be handled. She also has a winning way of dealing with people.” – Bill Nussbaum, Partner
Saul Ewing brings legal expertise and an understanding of life on campus to its nationwide representation of higher education institutions in litigation, compliance, policy review and implementation, and risk management.
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In Chicago’s most dangerous neighborhood, one high school is both a haven and an incubator for the next generation of lawyers of color BY MELISSA SILVERBERG // PHOTOS BY CALEB FOX To be a lawyer is a privilege. That’s how Jason Brown views his job. “This is a service profession,” Brown says. “Part of that service is to make our profession better than it was when we came into it.” From the time he was a teenager, Brown knew he wanted to be a lawyer. Twenty-five years later, not only has he accomplished that goal—working as general counsel for the North American territory of Dyson—but he is also helping hundreds of teens in Chicago pursue the same dream. As a board member at Legal Prep Charter Academy (LPCA), Brown is making sure the first-of-its-kind legal education reaches students who need it. Located in Chicago’s West Garfield Park, serving its residents and those of Chicago’s West Side, Austin, 22
“This is a service profession. Part of that service is to make our profession better than it was when we came into it.” – JASON BROWN
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LEGAL PREP CHARTER ACADEMY DEMOGRAPHICS 300 students are enrolled in grades 9–12. More than 95 percent of students come from lowincome households. 100 percent of the student body is “diverse,” or students of color. More than 80 percent of students will be first to graduate college in their family. The vast majority of students are three or more grade levels behind academically when they arrive at Legal Prep. More than 85 percent of students live on Chicago’s West Side in West Garfield Park, Austin, or North Lawndale.
and North Lawndale neighborhoods, Legal Prep Charter Academy is Illinois’s only legal-focused high school. Until now, the area surrounding the academy has been known best for having the city’s worst violent crime rate. Nearly a quarter of the area’s adult residents (aged 25 and older) do not have high school diplomas. More than 95 percent of the academy’s students come from low-income households. And the majority of students are at least three grade levels behind academically when they enter the academy. With context like that, the future for a teenager can seem bleak. LPCA is aiming to change that. “In the western and southern parts of the city, kids are averaging 12.5-13 on the ACT,” says Paul Chadha, 24
corporate counsel at Accenture, adjunct professor of law at Northwestern University, and Brown’s fellow board member at the academy. “We put a high school in place, and in three and half years, our kids scored an average of 17-20. That’s enough to get you into some colleges. If you look at Whitney Young—” a Chicago magnet high school ranked fourth-best in the state—“they’re around 28. I think we can get in that space.” Brown first heard about LPCA before the school even physically existed. He had been introduced to the school’s cofounders, Sam Finkelstein and Rather Stanton, through colleagues and instantly wanted to get involved. “They had an idea, a charter, and a
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dream,” says Brown, who leads development activities through the school’s Annual Barrister’s Ball, serves on committees, and recruits partners and volunteers. The academy enrolled its first class in 2012. The first class of seniors at LPCA is set to graduate in 2016. All of the school’s 300 students are “diverse,” defined by the academy as nonwhite. The students at LPCA learn math and reading, but they also learn Latin, conflict resolution, and negotiations as part of their curriculum. Brown and the school’s leaders know that not every student will become a lawyer, but the lessons and support they receive will help them succeed no matter their career path. “Everyone there is trying to encourage students to get to that next level and everyone has that energy that is infectious to push you forward,” he says. “The opportunity these students have in this environment is precious, and it doesn’t come along often.” Although Brown’s professional aspirations were supported from a young age, he knows not all students will have a champion in their corner. He recalls a humbling experience from his days in private practice that reminds him of that fact. He and a colleague encountered a couple African American girls over their lunch break one sunny afternoon. The girls, no older than junior high age, were seeking directions. When they saw the two men dressed in suits, they asked Brown and his friend if they were coming from
“Education is the cornerstone, but it is also about opportunity and access.” – JASON BROWN
church. Brown explained that they were coming from work and pointed to the towering office building that housed the law offices of Winthrop & Weinstine. “They were stunned to see people who looked like them in suits on a weekday, but also to see us going to work in a building of that size,” says Brown. “You take that for granted when you’re in it—when you have a job and are working hard. What we do is a dream for some people.” In the legal field, specifically, the stratification between the number of diverse attorneys and the constituents they represent is wide. According to the American Bar Association, there are about 1.3 million licensed attorneys in the United States. Nonwhite
Jason Brown & Paul Chadha Jason Brown and Paul Chadha, both members of the board of LPCA and corporate counsel working in Chicago, sat down to discuss the diversity challenges facing the legal profession. PAUL CHADHA: How is the legal field positively impacted by the contribution of diversity to its ranks? JASON BROWN: One of the intended consequences of diversity initiatives in the legal profession is to give individuals an opportunity in a profession they haven’t had before. An unintended but outstanding result of that work has been the increased access of legal services to a broader range of communities that never had it before. Because there are more people bringing their talents, education, skills, and services to a broader range of society, more communities that were historically underrepresented in the legal field have availed themselves of legal service and understanding. PC: You’re exactly right. I think diversity has increased accessibility for those communities from which diverse attorneys are coming. Southeast Asian American attorneys are a concrete example of that. Twenty or thirty years ago, you didn’t see many of them practicing at big law firms or corporations. Now this growing body of younger, diverse attorneys has turned around and opened a pro bono legal clinic on Devon Street (a Southeast Asian community in Chicago). They’re helping out with immigration, landlord-tenant, social security, and disability law—legal services that segment of society has traditionally gone without. JB: There have always been diverse-owned small businesses— whether a corner store or what have you—in immigrant communities, but one of the things missing from those communities has been a strong understanding, familiarity, and access to legal services. There’s a greater sophistication and ability to grow for minority-owned businesses just by having folks within their community to represent their interests. PC: Understanding benefits like increased accessibility, why has it been so difficult to achieve
diversity in certain areas of the law, specifically at large law firms? JB: It goes back to defining the goal of increasing diversity. In the beginning, law firms decided they wanted to have a diverse workforce, so the answer was recruiting. They specifically sought diverse talent and interviewed at diverse law schools. They went for diversity in terms of numbers. What they failed to do was work on retention and develop that talent, so it could be successful in those firms. When you have like-minded people with similar backgrounds, retention is fairly easy because you have a familiar and easy-to-understand formula that works, and everyone subscribes to it. When you add diversity to that mix and shake that up a bit, you find you can’t put a round peg in a square hole and expect it to fit. Law firms can recruit people, they just haven’t figured out how to get them to stay. PC: I think that is definitely true. I remember meeting with a large law firm when Accenture was working with its outside counsel on diversity and inclusion. We noted that the firm’s demography was consistently diverse, but significantly less so in the more senior ranks. It seemed that over time, those folks were gone. The managing partner expressed that the firm hired the top African American law students from the top law schools for the last 20 years. But that begs the question: where are those folks now? After 20 years there should be nearly 10 African American partners at just this firm alone, but they aren’t there; they’re gone. In 2014 there were a total of 2,037 equity partners working at the five biggest US law firms (by revenue). Only 27 of those people—about 1 percent—were African American. Corporations, can’t hire diverse attorneys unless law firms are hiring diverse talent. But before firms can get anybody, law schools have to be there. I don’t think Stanford graduated its first African American law student until 1968. So if you wanted to meet an
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“A lawyer is either a social engineer or a parasite on society.” – CHARLES HAMILTON HOUSTON
attorneys make up 12 percent of that total, African Americans a mere 5 percent. “Education is the cornerstone, but it is also about opportunity and access,” says Brown. That reality motivated Brown when he served as the executive director and general counsel of the National Association of Women- and MinorityOwned Law Firms and when he cofounded the Association of Corporate Counsel Chicago Chapter’s summer internship program for diverse law students. For the last 12 years, the program has helped place students in the legal departments of Chicago corporations, gaining them experience and exposure—two assets that are more valuable than ever. “For students who come up as the first in their family to go to college, access and connections are becoming much more of a socioeconomic issue,” says Brown. “Some will do okay, and some will have no shot. It’s not just about getting an A in tort. Good grades won’t ride you into a law firm. It doesn’t work like that anymore.” While there have been strides made during his time in the industry, Brown says there is still a long way to go. “When we can stop saying ‘the first woman to do this’ or ‘the first Asian American to do that,’ I will feel even better about our progress on race,” he says. “In this day and age, to still be seeing so many ‘firsts’ in so many professional positions is somewhat embarrassing.” Without diversity, Brown says, any industry cannot expect to succeed. Now, more so than at any other time, he adds, we are globally connected. To have diverse perspective is critical to move business forward. To be successful, businesses need teams that are representative of the world in which they operate. Those without will fall behind. Brown admits that even the academy may not be enough to change the track, perhaps the problem must be tackled earlier than high school, but at least for 300 students on Chicago’s West Side, the future is looking brighter. “Charles Hamilton Houston, a former dean at Howard University’s law school said, ‘A lawyer is either a social engineer or a parasite on society,’” Brown says. “Not everyone becomes a civil rights lawyer or argues Brown v. Board of Education, but all of us can have some impact. We all have a responsibility to make sure we aren’t just collecting a check. We have to bring up the next generation and make sure they have the same access and opportunities that we had, or better.” 26
African American Stanford lawyer with 48+ years of experience, you couldn’t. (You could hire Sallyanne Payton, the ’68 grad, who is now a law professor at Michigan). For a bit of perspective, more than 61,000 people graduated from law school in 1968. Do you think it’s the critical mass, or the lack thereof, that’s the problem? JB: When you approach diversity by the numbers, there’s risk. When I say “by the numbers,” I mean you’re only looking to move percentages. Focusing strictly on numbers doesn’t allow you to understand the foundational change that needs to happen. It’s about more than admissions, hiring, and bar passage. It’s training, awareness, opportunity, growth, and development. The shift in how we do things now will make the long-lasting impact in how we increase diversity. Like the firm you referred to, many firms hire the top black students, but they haven’t changed anything fundamentally inside. Each top attorney came in, and each left. They stared a cycle that will continue until the firms change it. It won’t be solved by bringing more people in. It must be attacked differently. PC: You helped establish the Association of Corporate Counsel Law Student Diversity Summer Internship Program—an extremely successful program for placing diverse law students in the legal departments of some of the biggest companies in Chicago. What is the biggest barrier for minority law students and attorneys looking to work for the large law firms or large corporations? Do you think there’s more we can be doing with firms and law schools to promote diversity? JB: I think some schools ride on their reputation and think if you graduate from there and have decent grades, firms will clamber to hire you. But we’ve encountered diverse students who have done really well, and they don’t have their pick of 15 offers. They’re using connections or people they know to get in the door because these law firms are not just looking at four or five law schools, but 45 law schools potentially to recruit a much smaller class than before. There are fewer opportunities and law firms are much more selective than they were 20 years ago. I’ve never seen it this tough to get a job as long as I’ve been practicing. It’s always been important to know people, to be connected. It’s
been helpful to use a personal or professional connection to get in front of the right people. It’s amazing how much I see that now as a necessity for students to get in the door and get hired. You probably see the same thing. Students you meet who are very bright and have great grades struggle. But a word from you can get them an interview with a firm that wouldn’t interview them on campus. PC: That’s right. I remember Accenture’s first legal summer intern 10 years ago through the program. As I recall her grades were great, but she wasn’t at a “tier 1” school. Through that summer with us she was able to network and interview with a major law firm and get a 2L summer internship with that major law firm that ultimately led to a job as an associate—she’s still there. I see that year after year. At Accenture we partner with Kirkland & Ellis to mentor students from Legal Prep Charter Academy once a month, and more than anything, the value in that program is the exposure these kids are getting. JB: I think the idea behind the mentorship program is genius. I think the school itself, its mission, and what it is achieving is phenomenal. There are a lot of charter schools doing great things, but I think the focus and how we do things at Legal Prep (including mentorship, the study of law and how it governs our society, negotiation skills, debate team, and dispute resolution skills) these are the types of things that will help these students or allow them to help someone else. Charter schools aren’t unique, but to have one that teaches that the law is the root of civilization is so important. It teaches them that they’ll be part of this society—a society that needs leaders, and they’ll be those leaders. PC: What goals do you have for the school and its students, and how do you hope to help? JB: The goal is to get every one of those students not just into a college but adequately prepared to be successful in college. As I’ve seen the struggles of students that come into Legal Prep as freshman and had conversations about where they are from a reading level perspective, I wonder if we’re being shortsighted by only focusing on high school and if we need to think about expanding and starting at the junior high level. I want to provide more fundamental training at that level.
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MissionDriven It was an offer he simply couldn’t refuse. After three decades in law working for one of the nation’s premier law firms, O’Melveny & Myers, Fram Virjee was on the cusp of retirement. But instead of winters in Florida and afternoons on the fairways, he planned to give back by helping the less fortunate help themselves. Virjee, who was born in London and came to the United States in 1966, had discovered a passion for assisting victims of genocide in Rwanda. He formed a nonprofit and bought tickets to East Africa. That’s when Virjee received a phone call from a California State University (CSU) trustee. The university needed a new general counsel—and Virjee was the perfect candidate for the job. Virjee—himself the product of the California public school system—had spent two decades representing the Los Angeles Unified School District in addition to his FORTUNE 50 clients. With Rwanda still in the forefront of his mind, Virjee was at a crossroads. “I loved the CSU mission, and I still believed in what my wife, Julie, and I wanted to do in Rwanda,” he recalls. “Ultimately, I realized both roles involved serving the underserved, and there was a way to do both.” He accepted the job.
Today, Julie makes frequent trips to Rwanda to build partnerships and facilitate the activities of their 501(c)3 (a retirement gift from O’Melveny), Yambi Rwanda. Virjee joins her as he is able while fulfilling his duties as CSU’s executive vice chancellor and general counsel. He stepped into the role after important conversations with new chancellor Tim White and other leaders. “I didn’t want simply to work as a lawyer. I wanted a chance to be part of the strategic decisions behind California’s most influential educational institution. And I saw that opportunity when Tim shared their vision,” he says. The university’s mission includes one particular tenet that resonates with Virjee’s passion for service: the institution is dedicated to providing access to individuals with collegiate promise who face cultural, geographical, physical, educational, financial, or personal barriers, and to assisting them in advancing to the highest educational levels. As executive vice chancellor, Virjee has more opportunity for influence and leverage to fulfill this mission than a typical general counsel or chief legal officer, and the potential influence and impact of his work is greater and longer-lasting. This gives him significant motivation and a platform from which to address the needs of underserved students within the university system and throughout California and the nation. With its network of 23 campuses across the Golden State, the California State University System has 50,000 employees and educates 460,000 students. And its impact is enormous. With more than three million alumni, half of all of California’s nurses, teachers, architects, and engineers come from the CSU system. One in 10 people in California with a baccalaureate degree received it from the CSU system, and one in 20 degrees in the nation are produced by the CSU system. “The potential for us to build the nation’s leaders is what led me here,” says Virjee. “We serve underserved communities. Almost 70 percent of our students are first-generation college students, and I wanted to be a part of serving them.” In his first two years, Virjee has looked for opportunities to join CSU’s efforts to revamp admissions and improve both online education and financial aid.
photo: California State University
Why Fram Virjee came out of retirement to answer a call to action BY ZACH BALIVA
A Passion for Serving the Underserved
VIRJEE ON WHAT MAKES YAMBI RWANDA A SUCCESS
“Yambi Rwanda is not simply providing stop-gap aid. It is designed to enable individuals in Rwanda to help themselves, one person at a time. I believe that this model will provide the best long-term sustainable impact on Rwandans, by Rwandans. I am also proud that the focus of all our efforts is on reconciliation and moving the Rwandan people forward in unity and bridging past divides through Rwandans working together as a single people.”
Virjee (far left) stands with his wife, students, and leaders of the School for the Deaf in Musanze, Rwanda. Yambi Rwanda provides financial resources to the school, covering its annual water bill and purchasing mattresses and school supplies, for example. The school houses, clothes, and feeds 125 students between the ages of 2 and 25.
To help build upon CSU’s strong foundation, he embarked on a visit across all 23 campuses. “I met with every president, provost, and financial leader to find out what they need to achieve and how we can help them,” he says. What could sometimes be a looser connection of schools started to reach greater unity. While other institutions struggled to defend sexual misconduct and harassment suits, CSU decided to become a leader in awareness and prevention. Virjee, together with his peers and colleagues, revised and revamped policies and started educating staff and students. The system hired a Title IX expert for all its campuses, testified before state and federal governments, and shared its best practices. In 2014, all freshman students received new orientation and training on the issues, and all 23 college presidents attended training and created an
individual leadership action plan to implement at his or her university. After two years on the job, Virjee is seeing the fruits of the team’s collective labors. Last summer, Washington Monthly ranked CSU campuses among the very best for serving the public good for their efforts in promoting community service and graduating low-income students. “This work gives me purpose and compassion, and seeing the results shows me that this is more than a legal job with no social impact,” he says. With the help of his peers, he’s making a difference for students in California. With the help of his wife and their partners, he’s making a difference for recovering Rwandans. And his dream of moving to Rwanda is still alive—Virjee says he plans to relocate to Africa when he retires from CSU.
— CLIENT CONNECTION —
> DURIE TANGRI LLP: “Durie Tangri
congratulates Fram Virjee for his recognition by Modern Counsel, and his continued contributions to California State University.” – Daralyn Durie, Partner
“The firm has a mission of being on the cutting edge of the law.” L AW 3 60 I P PR ACT I C E G R OU P OF T H E YEA R
Durie Tangri LLP 217 Leidesdorff Street San Francisco, CA 94111 Tel: (415) 362-6666 www.durietangri.com
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“If you bring enough money to the table, you can close a deal. Successfully integrating the business is more difficult.” – KURT STEPANIAK, KONE INC.
IMPLEMENT The financial climate is ripe for mergers and acquisitions. Case studies show that organizations that have perfected M&A to a repeatable process see return on their investments. But a recent study by KPMG found that more than 80 percent of mergers fail—they don’t increase returns for shareholders—suggesting the sale may be the first hurdle, but not the finish line in a successful transaction. The attorneys in this section who share stories of M&A all reiterate the necessity of communication. Whether that’s a thoughtful chain of messaging from the top or a boots-on-the-ground approach, transparency, honesty, and consistency go a long way in assuaging fears and getting your organization rowing in the same direction.
INQUIRY What are the hallmarks of a good M&A transaction? How can you replicate those in your organization? Is integration an art or a science? What are some universal tactics that make it successful?
A critical component of integration after a merger is IT. Bain & Company’s “IT in M&A” resource can help you set appropriate expectations and time lines for this process. Check out Forbes.com for George Bradt’s tips for creating a 100-day postmerger plan and defying the integration odds.
JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.
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Keep Calm &
GROUND How American Capital survived a potentially bankrupting litigation and came out on the offensive By Melissa Silverberg
Heather French had experience in litigation; she had dealt with busy deadlines and multiple cases looming before. But nothing could have prepared her for the crisis that American Capital faced in 2008. The problem started with heparin, a widely used prescription blood thinner. In 2008, after decades of safe heparin supply, it was discovered that for a short period of time, a counterfeit ingredient had been added to the crude heparin sourced from China and supplied to about a dozen companies worldwide, including Scientific Protein Laboratories (SPL), a global manufacturer of active pharmaceutical ingredients and, in 2008, a portfolio company of American Capital. The tainted product was sold to companies, including Baxter Healthcare, which distributed heparin to patients in the United States. More than a thousand lawsuits were filed, the Food and Drug Administration and US Congress were investigating, 32
national media was circling, and as deputy general counsel of one of the largest private equity firms in the world, French had a massive job on her hands. “This is not the type of event that happens in most company’s lives,” says French. “These things are very rare, and I’m not sure much fully prepares you for a situation like this that is so far-reaching and has so many different entities involved. It is even more magnified when it is related to the health and safety of people.” The most urgent task was to find out what was causing the spike in adverse event reports and make sure a recall happened quickly and effectively. Since American Capital owned the majority of the equity in Scientific Protein Laboratories, American Capital was also named in lawsuit after lawsuit. “Private equity companies don’t typically expect to be caught in the crosshairs of major product liability crises, but as the
HEATHER FRENCH Deputy General Counsel American Capital
photo: Moshe Zusman Photography Studio
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“It quickly became clear that we could figure out a creative litigation strategy or face bankruptcy.” – HEATHER FRENCH
The Charter Oak Fire Insurance Company et al v. American Capital, Ltd. et al When American Capital turned to its general liability insurer, Travelers, to fund the defense of the heparin litigation as promised by the terms of the policies Travelers sold to American Capital, Travelers responded by suing American Capital. Travelers sought to nullify its policies and said it should not have to pay because it did not understand that American Capital held a majority interest in various portfolio companies, including Scientific Protein Laboratories, so the policies should essentially be rewritten to bar coverage. Rather than simply contesting Travelers’ denial, French and her insurance counsel at Reed Smith LLP went on the offensive, seeking leave to file a counterclaim for fraud based on Travelers’ admission that it never intended to perform the promises it made in the policies. In September 2014, a federal judge in Maryland allowed the counterclaim to go forward, arguably a first in more than a century in Maryland, and a move that could give teeth to a body of law that is meant to hold insurance companies accountable, but previously had little enforcement.
majority equity holder of this particular portfolio company, that is exactly what happened,” says French. The stakes were extremely high for everyone involved. Once American had a handle on the recall and ensuring safety going forward, the private equity firm had to face the fact that there were hundreds of millions of dollars at stake. “Were we going to lose our entire investment in the portfolio company? Were we going to face our own exposure to liability?” These were the tough questions French says American had to ask. French was in charge of litigation for American Capital and spearheading SPL’s litigation efforts because it did not have its own in-house counsel. She had two clear choices: “It quickly became clear that we could figure out a creative litigation strategy or face bankruptcy for Scientific Protein Laboratories,” French says. French and American Capital decided to team up with Baxter and its law firm, Kirkland & Ellis LLP. French worked with Kirkland, as well as litigation and regulatory lawyers from Arnold & Porter LLP, every step of the way. She helped file hundreds of motions, got nearly 100 successful summary judgments, went through extensive discovery, and prepared and attended every deposition of every officer at Scientific Protein Laboratories and American Capital. She analyzed all available loss-reduction measures, including insurance, and worked closely with John Schryber, coverage counsel at Reed Smith, to develop a strategy to ensure that American Capital’s general liability insurer, Travelers Insurance of America, would fund the massive heparin litigation effort. A ruling in Ohio federal court came American’s way. The multidistrict litigation judge decided from a causation standpoint which cases would be viable and greatly whittled down the number of cases Scientific Protein Laboratories and Baxter were facing. “It was completely insane,” French said of the pace of her work during that time. “The crisis
broke in 2008 and continued at a breakneck pace for the next several years.” French had cut her teeth at Akin Gump working cases in the US District Court for the Eastern District of Virginia, also known as the “rocket docket”—a place where cases move quickly and deadlines are hard and fast. That experience would be integral to the volume and speed of work French would face over the course of the litigation. “I was used to really tight and challenging deadlines,” French says. “When you are in a crisis like this, everything has to be done yesterday. You don’t have time to spend extensively evaluating things. You have to react quickly.” There were daily phone calls to senior management and members of the board, and constant communication to keep all the lawyers on the same page. “At this point, I really came to appreciate working for an amazing GC and executive team,” says French. “Without their trust and support, it would have been an impossible situation.” At the same time, the financial crisis was erupting, and American Capital was dealing with the fallout of the recession and a number of other litigation matters because of the economic downturn. On top of all that, French had just given birth to her first child, a daughter, four months earlier when she had to travel from her home in Washington, DC, to Chicago to try the first heparin case. Her saving grace was that many of the lawyers from Kirkland and Arnold & Porter, including the lead lawyers, Leslie Smith and Ellen Reisman, were also mothers. “They understood that I left a daughter at home,” she said. “It was really helpful to me that I was going to trial with a group of people who were similarly situated and had all been there before. It was really tough to be in three places at once. It was a master juggling act to keep everything going.” A two-week trial concluded in June 2011 with a Cook County judge’s order that Baxter
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Congratulations to our Congratulations to our friend Heather French for friend Heather French for her extraordinary career her extraordinary career and leadership. We’re and leadership. We’re proud to join Modern proud to join Modern Counsel in recognizing her. Counsel in recognizing her. Reisman Karron Greene LLP ("RKG") Reisman Karron Greene LLP ("RKG") is a law firm based in Washington, is a law firm based in Washington, D.C., with a Southern California office. D.C., a Southern California office. Ellen with Reisman and Andrew Karron Ellen Reisman and Andrew Karron were longtime partners in an internawere partners in anjoined internationallongtime AmLaw 100 firm who tional AmLaw 100 firmEthan who joined with the third partner, Greene, to with the third partner, Ethan Greene, to establish a firm focusing on strategic establish a firm focusing on strategic resolution of complex litigation, with a resolution of complex litigation, with a particular focus on mass torts. The particular focus oncollectively mass torts.have The founding partners founding collectively have more thanpartners seven decades of experimore than seven decades of experience in complex litigation and ence in complex litigation and in the settlement, and all the lawyers settlement, and all the the firm -- including two oflawyers counselinand firm -including two of counsel and four associates from the same AmLaw four associates the same AmLaw 100 firm -- havefrom direct experience in 100 firm -have direct experience in negotiating, drafting, and administering negotiating, drafting, and administering complex settlements of mass tort complex of massmembers tort litigation settlements brought by leading litigation brought by leading members of the plaintiffs’ bar. of the plaintiffs’ bar.
Ellen Reisman Ellen Reisman Ellen.Reisman@rkgattorneys.com Ellen.Reisman@rkgattorneys.com 202-695-7712 202-695-7712 Andrew Karron Andrew Karron Andrew.Karron@rkgattorneys.com Andrew.Karron@rkgattorneys.com 202-695-7790 202-695-7790 Ethan Greene Ethan Greene Ethan.Greene@rkgattorneys.com` Ethan.Greene@rkgattorneys.com` 202-695-7798 202-695-7798 202-695-7705 (DC) / 424-252-1021 202-695-7705 (DC) / 424-252-1021 www.rkgattorneys.com www.rkgattorneys.com
and Scientific Protein Laboratories pay $625,000 to the estate of a man who died after using heparin. It wasn’t a win, but it was a good sign. “Because of the relative size of the judgment, it set things up to resolve many of the cases,” French said. In the next case, SPL and Baxter got a jury verdict in their favor, and the rest of the cases were largely dismissed or settled. For a situation with so much at stake, the tides turned for American Capital, which sold Scientific Protein Laboratories in 2014 for $210 million. “It was a really good result for a company that faced such an uncertain future a few years before,” French says. Today there are four heparin cases remaining of the original 1,000-plus, in addition to the insurance case pending against Travelers. While most of the crisis has passed, except for a few outstanding cases, French says the lessons from the experience were invaluable. “You can’t see it at the time, but the biggest crises are often the best learning experiences. I now look at things completely differently,” she says, considering matters on different levels at once now—the implications with customers, the press, regulatory, insurance, and litigation. The heparin cases showed French and American Capital how important it is to make the members of the legal team integral members of the business team as well. “It’s really an opportunity for lawyers to be more involved in the business and help reach the business goals through the use of good legal advice.”
— CLIENT CONNECTION —
> REED SMITH LLP: “Heather French’s
terrific success in mining her company’s liability insurance policies derives from her starting assumption that insurance should cover almost all business setbacks—if the carrier actually is held to its promises.” – John W. Schryber, Esq.
Shadows How a team built for general matters is balancing business as usual and a protracted fight with a federal agency in a David-and-Goliath lawsuit by Zach Baliva
It was the type of headline no in-house attorney ever wants to read. But it was the kind in front of Celia Catlett in October 2011: “Texas Roadhouse Refused to Hire Older Workers Nationwide.” And although it was disappointing, the then-associate general counsel was hardly surprised. After years of investigation, the Equal Employment Opportunity Commission (EEOC) formally alleged the restaurant denied older workers prominent positions. In its lawsuit, the EEOC alleged that Texas Roadhouse had demonstrated a pattern of age discrimination by underemploying workers over 40 years of age for highly visible “front of house” photo: Texas Roadhouse
positions dating back to 2007. The EEOC also alleged that the company suggested its managers should hire younger job seekers. With its suit, the agency is seeking monetary awards for applicants denied employment based on age. The suit dramatically changed daily life for the legal team at Texas Roadhouse. Catlett, who started in real estate law, joined Texas Roadhouse as the company’s second attorney in 2005. She was hired in to provide relief to a general counsel responsible for leading the company through an IPO. “It was all hands on deck in those days, and everyone in legal pitched in on any issues that came up,” she recalls. “We all did whatever needed doing, and that’s how I broadened my skill set.” Texas Roadhouse then entered a growth phase that would take it from roughly 125 to 465 locations in 10 years. When the mammoth lawsuit hit, legal had grown to a team of 11 professionals. Together, they would have to fight a powerful federal agency. In many ways, the department was prepared. The period of growth forced legal to specialize. They developed working groups and specific areas of expertise in public company matters, real estate, business licensing, contracts, IP, franchising, litigation, and employment issues. Still, legal wasn’t staffed for massive litigation. “We’re pioneers in fighting this kind of case,” Catlett says. “It’s unprecedented in our industry.” Immediately after learning of the EEOC action, Catlett and her colleagues partnered with outside counsel and worked to develop a strategy to address the litigation. That strategy
Lessons in Leadership FROM CELIA CATLETT
“I have a three-step leadership approach: hire the right people, give them the support they need, and get out of their way. I am a firm believer that people will do their best when they know you trust them and support them. I know my team members are good at what they do, or they wouldn’t have gotten through the door. The worst thing I could do as a leader is to signal that I don’t believe in them or their work by micromanaging them. Proper support is crucial to being able to get out of their way, though. Successful people can’t operate in a vacuum. We all need support systems and resources to help us develop. I want my team members to think of me as a safe place and a sounding board where they can ask questions and take risks. That is how they will achieve their maximum potential and really shine.”
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Texas Roadhouse BY THE NUMBERS
49 States with a Texas Roadhouse (all but Hawaii)
International Locations: in 4 countries (United Arab Emirates, Kuwait, Saudi Arabia, Taiwan)
$2.7 b Market Cap
involves heavy doses of communication and education. “We do not discriminate on any basis. This suit shows that the EEOC doesn’t understand our culture, our business model, or our industry,” Catlett says. “The EEOC seems to think that we have a secret, top-down mandate to violate antidiscrimination laws. Not so.” The only top-down guidance Texas Roadhouse gives its operators, she explains, is “don’t discriminate, and hire the most qualified candidate for the job.” After conciliation meetings, an unsuccessful attempt at mediation, discovery, and depositions of operators and corporate leaders, the EEOC remains unconvinced. In the fall of 2015, Texas Roadhouse prepared to move from fact discovery to expert discovery. “We have always been open to resolving this outside of a courtroom but will go to trial if we have to,” Catlett says. Eight years after her hiring, Catlett became Texas Roadhouse’s general counsel. In doing so, she moved the case to a different outside counsel—one she says has a strong reputation for handling nationwide EEOC cases and understands the unique Texas Roadhouse culture well. “We’re not a cookie-cutter restaurant chain. We do things our own way, and that’s important to our defense. I needed an outside partner who would embrace that,” she explains. As the case enters its fifth year, she says her priorities haven’t changed. She has to meet the legal needs of a thriving national brand and defend the EEOC case, all while keeping the distraction of these allegations to a minimum for her team. “A federal case like this can be a drain on time, money, resources, and energy. In some ways, we feel like we are expending a huge amount of effort boxing with shadows,” she says. Managing time and resources to fight the EEOC and run the legal department of a public company is a constant battle. Over the last several years, Catlett’s department has increased to 21 employees, 7 of whom are lawyers. Each time she adds a team member, Catlett asks the new hire to jump in with both feet, keep a good attitude, and form partnerships within the support center and in operations. That’s because the work of the legal department touches all aspects of the company. Catlett asks her team to stay transparent and patient. They present themselves as part of the solution, sitting in on meetings, rolling up
“Everyone lives in fear of this type of large-scale litigation, and now that we’re going through it, I’ve learned that it’s not the end of the world. [...] This will not define us.” – CELIA CATLETT
their sleeves, answering questions, addressing concerns, serving as a trusted advisor, and sharing information early and often. “The EEOC lawsuit is a great example of this, but really in everything we do, we need our partners outside the legal department to understand that we’re on their side. We have to be the counselors, soldiers, and the cheerleaders at the same time,” she says. Even with that philosophy at work, it’s hard for those on the inside of Texas Roadhouse not to see the EEOC lawsuit as a distraction. “It’s invasive, and there’s nothing we can do about it because we’re required to respond. This is just a footnote to what we’re actually supposed to be doing, which is running restaurants,” Catlett says, noting that the suit also impacts every one of the company’s restaurants. Operators attempting to run busy, multimillion-dollar businesses have to stop and dig for detailed information, often with very little notice. Catlett has an extremely effective associate GC of litigation who communicates with affected operators. Anytime there is a request related to the case, the associate GC calls personally to answer all questions and address each concern. For their part, most operators are happy to help. “They take it personally,” Catlett says. “They’re invested in the outcome, and they know that we’re fighting for them.” Being a part of a busy in-house legal team can be draining, but only if you let the stress of the job take over. Catlett is trying her best to prevent that. “When things get really busy, you have to focus on the fun part of the job,” she says. “The sheer volume of what we handle, especially when you throw in big litigation,
can suck the life out of you if you surrender to it.” Her department has been known to uncork a bottle of wine late on a Friday afternoon or cut out of the office an hour early to pick the kids up from school on a sunny day. “If you don’t take advantage of those moments when you’re operating above capacity, it’s just unbearable, and an hour of fun isn’t going to make the whole company fall apart,” says Catlett. Additionally, she checks in often with each member of her team to make sure they’re engaged in meaningful work and taking advantage of professional development opportunities. With so much unresolved in the EEOC lawsuit, Catlett has no choice but to remain flexible and open-minded. “Everyone lives in fear of this type of large-scale litigation, and now that we’re going through it, I’ve learned that it’s not the end of the world,” she says. “We’re still out there running successful restaurants. We still have a great brand. This will not define us.” Unless they reach an unexpected agreement, Texas Roadhouse and the EEOC will meet in court in 2017.
Legendary Legendary We We congratulate congratulate Celia Celia Catlett Catlett for for this this well-deserved well-deserved recognition. recognition. Like Like the the renowned renowned quality quality of of aa Texas Texas Roadhouse Roadhouse restaurant, restaurant, her her work work and and dedication dedication are are “legendary.” “legendary.”
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our friend Celia Catlett on this well-deserved recognition. It has been our privilege to partner with Celia and all of our friends at Texas Roadhouse over the years.” – Rebecca Pratt DeGroff and Christopher DeGroff, Partners
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brings an exceptional combination of skill, experience, and good judgment to her role as general counsel of Texas Roadhouse. It has been a great pleasure to work with her and our other friends at Texas Roadhouse.” – Frederick B. Thomas, Partner
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TRANSPARENCY IS THE KEY INGREDIENT Both externally and with internal clients, Kevin Goldberg emphasizes the importance of transparent counsel and communication By Jeff Silver
KEVIN GOLDBERG General Counsel Nestlé Nutrition North America
In August of 2015, Nestlé was accused of falsely advertising the nutritional ingredients in Gerber Graduates Puffs. The action highlights the delicate balance that all companies—even icons like Gerber and Nestlé—must maintain between regulatory compliance, consumer demands, and their own commitments to safety, quality, and transparency. Kevin Goldberg, Nestlé Nutrition’s general counsel, oversees North American operations and also heads compliance. He points out the difficulty of actions like the advertising lawsuit, which typically portray manufacturers as “bad actors,” especially when the scenario involves what he calls “our most sensitive consumers of all: babies.” However, those matters can also provide opportunities to demonstrate companies’ true standards, their efforts to uphold them, and
platforms to engage with consumers about their expectations. “The social media environment has changed everything because there is so much immediate access to information, both true and false,” Goldberg says. “Plus consumers have a heightened awareness of many different food-related issues. So even an accusation like this one gives us a chance to continue an ongoing dialogue that clarifies our approach and intentions and ensures we understand consumers’ priorities.” He points to Nestlé’s commitments to reduce artificial flavors and salt in its products as well as attention to issues such as genetically modified organisms (GMOs), arsenic, BPA, organic ingredients, and allergy sensitivities as examples of their responsiveness to calls for greater transparency. “Our commitment to safety, quality, and compliance has always been a top priority, but the new empowered consumer environment has certainly helped our already high standards evolve to become even more stringent,” Goldberg explains. As he responds to better-informed consumers and their expectations, Goldberg must still provide balanced legal counsel that supports compliance and company objectives.
Joining Forces Nestlé’s acquisition of Gerber Products Company at a glance DATE OF CLOSING: September 3, 2007 SALE PRICE: $5.5 billion PURCHASED FROM: Novartis STRATEGIC ADVANTAGE: Gerber Products would enhance critical nutrition and health and wellness components of the world’s largest food and beverage company, Nestlé.
Modern Counsel: What’s your strategy for offering the most effective advice to clients? Kevin Goldberg: My approach is always to remove barriers between
photo: Nestlé Nutrition
the business and law. We do that by ensuring we’re in alignment with an operational master plan that provides a comprehensive understanding of the top business priorities and objectives. That way we never operate in a vacuum. As lawyers, we also have to understand the overall value equation and how our activities create benefit for the company in the context of the master plan. That’s where the equation begins. If the goal of a contract is strategic ingredient sourcing, then focusing on penalties for noncompliance may be much less appropriate than emphasizing quality specifications or sustainability best practices. We have to understand the value of the activity in the context of business objectives. Otherwise, the contract could effectively be worthless. MC: How do you ensure the right balance between business objectives and appropriate legal advice? KG: My job isn’t to tell clients what they should or shouldn’t do. It’s to make sure they have all the information they need to make an informed decision, or enough that they can work with me to make it. It comes back to alignment of objectives and execution, risk and opportunities, good business practices, and compliance and transparency. MC: Can you give an example of how the legal department’s work is being influenced by and responsive to a new era of consumer expectations?
“The new empowered consumer environment has certainly helped our already high standards evolve to become even more stringent.” – KEVIN GOLDBERG
KG: One of the most recent examples is legislation in Vermont that may ban GMOs from all foods and beverages in the state. We’re making sure our businesses understand the full scope of that prospect so that we will be fully compliant if and when it goes into effect. That includes closely examining products and recipes to ensure they’re GMO-free. MC: What kind of impact will those sorts of changes, social media, and on-demand access to information have on your work in the coming years? KG: It’s already pretty clear what’s important to consumers: food safety, integrity of ingredients, and labeling transparency. Our challenge will be to effectively demonstrate how committed we are to all of those concerns. The issues will remain the same, but the bars for all of them will definitely be raised even higher than they are today.
White & Case congratulates
Kevin Goldberg, General Counsel of Nestlé Nutrition U.S., on his accomplishments and recognition by Modern Counsel.
We are honored to be included among Kevin and Nestlé’s “core business partners.” whitecase.com In this advertisement, White & Case means the international legal practice comprising White & Case llp, a New York State registered limited liability partnership, White & Case llp, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
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MARLA ZWAS Deputy General Counsel Flagstar Bank
AGENT OF CHANGE Marla Zwas has defined her career, and each organization she’s worked with, by forging a path to operational excellence By Keith Loria 42
One constant on the career path of Marla Zwas is her propensity to dig in and find innovative solutions. “I like to get my hands in the dirt,” says the deputy GC of Flagstar Bank. “Sometimes people say they look at in-house lawyers and wonder if they’re willing to roll up their sleeves, and I always tell them I’m willing to put my hands and elbows in the mud.” Whether it was covering PulteGroup’s compliance and legislative needs, helping Chrysler become an SEC-reporting company, or even in her current job, Zwas never stays put in her comfort zone. Instead, she reaches out, seeking opportunities to learn new legal concepts and wrangle with complex legal issues in need of practical resolution. Over the past 20-plus years, her leadership, determination, and legal skills have allowed her to direct wide-reaching initiatives at each of the places she’s worked, and this has been the value that defines her work as in-house counsel. Zwas credits her past experiences at both PulteGroup and Chrysler (now Fiat Chrysler Automobiles) with providing a sound training
photo: Flagstar Bank
“Sometimes people say they look at in-house lawyers and wonder if they’re willing to roll up their sleeves, and I always tell them I’m willing to put my hands and elbows in the mud.” – MARLA ZWAS
ground to develop the leadership skills and best practices for cultivating operational excellence that she brings to her initiatives at Flagstar. For example, at Chrysler she led the drafting of the company’s first public filings from scratch and established systems for that process in the future. That background in corporate governance provided invaluable insight into her current team’s efforts to standardize management committee governance at Flagstar. “Doing the first filing for Chrysler was a fascinating experience,” she says. “We had to figure out a way to tell the Chrysler story starting with a blank piece of paper. The general counsel gave me exactly what I requested: a chance to personally interview all the senior executives about their current initiatives and thoughts on the direction of the company.” Zwas outlined the key points from those conversations, typed up a treatment, and from there, her team developed a document that became the first public filing Chrysler had compiled as a standalone company since the ‘90s. At Pulte, Zwas was hired to manage litigation but quickly migrated to doing special projects for senior management. One of her most noteworthy achievements was designing and implementing a company-wide record management program at the request of Pulte’s CFO. “I didn’t know much about records management—or even basic project management—and had to learn them both, soup to nuts,” she says. The project involved retaining and storing records, handling electronic documents, and putting an IT system in place. It was
implemented in 18 months across 44 field offices, involving every business unit within the company. Around that same time, Zwas worked with the National Association of Home Builders to develop a modern piece of tort reform legislation known as the Notice and Opportunity to Repair Act, which dealt with the runaway problem of people suing their builders. “The bill was written to ensure you can’t sue a builder unless you’ve given notice about the defects in the home and given them the opportunity to inspect the home and make an offer to fix,” she says. “I led this process with a team of general counsel of all the leading builders in the country—all of whom were very senior to me.” Zwas became the doer on the project. “We hosted several marathon drafting calls until we had a piece of model legislation, and then spoke to state legislators about the bill,” she says. It was adopted in more than 20 states. Several years later, at Chrysler, Zwas became active with another industry-wide organization, the Automotive Industry Action Group (AIAG). Through the AIAG, she contributed to efforts to standardize the industry’s response to the SEC’s new rules on conflict minerals, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule requires companies to trace the source of all raw materials that go into their parts—all the way down to the minerals. It was an effort to disclose what public companies were getting from certain high-conflict regions, and Zwas jumped onto a team of industry lawyers that helped AIAG formulate communication materials they were distributing to suppliers to ensure deadlines were consistent and they were complying with the law in the same way. “I spent hours on the phone with other [original equipment manufacturers] and large suppliers because we didn’t want Honda asking in one way and Chrysler another,” she says. “We developed a common system everyone could use.” Chrysler’s extensive contribution on the issue of conflict minerals garnered the company the first-ever Pioneer Award from the AIAG. Zwas says she is always looking for challenges at work and in the organizations she helps. “My forte and what I hope that I bring to the table is the ability to envision, lead, and implement large-scale initiatives. Sometimes they involve operational pieces, some are purely legal,” she says. She continues to lead a number
Marla Zwas’s Top Five Tips FOR PROBLEM SOLVING AND SUCCESSFUL OPERATIONALIZING 1. For these projects to be successful, communication is key. You have to understand the business issues—listen to where people are now and what’s going on at the time. Once you understand your starting point, make sure you bring people along as you build on what is already in place. 2. Learn and use project management tools and techniques. Develop an action plan and refresh and share it regularly. Create a team by involving others, even if it is just for the limited purpose of seeking expertise or input on a specific element. It improves the outcome while also broadening acceptance. 3. When training and implementing, make sure your presentation and your materials are clear and understandable and not fraught with legalese. Prior to rollout, have a nonlawyer review your training materials, instructions, forms, and documents and provide you with honest feedback. 4. It’s important to take equal time to think about what you’re doing and how you are doing it to actually move the project forward. You have to start with a vision, but you also need to keep thinking strategically so that the final product is as elegant as possible. 5. Never believe that anything is impossible. Many people have told me an initiative won’t work, there’s not enough time, we’ll never get everyone to agree. I always see those as invitations to prove them wrong. You have to believe you will succeed, and you have to consistently project that belief.
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WilsonYoung congratulates Marla Zwas, Deputy General Counsel of Flagstar Bank, on her outstanding legal career and well‐deserved recognition by Modern Counsel. We are proud to call you our client and business partner!
WilsonYoung PLC is a boutique firm that specializes in the representation of policyholders in disputes with insurance companies and parties involved in complex contractual matters.
of initiatives in her current role that draws on the skills she developed over the course of her career. One of Zwas’s most important roles at Flagstar is working with a cross-functional team to help the bank prepare for compliance with the Volcker Rule. “It’s an extraordinarily complex rule that governs the kinds of investments that banks can make and the type of trading activity they can engage in. We had to look at how it applied to us,” she says. Zwas worked with the team to set up systems and policies to ensure Flagstar stayed on the right side of the law. For any initiative, Zwas says she starts her mission with a fact-finding phase. Once she gathers all the important intel, she moves on to the design and drafting phase. “The final and most important phase, where projects live or die, is the rollout, making sure a project is cleanly deployed with proper training, helpful tools, and legal guidance,” she says. When her team was tasked with standardizing records management at Flagstar, Zwas directed the initiative using her usual formula: learn the schedules people were using and develop a sound program that all staff, across all disciplines, will be able to use. “Once you set up systems,” she says, “it’s a matter of documenting and deploying it throughout the organization with training and tools and improving the program over time.” She and her team are also helping to standardize and formalize the bank’s management committee governance. “We have our board of directors and committees. Under that layer, we have management committees that make key decisions. In a bank, regulators look at all that we do, even at the management committee level. We are standardizing the way in which we define and operate those committees and formalizing the use of those committees to improve policymaking.”
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smart person, and she brings that intelligence and her extensive experience to bear on every project. She is always thinking 10 steps ahead, which makes working with her a true pleasure.” – James D. Wilson, Member
POWERED BY GROWTH How Dynegy came back from bankruptcy and doubled in size by acquiring three new portfolios and diversifying assets—all in four years’ time By Amanda Garcia
CATHERINE CALLAWAY General Counsel Dynegy
photo: Gittings Photography
When Catherine Callaway joined Dynegy in 2011, the company was in transition. A massive restructuring was in motion, Robert Flexon had taken the helm as CEO, a completely new management team was being built, and a chapter 11 process was underway. Fortunately, after 24 years working in the energy industry—specifically with companies in complicated financial situations—Callaway was no stranger to the challenges that come with such big changes. As a person who thrives under pressure, the general counsel was ready to face each one with a clear understanding of the industry and its accompanying legal issues. Dynegy is a Houston-based energy company with the capacity to supply power to 21 million homes. The company operates several plants around the United States and has a retail arm that directly serves residents and business in Illinois, Ohio, and Pennsylvania. By the time Dynegy came out of bankruptcy in October 2012, the company had fewer assets than before, but the same set of fixed costs within its existing corporate structure. Changes had to be made to move forward, so under Flexon’s leadership and with Callaway’s guidance, the company shifted its focus toward maximizing efficiency, increasing assets, and capitalizing on the results. It was the perfect foundation for growth. “We had a great support platform in Houston,” says Callaway. “So as we grew, we were able to achieve huge synergies in the process.” Dynegy moved from a high-rise to a one-story building
with simple, open office space that promoted collaboration and equality, while reducing redundancies. Emphasis was placed on developing a culture of diversity, equality, and unity under the motto, “Energizing you, powering our communities,” which was especially important as Dynegy began to acquire new facilities and assets. Dynegy’s first postbankruptcy acquisition was a portfolio of five coal power plants in southern Illinois from Ameren in 2013. That purchase kick-started the company’s growth and was a natural fit because the plants were in Dynegy’s existing regional footprint. In 2014, however, as the company sought to expand its footprint and diversify its assets, it simultaneously acquired Duke’s Midwest Generation plants and Energy Capital Partners’ Equipower plants, a total of 19 new facilities added to the Dynegy portfolio. “Both were amazing opportunities, so we pursued them at the same time, not believing we’d be successful,” says Callaway. “We were able to bring our financing package together but negotiate two separate transactions and announce both transactions at the same time.” Combined, this double acquisition was a $6 billion deal and doubled the size of the company. Not only did these acquisitions prompt tremendous growth for Dynegy, they allowed the company to diversify its fuel mix (expanding from primarily coal- to gas-fired plants) and enter the most lucratively promising geographic market structures in the industry. On top of that, all plants were already environmentally APRIL/MAY/JUNE 2016
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IMPLEMENT M&A As part of its 2015 acquisition from Energy Capital Partners, Dynegy gained 10 power plants. One of them, Kincaid, (left) is a coal-fired power plant in Illinois, generating 1,108 megawatts of the combined 6.3 gigawatt capacity gained by the transaction.
compliant with current and pending requirements, and Duke’s portfolio included a retail business. “We had a clear vision of the type of assets we wanted to acquire, so we concentrated in those areas,” says Callaway. In spite of all the ways these companies were different, they fit together perfectly as one Dynegy. Dynegy is federally regulated, so all transactions of this size must be approved by the Department of Justice. Because of that, Callaway and her legal team took great care to prepare for the acquisitions by ensuring they were in full compliance. They took the company through a screening process to ensure the purchases wouldn't give them too much market power. They did due diligence to understand the true assets and liabilities of the acquired companies, especially those related to the environment. They carefully considered financing and Dynegy’s ability to pay for the new assets. Callaway herself was directly involved in negotiating the sale and documenting the transactions, and throughout the process, she exercised great discretion as an active buyer of two companies who did not know the other was being pursued as well. She structured documents and deals while directing her attorneys, and they all worked around the clock for months. “I have an amazing team, which made the process much easier,” says Callaway. “I am also fortunate to have a CEO who is supportive of us and understands the value we bring.” 46
With so many new plants and employees from different backgrounds and regions, Callaway has taken the company motto to heart and is leading by example. Over the next year, she plans to visit every plant and host meetings during each shift in order to meet with all employees. “The people working in the power plants are the key to what we’re doing,” she says. “I strongly feel that every single one of them understands that it is my job to support them.” Integrating the newly acquired companies into Dynegy’s existing culture and structure is a priority in the coming months. Merging systems and continuing to increase efficiency are also key goals, and the potential for future acquisitions is always on Callaway’s radar. Having now crossed to the other side of a difficult transition, Dynegy continues to approach challenges as opportunities.
Dynegy’s Acquisitions AT A GLANCE
Ameren ACQUISITION DATE: December 2, 2013 ASSETS GAINED: Five coal plants and retail business in Illinois STRATEGIC VALUE: Ameren allowed Dynegy to grow by acquiring unregulated assets and a retail business. Plants were also easy to integrate because they were in Dynegy’s existing geographic footprint.
EquiPower Resources ACQUISITION DATE: April 2, 2015 ASSETS GAINED: 9 plants (capacity of 6,300 megawatts) STRATEGIC VALUE: Plants are in the favorable PJM and New England region and are a mix of coal-fired and gas-fired power generators.
Duke’s Midwest Generation Assets and Retail
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exceptional legal skills to guide Dynegy through an enormously complicated restructuring process, large strategic acquisitions and a changing regulatory landscape, which have made Dynegy a leader in the electricity sector.” – Michael Shenberg, Partner
photo: Eric Melzer
ACQUISITION DATE: April 2, 2015 ASSETS GAINED: 10 plants (capacity of 6,100 megawatts) and retail business STRATEGIC VALUE: Plants are in the favorable MISO region and a mix of coal-fired and gas-fired power plants. Duke’s retail business allows Dynegy to increase direct sales to individual customers.
POWERING OUR COMMUNITIES
White & Case congratulates
DYNEGY OPERATES POWER GENERATING FACILITIES IN EIGHT STATES IN THE MIDWEST, THE NORTHEAST, AND THE WEST COAST.
These facilities are capable of generating 26,000 megawatts of electricity, which is enough electricity to power about 21 million homes nationwide.
Catherine B. Callaway Executive Vice President, General Counsel and Chief Compliance Officer, Dynegy Inc. on being recognized for her outstanding legal career.
We’re proud to serve over 800,000 residential, municipal, commercial, and industrial customers through our Homefield Energy and Dynegy Energy Services businesses in Illinois, Ohio, and Pennsylvania.
We are proud to be included among Catherine and Dynegy’s “core outside counsel.”
In this advertisement, White & Case means the international legal practice comprising White & Case llp, a New York State registered limited liability partnership, White & Case llp, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
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THE CLOSER Since joining Element Financial Corporation in 2013, Jim Nikopoulos has been involved in nearly a dozen major acquisitions—fitting for an attorney brought to the North American equipment financier for his M&A experience. On the heels of an 8.6 billion CAD acquisition, he shares his best practices for smooth transactions. As told to Bridgett Novak
Understand your business’s goals. The most important thing when contemplating a merger or acquisition is that it be in step with your company’s overall direction and investment goals. At Element, we know exactly what areas we want to grow in and, therefore, what opportunities interest us. As a result, when we reach out to potential targets, we know the Element management team and board will support it. This might sound rudimentary, but a lot of companies don’t realize how important it is. Keep the deal team small. I tend to run the process for most of our M&A, along with the CEO, president, CFO, and other members of senior management. Speed and strategic certainty are essential to making a deal run smoothly, and having a smaller team facilitates both. When necessary, we will include people with expertise in the type of business we’re acquiring. For instance, for the GE deal, we tapped the lead lawyer in our fleet division to get his perspective. In 2013, we 48
bought GE’s US helicopter portfolio, and I had one of the lawyers in our aviation division weigh in on the deal. If there’s something we don’t fully understand, we will call in external counsel. To keep everything running smoothly, everyone’s roles need to be clearly defined. Each person needs to know why they’re there and what they’re expected to contribute. Conduct extensive due diligence. Do your homework; investigate the target thoroughly. If it’s a public company, that is easier. If it’s private, there are ways to get information, including people you can turn to who will have insights on its operations. When we acquired PHH Fleet, which was part of a public company, we spent several quarters pulling financial data and assessing the company. We knew what questions we wanted answers to. We discovered there were some shareholders who thought the company should split its two businesses (mortgages and fleet management). Knowing that helped us tailor and time
our offer, and we were able to close the deal in 30-45 days.
“You’re asking someone to sell their company to you; you have to build trust.” – JIM NIKOPOULOS
Be proactive. When we first began talking about the recent GE deal, our market cap was $4.5 billion, with $14 billion in assets. Adding another $7 billion worth of assets was a very big deal. To put GE at ease, we discussed how we would approach securing financing early in the process. Be friendly. We do not engage in hostile takeovers. We approach target companies in-person and start a dialogue. We want to understand their needs and expectations. You’re asking someone to sell their company to you; you have to build trust. Once a deal is negotiated, we stand behind all of the terms—pending some huge red herring—and focus on delivering the things we’ve promised. Integrate quickly and efficiently. When we acquire a company, we announce any personnel changes very quickly. The worst thing is to not have a
photo: Element Financial
Targeted Transactions A sample of the biggest deals closed in Jim Nikopoulos’s tenure with Element Financial
Acquisition of GE Fleet Business (Canada) PURCHASE PRICE: 570 million USD ASSETS ACQUIRED: 497 million USD Canadian portfolio STRATEGIC ADVANTAGE: Created a strategic alliance agreement with GE Capital in which GE and Element will collaborate in pursuit of Canada/US cross-border fleet management opportunities
Acquisition of GE Capital Helicopter Portfolio PURCHASE PRICE: 250 million USD ASSETS ACQUIRED: 63 helicopters operated by a diverse base of customers across a variety of industries
plan and let people linger and worry. We then introduce all the key people to our systems, make sure they understand who does what and that they are committed to our operating strategy. Our integration plan for GE calls for specific targets and line responsibilities that we have carefully spelled out. We will meet regularly to measure our progress against the plan to make sure we’re on track. Be transparent. As a public company, it’s important to be clear about the objectives you hope to achieve from a merger or acquisition. For the GE acquisition, we’ve told the market that we expect to realize a 20 percent accretion to our annual earnings per share based on fully annualized synergies in the range of $90-95 million. We have put these goals out there so the public will be able to gauge our success. We will be monitoring these indices weekly and monthly and reporting to the board every quarter. There’s no option for us not to achieve them. That’s just how we operate.
Trinity Rail Strategic Alliance Entered into strategic alliance agreement with Trinity Industries, a leading railcar manufacturer and lessor in North America, to provide lease financing up to 2 billion USD over a two-year term
Offering of Subscription Receipts, Debentures, and Preferred Shares TOTAL OFFERING SIZE: 1.4 billion CAD
Acquisition of PHH Fleet Business PURCHASE PRICE: 1.4 billion USD + assumption of 3.5 billion USD debt ASSETS ACQUIRED: 4.6 billion USD
Closure of ECAF I Ltd. Asset-Backed Security Debt Offering DEBT VALUATION: 1.21 billion USB ASSETS LEASED: 49 commercial passenger aircraft with appraised value of 1.57 billion USD on lease to 38 airlines STRATEGIC ADVANTAGE: Element acted as structure in the formation of ECAF I Ltd. and sourced third-party institutional equity coinvestors in the new ABS issuer
Increase in Senior Credit Facility
There’s something about Reed Smith and clients of substance. Reed Smith congratulates Element Financial’s Jim Nikopoulos, whose leadership is foundational.
Senior credit line increased to 8.5 billion USD Offering of Subscription Receipts, Debentures, and Preferred Shares (2015) TOTAL OFFERING SIZE: 2.78 billion CAD
Acquisition of GE Fleet Business PURCHASE PRICE: 8.6 billion CAD ASSETS ACQUIRED: 7.1 billion CAD of net earning assets STRATEGIC ADVANTAGE: Facilitated GE in structuring the transition to sell its European fleet operations to Arval, a wholly owned subsidiary of BNP Paribas
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JULIE JACOBS General Counsel AOL
TACTICAL TRANSACTIONS Julie Jacobs led negotiations for Verizon’s $4.4 billion acquisition of AOL. She has been on the forefront of the latter’s growth plans and development since joining AOL in 2000. She discusses the mass media company’s acquisition strategy, which is intended to build the biggest media platform in the world. By Teresa Dovalpage
Modern Counsel: With a deal that began as a joint venture, what caused AOL and Verizon to decide upon acquisition? Julie Jacobs: After many months of collaborative discussions between the two companies, we decided that there was incredible opportunity across the board that we could only deliver to our stakeholders if we were part of the same company—versus a joint venture—including product innovation, premium offerings for consumers, and breakthrough solutions for advertisers and publishers. Verizon wanted to leverage AOL’s advertising capabilities, our global 50
content brands, and our digital ecosystem expertise to help grow its business in new, meaningful ways. So, as the conversations continued, it became very apparent that the best path forward was an acquisition by Verizon. MC: What role did you have in the acquisition? JJ: As general counsel at AOL, my team and I led the negotiating, structuring, and documentation of the deal, including evaluating all of our assets with Verizon’s to understand the potential synergies the combination of the two companies would bring to
photo: Gino DePinto
consumers, partners, advertisers, publishers, employees, and shareholders. We also deeply analyzed our competitive set to determine what was best: standing alone, partnering with others, or being acquired by Verizon. MC: Having had experience in the acquisition of high-profile content sites HuffPo and TechCrunch, how did being on the other side of the transaction with Verizon differ? JJ: There are not many differences in the negotiation stages, so most of the differences I have personally experienced happened postclosing. At AOL, we’ve had a long-standing relationship with Verizon, so the entire process was collaborative and positive—starting with the negotiations, getting through the legal agreements, and then the actual closing of the transaction. And today, we continue to evaluate where we should unite our efforts and where we should continue to operate independently.
Transaction Tab A brief history of AOL’s inorganic growth ••
MC: What influence did you personally have on the Verizon deal?
AOL merges with Time Warner to become the world’s largest media company. AOL gains an ad network when it acquires Advertising.com, at the time the largest third-party online advertisement network. With its acquisition of TechCrunch, AOL gains a large, affluent, and niche audience to leverage for its advertising business.
JJ: In addition to all that the legal team was responsible for on the transaction of the acquisition process, part of my responsibility was working directly with the AOL board of directors to ensure they had a comprehensive understanding of all of the deal elements in order to make an informed decision on the transaction. This was a critical part of my role given the complexities we had to consider internally, externally, and related to the public markets.
MC: AOL recently closed a deal to take over display ad sales (mobile and video) for Microsoft in nine countries. What led to the decision of signing a 10-year deal so soon after the Verizon acquisition?
JJ: The Microsoft partnership around search and advertising was an extension of our existing strategy and long-time partnership with Microsoft. Our search deal with Google was set to expire at the end of 2015, and ultimately we made a strategic decision to go with Bing. On the advertising side, this partnership increases our global mobile, display, and video ad inventory scale; gives us access to a younger demographic with products like Skype and Xbox; and helps us expand internationally in nine key global markets, including the United States, United Kingdom, Canada, Brazil, France, Germany, Italy, Spain, and Japan. Our partners and clients are only beginning to realize the power of this combined reach and scale spanning AOL, Verizon, Microsoft, and Millennial Media.
AOL acquires the Huffington Post and gains a massive young audience. Following the success of AOL’s ad technology, the company acquires Adap.tv to expand its ad tech to include targeted video ads. AOL enters into a global strategic partnership with Microsoft to handle sales of digital ads on Microsoft platforms. Verizon acquires AOL for $4.4 billion In an effort to round out its mobile ad business, AOL acquires Millennial Media, which broadens the company’s capability to include in-app advertisements.
SUCCESSFULLY INTEGRATE AFTER AN ACQUISITION Kurt Stepaniak shares KONE’s tried and true practices By Crystal Spraggins // Photo by Caleb Fox
KURT STEPANIAK General Counsel KONE Inc.
or the last 18 years, Kurt Stepaniak has been the legal authority at KONE, Inc., and he’s shepherded plenty of new business into the company’s portfolio in those nearly two decades. Each year his team completes several acquisitions of independent elevator service companies. What makes KONE special? Stepaniak credits the company’s long-term growth strategy, willingness to reinvest in the company, focus on a single business, and culture of innovation. Stepaniak isn’t alone in his admiration for KONE’s creativity. This past August, and for the fifth year in a row, the company was named by Forbes as one of the most innovative in the world. Stepaniak describes the acquisition process at KONE as robust. Leads are generated from multiple sources, including KONE’s local offices (the company formally canvasses its branches once or twice a year, soliciting names of companies that could potentially fit into KONE’s long-term strategy), cold calls from owners looking to sell, and KONE’s director of mergers and acquisitions, who reports to Stepaniak. KONE’s CEO, CFO, head of service business, and Stepaniak comprise the acquisition committee and decide which leads to follow or abandon. All acquisitions are completed in-house by a dedicated team of acquisitions professionals. KONE’s long-term reinvestment strategy is fairly simple and starts with a goal of profitable growth. “I strongly oppose the philosophy that growth by itself is good,” Stepaniak says. “We buy companies. We don’t sell companies.” In other words, KONE doesn’t seek struggling businesses at bargain rates with the goal of turning them around and selling them for profit. Instead, targets for acquisition are well managed and enjoy strong customer goodwill and a reputation for great service. These prerequisites help ensure KONE is in the best possible position to assume the service contracts held by the previous owner. “KONE wants to be the best elevator company in every market,” says Stepaniak. “With every [potential acquisition] we ask ourselves, ‘How will this improve our position in a particular market?’” Stepaniak explains that mergers and acquisitions at KONE are different than in other industries. The 54
“If you bring enough money to the table, you can close a deal. Successfully integrating the business is more difficult.” – KURT STEPANIAK
elevator industry is made up of hundreds if not thousands of small elevator companies that operate locally, and every building owner is a different customer. KONE’s goal is to acquire several of these smaller companies each year, assume the contracts, and enhance KONE’s reputation as first-rate in customer satisfaction worldwide. In the high-stakes business of M&A, the biggest challenge is an unsuccessful integration. If a merger underperforms, service contracts, revenue, and customer goodwill all take a hit. “If we lose service contracts, then we know the integration isn’t working as well as intended,” says Stepaniak. His approach to a disappointing merger is practical: “If you’ve done everything right, it’s not going to go wrong. So, if it does go wrong, we’ve done something wrong. The worst thing you can do is not learn from your mistakes. If an integration underperforms, we find out why.” Weekly postacquisition meetings allow KONE leaders to track how well the integration is faring and, hopefully, tackle small problems before they become large ones. Other best practices start with the business model itself, which incorporates the legal side of acquisitions into the business side. In many companies, these are separated, leading to a significant disadvantage. According to Stepaniak, when the business and legal sides are separated, lawyers may be boxed into
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less-than-favorable terms that are agreed to prior to their involvement in the transaction. Stepaniak also takes special care to hire the right lawyers for his team. “Sometimes lawyers can become too focused on the legal side of things and lose sight of the business implications,” he says. “I hire great businesspeople who happen to be great lawyers.” KONE’s attitude toward the people side of mergers also sets the foundation for seeing an acquisition through to completion and integration. “Anybody can do a transaction,” says Stepaniak. “If you bring enough money to the table, you can close a deal. Successfully integrating the business is more difficult.” For a smooth integration, KONE makes a point of actively engaging both sellers and employees. It’s not unusual for previous owners to come and work for KONE, and the acquisition team takes pains to develop positive relationships with the technicians from the very start. “Technicians—the men and women who turn the wrenches—are the face of KONE to the customer,” says Stepaniak. So before the merger closes and the first day of work under the KONE banner even begins, the KONE team systematically instructs technicians and other staff members in “The KONE Way,” which includes training in safety, communication, and customer service. More practical matters, such as uniforms and business cards, have already been accounted for as well. “We want to make sure that no one shows up to work [that first day] without knowing exactly what to do.” So what’s in the future for KONE with respect to acquisitions? Stepaniak doesn’t even have to think about his answer. “More acquisitions.”
Our firm is proud
Congratulations Kurt! Thanks for your leadership and providing opportunities to succeed over these many years.
to work with KURT STEPANIAK and his entire legal team at Kone, Inc., and we are pleased to recognize his many accomplishments.
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IMPLEMENT M&A BRIAN LEVEY General Counsel and Chief Financial Officer Upwork
scale,” says Levey. “We connect the global demand for talent with the global supply of talent. It’s no coincidence that I ended up here.” Levey joined Upwork at a critical time for the company. In 2013, after a 13-year stint as a senior leader of eBay’s legal team, he left to serve as GC for oDesk, an Upwork predecessor. A year later, oDesk merged with Elance, another freelancing platform, and Levey took the legal helm of the combined company. In 2015, Elance-oDesk rebranded itself to form Upwork, launching a new platform that aims to quickly connect freelance workers (software developers, graphic designers,
writers, and other professionals) with paying clients. Levey stayed on as general counsel, and in June 2015, he was also named CFO—a role that allows him to make streamlined, risk-based decisions to benefit the entire company. That’s a lot of change for one business to weather, but Levey says his team navigated through the pain points of integration by focusing on the evolution of Upwork’s brand. Merging companies is never easy, of course, and competitors that combine forces present an even greater challenge. In many ways, the Elance-oDesk partnership was “like the Red Sox and the Yankees agreeing to merge,” Levey said. But the launch of a new platform allowed them to combine the best aspects of each company and drop the worst. “Merging during a period of growth is always much easier than integrating companies that are shrinking,” he says. “It creates a lot of runway to bounce around ideas and develop new skills. It was a great opportunity to start from scratch, and we got to take the best from both companies, both culturally and from a sheer user experience perspective.” From a leadership perspective, Levey says the transformation helped recalibrate his team’s mission and steadied its focus on helping Upwork take a growing segment of the market. Likewise, the merger-rebrand allowed Upwork to become a more customer-centric platform. “We’re a two-sided market: clients on one hand and independent professionals on the other,” says Levey. “This [merger] allowed us to take a fresh, new look at how we’re serving both sides.” As a whole, Upwork is throttling towards success in the freelance marketplace. The company’s platform cumulatively has more than 10 million registered freelancers—the largest freelancing site based on freelancer earnings. Upwork is playing in a market segment estimated to reach in excess of $20 billion by 2020, according to one staffing industry report, up from an estimated $3 billion in 2014. But don’t lump it in with the rest of the “gig economy.”
E-PIONEERS It’s basic entrepreneurialism: two brands saw a hole in the market and sought to fill it. How they combined their strengths to help Upwork claim its place as an industry trailblazer By Kristen Bahler
Supply and demand principles have dictated much of Brian Levey’s professional life. As an eight-year-old hocking collectibles at baseball card conventions and as a Federal Reserve Board employee working to decrease stock market volatility, those principles are the common thread binding Levey’s career. His current post is no different. As general counsel and chief financial officer at Upwork, an online freelancing platform, Levey is helping solve a common supply and demand equation: connecting independent professionals with the companies that need them. “Our goal is to make markets more efficient and to empower people on a global 56
“Just like eBay was a pioneer in facilitating the sale of global goods, Amazon revolutionized retail, and iTunes transformed music, I see Upwork as a pioneer in creating a new way for people to work.” – BRIAN LEVEY
“I don’t think of our platform as a ‘gig’ platform,” Levey said. “Rather, we’re making it easier for highly skilled and knowledge-based workers to enjoy a more flexible lifestyle. We’re responding to a need that exists, and we’re enabling opportunities.” In doing so, he adds, the company aims to rival the entrepreneurial achievements of its Silicon Valley forefathers. “Just like eBay was a pioneer in facilitating the sale of global goods, Amazon revolutionized retail, and iTunes transformed music, I see Upwork as a pioneer in creating a new way for people to work,” Levey says. “I’ve learned that it doesn’t make sense to be number two or three at anything in the business world.”
Congratulations Brian! We are honored to be an extension of your team. Matkowsky Law is a leading provider of tech-enabled legal services related to
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> INFOLAWGROUP LLP: “Working with
Brian is terrific. He is strategic, a quick thinker, and he understands both the business and legal issues confronting Upwork.” – Justine Young Gottshall, Partner
protecting brand & IP assets.
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> MATKOWSKY LAW: “A natural leader,
Brian Levey has built a strong team with a great sense of energy, engagement, and even sense of exploration. Brian is an incredibly smart lawyer with a strong sense of business acumen.” – Jonathan Matkowsky, President
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LEVELING THE PLAYING FIELD How Robert Bello and Hughes Marino went to bat for tenants in California and changed the rental game By Keith Loria
You might not hear Hughes Marino in the same breath as Facebook and Google, but Robert Bello says the real estate advisory firm is unlike any other, offering a company culture akin to Silicon Valley giants. Bello, the general counsel, was instrumental in helping pass a law that protects tenants and buyers throughout the state of California by extending commercial transactions disclosure requirements that already existed for residential transactions. Modern Counsel: What makes Hughes Marino a different kind of firm? Robert Bello: The culture is incredible. We’re incredibly progressive here. The owners have deeply invested in the work environment—bringing in inspirational speakers, holding multiple team-building events, and fervently living our core values. Unlike other companies where the mission 58
statement often has no meaning, we discuss our core values in every meeting and have had a number of team-building contests centered around the core values. You can see that our owners and staff operate by these values day in and day out. These core values deeply resonate with me because they’re the same core values I believe in. MC: What was the genesis of the law you helped pass? RB: Our president and CEO, Jason Hughes, has been doing this for 28 years and representing tenants for 25. In California, conflicts of interest in commercial real estate have long existed. Unlike in residential real estate, brokers had not been required to disclose such conflicts to their clients in writing, so most tenants were completely blind to it. This concept of dual agents and same agents representing the buyer and seller or landlord and tenant just never seemed right. In the commercial world, landlords hold more power and sway. They have the long-term relationships with brokers because a typical landlord will have a number of offices open up every year in comparison
photo: Hughes Marino
IMPLEMENT ROBERT BELLO General Counsel Hughes Marino
to a typical tenant, who will sign a new lease every three to five years. The steady stream of business means landlords are most brokers’ primary clients. We had the legislature extend the same protections that existed in residential transactions. MC: Why was this law important to Hughes Marino? RB: We represent only tenants and buyers, so we don’t have any conflict of interest in our representation. In California, the prior rule was that you had to make a disclosure, but it did not have to be in writing. Most brokers just never made the disclosure, and if a problem developed, it was typically a “he said, she said” situation, making it very difficult to prove the warning was given. I really enjoy helping people get a fair shake. Most tenants don’t have an understanding of the process. In this instance, whether it’s a FORTUNE 500 company or two-person start-up, our job 60
is to level the playing field and swing the pendulum back towards the tenant. MC: You lobbied long and hard for making this a reality. What lasting impact will the legislation have with the tenants affected by it? RB: We had the law extended to cover commercial transactions, so now brokers have to provide disclosure and obtain signed consent. Jason and I helped line up grass-roots support, reaching out to past clients, getting permission to share stories on how people were taken advantage of, and highlighting the structural imbalance inherent in the industry. We highlighted that, talked to clients, lobbied firms and worked with the state senator who sponsored the bill. The legislation was signed in August 2014 and went into effect January 2015. It’s been a huge change. Now, brokers have to make disclosures up front, so tenants have a fighting chance.
Setting Precedent Just before moving in-house, Bello helped secure a precedent-setting opinion in California concerning wrongful termination cases. The case concerned the proper standard for determining whether an employer wrongfully terminated an employee and broke the law. Another case, decided just one week before Bello’s client’s opening brief was due, changed the causation standard for wrongful terminations in violation of California statute. Bello’s case set a new precedent by extending the prior decision into the common law wrongful termination cause of action, raising the bar, and making it more difficult for plaintiffs to succeed on such a claim.
photo: Hughes Marino
Looking for award-winning commercial real estate representation you can trust? Look no further. Best Commercial Real Estate Company | 2011-2015 Best Places to Work | 2012-2015 Best Family Owned Business | 2014 Most Admired Company | 2012-2013 Most Trusted Band | 2011 At Hughes Marino we do one thing every day: Help companies save money on their real estate. Because we only represent tenants and buyers – never landlords – we never have a conflict of interest. With a fierce commitment to protecting our clients, backed by a 100% guarantee on service and results, we’re proud to be one of the most trusted names in commercial real estate.
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At Microsoft, a renewed company culture is guiding everything from innovation to governance By Amanda Garcia
Modern Counsel: How do you approach decisions about things like corporate governance and shareholder engagement at Microsoft?
JOHN SEETHOFF Deputy General Counsel Microsoft
John Seethoff: It ties back to Microsoft’s company values of integrity, accountability, transparency, being open and respectful, striving for excellence, and learning. Long-term thinking is what guides us. We know that we don’t necessarily have the answer right now, but we’ll learn the answer as the world changes. And as we formulate our approach to governance, we do it in the context of helping successfully operate and grow our business. MC: What is your overarching goal as you maintain and improve governance? JS: We want to maintain positive, open, constructive relationships with our shareholders. That doesn’t mean we always agree with each of them, but it’s important to create an opportunity for dialogue so they understand how our board is thinking. It all comes down to establishing credibility and trust. MC: Talk about Microsoft’s adoption of its proxy access for director nominations policy.
JS: The policy allows eligible shareholders to nominate candidates for election to the board. It’s a continuation of a path that we’ve been on for a long time, providing an appropriate balance of the role of shareholders and the board. For example, we were one of the first companies to adopt majority voting for directors. Proxy access started with a proposal brought by a shareholder more than a year ago, and while there were flaws, there were also sensible arguments supporting the concept, and it brought this emerging issue to the forefront. So we observed, asked a lot of questions, sought input from shareholders, and after a year of study our board decided to move forward with it. MC: How has the new plan changed shareholder interaction with Microsoft’s board? JS: We wanted to be able to facilitate direct involvement between directors and shareholders, so we proactively took on the process when Steve Ballmer—former CEO of Microsoft— announced his retirement. We immediately reached out to shareholders to discuss plans for a search process, at the conclusion of which we outlined where we ended up and how we got there. We’ve continued that conversation ever since. MC: What are Microsoft’s corporate goals at the center of those conversations? JS: Satya Nadella has organized our corporate mission around three goals: to reinvent productivity and business processes, to build the intelligent cloud platform, and to create more personal computing. In doing so, he also encourages us to be obsessed with customer service and always be thinking about how to meet the needs of our incredibly diverse, global group of more than one billion users.
In recognition of John Seethoff “[Being open and transparent, building constructive relationships, and acting with humility] fit whether we’re talking about the board’s engagement with shareholders, how we interact with our customers, or how we work together as one Microsoft.”
MICROSOFT VP AND DEPUTY GENERAL COUNSEL, CORPORATE
— JOHN SEETHOFF
Communication Strategy Internal communication about Microsoft’s culture change has been crucial to its implementation. From real-time conversations via Yammer, to monthly live Q&A sessions with CEO Satya Nadella, the messaging from leadership has been consistent. “It’s all about repetition and keeping it at the forefront in our communication,” says Seethoff. “It’s about embodying what it means to have a growth mind-set. Intentional culture change is an ongoing journey for Microsoft and will be a key factor in accomplishing our mission to empower every person and every organization on the planet to achieve more.”
MC: What role does corporate culture play in achieving these goals? JS: Satya has been building a corporate culture grounded in a growth mind-set— the notion that everyone at every level has the capability to develop and nurture their own potential. That individual perspective informs how we operate and grow in a collective sense as well. It’s about uniting a group of individuals around a shared mission, and working together to serve a greater purpose. MC: What is that greater purpose, and how does a growth mind-set contribute? JS: Ultimately it’s about serving our customers. We talk about culture and growth at every team meeting, and I encourage my team to take risks. I want them to be comfortable with uncertainty, and to view mistakes as learning opportunities. It’s
also important to recognize the success of others, and remember that it doesn’t diminish one’s own self-worth. Promoting this mind-set positively impacts individuals and the company as a whole, and more importantly, our customers. MC: How will the corporate culture reinforce initiatives around shareholder engagement? How will they work together to uphold your overarching corporate goals? JS: I always come back to the question, “How can we help?” It’s surprising how much clarity comes from asking that, and it’s the perfect place for our corporate mission and cultural initiatives to come together. It brings us right back to where we started, with being open and transparent, building constructive relationships, and acting with humility. These values fit whether we’re talking about the board’s engagement with shareholders, how we interact with our customers, or how we work together as one Microsoft. They keep us on track as we pursue our goals, work toward balanced governance, and develop as individual leaders.
THROUGH HIS LEADERSHIP of Microsoft’s corporate governance and the professional governance community, John Seethoff has established new standards of excellence. His thoughtful style of leadership and his efforts to understand shareholders’ concerns serve as examples to us all. Perkins Coie is proud to have been a partner with John for the past decade on Microsoft’s governance matters.
Thank you, John, for your valuable contributions to our profession.
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> PERKINS COIE LLP: “Perkins Coie is pleased to have a decade-long partnership with John Seethoff on governance matters. John’s role as a thought leader in the profession and national community has positioned Microsoft at the forefront of corporate governance and shareholder communication.” – Stewart Landefeld, Partner Perkins Coie LLP Attorney Advertising
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Working together â€“ To succeed!
We congratulate Lynne Puckett, Senior Vice President, General Counsel and Secretary of Colfax on her accomplishments and recognition by Modern Counsel. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. ÂŠ Allen & Overy 2015
LYNNE PUCKETT General Counsel Colfax
A TALE OF TWO TEAMS How Lynne Puckett transformed a disparate legal force into an efficient, results-oriented team By Taryn Barnes
photo: Modern Life Portraits
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Lynne Puckett joined the team at Colfax in 2010, but her connection to the industrial enterprise began even earlier while she was a partner at Hogan Lovells. Her experience as the company’s outside counsel gave her the necessary insight to identify areas of improvement, retool the in-house team, and bring costs under control. The Impetus The first challenge Puckett identified within Colfax’s legal function was the dysfunctional communication between inside and outside counsel, who operated like two arms out of sync. “There were many counsel who were accustomed to fighting their own battles without an appreciation of the global strategy, which is, of course, required to prioritize legal objectives,” says Puckett. “As a result, they were not used to working closely as a team alongside in-house counsel.” Outsourced litigators, she noticed, had many unchecked processes that could, unintentionally, negatively impact Colfax’s costs and results. So she aimed to create unity among the teams by first aligning the outside partners—who had grown accustomed to little to no oversight—with the business objectives and in-house team. “They were smart and talented attorneys but they did not know the business needs,” says Puckett. “They were not able to effectively balance those needs with the immediate desire to win every battle and every point, resulting in occasional Pyrrhic victories.” Realizing the existing landscape was not yielding the necessary results, Puckett resolved to make swift changes to the department. The Plan Puckett began with a counsel audit and determined the talent gaps both in-house and in Colfax’s outside counsel roster. Seeing the need to strengthen the in-house legal bench to better manage outside counsel and new matters, Puckett began recruiting a highly talented team to the in-house group. The focus of the new legal lineup would be on outcomes and results. Puckett created a strategic management style coined “active matter management,” where 66
the team views each matter on a transactional basis (not just a prior relationship basis) and selects the best outside counsel for that particular transaction, be it litigation or acquisitions. “It evolved out of necessity,” says Puckett. The system apprises her of all legal matters in terms of litigation and shifts in strategy. Puckett also empowers her team to involve themselves in major matters that arise and take an active role in managing them while maintaining good communication with the business leaders. The Results Having expertly built her team by scouting top talent—many of whom she had worked with in the past—and implemented active matter management, Puckett says Colfax has gotten better results and has successfully resolved many open matters, all while developing robust compliance programs and extensive global training programs. Using the Colfax business system, which focuses on continual business improvement, and with the help of her CEO and CFO, the legal department is running efficiently. One of the less quantifiable results of the department overhaul has been a change in culture. “We’re very open and challenge each other before we arrive at a final decision on strategic steps in any particular matter,” says Puckett. “That’s how a good team functions.” This dynamic has allowed other solutions to arise as well. The department is now benefiting from a new IP program that incentivizes associates to submit patentable ideas to maintain Colfax’s position as an innovator within its industry. “It allows us to get in front of patents as they are developed to make sure we are protecting our innovations, not infringing on others, and aggressively protecting our IP,” says Puckett.
Lessons from the CIA Prior to working in law, Puckett spent five years in the CIA where she had unique experiences—not the least of which included jumping out of planes, blowing up a variety of things, and learning tough skills. She credits her experience with the CIA in the development of her leadership style. “I learned a lot that was transferable not only to law but to project management— which is a primary focus for me,” says Puckett. Getting a group of people together to focus on a project, drive it, and communicate well without creating bureaucracy is important. “Accomplishing your goals is completely related to how you interact with the people whom you need to accomplish those goals.”
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> ALLEN & OVERY LLP: “Lynne
consistently delivers through her sharp business sense, excellent understanding of global operations, and hunger for success! I have known her for a number of years and am a proud witness of her achievements at Colfax.” – Thomas Ubber, Managing Partner–Germany
RECLAIMING THE LEGAL DEPARTMENT Why Scott Wornow took legal back from outside counsel, and how the change has impacted Atmel’s bottom line By Zach Baliva In his first two years at Atmel, chief legal officer Scott Wornow reduced money spent on outside firms by 50 percent. The changes didn’t stop there. Wornow’s new bosses hired him to improve the overall performance of a slow, rigid, and isolated department. And the stakes were high. The billion-dollar, multinational semiconductor company was in the process of streamlining operations. After the economic downturn of 2008, 2009 had been a rough year. Reduced demand impacted all business units, and the corporation focused on its product portfolio and its tentpole customers. To react to new realities and reposition Atmel for growth, senior leaders moved to focus on core competencies, enhance competitiveness, reduce spending, and improve efficiencies across the board. The economic crisis interrupted a plan already in place since 2007. Atmel had exited 14 noncore business areas, lowered operating expenses, and reduced headcount by 30 percent. Reinventing the legal department—Wornow’s mandate from the board—was the final step in the plan. The Impetus “The need for a change was pretty obvious on day one. Nearly all activities were handled photo: Atmel
outside the department and everything was disconnected,” Wornow says. After making partner at a number of large, international firms where he managed risk and performed several duties, Wornow knew Atmel’s lawyers could handle much of the work that was sent out—but they had never been given the opportunity. The department of 25 had little cohesiveness or collaboration. Many of the lawyers, accustomed to working alone on simple and routine tasks, had grown frustrated by the lack of opportunity and professional development. Morale was low. “My philosophy is that the inhouse lawyer is a businessperson with a legal perspective, but the objective remains a business one,” says Wornow. Previously, lawyers mostly worked separately from business people, and if the two did interact, it was only over cut-and-dried legal matters. Atmel’s business people viewed legal either as an obstacle, or a necessary evil. Despite the challenges that he would inevitably face, Wornow was encouraged because he saw the potential. “Atmel had been through a number of restructurings and was doing workforce reduction and facilities sales in Europe. I knew that if we could improve quickly, I could show my new colleagues how much value the legal department could provide in those areas,” he recalls.
SCOTT WORNOW Chief Legal Officer Atmel
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ATMEL OUTSIDE COUNSEL SPEND By strategically bringing work back in-house, Scott Warnow has been able to cut Atmel’s outside legal budget by more than 50 percent in five years.
$24 m 2010
Wornow was right. A legal team working below its potential was indeed hitting Atmel’s bottom line. By relying heavily on others to perform routine work, they were forcing the company to spend millions of dollars ($24 million in 2010) on outside firms. Secondly, Wornow argues that outside partners can rarely understand and serve a complex and evolving organization like Atmel as well as its own inhouse team. Additionally, department leaders often complained of legal’s slow response time. In his previous roles, Wornow had seen large firms and in-house teams perform well. “I knew we had the pieces to take back key jobs and not rely on outside help for day-to-day activities or even larger, more complex legal tasks,” he says. “Most lawyers like a challenge. Most want to develop subject-matter expertise and be trusted to take the lead on something.” He wanted Atmel’s legal team to handle HR issues, license negotiations, workforce reductions, board issues, and other matters. “This should all be in the core competencies of an effective in-house legal department,” he says. Getting there would require a dramatic course correction.
“There’s a correlation between reducing external spend and increasing morale because it sends more interesting work back inside the department.”
The Plan Step one was to reset expectations at Atmel, both inside and outside the legal department. Externally, Wornow worked to communicate with other senior leaders, describe the capabilities of a revamped legal team, and get early buy-in. Internally, he led a change in mind-set. Many of Atmel’s seasoned lawyers had been partners or senior associates at firms. Others worked inside major corporations. The skills were there; the expectations needed to shift. “I changed the standards that we hold ourselves to. We set out to do more while relying less on outside counsel and thereby reducing costs at the same time,” Wornow explains. With the aim clearly communicated, he reviewed Atmel’s outside partners and found the corporation was using more than a dozen firms. He resolved to reduce that number and cut the line item for outside counsel by 50 percent. Wornow knew that severing ties with outside firms would have some associated benefits for his team. “There’s a correlation between reducing external spend and increasing morale because it sends more interesting work back inside the department,” he says. When employees started doing M&A transactions and other items that were once fully outsourced, engagement, quality, and effectiveness all improved. The move allowed in-house attorneys to do the lawyering they had been hungry for
The Results With Wornow’s changes, Atmel’s legal department went from spending $24 million in 2010 to $12 million in 2013 and trending towards $9–10 million for 2015. The corporation also reduced the number of lawyers and support staff in its legal department from 25 to 15. “The lawyers bought-in to the changes, and adopted the mantra of doing more with less. The plan worked because they stepped up to the plate,” says Wornow. The feedback came almost instantly. Wornow’s colleagues in the finance department noticed a difference in M&A transactions early, saying they were completed with a much better understanding of actual risk. That’s because under the new approach, Wornow had IP lawyers, litigators, and others in his department working collaboratively to assess risk and complete due diligence. Today, Atmel still sends some work to its outside firms, but the work is more basic and less critical to Atmel’s core business. And Wornow has discovered an added benefit to his plan: quality from outside firms has gone up, too, because they’re less overwhelmed by volume. Atmel now uses about eight main partner firms, and scores each one on a quarterly basis. Those firms receive anonymous peer comparisons and economic incentives and disincentives for performance.
– SCOTT WORNOW
while shifting outside firms to a support role. The roles, as Wornow says, had been “somewhat reversed.” At the same time, Atmel aggressively introduced fixed-, alternative-, and success-fee arrangements and initiated requests for proposal for many of its matters, starting in 2011. The move helped bring down costs even more.
In 2013, Atmel’s legal team started developing online training modules for anticorruption and business standards with internal and cross-disciplinary risk management committees. In 2014, the group chartered a committee to review all standards and educate each business unit on standards bodies that Atmel works with and how these partnerships impact intellectual property. Wornow says these efforts allow for cross-functional information sharing and provide another mechanism for breaking down silos and better integrating legal in the business units and their long-term objectives. In 2015, the NYSE Governance Services’ Governance, Risk, and Compliance Leadership Awards panel named Atmel the best in-house legal team for corporate governance at a small-to-mid-cap company, writing that Atmel met “every legal, ethical, and compliance challenge with exemplary standards of integrity and legal expertise.” Now, a more responsive legal team at Atmel has a better understanding of the business and is calibrated to meet that business’s needs. Atmel’s products face strict regulations, and the corporation completes large transactions, hires employees, and opens facilities all over the world. Wornow’s department is adding value as legal interacts with research and development engineers and others to evaluate new products and identify potential legal issues. With a transformed legal team at the table, Atmel develops and releases new products faster than before.
Standing Out. Distinction is always confined to the few. Jones Day congratulates Scott Wornow, Senior Vice President & Chief Legal Officer of Atmel Corporation, on his many accomplishments.
HERBERT SMITH FREEHILLS PROVIDES STRATEGIC ADVICE TO THE LARGEST GLOBAL ORGANISATIONS. — CLIENT CONNECTION —
> JONES DAY: “Scott skillfully combines
broad knowledge of the law with a sharp business acumen to produce practical results. I am proud to be part of his team.” – Khoa D. Do, Partner
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We congratulate Scott Wornow on his leadership as Chief Legal Officer, Senior Vice President and Secretary of Atmel Corporation. HERBERTSMITHFREEHILLS.COM
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“So often, the most difficult part of accepting a new way of doing things is overcoming the fact that it’s unfamiliar.” – SUCHITRA NARAYEN, ORACLE
LEAD Last issue, Zimmer Biomet’s David Royster spoke about casting a shadow as a leader, influencing attitudes and behavior across an organization. Leaders may not be immune to the discomfort of change, but they have the power to paint challenges as opportunities and imbue enthusiasm over ambivalence in the face of transition. In this section, counsel from Nissan, Papa John’s, and Crate & Barrel demonstrate the power of positive leadership.
INQUIRY Do you have to concentrate on embracing change, or do you thrive in transition? What has been the biggest transition of your career, and what did you learn from it about your ability to handle change?
A recent study showed that the majority of today’s employees want digital and social media engagement from their employers through times of change. Harvard Business Review’s article on managing change with social media offers four compelling reasons why. Check out Forbes.com for 12 tips to overcome fear of change at work.
JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.
MODERN-COUNSEL.COM 7 1
CHRISTINA ACKERMANN General Counsel Alcon Laboratories
photo: Alcon Laboratories
Alcon’s 100-Day Legal Department Makeover When Christina Ackermann arrived at Alcon, she immediately saw a handful of areas within the legal department that she wanted to improve upon. She used her more than 11 years at Novartis, Alcon’s parent company, to inform talent allocation and development in the legal function BY BECKY MAY
The Impetus The first thing Ackermann noticed about the Alcon legal department was the fragmentation between the business structure and legal function. “There was no clear go-to person for our business partners within legal,” she says. Another challenge Ackermann encountered was finding a way to get the two legal segments of general legal and intellectual property to improve collaboration. Both were run independently of the other. Furthermore, the company’s headquarters, based in Fort Worth, Texas, created a lack of legal presence in Alcon’s locations outside of the United States. “Because we are a global company, we needed a global presence in legal,” says Ackermann. With a checklist of items that needed to be ticked off, the general counsel knew her previous experience at Novartis would come into play in reshaping the company’s legal department. The Plan Ackermann wasted no time in restructuring the company’s existing department, and once approved, she began implementing her 100-day plan. The first
part consisted of learning the business. Despite being under the umbrella of Novartis, Alcon’s operations were very different from the parent company. Alcon consists of three different businesses: surgical, pharmaceutical, and vision care, which essentially meant Ackermann had to learn the ins and outs of three different businesses. She needed to learn Alcon’s processes, initiatives, and people. “The most time-consuming part was getting to know how legal interacted with the business,” she says. Ackermann sat in as many committee meetings as she could to get a better sense of the company. “I needed to figure out which one of my lawyers I needed to send to what meeting so we could give immediate advice rather than reactive advice.” Part of restructuring the department included reevaluating current positions and redistributing personnel. “We have a number of talented professionals but we needed to leverage our level of expertise,” she says. Ackermann admits the changes didn’t go over well with everyone at first. “I took away work from some people and gave it to others,” she says. She also reorganized the paralegals, bringing them under an umbrella led by a senior paralegal, and split them into APRIL/MAY/JUNE 2016
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Kaye Scholer joins Modern Counsel in recognizing
Christina Ackermann Senior Vice President and General Counsel, Alcon Inc. For her legal leadership at Alcon and her service to the profession
Combining the continuity and business acumen of a century-old law firm with a practical forward-looking, results-driven approach.
two groups: general legal and patents. This created more efficiency and allowed them to support a whole function. In reorganizing personnel, Ackermann saw an opportunity to open the door for associate development. She saw that many employees had been in the same position for years, which is something she wanted to change. “When I interview an associate, I see if they can work in the pipeline of Novartis,” says Ackermann. One patent attorney, she uses as an example, moved to the general legal side of the function and is now leading a business franchise as its general attorney. “He is agile, and that is how you get the best out of people,” says Ackermann. “You stretch them with the right support.” Ackermann found that building centers of excellence would create a more dynamic work flow. She designated five centers: global regulatory and development, global transactions, global IP, global integrity and compliance, and global trade compliance. While divvying up staff, she also brought in a handful of new talent to actualize this plan. A technical challenge Ackermann came across was making the switch from a paper-based system to an IT database. “We weren’t going to be a law firm from the ‘80s. We’re going to be a lean law firm from 2015,” she says. Ackermann’s plan also targeted the company culture. In order to do this she elicited help from Alcon’s communications and HR departments. She promoted “Speak Up!” which encourages attorneys to say something when they see a red flag and to do so in a way that engages the business side to listen. It’s an initiative that is still in the process of coming to fruition. Ackermann foresees the “Speak Up!” culture sinking in through her interactions within legal and the business in different countries to develop a personal relationship. “Attorneys who are sitting alone, akin to sole practitioners in a country, need to learn that we, at the global or regional level, are a safety net for them and here to help,” she says. Another initiative the legal function is working on encourages lawyers to spend the day
Culture Shock Modern Counsel: How are you adjusting the company culture at Alcon? Christina Ackermann: We want to continue to build a winning culture. One of the themes we had in our recent global legal meeting was to continue to build on our “Speak Up!” culture and to advance the business objective. We are also trying to lead by example, so people don’t feel scared to speak up. Fear paralyzes an organization and I don’t want our employees to be afraid. MC: How do you build trust within a company? CA: Whether peer-to-peer or supervisor-toassociate, how we go about building trust is critical to the overall success of our team and ultimately the success of our company. In legal, our ability to build trust is key to enabling cooperation from our internal and external stakeholders so that we can arrive at effective solutions as quickly as possible. I encourage my teams to build an authentic rapport with their clients by actively listening to them, going into the field with them, joining meetings and conventions, and working towards measured solutions. Our counsel may not always be popular, but if we have built up trust with our teams, we’re able to handle matters diplomatically and at the same time build our credibility. We’ve started giving awards and recognition for work where the successful results are as much about the outcome as the way the outcome was achieved—building trust always plays a big factor in the work we choose to recognize.
with salespeople to see procedures and learn the products. In Ackermann’s eyes, this “ride along” initiative will help her attorneys give advice that isn’t in a vacuum. At Alcon’s most-recent global internal conference, company leaders emphasized the importance of modeling good behavior in order to achieve a cultural change. Ackermann says this global strategy will help her teams continue to build with a continued focus on optimism and clarity. The Results Since Ackermann began implementing her plan in March of 2013, the company’s legal department has improved. Prior to the departmental changes, Alcon relied heavily on outside counsel. “We leveraged
Novartis’s preferred legal firms to partner with firms that we have worked with before and which know us,” says Ackermann. “Our total external budget has gone down by bringing stronger talent in-house and managing our cases more vigorously, even though our total number of cases has gone up.” Ackermann continues to expand and enhance the Alcon legal team, particularly in countries outside of the United States. Since 2013, Ackermann has brought in a significant number of new staff members including lawyers across the globe, paralegals and assistants, and compliance officers. With legal staff in more than 26 different countries and growing monthly, she is still pushing the company to work on its global presence.
Arnold & Porter LLP congratulates Christina Ackermann for her outstanding leadership as Senior Vice President and General Counsel of Alcon.
Morrison & Foerster congratulates Christina Ackermann, Senior Vice President and General Counsel, on her accomplishments and recognition by Modern Counsel.
— CLIENT CONNECTION —
> ARNOLD & PORTER LLP: “Christina’s legal and business judgment makes her a very effective advocate for Alcon and an extremely easy partner with whom to collaborate. Her leadership and mentorship further demonstrate why she is leader in the field.” – Allison Shuren, Partner and Cochair FDA/Healthcare Practice Group — CLIENT CONNECTION —
> KAYE SCHOLER LLP: “Christina’s strategic
focus on Alcon’s business, her creativity as a lawyer, and her skilled leadership are widely respected by her peers and Kaye Scholer partners who have had the good fortune to work with her.” – Amy Conway-Hatcher, Partner
Christina’s recognition by Modern Counsel is well-deserved and we look forward to continuing to partner with her.
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
— CLIENT CONNECTION —
> MORRISON & FOERSTER LLP:
“Christina’s commitment to excellence is apparent in everything she does. Her keen business sense and legal acumen set a high standard and drive successful, team-oriented results.” – Grant Esposito, Partner
©2015 Morrison & Foerster LLP
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“Our goal is to be health-care executives with legal expertise.” The prescription for developing an innovative legal department AS TOLD TO KRISTEN BAHLER
JOE LAROSA General Counsel Regeneron Pharmaceuticals
When Joe LaRosa joined Regeneron as general counsel and secretary in 2011, the biopharmaceutical company was entering a period of explosive growth. Eylea, a drug used to treat wet age-related macular degeneration and other serious eye diseases, was on the cusp of FDA approval, and the company was in the process of building out its workforce and progressing its therapeutics pipeline. To match Regeneron’s entrepreneurial spirit, LaRosa bolstered the law department with a crop of exceptional lawyers, each of whom reflect the company’s hallmark passions for science and clinical development. As Regeneron continues to grow—in 2015, the company added more than 116,000 square feet of office and lab space to its Tarrytown, New York, headquarters—LaRosa’s team is playing a key role in its mission to bring new medicines to patients. Understand the company mind-set. Regeneron is fully focused on translating cutting-edge science into medicine. It’s the backbone of our company, and it starts with our CEO and board and cascades throughout the entire organization. It doesn’t matter what legal team you are on— everyone is connected to the mission of bringing new medicines to patients, and everyone is immersed in the company’s scientific focus. We don’t view ourselves as separate to that goal. Rather, we’re a part of the photo: Doug Abdelnour
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THE REGENERON LEGAL TEAM by the numbers
law department employees
Fitzpatrick is proud to serve as legal counsel for Regeneron and applauds Joe LaRosa for his business integrity and impressive leadership. We’re proud to join Modern Counsel in recognizing his career.
At Fitzpatrick, IP is not just a practice area – it is our sole focus. Our practice is dedicated exclusively to providing legal services in the intellectual property and related fields, including applying for patent and trademark protection, litigation, appeals, contested patent office proceedings including post-grant challenges (e.g., IPRs) and priority of invention disputes, licensing, opinions, corporate transactions and due diligence. Recently the firm won the Intellectual Property Boutique of the Year award by Legal 500.
Fitzpatrick We are IP NEW YORK | WASHINGTON, D.C. | CALIFORNIA
solution, which is grounded in compliance and business integrity and reflects the tone from the top. We understand the end game, and we’re very passionate about helping patients. We think that brings excellent outcomes. Hire accordingly. Given that scientific innovation drives our company, all of our patent lawyers have PhDs and vigorous science backgrounds. We get into very deep conversations about cutting-edge research technologies, genetics, and drug development, and our lawyers are able to “walk the talk” with our scientists. Supplementing that expertise with top-flight lawyers in commercial, regulatory, business development, corporate, and compliance practices, we help marry the science and the business with three-dimensional understanding. That makes our jobs so rewarding. Everyone at the company also has to have a very entrepreneurial mind-set. We have a phenomenal pedigree: Regeneron was founded by physician-scientists who quickly attracted a cadre of brilliant scientists and Nobel laureates to the company and its board. Because of these innovators, we have a lot of firsts under our belt. That means we have unique legal considerations, and our law department has to tackle complex problems in new, emerging areas and help develop solutions. This type of innovation at the top level breeds innovation in the law department. We hire smart people at the top of their game, and it’s a pleasure to work with people who represent the best in the business. Supplement specializations and disband the hierarchy. Another pillar to our success is our commitment to cross-training. The traditional model of lawyers specializing in a niche environment is not sufficient for this
PhDs or MDs
“The traditional model of lawyers specializing in a niche environment is not sufficient for this company. We are crosstraining functional experts to have a broader skill set.” – JOE LAROSA
company. We are cross-training functional experts to have a broader skill set. We think this provides the best development path for the lawyers and benefits the organization because they have a broader perspective when giving advice. It’s important to have people who specialize in regulatory law, patents, securities, and other areas, but the company benefits from having specialists who understand how their area intersects with the rest of the business. We try to train our lawyers so that they all can be a general counsel some day. We also don’t have a hierarchy in the legal department. I believe no one has a monopoly on skills and ideas. If you’re the person with the knowledge, you’re the one who stands in front of the CEO and chief scientific officer. This complements the open-door policy in our company culture; our walls are windows, and in our meetings, everyone with relevant information talks with the CEO and the senior team. It’s what makes this culture so innovative. At Regeneron, you check any old-style bureaucracy at the door.
Be a champion for growth. I think the role of lawyers in medicine has changed quite dramatically in recent years. Our goal is to be health-care executives with legal expertise, devoted to optimizing the entire drug discovery and development landscape. But as lawyers, we still have a deep understanding of the law and never lose sight of those important responsibilities. Our team is just as focused on advancing our pipeline of medicines as the rest of the company. We look at the full range of scientific and technological knowledge that we have at Regeneron and decide how to optimize value through the creation of legal pathways. We are integrated in the labs and proactively assess how our portfolio is properly protected and advanced.
We applaud our longstanding client Regeneron Pharmaceuticals and congratulate Joe LaRosa on his continued success.
— CLIENT CONNECTION —
> COVINGTON & BURLING LLP: “Joe
LaRosa is among the very best general counsel in the pharmaceutical business. Over the 20+ years we have worked together, he has consistently been a leader in advocating the interests of his clients and the patients they serve.” – Richard Kingham, Partner — CLIENT CONNECTION —
> FITZPATRICK, CELLA, HARPER &
SCINTO : “Joe has the ability to quickly digest
complex legal and technical issues and is an effective communicator. He is a team player and a pleasure to work with.” – Christopher Borello, Administrative Partner
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PUTTING A At Nissan North America, lawyers are evaluated on
PREMIUM ON how well they partner with their business clients
PARTNERSHIP BY BRIDGETT NOVAK
photo: Nissan North America
ANDREW TAVI General Counsel Nissan North America
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Andrew Tavi shares his strategy for fostering legal responsiveness and creative problem solving Modern Counsel: How did you know you were ready to lead the legal team of a major company like Nissan North America? Andrew Tavi: I worked for two law firms in Detroit, handling lots of deals for clients in the automotive industry. In 2005, I joined Noble International, a global automotive supplier. It was expanding into Mexico, Europe, and Asia, and took on a lot of debt to fuel that growth. It ended up suffering, as did most of the automotive industry, from the economic downturn in 2008. When the company filed for bankruptcy in 2009, the board appointed me CEO to help with the liquidation. At the time, the environment in the automotive industry was dismal. After completing the liquidation, I interviewed at Nissan in Tennessee and discovered another world. It was the same industry, yet everyone was positive and excited about the future, and it seemed like a well-run company with decisive leadership. My time at Noble and my stint as GC and CEO showed me that I could handle boards and executives, tackle legal issues outside my comfort zone, and make tough decisions. I thought Nissan would be a great place to apply my experience. MC: Sounds like you enjoyed working at the intersection of legal and business strategy. How have you incorporated that at Nissan? AT: We established a set of core commitments, so there wouldn’t be any confusion regarding our priorities. To do this job well, you can’t just be a smart lawyer. You need to understand our various businesses, the 82
goals of the client groups you’re counseling, and how to maximize the value of the company. The inside perspective gives us unique insights into how the company operates, what its objectives are, and what is required to move the brand forward. MC: What is the philosophy behind the tenets? How did you settle on the 11 commitments? AT: The most consistent theme is that we will understand business objectives and help our clients achieve them. Everything else is designed to help us do that and involves commitments like responding to requests within 24 hours, regular communication, eliminating legal jargon, and presenting advice and options in terms that can be easily understood. If we envision significant risks to something that has been proposed, we do not simply
The 11 Client Service Commitments We will commit ourselves to support the company’s strategic initiatives. We will understand the business objectives, particularly in the context of legal services provided. We will be available to participate in the early planning stages of a matter or project. We will acknowledge a request for service within one business day. We will, at the onset, establish a timetable and identify additional information needed in order to provide the best work product. We will recommend effective solutions, rather than saying, “No.” In recommending potential solutions, we will weigh the legal risks with business objectives and practical realities.
“What separates tomorrow’s GC from a competent subject-matter expert is the ability to think like our clients and make strategic decisions that will advance the company’s business objectives.” – ANDREW TAVI
We will partner with our clients in addressing any issues that result from our collective decisions. We will communicate in a clear and concise manner. We will provide clients with regular reports on major matters or projects, consistent with their needs. We will provide regular training to enhance our clients’ understanding of the law. We will continually review new legal developments, inform clients when it impacts their business, and work with them to design any counteractions.
“To do this job well, you can’t just be a smart lawyer. You need to understand our various businesses, the goals of the client groups you’re counseling, and how to maximize the value of the company.” – ANDREW TAVI
say “No,” but use our collective resources to present viable alternatives designed to achieve the business’ ultimate goals. MC: What is the biggest challenge of implementing these standards? AT: It is often difficult for lawyers to go on-record recommending one strategy over another. But that is what they must do. Our lawyers need to be able to explain the risks of certain actions, provide other options, and suggest alternatives they can stand behind. They need to have a high degree of risk tolerance, be comfortable making decisions, and be active members of the executive team. MC: Has this philosophy changed the makeup of the legal department? AT: Yes. When I first arrived here, there were many excellent subject-matter experts. They were very deep in a core area, but often didn’t have the perspective that allows for a full view of options or business impacts. So we rotated people across functions, redefined expectations, and brought in a number of lawyers with broader experience. Now we have a great 84
mix of talent. What separates tomorrow’s GC from a competent subject-matter expert is the ability to think like our clients and make strategic decisions that will advance the company’s business objectives. MC: How do you envision the future of Nissan as a result of the increasingly electronic nature of automobiles? AT: The industry has completely changed and we need to continue to anticipate and adapt. Our competitors and collaborators used to be the likes of Ford, Toyota, and GM. Now, they include Apple and Google. Cars have become moving computers. Our discussions increasingly focus on electric vehicles, autonomous vehicles, vehicle-to-vehicle communication, data collection, and cybersecurity. Every business function, including legal, needs to understand these new technologies and new challenges, so we can help plan for them and identify potential issues early. We don’t know exactly where we will be tomorrow; regulators, legislators, technology companies, and customers don’t know either. This new world is happening to everyone at the same time, and it’s moving very fast. It should keep our legal department busy for years to come.
— CLIENT CONNECTION —
> GIBSON, DUNN & CRUTCHER LLP:
“From an outside counsel’s perspective, Andrew is a general counsel everyone wants to work with because he is smart, articulate, engaged, and always personable. Andrew is a strong leader who has earned great respect both inside and outside of Nissan. He has carefully and successfully guided Nissan through numerous and varied legal issues with great vision for what is best for Nissan. We feel privileged to call Andrew a client and a friend.” – Peter Sullivan, Partner
Incentivizing Partnership Leaders of in-house legal departments often say their lawyers need to partner with internal clients and help the company achieve its business goals, rather than focusing on legal risks. At Nissan, Tavi has put meat on the bones by tying this approach to compensation. “The premise that Nissan lawyers will understand and commit to supporting the company’s strategic initiatives is so fundamental that each lawyer’s compensation is tied to accomplishing not only their own objectives, but also their clients’ objectives. “Like most companies, Nissan has corporate objectives like market share, profit, quality, and overall brand opinion. Relevant business units are expected to meet objectives that management believes will help achieve these goals. The legal department then sets targets for itself that are designed to facilitate the functional and larger corporate goals. All lawyers are evaluated (and compensated) by how well they have met these targets and by the actual results achieved by both the business units and the company as a whole. If the legal department meets its targets, but the objectives set by particular client groups or top management are not achieved, then not all compensation is earned (and vice versa). “The emphasis on these objectives can, at times, cause tension with the lawyers’ obligation to protect the interests of the company, but Nissan sees this as a healthy tension. It forces the lawyers to be active in the planning stages and creative with solutions.”
Andrew Tavi Vice President - Legal, Government Affairs & Human Resources, General Counsel & Chief Compliance Officer
Nissan Americas on his accomplishments and recognition by
Hogan Lovells congratulates Andrew Tavi of Nissan on his outstanding career and contributions to the legal profession. We are proud to call you our partner in business.
2,500+ lawyers. 45+ offices. 26 countries. www.hoganlovells.com
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Hogan Lovells is an international legal practice, including Hogan Lovells US LLP and Hogan Lovells International LLP. © Hogan Lovells 2015. All rights reserved.
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CAROLINE OYLER General Counsel Papa John’s
Trading Places Caroline Oyler had little traditional management experience when she stepped into a lead HR role for Papa John’s in 2008. But with an outsider’s perspective, she helped the team navigate a time of change BY KRISTEN BAHLER
Modern Counsel: You stepped in as interim vice president of human resources during a transitional time for Papa John’s. What was going on at the company at the time? Caroline Oyler: I took the role at the end of 2008. Our CEO had just left, and our founder John Schnatter, “Papa John,” had come back as the new CEO. We were happy about that, but there were a lot of changes as a result. Our general counsel and head of HR had abruptly left, and there were some holes to fill. In the months that followed, we had some executive departures, and some executive hires. And, towards the end of my tenure, I had to make some changes to the HR team. MC: With no previous HR experience, how did you deal with those changes, as well as the challenges of leading a new team? CO: It would have been a stretch assignment under ordinary conditions, but because it was a time of change the role was especially challenging. I have a labor and employment background, and was originally hired in the HR department— but as a lawyer. I had already forged relationships with some of my peers in HR. But leading an established team as an outsider is not easy. As a leader, you have to be as clear as you can in setting the direction and strategy of your team. photo: Papa John’s
To establish that direction in a leadership structure that someone else has created is challenging. I had to step in and try to gain credibility pretty quickly. With an abrupt change like that, you want to set the right tone and be very positive and reassuring if you need to be. You also have to be flexible and able to adapt and adjust—especially at a company like Papa John’s. We have an entrepreneurial spirit, and our culture is fast-paced and dynamic, so I had to be prepared to change course when required. MC: Looking back, how has that experience influenced the way you lead the legal team today? CO: More than anything, those nine months taught me how to listen to my team and how to make it clear that I valued their opinions. But it also taught me how to step up and lead. A leader has to be the ultimate decision maker; you have to carve your own path while considering the implications for the team. You have to make tough decisions, but you also have to have empathy. I think I do that today. From a management perspective, I learned how important it is to align with my peers on the executive leadership team, and to have the support of other functions. That is not something I had much experience with before, and I think it carried over to my current role. Overall, the HR position was a huge jump for me in terms of management experience, but I’m so glad I did it. I’ve never regretted that experience. I
Best Practices Oyler led the Papa John’s HR team for nine months as the company endured an array of leadership staffing changes. Here are her five tips for successfully managing change in times of uncertainty. 1. Set clear direction and strategy. 2. Listen and be empathetic. 3. Communicate changes through regular interaction and reports. 4. Empower and support the team to help them feel secure. 5. Encourage buy-in and ownership of changes by modeling positive behavior.
even considered pursuing the role permanently, but in the end, my heart was in legal. MC: Are there major differences in how you manage the legal team versus how you led the HR team? CO: I’m not sure you need different leadership traits to be successful in those two functions. In both departments, we try to integrate with our business units to drive the business; that’s our ultimate goal. Both are support functions, in a sense. So the philosophy and overarching principles are the same. The day-to-day functions APRIL/MAY/JUNE 2016
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are different—the legal team is smaller, and there are different opportunities— but I think a successful leader on any team exhibits many of the same traits. MC: How would you classify your leadership style?
Cheng Cohen congratulates Caroline Oyler on this tremendous recognition of her success and achievements. We are honored to be a part of the outstanding team she leads.
www.chengcohen.com 2014 Papa John's International, Inc. All Rights Reserved.
CO: In some ways, it’s very participatory. I try to get input from my team as much as I can, and try to reach a consensus when appropriate, especially with issues concerning our department as a whole. When you discuss things as a team, it results in ownership of the decisions. Overall, I set the strategy for the team, and I’m the ultimate decision maker. But I’ve got a lot of smart, talented people in my department, and I like to empower them as much as possible. It makes the team stronger, and better equipped for the future. MC: Your legal team has a flat structure with little opportunity for advancement. How do you keep your team engaged? CO: It’s challenging, but small things matter. I try to let them know how valued their work is through recognition. We also have regular conversations about whether or not they’re happy with what they’re doing, and if there is anything they want to change up, or if there are any new areas of the law they want to take on. There are always new developments and new things we have to take on as a company, so things stay interesting. Our international business has really grown in the past few years, for example. And with all of the recent activity with data breaches, most members have had to step up and learn that area. More than anything, we have fun, and we support each other. That’s important, and it breeds loyalty. There are many long-term Papa John’s employees on the legal team. There is so much historical knowledge and commitment and a passion for what we do here. I view that as a huge advantage.
Strength in Flexibility How Suchitra Narayen used her Six Sigma black belt to simplify process and create a legal infrastructure at Oracle BY AMANDA GARCIA
“Life takes you in interesting directions, no matter what you have planned,” says Suchitra Narayen, associate GC of supply chain at Oracle. Narayen’s career has taken many unexpected turns over the past 25 years, but being flexible enough to work in different firms and industries, in Canada and the United States, and eventually in-house, she has developed a diverse set of skills and knowledge that has taken her beyond what she ever imagined in law school. Narayen was hired at Sun Microsystems in 1999, which was acquired by Oracle in 2010. That merger allowed Oracle to expand from software and services into hardware for the first time. It also provided Narayen (who accepted her current position in the merger) with a blank photo: Christophe Testi
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canvas. “There was no legal infrastructure for hardware or supply chain when I came on board,” she says. “I was given an incredible opportunity as well as the responsibility to build it.” The task was to build a team; develop templates, processes, and requirements for procedures that didn’t exist yet; and do so in a way that was cohesive with Oracle’s existing company culture and established expectations. It was a massive undertaking. Fortunately, Narayen’s experience, skills, and Six Sigma black belt provided a natural solution. Six Sigma is a methodology for designing or improving processes. It is a set of tools and analytical techniques to identify problems, solve them, and sustain the resulting improvement. It is a robust way of developing effective processes for users, and it has many applications. While Oracle did not mandate the Six Sigma approach, it was the most natural choice for Narayen, so she began training her team in its methods. “So often, the most difficult part of accepting a new way of doing things is overcoming the fact that it’s unfamiliar,” says Narayen. “I was persistent in asking people to try very small bites at first, so they would realize the benefits through their own experience.” Part of that experience was a shift in mind-set as team members began
Five Six Sigma Takeaways FROM SUCHITRA NARAYEN 1. Try it. You’ll like it. 2. Remember to look at the legal process from the outside user’s point of view. If you put yourself in his/her shoes, it will help you understand how clear the process is to a nonlawyer, which will then allow you to adjust accordingly. 3. Test everything before you roll it out. 4. When it comes to change management, focus on the people. Processes are important, yes, but be sensitive to the people first. 5. Have a good sense of humor. It’s all in how you approach the process.
“So often, the most difficult part of accepting a new way of doing things is overcoming the fact that it’s unfamiliar.” – SUCHITRA NARAYEN
looking at everything as a process that could be analyzed and improved. They began collecting and organizing existing data, and then assessing it in the context of a bigger picture, analyzing it for inefficiencies. The next step was to break down the data into categories so it could be addressed and refined. When considering old materials, for example, Narayen and her team were able to reduce a 12-page form down to only three, leaving a simple form that was far easier for users to complete. “That immediate simplification reduces the negotiation cycle and terms to be reviewed,” says Narayen. “It is much more sustainable.” Language was another key component to applying Six Sigma methods, both by simplifying complex language within forms, and in putting data behind subjective descriptions. For example, when referring to “lots of issues,” it was important to establish what the word “lots” actually meant. “If we were going to take action,” says Narayen, “We were going to make sure it was focused in the right area.” It was also important to clearly identify responsibility within the team and to consistently communicate with each other. Together, Narayen’s team simplified systems, forms, and templates, as well as the way they communicated those systems with nonlegal colleagues and internal clients. “The key to Six Sigma is that it’s practical and simple,” says Narayen. “It’s a set of versatile, easy-to-use tools that are applicable in many situations.” Thanks to simplification, consolidation, and increased efficiency, users at Oracle have saved hours through streamlined hardware-related processes. Now, after
years of thorough analysis, Narayen’s team is primarily focused on sustaining the improvements they’ve made. “We have come a long way, but we are still looking at what tweaks we can make,” says Narayen. “Our job is never fully finished.” To maintain the team’s internal agility, Six Sigma methodology has been built into the training of all new employees. The team engage in quarterly reviews, as well as an annual reviews of all key processes. They assess issues and identify frequently asked questions to determine where those questions should be directed and how they should be consistently answered. Narayen is also careful to remember that their work is part of a much bigger picture. “Our goal is to develop the most effective process for users—to make sure the task is done correctly the first time and that work is done collaboratively,” she says. That collaboration comes through finding the connecting points between their legal team and Oracle’s greater business goals. It also means working closely with internal clients and other teams to understand their processes and ensure that, when they overlap, both perspectives are satisfied. “There are so many places of natural synergy within Oracle,” says Narayen. Amid constant change, Narayen emphasizes it is important to always be learning. “You have to be curious and have the stamina to know that your work is making a difference.” For Narayen, Six Sigma has offered a powerful way to lead others into making a difference at Oracle. “It has been a unique and wonderful opportunity to build this team and infrastructure.”
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> QUISLEX: “Solving the challenges associated
with large-scale and complex legal services requires intellectual rigor and diverse skill sets. Suchitra’s rich experience and Six Sigma expertise bring them all to bear. Her accomplishments at Oracle stand as a testament to her exceptional talent.” – Ram Vasudevan, CEO
QuisLex congratulates Suchitra on her recognition by Modern Counsel! We are proud to support Suchitra and her legal department.
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After The Spin-off: How Ross Mansbach and his team learned to do more with less BY ELLE SINCLAIRE
ROSS MANSBACH Deputy General Counsel Halyard Health
What happens to a legal department after a spin-off? That was the question Halyard Health, Inc.’s lawyers had to answer after the $1.7 billion global medical device company spun off from $20-plus billion KimberlyClark Corporation. After an intense, yearlong process, the spin-off transaction closed on October 31, 2014. At that point, Halyard Health became an independent, publicly traded company. For Ross Mansbach, Halyard Health’s deputy GC and corporate secretary, and John Wesley, its GC and chief ethics and compliance officer, the challenge was to do more with less. At Kimberly-Clark, they were part of a great team of more than 75 lawyers, who covered most legal specialties and geographies. At Halyard Health, they would have just five lawyers and two paralegals, all based at the company’s headquarters in Alpharetta, Georgia. Handling more with less means, in part, having the right corporate culture. That’s one thing Mansbach wanted to “take” from KimberlyClark: the legal department’s culture of excellence, collegiality, and compliance. Also, he wanted to leverage the benefits of working in a matrix organization, where people collaborate and consistently ask, “What more can I do?”
One way to keep that culture was to keep the people who were on his legal team at Kimberly-Clark, and they all came with him to the new company. The difference was that, like Mansbach himself, they had to expand their skill sets. Where Karl Sidor, an associate general counsel, used to be “just” a patent attorney, he had to become the lone IP attorney, handling all patent, trademark, and copyright matters globally while still supporting related needs of the research and development function. Similarly, Shivani Kaul, also an associate general counsel, used to mainly be a commercial attorney, but she had to learn to support additional staff functions like strategy and regulatory; manage whole regions like Europe, the Middle East, and Africa; handle compliance matters; and manage litigation. Handling more with less means finding more people like Sidor and Kaul, people who are talented, dedicated, and flexible. That became the template. “All of that focuses more on the person than the specific technical skill,” says Mansbach. With three positions to fill, Mansbach built out the team with one additional lawyer and two paralegals who could handle the company’s immediate needs but also
Halyard Health AT A GLANCE INDUSTRY: Medical Device Manufacturing and Sales WORLD HEADQUARTERS: Alpharetta, Georgia OPERATING SPECIFICS: 11 global manufacturing facilities, 12,000 employees worldwide REVENUE: $1.7 billion net sales
photo: Halyard Health
One way to keep that culture [of excellence] was to keep the people who were on his legal team at Kimberly-Clark. The difference was that, like Mansbach himself, they had to expand their skill sets.
whatever else might come the company’s way. One of his hires, Jake Robinson, was a fourth-year transactional attorney from a prominent Atlanta-based law firm and someone who would likely have been too junior for Mansbach’s team at Kimberly-Clark, but he fit the template for Halyard Health. Another hire, Brenda McCaffrey, was a paralegal at a small Atlanta firm whose primary work experience related to sports and entertainment, but she too fit the mold. The benefit of Mansbach’s approach became quickly apparent. McCaffrey was hired mainly to work on commercial agreements, but the company’s needs shifted to litigation, and she’s become primarily a litigation paralegal. “She might need to reinvent herself again tomorrow,” says Mansbach. Even when there was no substitute for a specific skill set that Halyard Health needed, as was the case with the SEC paralegal that the newly public company had to hire, Mansbach waited until he found just the right person. Christine Hermann came from Newell Rubbermaid, where she was a securities paralegal. At Halyard, she also supports the board of directors and the finance function, among other responsibilities.
Handling more with less also means leveraging outside counsel. At Kimberly-Clark, with so many specialties and geographies already covered, there was less need for outside counsel. At Halyard Health though, the attorneys need to determine when it makes sense to bring in a specialist. Sometimes the need is obvious. Halyard’s UStrained and qualified attorneys can’t resolve on their own certain employment issues in India, corporate matters in Brazil, and regulatory challenges in Turkey. Mansbach and Wesley have developed a network of outside counsel in the United States and outside the states to help as needed. “I have the best team I’ve ever had,” says Mansbach. “I feel like we took the best of Kimberly-Clark with us, and we transformed into a legal department that meets the needs of a company that, while smaller, is still a significant global medical device company.” Wesley agrees. “I look mainly for two things in employees: attitude and aptitude,” he says. “We put together a team that has those qualities in spades, and it’s really paying off. I get only compliments—superlatives, really—about the Halyard Health legal team. Ross has a right to be proud.”
Segal McCambridge joins Modern Counsel in recognizing Ross Mansbach of Halyard Health for his dedicated leadership and guidance.
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DANIELLE SHEER General Counsel Carbonite
photo: Marianne Karmel
When Danielle Sheer started at Carbonite, the cloud services provider was still very much a start-up with IPO dreams. Those early years were about building a well-oiled corporate machine, without disrupting the innovation engine. Now 10 years in, the legal department is still employing start-up-like innovation to support the growing company.
Foley is proud to support Danielle Sheer and Carbonite in achieving their legal and business goals.
BY MELISSA SILVERBERG
Modern Counsel: What is Carbonite’s global strategy, and how does its culture reflect that? Danielle Sheer : At Carbonite, we believe in finding smart, simple solutions to problems. Our culture reflects that in everything we do—whether it’s our approach to negotiating customer contracts, expanding internationally, or building the next cool new tech solution for our customers. Our global expansion strategy took Carbonite to Germany last year; we hand-selected a team in Munich and acquired a start-up team in Viersen. Germany is leading the world in data security and privacy practices, and Carbonite is working to instill that security discipline and innovation in the United States.
MC: Despite being 10 years old, Carbonite has maintained some start-up qualities. What are they, and why are they beneficial? DS: We have a work hard, play hard mentality. The idea of worklife balance has blurred with the advancement of technology and the reality of being available anytime, anywhere. At Carbonite, we actually find that liberating. You want to coach your kid’s T-ball team? You should. The reason we work so hard is for our families, and that time is important. At the same time, we all feel ownership in our results and a great responsibility to each other for the team’s and the company’s success. We believe finding your own balance is key to superior performance.
For more information about Foley, please contact Boston Office Managing Partner, Susan E. Pravda, at firstname.lastname@example.org.
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MC: How does the legal department support company culture?
cong ratu I ates
DS: Legal is the place you go when you want to get something done. We enable the business to move smarter and faster. The legal team is uniquely qualified to think about complex issues, analyze opportunities from a 360-degree perspective, and design unique solutions. We then connect with our business colleagues to provide them optionality, backup, and resources.
Danielle Sheer (VP & General Counsel)
on her accomplishments with
• MERGERS & ACQUISITIONS• • TECH TRANSACTIONS & LICENSING• • IP STRATEGY & PROSECUTION• • VENTURE CAPITAL & PRIVATE EQUITY•
MC: How have you collaborated with other business functions to achieve a unified culture? DS: In order for the legal team to be successful, we’ve built relationships with engineers, support professionals, accountants, the sales team, everyone. We work hard to strengthen these relationships by creating and maintaining cross-functional teams and, sometimes, by partnering with the business on opportunities no one else has time to hunt down. We also spend time thinking about how to perfect the flow of communication to all employees and to all of our offices globally.
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— CLIENT CONNECTION —
> FOLEY & LARDNER LLP: “Danielle’s
dedication and passion, together with her exceptional people skills and deep legal knowledge, make her an invaluable general counsel and business and strategic advisor for Carbonite.” – Susan Pravda, Boston Office Managing Partner
Sheer cofounded a group at Carbonite called SaaSy, which aims to empower women to take hold of leadership positions in the tech industry. Members and those connected to the organization share how it has benefited them personally and professionally. “Though I’ve mostly observed SaaSy from the periphery, my organization benefits from senior and key positions being filled by talented women, a reflection of our culture and company goals. I’ve learned that our businesses are made better by engaging women in both technical and nontechnical organizational roles. Having a core of women to learn from who’ve already made a place for themselves in technology helps open the door of possibility to everyone who will follow.” – JIM FLYNNE, VICE PRESIDENT OF OPERATIONS
“Being involved with SaaSy was a great experience. It allowed me to develop a great bond with the other female leaders at Carbonite, which improved my confidence and contributed greatly to my success as a leader in the organization. I was able to share my experiences as a working mother and support younger women who were doing the same. I think there is a true power in women helping women in the workplace. Being a little bit vulnerable in talking openly about challenges we face really allows for growth and development, and SaaSy provided a forum for those discussions.” – KIM ROSE, VICE PRESIDENT, PROGRAM MANAGEMENT & EXECUTION
“Danielle has been an advocate for women’s leadership throughout her career. With the founding of SaaSy, she created an opportunity for both women and men at Carbonite to have better visibility into the value of investing in women in the workplace, particularly in the high-tech sector.” – CASSANDRA HUDSON, VICE PRESIDENT OF FINANCE & CHIEF ACCOUNTING OFFICER
Growing With Purpose Senior Care Centers (SCC) scooped up more than 75 skillednursing, assisted-living, and independent-living facilities in Texas and Louisiana in 2015—cementing its position as the largest nursing home provider in the state of Texas. Ben Hanson is a growth story in his own right. The chief administrative and strategy officer shares his process for professional growth and how his legal experience has made him a better leader at SCC. BY KRISTEN BAHLER
Modern Counsel: How has your experience in law and politics helped with your current charge?
BEN HANSON Chief Administrative and Strategy Officer Senior Care Centers
Ben Hanson: From a professional standpoint, the training you get as a young lawyer is the bedrock of your career. And as I think back, the foundation of my career was an intersection of business, law, and policy. I started out as a corporate securities lawyer for what was, at the time, a regional firm with national aspirations, and it served as a foundation for how I developed technically as a lawyer. There I learned how to become a proficient corporate lawyer. That led into government relations, where I worked as a senior staff member for Governor Rick Perry and as a chief of staff for two Texas secretaries of state. The nature of politics is relationship-oriented, so my various government roles taught me how to build and maintain relationships. MC: When did the business aspect come into play? BH: In 2008, I joined Harden Healthcare— an Austin-based senior health-care services provider—as senior vice president, general
photo: Senior Care Centers
counsel, and secretary. I was primarily responsible for managing the legal and compliance sides of the business, but I also took a direct interest in the growth of the business as it related to the corporate development function. The then-CEO believed in leadership development, and he allowed me to have an executive coach. Typically, a coach isn’t affiliated with the company you work for, and can give an outsider’s perspective on some of the moral, ethical, and communication issues that come with being a leader. I’ve worked with my executive coach for more than three years now. Anytime I need an honest broker, he’s there, usually offering a view I perhaps neglected to see at first. MC: Senior Care Centers completed a number of acquisitions in 2015. Why were these acquisitions the right choice for your company? Given some precedent-setting decisions by the Federal Trade Commission, did you ever fear the risk of antitrust? BH: Senior Care Centers more than doubled in size in 2015, including the acquisition of Harden Healthcare. We’ve grown tremendously, but it hasn’t been
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“In the long term, we’re trying to become a more integrated post-acute provider of health-care services. [...] Whatever the patients need, we want to provide services along that entire continuum of care.” – BEN HANSON
BH: Career growth is very important to us. We find career ladders for entry-level staff that allow them to grow both personally and professionally. Employee health and well-being are also paramount in our minds. What you’ll typically find in a health-care setting, is that the industry attracts tremendous outward-facing caregivers. There’s a personal focus on healing; employees want to make people feel better, even at their own expense—especially among nurses or certified nursing aides. Wellness is not just for our patients but also for our caregivers and our entire staff. We make that very clear. MC: How do you see the skilled-nursing industry evolving?
for growth’s sake. We’re growing with a purpose. We believe we provide better clinical outcomes for our patients than any other provider, and that we have the ability to provide rehab, pharmacy, and wellness services better than third parties. Today, we’re taking care of about 10,000 patients on a daily basis, and we want to continue that growth. As for the risk of antitrust, I have seen those concerns at the hospital level, where there are only one or two providers in a metro area. But with skilled nursing, you may have 25 or 50 assisted-living facilities in one city. Despite the fact that there’s a tremendous amount of consolidation, the health-care marketplace is still incredibly fragmented. Health-care services are, and will remain, a local business. MC: With these acquisitions comes the incorporation of huge teams of people. Was it a challenge to integrate these new teams into the culture of your company? 98
BH: We’re currently experiencing a paradigm shift. If you think back to the 1980s and how nursing homes were perceived at that time, those are not good memories. With the help of the Affordable Care Act, and the transparency and increased consumer protection afforded by it, the skilled-nursing model is evolving—and will continue to evolve for the next 10–20 years. Tremendous consolidation is helping that effort. The first waves of the “silver tsunami”—the baby boomer population turning 65 and being Medicare-eligible— are just reaching our shores, so the demographic trend is very compelling. MC: What’s next for SCC? BH: In the long term, we’re trying to become a more integrated post-acute provider of health-care services. The typical hospital model centers on the acute patient segment, which is typically physician-driven. Post-acute is a nursing-driven model, and focuses on patient care after patients leave the hospital and transition back to one of our facilities, to home, or even to hospice. Whatever the patients need, we want to provide services along that entire continuum of care.
Senior Care Centers BY THE NUMBERS
96 9 facilities in the state of Texas
in the state of Louisiana
patients cared for on a daily basis
12,500 residents of Texas and Louisiana employed by SCC
skilled-nursing and assistedliving facilities added in 2015, more than doubling the size of the company
One of the benefits of being in business since 1912 is having successfully dealt with nearly every legal challenge known.
PLEASED TO SUPPORT SENIOR CARE CENTERS AND THEIR MISSION TO HELP FAMILIES SUCCESSFULLY MANAGE THE RESPONSIBILITY OF CARING FOR THE ELDERLY
“We’ve Done That.”
We salute chief administrative and strategy officer Benjamin M. Hanson
Underwood congratulates Ben Hanson.
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VICKI DONATI General Counsel Crate & Barrel
Behind Every Great Leader The five things every GC must do to shepherd in new leadership BY PETER FABRIS // PHOTOS BY CALEB FOX
Vicki Donati has experienced four leadership transitions in her seven years as general counsel for Crate & Barrel. As a seasoned executive, she believes that she is poised to help smooth the transition for the company’s newest CEO, who took the reins in July 2015. She shares her five musts for establishing trust and priming the organization for a new leader. Embrace the leadership role. In most cases, a change of leadership means changes in strategy and management style that can make people apprehensive, at least at first, Donati says. The new CEO directs the effort, but other corporate leaders bear responsibility to see that the changes are successful. “You need to understand that, as a leader, the way in which you react to change and how well you respond to it—both personally and professionally— will influence how others respond and how quickly the organization can regain its footing following the transition,” Donati says. “If you are fearful or reticent to change, others will take their cue from that. Step one is to figure out and understand the change in direction, then focus on how you can best
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“If you are fearful or reticent to change, others will take their cue from that.” – VICKI DONATI
communicate that change to others and lead in a way that helps others to understand the change and how they fit in.” Keep an open mind, and be responsive to a new leadership style. Every leader has his or her own way of communicating. Sometimes the contrast in style to the prior leader is sharp. But Donati emphasizes to recognize that although the prior way may be comfortable, that doesn’t make it right or better, or the only way. “Our past few CEOs were somewhat formal in their approaches to the business and to how they expressed ideas,” Donati says. “Our current CEO is much more casual. He is plain-spoken and uses colloquialisms and frequent pop culture or sports references to convey his points.” Some in the organization may confuse this informality with a lack of gravitas. That’s not the case, Donati says, pointing to the strong substance underlying his manner of speaking. “He asks good questions and has put forth serious strategic goals and smart tactical guidance.” Those who might have dismissed or prejudged the new CEO’s ideas based on his style would have missed out on the substance he brings to provide a competitive advantage. Knee-jerk reactions are easy—human, even; critical listening and collaboration are much more difficult, but that is the stuff of a good leader, helping others put substance over form. Provide the new leader with honest feedback. A good leader welcomes constructive criticism and expects top lieutenants to provide it. This is particularly important when the new CEO comes from outside the organization. 102
A strong GC can help the new leader see how his ideas are resonating with and impacting the organization and help unearth pockets of discomfort that might not be obvious to a newcomer. “Be tactful, but be honest,” Donati advises. “I have found that being very direct in terms of what I am seeing and hearing the needs of my team works well.” Negative feedback is especially important. “If you see the world differently or feel there is a disconnect, it is important to step up and say so or ask for more context,” Donati says. This gives the new leader an opportunity to more thoroughly
explain his or her vision. And, it is an essential building block for a good relationship, assuring the new leader that you are there to help and that you will be honest even when the message is unpopular. Be proactive in building trust. A GC must show that he or she understands what the new CEO—and the broader business—is trying to accomplish. More than having a good legal mind, he or she needs to demonstrate good business judgment. That allows the new CEO to see a GC not just as the person who puts up guardrails and talks about risk, but also
Donati shares how compliance has evolved for the global consumer goods company Modern Counsel: How has Crate & Barrel’s approach to compliance changed during your tenure? Vicki Donati: We have become much more formal and centralized in how we approach compliance and risk management. Much of that altered approach has been driven by where our legal and regulatory systems have gone. We face many more laws and regulations, and much more complexity. We have had to develop a more structured and supportive system to recognize, understand, and even anticipate that landscape and to deal with the compliance needs in a more holistic way.
Dedicated to Excellence
The law firm of Dykema congratulates Vicki Donati, General Counsel of Crate and Barrel, on being featured in this special issue of Modern Counsel.
MC: What compliance issues are particular to the retail industry? VD: Because it is consumer-driven, the retail industry often reflects society at large. We, like our customers, are focused not just on the ethics of good business— avoiding fraud and corruption and working to ensure that our business practices don’t leave room for liability or unethical behavior, real or perceived—but also on social compliance. We want to be sure that the vendors and partners we do business with are operating in a way that respects human dignity and abides by the highest standards of human decency. That means auditing and engaging with our partners to ensure that we can be proud of and feel good about the products we offer. The other hot-button issue in the retail industry is data security and privacy, making sure the data we hold is secure and that our use of that data respects the privacy we’ve promised. We take these obligations seriously and review our operations regularly to ensure that we have the right controls and the best uses of ever-evolving technologies in place to safeguard the data entrusted to us. MC: What do you do to ensure that your vendors are in compliance with regulations and standards? VD: More and more, we work with independent third parties to audit our vendors and ensure that our high standards are met worldwide. This is an area where US companies are leading the way. We recognize that there is power in using purchasing dollars to do business only with suppliers you feel good about, not just operationally, but ethically.
Vinson & Elkins joins Modern Counsel in its recognition of Victoria Donati, General Counsel of Crate & Barrel. V&E is proud to be a core business partner and legal services provider to Crate & Barrel. With a strong commitment to our clients, V&E brings insight and knowhow, building on a strong foundation since 1917.
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Fox Swibel Chicago’s leading boutique business law firm
Neal Gerber Eisenberg raises its glass to alumna and friend
Vicki Donati, General Counsel of
Crate & Barrel.
Much like our clients, our partners have the entrepreneurial determination to deliver first-rate creative business solutions with a costeffective approach.
We are proud to serve as legal counsel to
Crate & Barrel
and applaud our client’s leadership for their success. We look forward to our continued partnership. www.ngelaw.com
as the person he or she can trust as an objective sounding board through the transition. “It is on me to develop a positive working relationship with and to gain the trust of the CEO and other key leaders,” Donati says. “The GC role gives me a bit of the catbird seat to step back, listen, and observe: Where do we need to ask more questions? Where can I help in adding a critical eye backed by a solid understanding of our business strategy and goals? Where are we missing critical alignment?” A GC is in a good position to be a cultural translator as well. Helping the new leader understand organizational mores by providing context to past decisions and, at times, resurfacing discussions of risk and benefit that may have been concluded differently under different leaders with different strategies.
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Bad-mouthing past leaders is bad form. By the same token, providing context for past leaders and decisions doesn’t mean being unduly critical or dishing blame. “You do yourself no favors by pointing out every mistake by the last leader or by passing judgment on past behavior,” Donati says. “Bear in mind that quite often these were decisions that you were privileged to be a part of. The hows and whys of where you are can be important, even when the new leader wants to go in a different direction. Casting aspersions on past decision makers is irrelevant and damaging. All that does is reflect badly upon you as the person speaking ill of the past leaders.” The primary goal of a transition is to move forward in a positive way. You do that by teasing out the positive from the newness that surrounds you.
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> FOX, SWIBEL, LEVIN & CARROLL, LLP:
— CLIENT CONNECTION —
“Fox Swibel congratulates Vicki Donati of Crate & Barrel. Vicki is a phenomenal role model both to professional women and our daughters.” – Jill Coleman, Partner
CAROLINE MCNICOLL General Counsel Pharmascience
RESOURCE REALLOCATION How restructuring assignments increased motivation and efficiency for Pharmascienceâ€™s legal team BY JACQUI SHINE
photo: Studio McCall
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harmascience, Canada’s third-largest manufacturer of generic medications, has grown significantly since Caroline McNicoll joined the company eight years ago—and so has the range and volume of requests for in-house consultation and assistance. McNicoll serves as general counsel and corporate secretary. Her team—six other attorneys and one paralegal—covers all areas except patents. The department is strongly collaborative, she says. “Across the industries I’ve worked in, I’ve found that powerful teams have always had significantly more impact than ‘star’ attorneys.” Because Pharmascience products are sold in more than 60 countries, and the company’s four divisions develop and produce hundreds of over-the-counter and prescribed medications, the legal team’s wide range of work requires broad expertise in international law, business, litigation, regulatory issues, and scientific research. “One of the challenges we were facing was the volume and diversity of the requests the legal department was receiving compared to the limited resources that we had,” says McNicoll. The way requests were handled was making the department’s work flow inefficient: senior attorneys were bogged down with legal minutiae, which necessitated the significant outsourcing of work to contract attorneys. “We’re in the generic industry,” a competitive global market, McNicoll says. “There’s a lot of price pressure on the market. So everybody has to rethink the way they’re doing things and be as efficient and productive as possible.” The solution lay in developing a new way to prioritize projects and assign work. “Although every request is important to us,” McNicoll says, “they don’t all have
the same level of complexity and impact on the company’s growth and strategic objectives.” Thus, she began developing a process that allowed the department to assess each project on a risk and value scale. “Our goal,” she says, “was to align and optimize the use of legal resources in the areas that had the greatest strategic value for the company, or greatest impact on risk mitigation, and to ensure the proper allocation of time and resources within the legal department.” Projects of high
start discussions on potentially big commercial transactions and very strategic transactions. “But given the volume of requests we were receiving for this type of review,” says McNicoll, “it made more sense to use a skilled paralegal to handle these requests and ask legal counsel to support our clients in the areas where legal training is more required.” Developing a new system was a collaborative and client-centered process. Because four different business units compose Pharmascience, the team needed to assess the range of services each required. “We have an overall corporate strategy, but each subsidiary business unit has its own strategic priorities that will then fall under the umbrella of the corporate strategy, so the first challenge was to understand each unit’s priorities and concerns,” she says. Thus, McNicoll’s team began reaching out to survey their clients’ needs, asking questions about their strategic plan, making sure that they understood that plan, and asking, “How can I have an impact for you?” While delivering excellent service to each business unit was important, McNicoll says the team had to make sure that they did not forget about the role of protecting the company’s assets. Involving Pharmascience’s CEO in the process was crucial. Partway through the process, he sat with the team to give feedback on where they were going and to make sure their efforts were in line with his vision. Though the new process is still being implemented, McNicoll has already seen strong—and surprising—results. “This initiative did not only result in better prioritization of work and increased efficiency, but also a change in mentality,” she says. The team was somewhat skeptical of the process initially, but an enthusiastic
“Although every request is important to us, they don’t all have the same level of complexity and impact on the company’s growth and strategic objectives.”
– CAROLINE MCNICOLL
value or risk would be assigned to senior legal staff, allowing them to maximize the value of their expertise for the business; other matters would be assigned to junior lawyers or the team’s paralegal. The assessment is not a measure of the importance of each task, because the work is always important, McNicoll says. But not every matter requires the same type of knowledge or skills. She points to the routine review of confidentiality agreements. Though the task may seem simple, it is actually the first step that will allow legal’s commercial colleagues to
initial response from clients got them very excited and motivated, she says. Reassigning work based on complexity has given team members broader involvement in the whole range of the unit’s cases. “The members of our legal department feel much closer to our clients. Now they have skin in the game,” she says. “It’s like they are part of the success and everyone’s contributions are geared toward the same goals. I find this is an amazing motivation factor for everybody.” As expected, the initiative also led to improved cost management and greater client satisfaction. “By freeing up the time of our senior lawyers,” McNicoll says, “they can handle the more strategic priorities,” and the unit can rely less on the work of contract hires. Continuing to control and decrease spending is her next priority. This, too, involves collaboration across the company. Because the business has different legal budgets throughout the company, which may not be reflected in McNicoll’s budget, she wants to ensure that all spending is accounted for. Perhaps most importantly, the process reaffirmed the extent of the legal department’s commitment to its clients. “Now [our clients] know even more that we have their best interests at heart,” McNicoll says, “even if it means sometimes not having the same opinions.”
— CLIENT CONNECTION —
> GARDINER ROBERTS LLP: “Caroline is highly intelligent and quick to understand the issues in complex litigation. It is a pleasure to work with her.” – Carol Hitchman, Partner
YOUR PARTNER EVERY STEP OF THE WAY. Gardiner Roberts LLP serves the diverse legal needs of growing companies and the dynamic people who run them. Clients rely on our 90+ years of experience as a full-service business law firm providing practical legal guidance and comprehensive solutions to complex problems.
Lavery is proud to work with Caroline McNicoll and Pharmascience. Congratulations on this recognition by Modern Counsel !
For more information on how we can help, visit us online at www.grllp.com
Gardiner Roberts LLP 40 King St W, Ste. 3100 Scotia Plaza Toronto, ON M5H 3Y2 T 416 865 6600 F 416 865 6636 www.grllp.com
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BECKY KRAUSS General Counsel Sandia National Laboratories
Stay the Path
Modern Counsel: What have you learned in the past 12 years as general counsel? Becky Krauss: I have learned how important it is to be a valued partner with the management team. Itâ€™s not enough to be a legal adviser. What builds great relationships, and what gives me job satisfaction, is when I am truly a partner with the business client. That means understanding the context of the company, the mission, the culture and giving legal advice within that environment. Iâ€™m not just helicoptering in and jumping back out.
At Sandia National Laboratories, Becky Krauss aims to be a partner to the business by supporting internal clients every step of the way BY MELISSA SILVERBERG
photo: Sandia National Laboratories
“When I came to this company, there were a lot of lawyers who preferred to stay in their ivory towers and let the clients come to them. [...] Now there is an understanding that the lawyers are with our clients on the path. I want to clear that path and make it easier for clients to achieve their objectives.” – BECKY KRAUSS
MC: What was the legal environment like at Sandia when you started and how have you changed it? BK: When I came to this company, there were a lot of lawyers who preferred to stay in their ivory towers and let the clients come to them. It wasn’t about being proactive or building relationships. We’ve developed a different culture over time, so now there is an understanding that the lawyers are with our clients on the path. I want to clear that path and make it easier for clients to achieve their objectives. We’re all in it together. It develops over time, but you have to build relationships and trust the partner to know that you aren’t going to just say ‘No’ or slow them down. I’m actually trying to help speed them along their path, compliantly and within the boundaries of the law while understanding the risks in that decision-making process. You build those relationships by having integrity, being there, and making sure that when you give advice, you stay right there with them. MC: Most of the work Sandia National Laboratories does is sensitive, but is there a project you are most proud of? BK: In 2014 we got the call to help out with the Ebola crisis. Another government agency asked us to help figure out how blood samples could be safely transported. There were a whole host of other issues we had to work through to make sure our workers would be safe going to foreign countries impacted by Ebola and bringing them back to work. We involved HR, communications, legal, science, and engineering to get it all done. It’s just great how this company pulls interdisciplinary teams together to work through issues.
Ebola was one that was particularly exciting that we can be proud of. MC: Why are you so passionate about encouraging other women in the workforce and what is your advice to them? BK: Starting out in my law firm 20 years ago, I heard and saw what several women who came before me had to deal with to climb the ladder, and I certainly experienced some of it myself. The classic example I hear from many women is when you go into a meeting and speak up with an idea, it falls flat; then a few minutes later, a man says it, and it’s the greatest idea they’ve ever heard. I’ve experienced that, and I know a lot of other women have as well. Those experiences give me the passion that it doesn’t have to be like this. It can be better. People need to be more aware. I want to help women both create and be a part of a better work environment. I led the Women’s Action Network at Sandia for a decade. I always tell women that they need to find strength in allies and networks. Your voice can be heard so much better and you will feel so much more empowered in your job if you have the strength of other people who are looking out for you.
Trucker Huss congratulates Becky Krauss General Counsel of Sandia Corporation for her outstanding recognition in Modern Counsel. We are honored to call you a partner and wish you continued success.
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MC: How would you describe your leadership style? BK: I am an engaged leader, and I love working with different lawyers, advising, developing, and coaching them and, hopefully, inspiring their initiative. I love working here. It’s always fascinating. I bring the passion I feel for this place to the people who work with me, and it catches on.
One Embarcadero Center 12th Floor San Francisco, CA 94111-3617 415.788.3111 www.truckerhuss.com
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Variety Show In a company committed to creativity, a lawyer is not limited to the legal realm. How Rob Rader helped Ovation build a digital arts community BY TERESA DOVALPAGE
John Stuart Mill probably couldn’t have fathomed the concept of the Internet when he wrote On Liberty—let alone the entity of YouTube. But the latter provides a perfect laboratory to test his timeless theory of the marketplace of ideas. And Ovation TV is betting on more than 150 years of triedand-true political theory. Ovation TV is the only television network in America devoted exclusively to the arts. And YouTube is an often-untapped pool of creative talent waiting to be discovered. Last spring, Ovation launched Ovation Digital Arts, its multiplatform community focused on developing a partnership with a number of YouTubebased creators that include musicians, dancers, painters, and photographers. Ovation Digital Arts, like its artists, is an organic entity. Relying on the mechanism of the Internet and the power of crowdsourcing, it invites artists with public appeal and star potential. YouTube provides a dual platform: artists publicly audition with their uploaded content, and the audience elevates the best content with likes and views. “We used the power of the web to find them, then word of mouth took over,” says Rob Rader, Ovation 110
ROB RADER General Counsel Ovation
TV’s general counsel. “We now have more than two million subscribers.” In developing the platform, Rader worked closely with Stephen Dypiangco, vice president of Ovation Digital Arts and former channel manager of YouTube Nation. “Stephen’s vision and team really have invigorated our online offerings,” says Rader. Though there were already big companies in the digital market, Rader says Ovation Digital Arts was able to create a groundbreaking community focused on arts and culture that allows YouTube creators to shine. Rader worked closely with the implementation of Ovation Digital Arts, based on his longtime experience as head
of business and legal affairs for MGM and representing diverse online properties like Collective Digital Studios, Buzznet (now SpinMedia), Epic Fu, Ask A Ninja, and Boing Boing. “Most cable networks are only interested in adding subscribers rather than supporting the artists, but we have managed to offer these talented creators the help they needed to take their careers to a new level,” he says. Among the featured artists are Tom McPherson; “samuraiguitarist” Steve-san Onotera; photographer Matt Day; and former Disney animator, illustrator, and Oscar-nominated filmmaker Aaron Blaise. Collaboration among artists, producers, and programmers has been essential to the project implementation. Film critic David Poland is having his show featured on Ovation TV’s linear and video-on-demand platforms. Ovation Digital Arts discovered Poland through his 57,000-plus-subscriber YouTube channel, “DP/30: The Oral History of Hollywood”. The next stage is investing in Ovation Digital Arts’ new partners through TV programming, financing, and crowdfunding and helping them secure distribution deals that allow the artists to find additional revenue sources. Though the process of creating and establishing the platform has been organic and smooth, Rader admits that there are some issues that still need work. “We would like to add more in-house expertise in the fields of software development and programming,” he says. “We are definitely interested in adding more Latino content to the network as well, including projects with comedian Gabriel Iglesias and other partners, as well as more original programming on top of the 250 hours of new programming we feature each year.” In less than a year, Ovation Digital Arts has introduced its
featured artists to 50 million subscribers and given them personalized audience development support. Ovation TV has provided more than $15 million in direct support to the artistic community and arts education since 2007. Through the Ovation Foundation, the company has offered a number of grants as well as sponsorship for community events. Ovation TV’s tagline is “Art Everywhere,” and Rader says the organization lives up to that. “We want to make sure that everyone has access to the transformative power of art, not just by full-time artists, but in how people live their lives,” he says. Last August, Ovation Digital Arts launched a new crowdfunding initiative called Creative Studio. Working closely with RocketHub to support filmmakers, writers, designers, and illustrators, the company ran a contest through its website to give $5,000 to certain particularly exciting projects. “If we fall in love with an idea, we will put that project on a TV special next year,” says Rader. Ovation is also developing more over-the-top programming (videos broadcast from the Internet rather than from traditional television or cable). “The number of people viewing video online has increased,” says Rader, “and so has the demand for new digital content. That’s where the future is, and we are planning for it.”
— CLIENT CONNECTION —
> THE POINT MEDIA: “As
Rob’s outside counsel, we are always impressed with his focus on priorities, breadth of legal knowledge, and strong energy. Rob gets the job done with great skill, integrity, and respect for all.” – Elizabeth Zee, Partner
photo: Michael Helms Photography
The Point Media congratulates Ovation’s Rob Rader on his accomplishments, vision and recognition by Modern Counsel. We are honored to be part of the Ovation team.
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Congratulations Greenberg Traurig congratulates Rob Rader on his recognition in Modern Counsel magazine and on his longstanding contributions to the legal profession and his community. Committed to Client Service
At Greenberg Traurig, we pride ourselves on our ability to provide in-house counsel in the Entertainment industry with the hands on support and resources that are essential ingredients to success.
The Business of Entertainment The Point Media 350 South Beverly Drive, Suite 170 Beverly Hills, CA 90212 310.553.5900 thepointmedia.com @tpm_law
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“Certain regulations are principlesbased, meaning that there are often no definitive rules to follow. [...] This makes for a challenging environment in its own right, and when you layer in the rapidly changing global regulatory landscape, the challenge becomes even greater.” – JOHN ROTH, VENOR CAPITAL MANAGEMENT
EVALUATE Anyone who works in-house will tell you that counseling is not a binary science. Leadership relies on attorneys who can do more than say, “No.” Dan Sanders, of Michelin, says he is evaluated on his appetite for risk—a necessity in a growing entrepreneurial company. He and his peers in this section make calculated decisions every day with a variety of stakeholders in mind. See how they’re not just mitigating risks, but taking some too, and their businesses are reaping the rewards.
INQUIRY Do you use any models or graphic tools to help your organization visualize risk? Beyond compliance, what is your organization’s ethical code, and how do you interpret it for legal purposes?
For insights on finding the right balance between caution and proactive counseling, read Deloitte’s white paper, “The Risk Intelligent General Counsel.”
JOIN US ON LINKEDIN. Share your thoughts and find out what others are saying.
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TV Guide The Internet and digital technologies have drastically changed the faces of communication and entertainment. The National Cable & Telecommunications Association is a legal and policy watchdog making sure they continue to change for the better BY JEFF SILVER // PHOTOS BY CALEB FOX
The state of the cable and telecommunications industry is light-years away from where it was when Rick Chessen began his career. Digital technology was in its infancy, telephone companies were prohibited by law from providing video services, and satellite services were literally just getting off the ground. A decade or two can make a lot of difference. This environment has raised the importance and profile of the National Cable & Telecommunications Association (NCTA), of which Chessen is senior vice president of law and regulatory policy. The organization represents both sides of the industry—programmers and operators—and as markets and technical innovations continue to evolve, it is charged with protecting the best interests of both its wide-ranging members and the customers they serve. NCTA bases its activities on both legal arguments, such as statutory construction and constitutional issues, and policy issues related 114
to the legitimacy and efficacy of various proposals. In most matters, it is also guided by the philosophy that regulation is either unnecessary or can be reduced when competitive market forces ensure a fair playing field, adequate consumer choice, and ongoing innovation. This often results in attempts to bring about change to outdated statutes and regulations, such as the 1992 Cable Act, which took effect when cable operators controlled more than 95 percent of the pay-TV market and owned more than 50 percent of programming networks. “The act was intended to spur competition, but now cable has only 52 percent of the traditional pay-TV market and vertically integrated programmers have dropped to about 13 percent. And that doesn’t include powerful new online competitors like Netflix, Amazon, and Hulu,” says Chessen. “With so many consumer choices, regulations based on a snapshot of the world in 1992 no longer make sense.”
RICK CHESSEN Senior Vice President of Law and Regulatory Policy National Cable & Telecommunications Association
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Protecting the Future of Wi-Fi Performance As the prevalence of video and other bandwidthhungry media applications increases, Cisco estimates that two-thirds of all Internet traffic will be via Wi-Fi by 2019.
One of the organization’s latest challenges is sounding the alarm that deployment by some wireless carriers of LTE-U (a proprietary technology involving a privately-developed specification) could cause significant disruption to consumers using Wi-Fi to access the Internet. NCTA contends that existing technologies like Wi-Fi that operate in the unlicensed spectrum bands utilize protocols to ensure cooperative sharing of available bandwidth by all devices. But LTE-U, according to NCTA, is not currently designed to foster such “collaborative use” and will degrade Wi-Fi performance. “Wi-Fi is essential to how millions of consumers use the Internet every day,” says Chessen. 116
“We don’t oppose the LTE technology in the unlicensed bands—we just want to make sure that the version being rolled out will coexist fairly with others. The best way to do that is to work collaboratively through private-sector standard-setting bodies. That’s what made the unlicensed spectrum such a runaway success in the first place.” NCTA is also a named petitioner in an appeal of the Federal Communications Commission’s (FCC’s) decision on net neutrality. Previously categorized as Title I (assigned to lightly regulated areas), broadband access was recently reclassified as a Title II common carrier service, which brings much greater regulation. NCTA
According to the NCTA, Wi-Fi’s listen-beforetalk protocol ensures “cooperative” use of unlicensed spectrum and proper performance of all devices. Proprietary LTE-U technology will likely create interference with Wi-Fi and impair performance. A standards-setting organization is working on a version of LTE technology called License-Assisted Access (LAA) that promises more reliable assurance of shared spectrum use. Mutually agreed-upon standards will ensure proper performance of nextgeneration 802.11ac Wi-Fi, which promises speeds dozens of times faster than current technology.
“Without excessive regulation, the industry has been able to continue developing and deploying new innovations. And at the same time, consumers have benefited economically and environmentally while enjoying more features and capabilities. That’s a win for everyone involved.” Mintz Levin applauds
– RICK CHESSEN
also spear-headed efforts among all payTV providers to create the Voluntary Agreement for Ongoing Improvements in the Energy Efficiency of Set-Top Boxes (VA) that ultimately established commitments for energy use in set-top boxes provided by cable, satellite, and telco-TV that took effect in 2014. The industry-initiated VA made the Department of Energy proceeding unnecessary and was praised by Energy Secretary Ernest Moriz. An independent audit also reported that the VA has saved consumers $504 million and helped reduce greenhouse gases by nearly three million metric tons. “Those are the kinds of outcomes we strive for,” says Chessen. “Our members worked collaboratively to achieve consensus both internally and externally. Without excessive regulation, the industry has been able to continue developing and deploying new innovations. And at the same time, consumers have benefited economically and environmentally while enjoying more features and capabilities. That’s a win for everyone involved.”
NCTA for his visionary leadership and commitment to the cable and broadband industry.
– Mintz Levin – Providing legal strategy and creative solutions to cable operators, broadband providers and programming networks for over 30 years.
— CLIENT CONNECTION —
> MINTZ, LEVIN: “Rick’s blend of creative
thinking, deep legal knowledge, and diplomatic advocacy make him a standout in the communications field.” – Tara Corvo, Chair, Communications Practice
maintains that the common carrier designation, designed in the 1930s to regulate telephone monopolies, is the wrong way to ensure the continued health and vitality of the web. “Imposing such obsolete rules on the Internet is a mistake. It introduces a hugely intrusive regime when there are more appropriate measures the FCC could have taken that wouldn’t have such a negative impact on the investment needed to expand and improve broadband networks,” Chessen explains. Under a provision called “section 706,” he points out that the US Court of Appeals had already provided a road map for the adoption of net neutrality rules without detrimental effects to investment and innovation. NCTA’s primary focus continues to be communications-related agencies like the FCC, but the varied interests of its members often dictate a broader focus. This benefited the public after the Department of Energy initiated a proceeding in 2011 to regulate the energy use of set-top boxes provided by cable and other pay-TV providers. However, the type of standards that were being considered had been developed for commodity products like refrigerators and dishwashers. NCTA argued that the proposed regulations limiting set-top box energy consumption would create inconveniences for users, stifle innovation and be unable to keep pace with other nonregulatory methods specifically tailored to the communications environment. It
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Tread Lightly In the aftermath of the Ford-Firestone recall, lawmakers passed legislation to change safety, reporting, and liability standards. Sixteen years later, car companies are issuing more recalls than ever before. In this new world of unprecedented scrutiny, automakers and their partners turn to inside counsel to help map the road ahead. BY ZACH BALIVA
Dan Sanders joined Michelin in 1996 to manage product liability for the iconic tire manufacturer. He describes the first few years of his tenure as “sleepy” ones for the industry. It was business as usual. But on August 3, 2000, everything changed. That’s when the National Highway Traffic Safety Administration (NHTSA) announced its investigation into Firestone’s tires. One hundred and ninety-three consumers reported tread separations. Twenty-one of those incidents involved death. Three months 118
earlier, NHTSA had contacted Firestone and Ford (the latter equipped many of its vehicles with Firestone products) about unusually high tire failure rates. Bridgestone, Firestone’s parent company, ultimately recalled a record 6.5 million tires. Ford promised to increase quality standards, and less than two weeks after announcing its investigation, NHTSA reported 62 fatalities linked to vehicles equipped with the recalled tires. The House Commerce Committee started its own investigation, and
DAN SANDERS General Counsel Michelin North America
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The Impact of the TREAD Act •• 2001 13 million Firestone tires force Ford to recall vehicles. •• 2003 General Motors recalls 1.8 million vehicles for faulty windshield wiper motors on several models. •• 2004 2.4 million Chrysler vehicles are reported to move out of park without a key in the ignition. Breaking tailgates force a recall of 3.7 million Chevrolet Silverado, Avalanche, and GMC Sierra models. •• 2005 4.5 million Ford pickups and SUVs are recalled due to a bad cruise control switch. •• 2009 After more than 60 reports of unintended acceleration, Toyota announces a recall of 4.4 million vehicles due to a faulty gas pedal in its Camry, Prius, and Tacoma. Ford issues another recall of 4.5 million vehicles for the same cruise control switch first recalled in 2005. •• 2012 2.5 million Camry and Corolla models are recalled for a window switch assembly that poses a fire risk. •• 2013 Hyundai Motor Corp and Kia Motors recall 1.8 million vehicles to address a potentially faulty switch and loose headliner. Toyota, Honda, Nissan, and Mazda recall 3.4 million vehicles for flawed airbags made by Takata Corp. •• 2014 General Motors’ defective ignition switch that stops a car while it’s driving is linked to more than 50 deaths. The company recalls a total of 30.4 million vehicles in one year and pays an estimated $4.1 billion. Takata increases the size of its defective airbag recall from 18 million to 34 million, or more than 14 percent of cars on US roads. The recall is the auto industry’s largest ever and one of the largest in consumer product history.
Congress held hearings, during which Ford admitted to knowledge of similar tire quality problems two years earlier. Clarence Ditlow, executive director for the Center for Auto Safety, testified before a Senate Committee that Ford and Firestone knew of the tread flaw but failed to report their findings to NHTSA. The recall perpetuated numerous lawsuits against Ford and Firestone as injuries and deaths linked to the auto and tire combination started to climb. While Sanders and Michelin leaders remained confident in the quality of their products and strength of the company’s values, they knew major changes were in store. Plaintiffs were filing thousands of lawsuits against Ford and Firestone. Their executives, who testified before Congress, faced civil and criminal penalties. “The temperature rose significantly,” Sanders says. “Their actions would alter the course of our business forever.” As the companies released their tightly held trade secrets and design specifications to attorneys, experts, and Congress, lawmakers and ordinary citizens received an overnight education on the inner workings of the industry. The Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act, passed as a direct response to the recall in 2000, created an early warning and governmental reporting system to detect and address quality problems in tires. The bill included significant civil and criminal penalties for noncompliance. Suddenly, auto and tire companies found themselves in a race for top talent. As the recalls drew the attention of some of the most sophisticated plaintiff lawyers in the country, many companies
scrambled to hire lawyers just to deal with the mounting litigation workload. Others, like Michelin, wanted lawyers to focus more on the quality and efficiency of systems to prepare for the future. Lawyers like Sanders, who once worried about defending his company in relatively routine automobile cases, had to pivot instead to manage litigation and the company’s valuable image—risks potentially worth billions of dollars. The ordeal changed the role of legal at Michelin. “We went from a quiet, relatively unknown operation to one with major scrutiny from company executives, the government, our customers, and insurance partners,” Sanders says. The number and complexity of lawsuits climbed. Jurors became more skeptical of auto and tire companies. More plaintiff lawyers flocked to the industry. Just before the recall, Michelin’s top lawyers had reorganized their outside and inside litigation structure. “It’s better to be lucky than good,” Sanders says. “The move helped us deal with the postrecall world in ways we never could have planned.” In 1999, the company was using more than 100 firms to defend its litigation. The firms—hired based on geography—struggled to be efficient and coordinate their efforts. Michelin implemented a regional counsel system to consolidate the work among five key law firms and remade internal processes to operate more effectively. When the FordFirestone recall hit six months later, Sanders and his peers simply deployed their new system. Then, they met with senior leaders and stakeholders to share their plan for the future. It was Sanders’s charge to demonstrate legal’s role as a strategic partner in a postrecall world.
“We went from a quiet, relatively unknown operation to one with major scrutiny from company executives, the government, our customers, and insurance partners.” – DAN SANDERS
Though Sanders is quick to point out that Michelin never wishes harm on competitors, the new era that Ford-Firestone created gave Michelin some advantages. A better-informed public focused more on quality and safety and the important role they play in maintaining the air pressure and condition of their own tires. “Those things played in our favor, and the decades of research and development we’d done as a company put us in a position to differentiate and succeed,” he says. Sanders and his colleagues initiated important conversations with their most significant partners. And while the conversation didn’t change, key players did. “We found ourselves talking to much more senior leaders both inside and outside. We started interacting with the very top executives for our key customers,” he explains. “Those customers wanted to know how Michelin was responding and what set us apart from our competition.” Today Sanders is Michelin’s vice president, general counsel, and secretary, and the issues created by the Ford-Firestone recall remain significant: NHTSA levied record civil penalties of $126 million in 2014. In July 2015, the organization dinged Fiat Chrysler with a $105 million penalty for failing to provide an effective recall remedy and failing to comply with reporting requirements. Transportation Secretary Anthony Foxx said the penalty “puts manufacturers on notice that the department will act when they do not take their obligations to repair safety defects seriously.” Since 2009, NHTSA has fined auto companies hundreds of millions of dollars, and the Department of Justice agreed to forgo prosecuting Toyota over allegations
that the company concealed safety defects linked to at least 12 deaths. To avoid further investigation, Toyota accepted a $1.2 billion penalty. The number of vehicles recalled in 2014 beat the prior three years combined. And while tire recalls are a very small percentage of auto industry recalls since 2000, what links the most problematic recalls is a failure to respond in a timely manner. “When that happens, it is difficult for other corporations because the public loses trust, and that never helps corporations in litigation,” Sanders says, adding that he’s proud of how quickly Michelin responds whenever issues arise. When it must take a market action, it does so as quickly as possible. “We think our actions show our system is working and demonstrate that we’re committed to quality. We think our customers and the public see it,” says Sanders. Michelin strives to take market action based on facts, even when accidents or injuries have not occurred. In doing so, it addresses smaller problems and avoids larger, more costly ones. In 2015, NHTSA completed its investigation into blowouts allegedly caused by a Michelin tire. After an auto hauling company filed the complaint, NHTSA responded but found that excessive speed, and not any fault with Michelin tires, caused the accidents in question. As events like these escalate, Sanders says the general counsel must bring solutions and present strategy. “My boss is our president and chairman, and he evaluates me not on my technical legal skills, but on my leadership, influence, and risk-taking appetite,” he explains. “I use my legal skills in our department and with our outside firms, but upstream I need to show what impact
How does good communication serve leadership in times of crisis? “When I was in France, a mentor taught me to bring three presentations to every meeting: a 30-second one, a 3-minute one, and a 30-minute one,” says Sanders. “When you deal with CEOs and other business leaders, you never know how much time you may have, and you need to be very concise. It’s one thing to be proactive, but you also have to communicate it in a way that can influence the outcome. That’s especially true in a crisis. Clarity matters, and time is of the essence. No one wants to read a 10-page memo. If you can’t explain the issue in one page, you probably don’t understand it yourself.”
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Yukevich | Cavanaugh Congratulates
DAN SANDERS Vice President, General Counsel and Secretary, Michelin North America, Inc. On being recognized for his outstanding accomplishments and leadership.
“[I’m evaluated] not on my technical legal skills, but on my leadership, influence, and risktaking appetite. […] Upstream I need to show what impact a decision or initiative will have on the overall business.” – DAN SANDERS
Yukevich | Cavanaugh is honored to work with Dan Sanders and Michelin North America. We look forward to continuing to serve their legal needs.
a decision or initiative will have on the overall business.” At Michelin, Sanders is able to do that because he supervises a responsive and proactive department that knows the business well. He’s moved each lawyer into the business unit that he or she represents instead of keeping attorneys huddled together. Michelin has ambitious growth plans for the next five years, and as the company progresses, the legal department must provide critical support. Sanders believes in hiring good lawyers with the right values, and then stepping back to let them work. If 15 years of major recalls have taught him anything, it’s that nothing stays the same—product liability evolves, Congress enacts new laws, and regulations change. “We don’t have a crystal ball, and don’t know what will happen next,” says Sanders. “All we can do is learn and grow, and ensure the right people and systems are in place to take us where we want to go.”
GIVE HIM A HAND. DLA Piper salutes Dan Sanders, General Counsel at Michelin North America. His lifelong devotion to excellence in the practice of law and commitment to the community inspires us.
James M. Brogan, One Liberty Place, 1650 Market Street, Suite 4900, Philadelphia, PA 19103 | 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 photo: TKTKTKTK APRIL/MAY/JUNE 2016 MODERN-COUNSEL.COM 1 2 3
JOHN ROTH General Counsel Venor Capital Management
photo: Venor Capital Management
In the wake of Dodd-Frank, a culture of transparency is holding fund managers accountable to ever-changing regulation BY AMANDA GARCIA
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he alternative fund industry manages trillions of dollars, but prior to 2010, regulators had limited visibility into it. Many believed that this industry was a haven for bad actors posing a systemic risk to global financial markets, says John Roth, GC and chief compliance officer at Venor Capital Management. The Dodd-Frank Wall Street Reform and Consumer Protection Act intended to pull back the veil. Elimination of the so-called “private adviser exemption” from Dodd-Frank caused many private fund managers, like Venor, to become subject to the full scope of regulation by the Securities and Exchange Commission—a dramatic shift for an industry that previously flew below the radar. Firms like Venor are now required to publicly disclose a significant amount of information, as well as file extensive nonpublic reports with regulators—filings that have yet to prove their benefit to investors, says Roth. Many industry professionals complain that the pendulum has swung too far, creating an unreasonable barrier to entry, but Roth believes it will be worth it in the long run if reforms eliminate bad actors and clean up the markets in general. Modern Counsel: What are some unique challenges that attorneys in this industry face? John Roth: Certain regulations governing the investment advisory industry are principles-based, meaning that there are often no definitive rules to follow. Imagine a road sign stating that the speed limit is “safe speed” rather than “25 MPH.” When traveling down that road, you must make a subjective determination regarding what constitutes a safe speed, taking into account various factors such as road conditions, pedestrian traffic, visibility, etc., and police patrolling the road may not agree with you. This makes for a challenging environment in its own right, and when you layer in the rapidly changing global regulatory landscape and the fast-paced nature of Wall Street in general, the challenge becomes even greater. 126
MC: How do you approach compliance in that context? JR: Compliance professionals are integral to helping firms create value for investors within the boundaries of applicable domestic and international law. We must do so by always placing the interests of our clients ahead of our own. The starting point, I believe, is to maintain a steady drumbeat of awareness throughout the firm about how compliance applies to each person’s role. At its most basic, it comes down to good communication and firm-wide buy-in. MC: What is your strategy for earning that buy-in throughout the firm? JR: It’s imperative to keep all employees aware of current law and new developments, and how both impact each employee on a daily basis. Because I can’t be everywhere at all times, I try to effectively deputize everyone through training to be issue-spotters so that my reach is naturally extended. I keep an open door and remain a visible part of the business. While I have to be reactionary at times, I also must be proactive and stay ahead of issues before they become problems. I consistently remind everyone that we should focus on what should be done in a given situation rather than settling on what can be done, because the two are not always the same. MC: How do you balance all the moving parts? JR: It’s important to never make legal decisions in isolation. I want to be part of the solution for the business, not a roadblock. Mindful that there are inherent uncertainties lurking behind many issues, I focus on understanding the firm’s business so that I can help the firm evaluate options in a holistic manner. Because it is a dynamic environment, it goes back to expanding awareness, building mutual trust, and being able to make decisions in real time.
Regulation Cheat Sheet A breakdown of new regulation imposed on the alternative fund industry in response to the global financial crisis PRIVATE FUND INVESTMENT ADVISERS REGISTRATION ACT OF 2010 (TITLE IV OF THE DODD-FRANK ACT) Requires private fund managers to register under the Investment Advisers Act of 1940, thereby enabling the Securities and Exchange Commission to fully regulate many hedge fund and private equity fund managers. EUROPEAN ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE Coming into force in 2011, the directive regulates the management and marketing of private funds in the European Union, and severely restricts the ability of US-based managers to do so without submitting to an extensive reporting regime.
JOSEPHINE WANG General Counsel Securities Investor Protection Corporation
As goes investor confidence, so goes the stock market. Restoring confidence and recovering losses has been SIPC’s mission for almost half a century BY RUSS KLETTKE // PHOTOS BY CALEB FOX
The words “chaos” and “panic” were no exaggeration of terms in September 2008. This was when Lehman Brothers Inc. unraveled due to unsustainable risk. A few months later the infamous Bernard L. Madoff Investment Securities LLC went under due to fraud. During that fall, thousands of investors had billions of dollars at risk and images of the Crash of 1929 loomed large. But order and confidence ultimately prevailed. That’s because a safeguard to the securities industry, the Securities Investor Protection Corporation (SIPC), did what it was designed to do. Since SIPC’s creation in 1970, cash, stocks, and other securities held with Lehman, Madoff, MF Global Inc., Stratton Oakmont Inc., and other firms have been restored, in part for some and in full for others. SIPC traces its origins to an explosive rise in trading in the late 1960s, at a time when office APRIL/MAY/JUNE 2016
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“We do not provide insurance but assurance that if your brokerdealer fails, your cash and securities will be protected.” – JOSEPHINE WANG
automation did not exist by contemporary standards. Mistakes were common, there were cases of willful misuse of customer assets, and smaller firms crumbled, leading to a significant drop in investor confidence. Congress responded with the Securities Investor Protection Act, which created SIPC. The two-fold purposes were “to strengthen the regulatory framework, 128
and … to provide a backup to that framework in the form of an industry-funded customer protection program.” A seven-member board—three people from the securities industry, two from the private sector not associated with the securities industry, and one member each from the Federal Reserve Board and the Treasury— oversee their work.
“We are in some ways analogous to the FDIC,” says Josephine Wang, general counsel with SIPC, referring to the familiar Federal Deposit Insurance Corporation, which protects bank depositors in case of a bank failure. “We do not provide insurance but assurance that if your broker-dealer fails, your cash and securities will be protected up to $500,000 (this includes up to $250,000 for cash on deposit with the brokerage for investment purposes).” SIPC does not serve as a regulator, which is left up to the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), a nongovernment regulator of member brokerage firms and exchange markets. Supported by assessments on broker-dealers that are based on their securities revenue, SIPC maintains a fund approaching $2.5 billion. Even in the 2008 crisis and its aftermath, SIPC did not need to tap into a reserve $2.5 billion line of credit it has with the Treasury. At SIPC’s request, a trustee is appointed to liquidate failed broker-dealers and
to work toward the swift return of customer cash and securities. For example, in the Lehman Brothers meltdown more than 110,000 Lehman account holders regained control over their assets within days due to an account transfer process backstopped by SIPC funds. Customers had 100 percent of property restored, representing $92 billion in assets. To be clear, investors may lose value in their accounts due to a drop in stock values. But they do not lose their market shares. From her position and 32-year tenure with SIPC, Wang has been a witness and participant in some of the most momentous liquidations in the securities industry, perhaps most famously the Madoff case. “The securities business is very fast- moving, evolving, and changing,” says Wang. “It’s pretty fascinating, including the reasons firms go under. I’m very fortunate to serve in this position.” As of 2015, the trustee in charge of the Madoff case has recovered more than $10 billion for distribution to customers. This means that a customer owed $10 million by the Madoff firm, for example, has gotten back $5.3 million, due to distributions from the trustee and SIPC advances. Claimants in this case split into two groups, one being those who withdrew more than they deposited with the broker—fictitious profits consisting of other investors’ money, as it turned out—whom Wang calls “net winners.” Those who withdrew less than they deposited with the broker are the “net losers.” In seeking to recover fictitious profit, Wang says the trustee “is trying to level the playing field, by making sure that some investors don’t benefit at the expense of others.” She expects more recoveries to come.
45 Years of Asset Recovery •• 1970 After two volatile years of high trade volume and falling stock prices, the broker-dealer market consolidates through a rash of mergers and failures. SIPC is created, protecting customers up to $50,000 from broker failure and rebuilding consumer confidence in the securities market. •• 1973 The first liquidation involving an NYSE member, Weis Securities, Inc., occurs. •• 1978 After amendments to the Security Investor Protection Act, customer protection is raised to $100,000, then to $500,000 two years later. •• 1992 The SIPC fund is authorized by the board to increase from $12.6 million to $1 billion, which it does by 1996. •• 2000 At its 30-year anniversary, SIPC marks 291 customer protection proceedings. •• 2007 No customer protection proceedings are called (for the first time in SIPC’s 37 years). •• 2008 The Lehman Brothers and Madoff firms set historic standards for bankruptcy and Ponzi schemes. •• 2010 The Dodd Frank Reform Act increases SIPC’s line of credit with the Treasury to $2.5 billion.
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attracting businesses, retaining talented residents, and revitalizing urban centers. “Clearly, a lot has happened in our state since the recession.” Governor Rick Snyder and the state legislature deserve a lot of the credit, according to Nelson, who says lawmakers have done a lot to stimulate the state’s economy. In 2011, for instance, they passed sweeping tax reforms, including a new corporate income tax that’s levied only on large corporations while exempting small businesses. “Returning to a competitive tax structure here in Michigan was a tremendous change,” Nelson explains. “It’s something we needed to do not only to help our economy grow, but also to remain competitive nationally as businesses are looking for places to locate and expand.” In addition to tax reform, state lawmakers have passed measures improving fiscal stability and embracing regulatory reform. “Over the last six years, we as a state have
eliminated just under 2,000 burdensome and unnecessary regulations that impacted businesses,” Nelson continues. “A competitive tax structure, fiscal stability, and regulatory reinvention. Those are three dramatic, positive improvements that have gotten our state to where it is today.” Where it is today is impressive: more than 420,000 jobs have been created in Michigan since December 2010. Michigan leads the nation with 138,400 new manufacturing jobs since 2009. The state ranks first in the nation in concentration of industrial designers and engineers, research and development professionals, and skilled-trade workers. Michigan’s GDP growth outpaced the national average in 2014, growing by 13.9 percent compared to the national rate of 10.7 percent. And Michigan-based venture capital firms have $1.7 billion in capital under management, up 45 percent from five years ago. Although lawmakers have been instrumental, MEDC has played a significant role as well in the state’s turnaround. Established in 1999, the organization looks like a public body—it receives government appropriations, for instance, and is subject to government regulations and oversight— but behaves like a private enterprise: it has a board of directors, for example, receives supplemental private funding, and has the ability to manage its own procurement and determine its own programming. This is key, according to Nelson. “Our structure provides us a little bit more flexibility. It also allows for more continuity. Because we are always seating new governors and legislators, having the MEDC means the state can maintain its momentum and keep delivering on its economic and community development initiatives.” Several current programs perfectly illustrate those initiatives and the contributions they’re making to a new, stronger Michigan—not only in Detroit, but across the state. The first is MEDC’s public/private Pure Michigan Business Connect program. Launched in 2011, the multibillion-dollar initiative connects Michigan businesses with one another for the purpose of stimulating intrastate business-to-business commerce. Among the network’s members are Michigan’s two largest utility companies, DTE Energy and Consumers Energy, which have joined together on a multibillion-dollar purchasing increase with Michigan-based vendors and suppliers. Pure Michigan Business Connect has generated more than $2.7 billion in new
photo: Michigan Economic Development Corp.
Success In just a few years, the Michigan Economic Development Corp. has helped Michigan go from bust to boom BY MATT ALDERTON
Just a few years ago, the city of Detroit seemed like a lost cause. Once the automotive capital of the world, its biggest industry was struggling to keep pace with foreign competition. Jobs were moved offshore, factories were shuttered, and prestige was lost. Then came the recession, which made an already festering wound deeper. During the economic downturn and the concurrent housing crisis, employment plummeted and foreclosures peaked, leaving the city with $18 billion in debt and its lowest population in more than a century. Once teeming with life, the Motor City was now riddled with blight. So much so that in 2013, Detroit became the largest-ever US city to declare bankruptcy. But that was then. Today, Detroit isn’t falling. Instead, it’s rising. Buoyed by a new mayor, state and federal support, and private-sector investment, the city and its economy are flourishing. As a result, employment is increasing, residents are returning, neighborhoods are developing, and businesses are booming. As goes Detroit, so goes the rest of Michigan, according to Jennifer Nelson, a Michigan native who says the state—just like its largest city—is undergoing a radical transformation and turnaround. “About six years ago, our unemployment rate was over 14 percent. Today, our unemployment rate has dropped to 5.1 percent,” says Nelson, chief operating officer and general counsel of the Michigan Economic Development Corp. (MEDC), a quasi-governmental organization whose mission is supporting the Michigan economy by growing and 130
JENNIFER NELSON Chief Operating Officer and General Counsel Michigan Economic Development Corp.
contracts for Michigan companies in a va- developers in acquiring and developing riety of industries, explains Nelson, who real estate in downtowns and other vital says the program helps Michigan not only commercial corridors. support existing businesses, but also attract “We’ve had great results encouragnew ones. “As we work on attracting busi- ing revitalization in downtown areas in nesses to the state, it helps for them to see some of our larger cities, including not that there is a supply chain here that can only Detroit, but also places like Grand help them deliver whatever goods or ser- Rapids, Flint, and Pontiac.” Nelson says vices they offer.” public spaces are another important focus In the same way it helps them find sup- for MEDC, which stimulates development pliers, MEDC assists Michigan businesses of parks and plazas through Public Spaces, with exporting, contract procurement, ac- Community Places, a creative crowdfundcess to capital, and workforce development. ing program whereby money raised for a Since 2011, MEDC’s Michigan State Trade community project is matched dollar for Export Program (MI-STEP) has helped dollar up to a certain amount. “It’s been more than 980 companies sell to over- wildly successful,” says Nelson. seas markets. MEDC’s Michigan Defense Although money is effective, it’s not Center, meanwhile, has helped dozens of requisite. MEDC’s Redevelopment Ready Michigan-based defense contractors secure Communities program, for instance, certifies municipalities government contracts to make sure they’re with the Department of optimized for business Defense. Its Capital Access investment in areas such Program likewise has faas customer service and cilitated business growth development approval by stimulating millions reduced unemployment by of dollars worth of small processes. Administering it more than 9 percent business lending by banks. requires time and staff, but eliminated just under 2,000 Finally, its Career Jump not financial incentives. burdensome regulations on businesses Start, Michigan Advanced “We know we need to of created more than Technician Training, and fer incentives to businesses 420,000 jobs Skilled Trades Training to remain competitive na increased GDP by more Fund programs assist tionally, but we’ve learned than $50 billion increased per capita companies in finding, that there are a lot of other income by more training, and acquiring things we can do to meet than $6,500 skilled workers. the needs of growing com“What we’re hearing panies,” Nelson says. from companies right now is how much This is especially important now, as they need talent,” Nelson says. “Through MEDC was forced to lay off 65 employees our programs, we identify what skills in fall 2015 in response to a 27 percent cut employers need and then work with in its 2016 funding. community colleges to make sure there is “As the COO, I’m focused on making sure training and education to prepare poten- we’re as efficient as we can be,” continues tial employees for the jobs of today and Nelson, who says MEDC will be increasing tomorrow.” its reliance on regional partners to execute Of course, employees don’t need skills more programs with fewer resources. alone. They also need communities in Even with fewer resources, Nelson exwhich to live, work, and play. In addition to pects Michigan and MEDC’s momentum economic development, MEDC therefore to continue thanks to recent success stohas numerous programs stimulating com- ries like Clemens Food Group, which broke ground on a new pork processing facility in munity development. “When they’re locating or even expand- Coldwater, Michigan, in July 2015. ing in a community, businesses want to “Clemens Food Group was a huge success make sure it’s a place their employees want this past year,” concludes Nelson, who says to live,” explains Nelson. She highlights sev- the plant is expected to generate more than eral community development programs of $256 million in private investment and crenote, including the Michigan Community ate approximately 810 jobs when it begins Revitalization, Downtown Infrastructure operating in late 2017. “They chose Michigan Grant, Community Development Block based on state and community support, site Grant, and Downtown Signature feasibility, and labor force preparedness. Building programs, which administer So, the things we’re trying to put in place incentives, grants, and loans to assist are working.”
In Six Years, Michigan Has
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EVALUATE PRIVACY STEVEN TAM Chief Privacy Officer and General Counsel Vancouver Coastal Health Authority
Modern Counsel: Why is e-health an imperative in the Canadian health-care system now? Is it to benefit patient care or perhaps to provide broader information about health-care trends? Steven Tam: It’s both. By creating one record per patient, we can share information across hospital boundaries to make better care decisions about the patient. We can subsequently analyze the aggregated data to look at ways to improve how we deliver care by capturing information electronically. MC: Can you describe some of the tangible benefits of e-health? ST: There are various ways in which it can work. It can reduce the need to repeat diagnostic tests because all information is available from one source, and it reduces communication errors through computerized physician order entry. We will also see better medication reconciliation, avoiding adverse drug events and allergic reactions. In the case where a person arrives in the emergency department at one hospital when they had a surgical procedure or other treatment at another, we can know what treatment was previously provided.
MC: E-health still sounds like a huge change for health-care staff. ST: There will be an adjustment period when switching from paper to electronic records; however, it will eventually enable them to spend less time looking for required information or passing it along to others and more time focused on actual treatment and service delivery.
BY RUSS KLETTKE
The Canadian health-care system is much like that of the United States. Both are migrating to electronic medical records systems. For patients, it means safer and more effective care. Health-care providers can get a holistic view of the patient in short order, while public and private health organizations can employ their resources more efficiently. This ultimately leads to better knowledge about populations and how to improve services. The evolution of data collection and 132
use comes with its own challenges, of course—particularly patient privacy. On the leading edge of that is Steven Tam, general legal counsel and chief privacy officer of Vancouver Coastal Health Authority (VCH). Tam needs to stay on top of the opportunities and threats in e-health, which compelled him to work collaboratively with his peers at other health-care organizations to wrestle with the benefits of data and concerns for confidentiality.
MC: What is the state of data collection and utilization in health care right now?
photo: Clive Camm
ST: It’s fragmented. For this reason we’ve launched the Clinical and Systems Transformation to replace many of our existing systems among three separate health organizations with a single system. (The other two organizations are Providence Health Care and the British Columbia Provincial Health Services Authority.)
“Data can help us maintain quality standards in the face of limited resources. We might root out where resources are used inefficiently and find better data to support research.” – STEVEN TAM
of health information within the public health-care system in British Columbia. MC: Who is involved in GHISA and what exactly does it apply to? ST: The parties to the agreement are the Ministry of Health and all six health authorities within the province. It documents participating parties’ intentions to share information that is reasonable, relevant, and necessary to deliver healthcare services or in relation to health-care planning and other secondary uses of health information. It is limited to what is permitted under FIPPA (the Freedom of Information and Protection of Privacy Act) and other laws.
MC: From a legal perspective, what are the biggest challenges of e-health and other new technologies?
MC: What are the biggest challenges when balancing the use of data against the protection of patients’ privacy?
ST: We are concerned about health authority obligations and liability for preventing unauthorized access, about securing large volumes of data, and compliance requirements around the storage of data inside Canada only.
ST: In a very large organization with many historical existing practices, it’s essential to establish organizational-level information governance to bring more consistency to how policies are implemented and complied with.
MC: Why would data be stored outside of Canada?
MC: Information gathered by e-health systems can affect public health on a macro level. How might that play out?
ST: The current laws in British Columbia prohibit us from storing personally identifiable data outside of Canada, but many cloud-based services and other technologies, from basic communication tools to specialized health-care IT/data services, rely on data either being stored in or processed through computers over the Internet outside of Canada. MC: It seems as if sharing health-related data across independent health-care organizations could be problematic. How do you manage that? ST: I approach it holistically, attacking the problem at a system level. I worked with my peers at the other organizations to create something called the General Health Information Sharing Agreement (GHISA) to support these activities. GHISA establishes a common legal, policy, and governance framework for the sharing
ST: In a complex and diverse health-care world, it should enable standardization of how care is delivered. This can help us set and meet benchmark standards across different facilities. Canada also has an aging population, so data can help us maintain quality standards in the face of limited resources. We might root out where resources are used inefficiently and find better data to support research.
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> CLARK WILSON LLP: “Steven is smart,
hard-working, and well versed in areas of the law that are crucial to VCH’s ongoing success. His grasp of the organizational complexities and can-do attitude make him an effective leader and problem solver.” – Neil Melliship, Partner
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EVALUATE HEALTH CARE
Serving the Most Vulnerable Molina Healthcare’s roots go back to its founder, a doctor who saw the struggles of Medicaid patients in the ER. Jeff Barlow explains how the organization accomplishes its mission in 17 states and is growing
costs can arise during the course of the year. For example, in December 2013 the FDA approved an important new drug, Sovaldi, to treat hepatitis C. It added $84,000 in costs per patient for a 12-week course in 2014. We can see drugs in the FDA approval pipeline, but we don’t know how a drug will be priced until it is released. Another example is when a flu strain is particularly virulent one year, causing above-average outpatient costs and hospitalizations.
BY RUSS KLETTKE
MC: Is there a way to make up for those times of extraordinary expenses?
Modern Counsel: How did Molina become the insurer of the financially vulnerable? Jeff Barlow: We were founded by the father of our current CEO, an emergency room physician who saw what Medicaid patients went through to get access to medical care. MC: And it’s possible to be a profitable company in that segment of the industry? JEFF BARLOW General Counsel Molina Healthcare
JB: It’s possible, but our profit margins are very slim—often less than one percent. We try to negotiate contracts with each state that allow us to stay in the black. MC: What’s your role in those contracts?
MC: The Affordable Care Act (ACA) has expanded the population of people on Medicaid, but many patients still rely on the expensive ER for primary care. JB: We have about a half-million new Medicaid expansion members as a result of the ACA. They are in a transitional phase; it takes about a year and a half for patients to learn about having a primary care physician. MC: How is it beneficial that you also work in the Medicare segment?
MC: Could you provide an example?
JB: These are two programs that previously never coordinated with each other. When a person is dually eligible for both programs, we can help coordinate their benefits, thereby providing better quality care at less cost to taxpayers. The Center for Medicare and Medicaid Services is now encouraging states to work on this, and we are participating in pilot programs in six states.
JB: Our rates are generally fixed in advance for a full year, but unanticipated new medical
MC: And you have marketplace insurance plans also?
JB: I am not the principal negotiator. I get involved when the rates are not actuarially sound. The rates should be set according to historical claims data, but there are a lot of things that change quickly in health-care delivery.
JB: There are various possibilities. We sometimes try to negotiate exemptions from the capitation rates in a stop-loss type of agreement, or get compensated on a fee-for-service basis.
photo: Diana Miller Photography
We congratulate Jeff Barlow on his accomplishments with Molina Healthcare We take pride in helping Jeff and Molina Healthcare with • public offering of common stock • private placements of convertible notes under Rule 144A
“We were founded by the father of our current CEO, an emergency room physician who saw what Medicaid patients went through to get access to medical care.” – JEFF BARLOW
JB: Yes, this is primarily to serve what is called the “churn,” for when a patient’s income rises above or below the level required for Medicaid eligibility. We have commercial marketplace policies available now in nine states. MC: You have been involved in Molina’s growth. From your position, what advice do you offer other health-care insurers?
Building a Bigger Network and Better Economies of Scale MOLINA HEALTHCARE ACQUISITIONS
Health Information Management Division of Unisys YEAR ACQUIRED: 2010 COST: $135 million SERVICE AREA: Louisiana, New Jersey, West Virginia, Maine, and Idaho BUSINESS: Now known as Molina Medicaid Solutions, this division operates Medicaid Management Information Systems
• review of quarterly and annual reports and proxy statements • real estate acquisitions and dispositions, including the acquisition of the twin tower headquarter building in Southern California • commercial leasing and general real estate advice
Abri Health Plan in Wisconsin YEAR ACQUIRED: 2010 COST: $16 million SERVICE AREA: Wisconsin GROWTH: 89,000 members
Lovelace Health Plan in New Mexico
JB: It is generally better to do asset deals than stock deals. When you acquire an entire company, there is a need for much more due diligence, and you have to be comfortable with its liabilities. When we negotiate simply to assume a single Medicaid contract, it’s quicker and more efficient. We have also found it’s more cost-effective to expand within a state where we already have some presence.
YEAR ACQUIRED: 2013 COST: $53 million SERVICE AREA: New Mexico
MC: How does growth for the company benefit patients?
YEARS ACQUIRED: 2014/2015 TOTAL COST: $45 million SERVICE AREA: Florida
JB: The bigger we are, the larger our provider networks are and the more integrated high-quality care we can provide. Scale also contributes to better capital adequacy [the amount of capital required by regulators to balance against risk].
Providence Human Services
• new $250 million credit facility
Community Health Solutions in South Carolina YEAR ACQUIRED: 2014 COST: $57 million SERVICE AREA: South Carolina
First Coast Advantage and Preferred Medical Plan
YEAR ACQUIRED: 2015 COST: $200 million BUSINESS: This added a behavioraland mental-health services provider operating in 23 states
Proven strategies and steady growth for nearly 30 years
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The financial services industry is a favorite target of cyber criminals, but the brunt of such attacks is felt by more than the institutions. Why everyone has a stake in the fight for cybersecurity BY MELISSA ANDERS
Financial services companies lost an average of $23.6 million to cybersecurity breaches in 2013—up nearly 44 percent from the prior year. That’s a higher average annualized cost than any other sector. Security breaches impact the bottom line, costing millions of dollars while disrupting business and damaging trust. “If cybersecurity isn’t in your top three priorities, it should be,” says Greg McShea, senior vice president and general counsel of Janney Montgomery Scott LLC, a full-service financial services firm and subsidiary of the Penn Mutual Life Insurance Company. Cybersecurity is an area where the interests of regulators, the regulated, and clients are all aligned, McShea says. And as a result, regulators and firms are collaborating and sharing information in the area of cyber crime more than ever. The Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority often host seminars and invite leaders from Janney and other firms to participate on panels where they can share best practices on combating security threats. Trade organizations also sponsor meetings to help the industry 136
stay current on the latest trends. “If a firm has a problem, the entire industry gets a black eye for it,” McShea says, “so there’s mutual interest to be on top of this and locked arm-in-arm.” Regulators frequently examine firms to ensure they have the proper safeguards in place. The SEC recently came out with a new list of exam priorities with respect to cybersecurity. Companies can face fines and penalties for failing to comply with regulations or protect customers’ information. Many states have employee and customer protection statutes, and there’s also civil exposure from litigants, something that Janney has been fortunate to avoid thus far. Some of the liability is shifting from banks and financial services firms to merchants. New regulations took effect in October 2015 that hold business owners responsible for fraudulent transactions when credit cards embedded with security microchips are used. The investing public is slowly recovering from the 2008 financial meltdown and Bernie Madoff crisis, McShea says. That’s why protecting clients’ personal information from cyber attacks is a good opportunity for the industry to restore
The financial services industry ranks first among 26 industries most targeted by cyber criminals.
$23.6 M The average annualized cost of cybersecurity breaches for a financial services firm in 2013 was $23.6 million.
88% of cyber attacks are successful in less than 24 hours.
stradley ronon is proud to recognize the work and achievements of
Gregory B. mcshea “If cybersecurity isn’t in your top three priorities, it should be.” – GREG MCSHEA
trust and confidence. The opposite also holds true. “We can ill afford a significant breach of any kind,” he says. One of the biggest challenges lies in the constantly evolving nature of the hackers. While firms work within their four walls to protect client data, clients themselves can be hacked through personal e-mail takeovers and other fraud. The types of hacks are ever-changing and becoming more sophisticated. Janney works closely with clients whose information may have been compromised. For example, if a client’s e-mail is hacked, the company will work with the client to change account numbers and speak to them about the importance of password protection. “Many times that’s where it begins and ends,” McShea says. Other best practices include third-party testing of systems and controls, penetration testing, strong access rights inside photo: Joy Godowski/Janney Montgomery Scott LLC
and outside the firm, and controlling access to information when employees leave the firm. Strong governance and employee training also help firms stay on top of the issue. “It’s an evolving iterative process,” McShea says. “It’s about remaining adaptable and humble because if something looked good and appropriate a year or six months ago, it may not necessarily be the case today.”
senior vice President and general Counsel Janney Montgomery scott llC
he cares deeply about doing business the right way.
Pennsylvania Washington, D.C. neW york neW Jersey
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> STRADLEY RONON: “Greg is the general counsel for whom every outside lawyer wants to work. He is incredibly smart, decisive, fair, and has a great sense of humor. He cares deeply about doing business the right way.” – Paula D. Shaffner, Cochair, Securities Litigation & Enforcement
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“This is a service profession. Part of that service is to make our profession better than it was when we came into it.” – JASON
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Off the Cuff
WITH SHANNON COUFFER
MODERN COUNSEL: What three words best describe you? SHANNON COUFFER: Intelligent, balanced, judicious. MC: What’s the best advice you ever received? SC: My husband, who is an excellent people manager, told me, “There’s no hard-and-fast way to manage or lead people. You have to be fluid, flexible, and empathetic to whatever is going on for them in that moment.” MC: What is your favorite legal term? SC: Barratry. (It’s a common-law crime in England.) We’ve got a legal system where people can set up whatever frivolous lawsuit they want without consequences. It’s a crime in Illinois; I wish it was prosecuted. MC: What is your hidden talent? SC: I love to sew children’s clothes! MC: What do you believe is possible that others don’t? SC: I have always believed that women are capable of greater things. In grade school I wrote an essay explaining I’d been chosen “Woman of the Year” because I was president of the United States. My teacher said there would never be a woman president. I said, “Yes, there will.” And look how close we are now in both political parties!
CHRISTINA ACKERMANN (p72) Senior Vice President, General Counsel Alcon Laboratories Ackermann worked with Alcon’s parent company, Novartis, for more than 14 years prior to joining Alcon. She worked in the Novartis Pharma and Sandoz divisions of Novartis. Previously she served in associate general counsel roles for Bristol-Myers Squibb and DuPont Pharmaceuticals. Ackermann studied at York University, Toronto, Canada and Queen’s University, Kingston, Canada, where she received her bachelor of laws degree. She went to King’s College at the University of London for her postgraduate degree in European Commission competition law. 140
JEFF BARLOW (p134) Senior Vice President, General Counsel, and Secretary Molina Healthcare, Inc.
ROBERT BELLO (p58)
General Counsel Hughes Marino
After earning his JD at the University of Pittsburgh School of Law, Barlow earned a master’s degree in public health from the University of California, Berkeley. He worked in private practice (Quarles & Brady and DLA Piper) before joining Molina Healthcare in 2004.
Bello earned his MBA at San Diego State University and gained extensive experience counseling and representing clients in all aspects of business law, including: real estate, contractual, and labor/employment issues. In his career, he’s handled complex real estate litigation involving multiparty investor/developers, contracts, and the sale or transfer of projects, and has played an important role in helping businesses defend claims of wrongful termination, discrimination, and harassment, while also working closely with management to prevent employment issues from escalating into litigation. photos: Caleb Fox
JASON L. BROWN (p22) Vice President, General Counsel, and Secretary Dyson Brown received his undergraduate and law degrees from Howard University, a historically black college. He started his career as a litigator, then spent seven years at Pepsi Americas. In 2010, he became the first executive director of the National Association of Minority- and Women-Owned Law Firms (NAMWOLF). Most recently he worked as the associate general counsel at MillerCoors before joining Dyson in late 2013.
RICK CHESSEN (p114) Senior Vice President, Law and Regulatory Policy National Cable & Telecommunications Association (NCTA) In private practice Chessen worked with major media companies, then spent 14 years in senior positions at the Federal Communications Commission, all of which prepared him well for handling legal and regulatory issues with the NCTA.
SHANNON COUFFER (p14) Director and Managing Counsel, Regulatory Law Walgreens Couffer earned a bachelor of science in nursing degree at St. Mary’s College before becoming a Civitas Child Law Scholar at Loyola University of Chicago, where she earned her law degree in January 1997. She spent about 10 years with the Lake County State’s Attorney’s Office before coming to Walgreens.
LISA BROWN (p18) Vice President and General Counsel Georgetown University Brown is an alumna of Princeton University. After graduating from the University of Chicago Law School in 1986, she went on to clerk at the US Court of Appeals 11th Circuit in Alabama. Her interest in civil rights law brought her to Shea & Gardner, where she later became partner. From there, she worked for a number of government offices including counsel to then-Vice President Al Gore and the Obama administration. Today, she’s focusing on Title IX and sexual assault cases as the vice president and general counsel of Georgetown University.
CATHERINE CALLAWAY (p45) Executive Vice President and General Counsel Dynegy
Callaway has worked in-house and in the energy industry ever since her first job out of law school at Chevron. She has been in her position at Dynegy since 2011 and has seen the company double in size through three acquisitions during her tenure.
CELIA CATLETT (p37)
General Counsel and Corporate Secretary Texas Roadhouse, Inc.
Catlett studied law at Vanderbilt. She started her career in New York City before joining Texas Roadhouse in 2005.
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“As a leader, my job is to motivate and inspire people to achieve a common goal or execute a vision. A good leader encourages growth and creativity, and is always willing to listen.” – ANGELIQUE DAVID
ANGELIQUE DAVID (p10)
Senior Managing Director, General Counsel, and Corporate Secretary Ziegler
Prior to joining Ziegler in 2007, David worked in the corporate department at Locke Lord, LLP, focusing on investment management, investment banking, mergers and acquisitions, corporate finance, and general corporate law. She has a bachelor’s degree in psychology and English from Case Western Reserve University and a law degree from Northwestern University.
VICKI DONATI (p100) General Counsel Crate & Barrel Holdings, Inc. Donati has been general counsel since September 2008. She previously worked with the company as outside counsel. She was a partner with Neal, Gerber & Eisenberg LLP in Chicago, where she was a member of the firm’s employment/labor and association law groups and often worked on commercial litigation matters. She is responsible for establishing and overseeing all aspects of the company’s global legal, compliance, and data security/privacy strategies. 142
HEATHER FRENCH (p32) Senior Vice President and Deputy General Counsel American Capital
KEVIN GOLDBERG (p40) Vice President and General Counsel Nestlé Nutrition
French received her JD from the Georgetown University Law Center, where she was an editor of the Georgetown Journal of Legal Ethics. French was counsel in the Washington, DC, office of Akin Gump Strauss Hauer & Feld LLP where she focused on complex commercial and employment litigation before joining American Capital in 2004.
After focusing on general commercial litigation in private practice, Goldberg spent five years as in-house counsel in the telecommunications industry. He then transitioned to consumer and food products with Novartis before transitioning to Nestlé Nutrition in 2007.
photo: Caleb Fox
BENJAMIN HANSON (p97) Chief Administrative and Strategy Officer Senior Care Centers Hanson Joined SCC in mid-2015 after a string of general counsel roles at Capstar Partners, Harden Healthcare, DMX, and more. From 2003 to 2005, he served as a senior staff member for Governor Rick Perry. Hanson started his career as a corporate securities lawyer and specializes in corporate development strategies and mergers and acquisitions. LEAVING AN IMPACT Hanson is chairman elect of the board of directors of the Central Texas division of Meals on Wheels, a national charity famous for providing hot, nutritious meals to community members unable to purchase or prepare their own. In the Austin area alone, the organization provides more than 3,000 meals a day. Hanson has been a volunteer for Meals on Wheels for six years. He and his wife have made it a point to deliver meals with their four children every Christmas season. The family tradition has had a tremendous impact on his kids’ perception of the world, Hanson says.
HOW ARE WOMEN LEADERS CHANGING THE TECH INDUSTRY? “It’s clear that there is a real movement among women leaders supporting each other in their careers and empowering the next generation. I am proud that at AOL our executive leadership is more than 50 percent female, and we have many women-focused priorities. This movement inside AOL is where I, along with other female leaders and employees, am working to build a network and organization for women to assist each other. It is both formal and informal. We have a long way to go, but it’s happening in real time. The energy around these issues inside and outside of AOL is palpable, and the time to make change is now. I’m thrilled to have the opportunity to take part in the movement.”
JULIE JACOBS (p50)
Executive Vice President, General Counsel, and Corporate Secretary AOL Jacobs graduated from Georgetown University Law Center and holds a bachelor of science degree in finance from the University of Colorado, Boulder. She is responsible for all legal, regulatory, compliance, and public policy matters for AOL. She also oversees AOL’s corporate services function, encompassing its facilities and operations. Prior to becoming the company’s GC in 2002, Jacobs served as senior vice president, deputy general counsel, and assistant corporate secretary.
BECKY KRAUSS (p108) Vice President of Legal and Prime Contract, General Counsel, and Corporate Secretary Sandia Corporation, Sandia National Laboratories After graduating from Boston College Law School, Krauss spent six years at a private law firm, Wiggin & Dana, where she first worked in environmental safety and health law. She moved to Sandia National Laboratories in 1994 and worked as an entry-level attorney, senior attorney, and then deputy general counsel. She was promoted to her current position in 2003.
JOE LAROSA (p76) Senior Vice President, General Counsel, and Secretary Regeneron After 10 years in private practice, LaRosa moved to Schering-Plough Corporation, where he stayed for 16 years. In 2011, after serving as the GC of another pharmaceutical company and a brief stint in another industry, LaRosa joined Regeneron, a publicly held company with growth potential and an entrepreneurial spirit LaRosa says is “extremely gratifying” to be a part of.
BRIAN LEVEY (p56)
General Counsel and CFO Upwork
As a student at Stanford University, Levey’s honors thesis focused on supply and demand and the 1987 stock market crash. That paper was a sign of his lifelong interest in market economics. Levey’s current post—which connects the supply of freelancers with the demand of work—is a natural extension of this interest. TWO DISCIPLINES, ONE FOCUS “Stepping into a CFO role is easier when your company and market segment are expanding and growing. And it helps to have a great team already in place that you can trust. Coming into these two disciplines, I now have to wear several hats, but my main focus is helping the teams constantly innovate, so that we can maintain a leadership position in this segment of the market, and keeping the mindset of a nimble start-up, even as we mature.”
United Way As a board member of the United Way of Central New Mexico, Krauss shares why the organization resonates with her. MODERN COUNSEL: What is the organization working on right now? BECKY KRAUSS: We focus on helping people achieve their potential through education, financial stability, and health. Over the last couple of years, the major focus we have had is on a project called Mission Graduate, whose goal is to increase the amount of college degrees in the area by 60,000 by the year 2020. MC: Why are you so passionate about this work? BK: Perhaps it’s because I’m a mom to three kids, and I want New Mexico to have a good education system, or perhaps it is seeing how important education was to my own path, but it’s a really important project I’m so happy to be a part of. MC: Why is philanthropy so important to Sandia? BK: We are a significant employer in the state of New Mexico, where we have more than 10,000 employees. This is our community, and these are our people. I think we owe it to this community and those people to give back.
ROSS MANSBACH (p92) Vice President, Deputy General Counsel, and Corporate Secretary Halyard Health, Inc. Mansbach began his corporate career with Kimberly-Clark in 2003. He made his way up to deputy GC there and assumed that role at Halyard Health when it spun off from the consumer goods company. Prior to practicing in-house, he was a partner at Powell Goldstein (now Bryan Cave). He holds his bachelor’s degree from Yale and his JD from the University of Chicago Law School.
CAROLINE MCNICOLL (p105) General Counsel and Corporate Secretary Pharmascience, Montreal
McNicoll holds a bachelor of laws degree from Montreal’s Laval University/ Université Laval and a master’s degree in law and international business from the University of Ottawa. Prior to becoming general counsel at Pharmascience, she served as counsel for Bombardier and Quebecor World Inc. APRIL/MAY/JUNE 2016
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GREG MCSHEA (p136)
Senior Vice President and General Counsel Janney Montgomery Scott LLC
McShea has more than 20 years of legal experience, mostly in the financial services industry. He has served in leadership roles for M&T Bank, Legg Mason Capital Management, and others. He earned his law degree from the Catholic University of America.
SUCHITRA NARAYEN (p89) Vice President of Legal and Associate General Counsel, Supply Chain Oracle Narayen graduated first in her class from the University of Calvary in Canada. She has won multiple awards for her pro bono work, as well as the Diversity Award from the Santa Clara County Bar Association. Narayan is a Six Sigma certified black belt, which she achieved during her tenure at Sun Microsystems.
JENNIFER NELSON (p130)
Chief Operating Officer and General Counsel Michigan Economic Development Corp. (MEDC)
A Michigan native, Nelson earned her bachelor’s degree in speech communication from Northern Michigan University and her law degree from Michigan State University. Prior to joining MEDC, she was an attorney at the law firm Dykema Gossett, where she was a member of its public finance corporate group, specializing in corporate, real estate, public finance, and commercial loan transactions. She began her MEDC tenure in 2005 as assistant general counsel, became general counsel in 2009, and assumed her current role in 2015.
JIM NIKOPOULOS (p48) Senior Vice President, General Counsel, and Corporate Secretary Element Financial Corporation Nikopoulos earned a bachelor’s degree in economics and political science from the University of Toronto and a law degree from Osgoode Hall Law School at York University. In 2001, he joined Davies 144
FAMILY TRADITION As a junior high school student, Oyler participated in a mock legislative assembly where she ran for governor, and won. The experience sparked an interest in the legal system and incited a fascination with how a bill becomes a law and how judges interpret that law. Coincidentally, one of her opponents would become her boss at Papa John’s decades later—“It was a close race, but I beat him,” Oyler says. Today, that mock assembly is still alive, and all three of Oyler’s children have participated in it.
HOW DO YOU LEVERAGE A DIVERSE LEGAL SKILL SET? “What I planned to be and what I am today are very different. Fortunately, in my transition from Sun Microsystems to Oracle I discovered that so many skills are versatile and transferable to very diverse situations. I had to figure out the fine details, but taking the step away from my neatly organized, original plan was worth it. If you’re flexible and willing to learn, good opportunities will come your way. The best part of my job is the global nature, and the broad range of issues I get to address. It may be different than I planned, but it is also far better.”
THE MAN WHO SAVED JAMES BOND Rader was a junior attorney at MGM at the time Sony tried to establish a rival James Bond franchise. “I pointed out that the rights they claimed weren’t valid in the United States based on the fact that Ian Fleming (author of the James Bond novels) didn’t live into the second term of copyright,” says Rader. He helped MGM keep the franchise. Rader also helped launch the James Bond video game franchise (GoldenEye, Tomorrow Never Dies, The World Is Not Enough) in partnership with Activision Blizzard, Electronic Arts, and Nintendo, which brought Agent 007 to a new and younger audience. “It was key to the future success of the franchise to introduce James Bond to the next generation,” says Rader. “As a longtime video game attorney, I was ecstatic for Bond to explain to that new generation how to properly mix a martini—‘shaken, not stirred.’”
Ward Phillips & Vineberg as a corporate generalist. After six years, he moved to TeraGo Networks, becoming the wireless broadband company’s first vice president of corporate development and general counsel, helping with its IPO. He joined Element Financial in 2013.
CAROLINE OYLER (p86)
Senior Vice President and General Counsel Papa John’s
Oyler majored in broadcasting at Western Kentucky University as a “backup plan,” but never wavered from her ultimate goal of becoming a lawyer. In 1990, she took a position with the private law firm Wyatt Tarrant & Combs, where she worked for nine years. In 1999, Oyler joined Papa John’s International as senior counsel, and in 2008, she stepped into an interim head HR role, guiding the corporation through a period of executive changeover. Oyler returned to legal in 2009, and has headed the department since 2012. She is an alumna of the University of Virginia School of Law.
LYNNE PUCKETT (p65)
Senior Vice President, General Counsel, and Secretary Colfax Corporation
Puckett came to Colfax in 2010 after serving the company as a partner at Hogan Lovells. She completed degrees at James Madison University and the University of Maryland Francis King Carey School of Law.
ROB RADER (p110) General Counsel and Corporate Secretary Ovation TV
Rader was vice president of business affairs at MGM for nine years and helped run its $1.2 billion home entertainment division before coming to Ovation in 2013. Rader has responsibility for all business and legal matters, including distribution, production, acquisition, corporate and litigation. He is also the secretary and treasurer of Downtown Santa Monica, Inc. and a board member of public radio station KCRW.
“The worst thing you can do is not learn from your mistakes. If an integration underperforms, we find out why.” – KURT STEPANIAK
JOHN SEETHOFF (p62) Vice President and Deputy General Counsel Microsoft Seethoff has been GC at Microsoft Corporation for the past 16 years. He is a member of the Washington and California bars and received his JD from the University of California at Los Angeles School of Law. His specialties are corporate governance and securities.
DANIELLE SHEER (p94)
Vice President, General Counsel, and Corporate Secretary Carbonite
JOHN H. ROTH (p124) General Counsel and Chief Compliance Officer Venor Capital Management
DAN SANDERS (p118) Vice President, General Counsel, and Secretary Michelin North America
Roth has been in-house counsel within the private fund industry since 2007, including with Venor since 2011. He earned bachelor’s and master’s degrees in finance, and after law school he earned a master of laws degree in taxation.
Sanders earned his law degree at the University of South Carolina School of Law and started his career at King & Spalding. He later moved to Nelson Mullins Riley & Scarborough, where he first interacted with Michelin. Michelin hired Sanders in 1996. His career has included a two-year stint in France and three years in charge of audit and risk management. He became vice president, general counsel, and secretary in 2014.
photo: Caleb Fox
Sheer earned her JD at Georgetown University and started her legal career in corporate and securities law at Willkie Farr & Gallagher LLP in New York. She joined Carbonite in 2009 and helped lead the company to its public offering in 2011.
KURT STEPANIAK (p52) Senior Vice President of Law and Acquisitions KONE Americas
Stepaniak serves as the regional general counsel for KONE and is the chief compliance officer and corporate secretary. Stepaniak joined KONE in 1997 and previously worked in the automotive industry. Stepaniak graduated from Wayne State University Law School. APRIL/MAY/JUNE 2016
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What I’ve Learned After three decades defending class action suits, Virjee shares hard-won lessons. THE POLITICAL PROCESS OFTEN INTERFERES WITH STRONG POLICY. In Williams (ACLU) v. State of California, the largest class action in state history, the ACLU claimed on behalf of all K-12 students in the state that they were being denied a free and equal education under the California Constitution. Virjee, along with his partners at O’Melveny & Myers, defended the state. The state was “winning” the litigation—a strong dispositive summary judgment motion was on file, and the court had expressed its preliminary favor thereto, says Virjee. In the middle of the litigation, Governor Davis was recalled and the ACLU went right to Governor-Elect Schwarzenegger to negotiate a settlement without any discussion with the then-administration or outside counsel. JUST BECAUSE YOU HAVE ALWAYS DONE SOMETHING ONE WAY, DOESN’T MAKE IT CORRECT. When a class of financial advisors filed a class action for overtime pay they claimed they were entitled to, Virjee represented Citigroup and UBS Financial Services as defendants. “The brokerage firms were very slow to come to grips with the possible nonexempt status of the brokers because they had been paying them straight commission for decades,” says Virjee. SOMETIMES YOU ARE JUST RIGHT ON THE FACTS. IF YOU ARE RIGHT, STAY THE COURSE. Virjee defended H&R Block in a federal class action, in which the class claimed tax professionals should be paid for continuing education courses. H&R Block’s position was that the time was not compensable because the professionals were on an annual shortterm contract, and the courses were “required” only as a prerequisite to be considered for rehire. “Strong legal writing and analysis will expose the faults of the other side’s argument,” says Virjee, who was able to prove with his counterparts at O’Melveny & Myers that the professionals were not employees during training. “You must be prepared to do the heavy lifting to get it right.”
STEVEN TAM (p132) General Legal Counsel and Chief Privacy Officer Vancouver Coastal Health Authority With extensive experience in privacy, corporate, and governance law, Tam holds a master of laws degree from York University (Osgoode Hall Law School) and a bachelor of law degree from the University of British Columbia. He formerly worked as senior counsel for HSBC Bank Canada.
ANDREW TAVI (p80) Vice President–Legal, Government Affairs and Human Resources, Chief Compliance Officer, Secretary, and General Counsel Nissan North America After earning his JD from the University of Michigan, Tavi worked at Dickinson Wright and then Foley & Lardner in the areas of M&A and corporate and securities law. He then joined automotive supplier Noble International, and, as GC and CEO, helped guide the company through a bankruptcy filing. He became GC of Nissan Group of North America and Latin America in 2009 and assumed HR responsibilities in 2014.
FRAM VIRJEE (p28) Executive Vice Chancellor and General Counsel The California State University (CSU) System Virjee was born in London and immigrated to the United States in 1966. He spent 30 years as a Labor and employment partner at O’Melveny & Myers, where he negotiated hundreds of collective bargaining agreements and led the firm’s national class action labor and employment practice. He joined CSU in 2014.
JOSEPHINE WANG (p127)
General Counsel Securities Investor Protection Corp.
Wang initially worked for the Commodity Futures Trading Commission after receiving her law degree from Georgetown University Law Center. Admitted to practice in the District of Columbia, she is a member of the Bar of the United States Supreme Court and coauthored a comprehensive article on stockbroker liquidations published in Cardozo Law Review (1990).
SCOTT WORNOW (p67)
Senior Vice President, Chief Legal Officer, and Corporate Secretary Atmel
Wornow graduated from the Universities of Virginia and Cambridge before earning his JD at Harvard Law School. He spent six years with Paul Hastings, where he worked in corporate finance and M&A before leaving in 2000 to help take Omnisky through an IPO. From there, he went to OpenTv and later returned to firm life with Goodwin Procter and then Baker Botts. He joined Atmel in 2010.
MARLA G. ZWAS (p42)
Senior Vice President and Deputy General Counsel Flagstar Bank
After graduating with a degree from Cornell University in 1988, Zwas took a couple of years off before attending law school. She set aside that time to do public interest work counseling victims in a rape crisis center, developing AIDS education programs, and supporting a law firm’s foster care litigation practice. She obtained her law degree from Fordham University and originally worked as a commercial litigator in a large Michigan law firm until deciding she wanted to provide her services in a diverse team environment.
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