Tuesday, the InsideCounsel SuperConference kicked off with a presentation by Eric O’Neill, the former FBI agent whose spy-catching was immortalized in the Hollywood film, Breach (he’s Ryan Phillippe). O’Neill told spy stories that, while exciting, had questionable relevance for the gathered in-house crowd, beyond some advice for preventing corporate espionage. Watch what kind of information you give out at trade shows, for one.
The next panel was more directly applicable for those in attendance: a panel on corporate governance moderated by former Ambassador and current Nelson Mullins partner Philip Lader. With tan skin and a generous mane of white hair, he had the air of a cruise ship director and so it was not surprising that he did an excellent job steering his panel.
His panel — comprised of Marriott International’s EVP and General Counsel Edward Ryan; Delaware Supreme Court chief justice Myron Steele; Chicago business school dean Edward Snyder; and Enron whistleblower Sherron Watkins — gave practical advice for in-house counsel on managing risk and dealing with outside counsel.
What’s one thing all corporate lawyers should be thinking about? Well, besides the implosion of the legal job market. Dean Snyder says left-tail risk should be on everyone’s minds…
“We don’t expect zero mistakes [from corporations].” said Dean Snyder, who is the outgoing dean of the University of Chicago business school and will soon be going to Yale’s b-school. “But there may be too much focus on ‘are we within the bounds of the compliance and regulatory framework?’ and not enough on ‘are we really looking at the totality of what is at stake?’”
Companies are focusing too much on staying compliant, and not enough on other potential negative outcomes — such as the impact of decisions on their brand and their relationships. He then brought up BP as an example, saying that the company may well have been acting lawfully but that it was acting without looking at the totality of its risk taking.
Seriously. Beyond all the lawsuits it’s going to face, the oil spill has given birth to a hilarious fake BP PR Twitter account. Sample tweet: “Jesus walked on water and soon you can too! (Please pray for BP, we’re losing a lot of oil).”
But hey, no use crying over spilled oil. What can other companies do to prevent serious unpluggable damage to their business?
Marriott GC Edward Ryan suggested that companies give more control to the in-house legal department. A little self-serving perhaps, but sound advice:
“Look at who is responsible for retaining counsel,” advised Ryan. At Marriott, there’s no business unit that can hire its own legal counsel and get its own advice. The legal dept does all the hiring, and makes sure Marriott gets the best advice at the cheapest price. That’s not the case at all companies.
“At some companies, departments outside of legal counsel retain outside counsel, and I think that’s really dangerous,” said Ryan, who told me outside counsel are sometimes a little too excited about pleasing clients and getting a deal done. “You need an internal check on that legal advice.”
The panel closed with a discussion of left-tail risk, “something in business that lawyers may not be aware of,” according to Dean Snyder.
Of course lawyers think about risk all the time, but Snyder fears they are not thinking enough about the risk potentially posed by rare and catastrophic events. BP’s green and white signs again came to mind.
Sherron Watkins — whose résumé includes stints at three now-failed companies — said lawyers should be thinking: “If the worst does come to pass, what are our documents and internal trail going to look like?”
Speaking of, have you seen BP’s “shocking memo“?
There were also some fun questions for the panel. Lader asked Snyder how he finagled a $300 million gift for the University of Chicago business school, resulting in its new name (he had a beer at a hotel bar with the donor, David Booth).
And Lader asked Marriott’s Ryan how to find the best hotel deals. Marriott’s outside counsel should take note of his answer: Ryan responded that price should not always be the determining factor for a quality experience.