What In-House Legal Groups Can Learn From 'The Godfather'
Corporate counsel must be strategic partners and advisors to the company's executive team and board.
Ask most corporate executives at companies about their legal departments and they will almost unanimously speak to the value such groups create by protecting their organization from risk. Those same executives will also likely indicate that the in-house team is a key part of the organization’s commercial success in transactional matters ranging from negotiating M&A deals and joint ventures to resolving disputes. This fits in with a common perception of the in-house legal group as a service group. However, in an era where disruption has become the norm, it is more important than ever for in-house groups to position themselves as strategic partners and advisors to the relevant company’s executive team and board.
An analogy for in-house counsel can be found by comparing two characters in The Godfather, one of the most popular movies of all time. Think of Luca Brasi, who carried out any and all orders from the Godfather, as opposed to Tom Hagen, who as consigliere was clearly a key strategic partner to Don Vito Corleone, the “CEO” of the family. Luca, while great at his job, was ultimately performing services. He was not a critical part of his organization’s decision process, and in the wake of his untimely demise, it did not miss a beat in finding a replacement. Those areas for which he was responsible continued to function well with his replacement. Without Tom Hagen, however, the Corleone family would not have been nearly as successful in seizing opportunities and responding to challenges. Technology, data and analytics are making it easier than ever before for the in-house groups to orient themselves and function more like Tom Hagen than Luca Brasi. Some examples are:
- From Risk to Opportunity: Building on its role of protecting the company from risks, in-house groups are well placed to leverage technology, data and analytics to help the company turn risks into opportunities. Monitoring news and other online activity focused on business, finance, legal and regulatory issues can enable the legal team to identify material events such as geopolitical risks, deals, regulations and litigation impacting the company, its largest customers, suppliers, competitors and the industry as a whole. The in-house team can distribute daily dashboards with actionable intelligence and insights to members of the executive team that enable the commercial side of the business to proactively and quickly put in place strategies enabling the company to seize opportunities and deal with challenges.
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- Globalization and Data Protection: Cyber and data protection compliance have become major issues for multinational companies, and that trend is going to continue to accelerate. When I was a general counsel dealing with data protection issues, my team often had to engage with advisors in a number of countries and then spend a significant amount of time synthesizing the data coming from these advisors. In-house counsel now have the ability to very quickly synthesize data on regulations, lawsuits, local news, etc. from multiple jurisdictions and to leverage analytics and benchmarking tools to determine which countries pose the highest risks to their businesses. This ultimately is a key factor in helping companies determine which countries would be best for them to locate facilities and satellite offices.
- Growth: All companies want to grow and build shareholder value whether that growth be organic or inorganic. In-house teams are in a better position than ever to capitalize on increased transparency and data pertaining to M&A deals. Beyond its normal role structuring and negotiating deals, an in-house group acting as a strategic partner can leverage its access to data to take the lead on providing insights on potential targets, comparable deals, deal multiples, risks that impact a buy vs. build decision, etc. The in-house team can also help their colleagues identify potential acquirers for parts of the company that the organization may be considering divesting while also leveraging data and analytics on topics ranging from litigation to regulatory change to help the company decide which assets to hold onto.
- Influencing Legislation and Regulation: In highly regulated industries such as banking and insurance, the legal teams are often in the strongest position to impact legislation and regulations. This is also true in industries in which the participants rely on regulations to drive customer behavior. During my tenure at PR Newswire, the SEC was instituting new rules and guidance regarding Regulation FD that directly impacted the practice of public companies putting out press releases on their earnings and other material events. Relaxed Reg FD rules could have had a material impact on the frequency and types of disclosures being pushed out by companies, which would have a meaningful impact on the business models and P&Ls of news distribution companies. Given its competencies and experience, our legal team was best placed to be a key strategic advisor to our colleagues and meet with and influence the SEC and other government participants focusing on the consequences of regulatory change on the shareholders that Reg FD was designed to protect.
- Talent: In addition to their normal role protecting the company by putting in place non-competes with key employees or helping the company navigate through restricted covenants, the in-house legal team can play a critical role in helping the company secure and manage talent. In-house lawyers have a holistic view of the company that allows them to break down business silos and identify opportunities for existing employees across the organization. In-house counsel also have a broad perspective on who the company is hiring and where the candidates are coming from. The legal team can use this perspective to be a strategic partner to human resources teams across the organization in order to help figure out the best places for the company to source new talent.
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These are just some examples of how an in-house group can act as a strategic partner and advisor to other parts of the business. Doing so starts with having an optimized structure and communication mechanisms in place as well as securing access to data and analytics that ultimately drive valuable and proactive insights. By orienting their teams this way, general counsel can ensure that other executives at their organizations and their boards partner with and involve the legal team early to get Tom Hagen-like strategic benefits.
Scott Mozarsky is President of Bloomberg Law and Bloomberg BNA’s Legal Division. In this role, he is accountable for driving growth of Bloomberg BNA’s legal products, including its flagship Bloomberg Law platform. You can reach Scott by email at [email protected] and follow him on Twitter at @smozarsky.
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