Veta T. Richardson is the President and Chief Executive Officer of the Association of Corporate Counsel (ACC). With an international membership of more than 40,000 in-house lawyers at more than 10,000 organizations in 85 countries, ACC serves as the "voice of the in-house bar" for corporate lawyers at 98 percent of the Fortune 100 and 51 percent of the Global 1000. Ms. Richardson previously served as executive director of the Minority Corporate Counsel Association (MCCA), as vice president and deputy general counsel at ACC, and as in-house counsel at Sunoco, Inc.
The Association of Corporate Counsel is the world’s largest legal association focused on in-house counsel. What are some of ACC’s priorities right now?
One of ACC’s top priorities right now is to strengthen the role and positioning of the general counsel as a key executive in the C-suite and at the board table. We are seeking to increase the percentage of companies employing the best practice of having the general counsel as a direct report to the CEO and a regular attendee at all meetings of the company’s board of directors. Astonishingly, our Chief Legal Officers 2018 Survey research revealed that only 70 percent of public company GCs have a direct reporting relationship to the CEO, and even fewer at private companies and organizations outside the US. ACC’s corporate governance mission is for 100 percent of general counsel to report directly to the CEO, serve as a member of the executive management team and have a seat at every board of directors’ meeting.
Having the chief legal officer (CLO) or GC as a direct report to the CEO ensures that the company’s top lawyer is present when business strategy is formed, confirming that legal risk and compliance perspectives are reflected in the strategy. The GC is uniquely situated to guide the company in these important areas and having the GC present sets the right “tone from the top” regarding the corporate culture.
Given that law firms work in partnership with in-house counsel to serve the company’s full range of legal needs, a company’s law firm should also advocate for a well-positioned GC. Because if the in-house lawyers do not know what is going on and are not consulted by the business people, the outside counsel’s job becomes all the more difficult. Regulators, too, should issue guidance that encourages companies to employ this best practice of direct-to-CEO reporting for GCs and healthy board relationships with the GC.
ACC further believes that a vocal, strategic, and well-trusted GC works in the best interest of investors. Legal and compliance risks are too significant to sideline and the CLO/GC is the chief ethical steward of the company and a key ally to the board of directors and CEO.
Even as we mark the passage of a full decade since the great recession, improving the economics of legal services remains a persistent topic. How has the in-house bar done better in cutting costs and improving predictability of spend? Where does improvement still need to be made?
In 2008, ACC launched the Value Challenge, which seeks to reconnect the cost and value of legal services. We’ve seen widespread adoption of the three tenets: 1) lowering costs, 2) increasing predictability (through effective budgeting and value-based fee structures), and 3) ensuring better outcomes (such as fewer disputes, lower settlements, and faster turnaround times). Corporate law departments have fully embraced the challenge. For the past seven years, ACC has announced a select few “Value Champions,” companies that have made huge strides towards controlling costs and saving time. This year, one company achieved a cost savings of almost 60 percent for employment and labor work, and another consolidated outside litigation counsel by 80 percent, all by deploying value-based principles.
In recent years, we’ve also seen—and encouraged—the proliferation of legal operations professionals in the corporate law department. We started ACC Legal Operations, a special membership section, three years ago. The ACC CLO 2016 Survey found that the percentage of GCs reporting legal operations staff in their departments more than doubled over the previous year, and growth has continued each year since. GCs who invest in law department chief operating officers or other legal management professionals enable their departments to employ innovative strategies to reduce costs, use technology in new ways, and restructure work flows. All of this allows the GC more freedom and free time to contribute to business strategy.
Despite all this growth, there is room for additional improvement in the area of benchmarking, so that companies know where to start and where to focus their efforts for maximum impact. Tracking key metrics and measuring your status against departments of companies of similar sizes/industries allows the law department to identify where specific improvements are still needed, then deploy resources to accelerate the change in these areas. ACC now offers custom benchmarking reports in order to help corporate law departments around the world with this process.
Legal finance is a tool that in-house counsel can use to shift costs off corporate balance sheets, to manage risk and to create greater certainty in litigation budgets. What’s your view of the level of awareness of this tool among ACC’s membership? What are the gaps in understanding that need to be addressed?
The May 2018 ACC Docket cover story is actually precisely on this topic. The headline is, “How Litigation Finance Can Turn Your Legal Department into a Profit Center.”
Among in-house counsel, there is a level of awareness of litigation finance as a potentially powerful tool, but I don’t think all in-house lawyers, especially at smaller or mid-size companies, have the full understanding of its potential. In many cases, it’s likely a time and resource issue, with in-house counsel unable to turn their full attention to establishing the litigation finance first steps—or their practice focus is another area of law and as a result, litigation finance is not necessarily on their radar.
Litigation finance works just as well for the defense of weak claims as it does the pursuit of strong claims—making it a far more broadly useful tool for in-house counsel. Do you think this message is getting through to ACC’s membership?
I really cannot comment on when it may work best or not and will leave that to others to assess. What I can say is that we are certainly in an era where general counsel possess greater business savvy. Therefore, I think the recent article published in our peer-review publication, the ACC Docket, indicates that there is a growing curiosity about litigation finance and a lot of interest in how it can transform the law department away from a cost center and, in some cases, even to become a profit center. But at a time where law departments are always “doing more with less,” just finding the time and place to start can be a challenge.
In your view, is legal finance something law firm lawyers should be ready to educate their clients about?
I think that smart law firms are always looking to educate their clients on topics that are relevant to their companies, their operations.
In many ways, ACC’s commitment to helping in-house lawyers better promote their value inside their own organizations is consistent with a broader push for lawyers to be savvier about business and finance. ACC’s “value challenge”—focused on achieving lower costs, more predictable budgets and better business outcomes—is a great example. Can you expand on the forces that are driving in-house lawyers to be more effective business people? What are the major obstacles they face in becoming more business-savvy, and how can their partners be of help?
As geopolitical events shape the business landscape, compliance and risk come to the forefront and business decisions almost always become legal decisions. In turn, in-house lawyers have also found that they must be more aware of business factors in order to help their companies best navigate the challenges of a more acute regulatory environment.
Many in-house lawyers seek positions at corporate law departments because they have dual interests – law and business. They want to shape the direction of the company and offer their legal skills in a way that can advance the business. Certainly, a challenge that many in-house counsel face is that they wish to run the law department like a business but they also wish to be more involved in overall business strategy. Running the law department like a business involves having very fine attention to detail, focusing on the operational side of things, and staying very attuned to the day-to-day law department management. But being involved in overall business strategy means keeping your eye on big picture risk, participating in executive-level meetings, and having an outward focus on how your counsel impacts the company. As anyone with multiple roles can tell you, it can be hard to be acutely aware of day-to-day details and also focused on overall strategy and vision and innovation. A challenge, then, is certainly balancing both of those sides of being a business-savvy GC, in addition to the counselor roles in-house counsel must also play.
External partners can help by ensuring they offer support in both of these contexts. They can provide previews of the big picture “what’s to come” on large-scale topics like Brexit, cybersecurity and regulatory enforcement trends, and they can serve as close collaborators when it comes to building law department management strategies that put cost management and efficiency first.