In-House Counsel

What Are GCs Worried About?

Observations from the Bloomberg Law Leadership Forum.

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Last week, Bloomberg Law hosted its 2019 Leadership Forum in New York, at the Bloomberg Tower. The invitation-only event brought together senior in-house counsel and law firm partners, with a roughly 60-40 split in attendees in favor of the former. This year’s theme was “Corporate Transactions: Leading the Strategy,” but a more apt title might have been something along the lines of “Look Out! Data Breach!!” As Bloomberg Law’s Tanjima Islam put it, “[I]n all of our conversations, the topic of using data as well as privacy issues seems to emerge just due to the nature of all of the regulatory changes and the high risk involved.”

Some highlights and observations:

GCs are the Chief Worry Officers

The Forum punctuated its panel format with live polling of the audience on what were described as the “top-of-mind” issues of our moment. Apparently, the view from the top is of a landscape fraught with risk, threats, and red flags. The first question posed was “What keeps you up at night?” (Not “might” or “could” keep you up — everybody took it for granted that none of their peers sleep.) The answer choices/parade of horribles ranged from “data breach” to “market volatility” to “dawn raid.” Forum emcee Amanda Allen narrated the transparently unfolding vote tallying like a darkly comic horse race.

EVERYBODY has been breached

Among other things, data breaches imperil deals. During the day’s panel specifically devoted to data breaches, it was immediately stipulated that “It’s not IF you have had a breach, it’s what kind of breach have you had?” As financiers increasingly add major privacy conditions to financing agreements, everyone is looking for “low-level/high-impact” steps to prevent or mitigate the fallout from data breaches. Unclear if any were agreed upon, but to paraphrase one interesting insight from Monica Hennessy of Otsuka Pharmaceutical, “If a potential target asserts privilege regarding an incident report, then look out.”

Breaches: bad, worse, worst

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We let Roy Iversen, security director for the cybersecurity firm Fortalice, explain: “There are three steps to a typical breach. 1. Reconnaissance, 2. Exploitation (executing malware, etc) and 3. Exfiltration of data. Sometimes an intrusion will stop at 1, sometimes at 2, but it’s the third step you’re most concerned about. Obviously, that’s oversimplified, but the point is that every organization and “breach” is different, and you need to thoroughly investigate to determine what the impact and relevance is.”

Anyway, it’s not the data, it’s the tools

On a panel concerned with valuing a data in a transaction, Kirkland & Ellis partner Claudia Ray asserted that one cannot talk about the value of data in a vacuum, without understanding that the real value is in the tools that extract value from it. Ray made this point more than once, the second time in neatly sidestepping the question of whether data as an asset depreciates or appreciates. (Answer: it depends on the tools you bring to it.)

Scars are good for team building

From the Forum’s panel discussion on leveraging talent, one learns that “scars” or “battle scars” is a trendy metonymy for “experience.” As in, “you want team members with scars and the right kind of scars.”

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As for other desirable qualities in human capital, one of the panelists offered these thoughts on (presumably?) innovation and creativity: “In this competitive environment, businesses are operating on the thinnest of margins, and so there is a premium on novel, or even cavalier, approaches. Plain vanilla deals — pulled from the ABA forms library — don’t make money.”

Fun fact!

In the “Ask A Bloomberg Law Analyst” portion of the proceedings — which really should be its own standalone series — a show of hands revealed that more (roughly double the number) of Forum attendees had some sort of firsthand experience with some aspect of cannabis law than with cryptocurrency and/or blockchain. Both groups were well in the minority, but still it makes you think, man.

Trade wars are just a form of “appreciation”?

The day kicked off with a sort of “fireside chat” with the current U.S. Attorney for the Outer Boroughs, Richard Donoghue. It was in this conversation that the specter of data privacy appeared when Donoghue made the sobering observation that, however urgent the issue of breaches might be for companies, for the government, it’s a secondary matter.

Donoghue had a good line about GCs keen interest in the government’s enforcement priorities around insider trading: “It’s like asking, ‘How fast can I go before I get pulled over?’” But to be sure, he did advise against it, especially because it’s so easy to get caught: “People don’t realize how easy it is to tie people, the buyer and insider, together.”

In response to the inevitable policy compare/contrast question regarding the current administration and the last one, Trump-appointed Donoghue insisted that while the “fundamentals don’t change,” the current administration has a “greater appreciation of both how government affects business and how business affects national security.” Straight faces were maintained by all present and hypothetical follow-up questions were left unasked. Probably for the best, it wasn’t really that kind of room.

Coming Up: In-House Forum West

Perhaps recommendations are pointless in the context of an invitation-only event, but for what it’s worth, the Forum series would seem to have few peers in terms of the quality of its content, crowd, and level of execution. Should the opportunity arise, Left Coasters would do well to check out the June 20 Bloomberg Law In-House Forum West in San Francisco, a full-day program exclusively for in-house counsel. The event will focus on government and corporate internal investigations.

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