A framework for legal issue management (2) – the three categories. By Jonathan Smith

January 14, 2015

Handling the business as usual. 

The “business as usual” (BAU) category of activity covers those activities which represent the organisation’s purpose, as distinct from those activities which are necessary for but incidental to those purposes.  So in the case of a retailer, the purchase and resale of goods, and in the case of a bank, the acquisition and provision of finance – distinguished from, for example, employment issues which are required by each of them, but are not the things they do for a living.  The distinction between the two is not hard and fast, the difference being in the type of strategic oversight which the general counsel should exercise over the activities comprised in each of the categories.

Often a lawyer tasked with heading a legal team will have a background in the law and business or operation of business as usual activity.  Most IT GCs have at some time in their careers negotiated IT contracts; most insurance GCs have a background in insurance law.  This deep domain knowledge can be a hindrance as well as an asset to a GC, particularly one undertaking their first leadership role.  The hindrance can arise through the temptation to get too involved in the BAU work just because it feels familiar and therefore comfortable.  Lawyers can give themselves permission to do this kind of activity because they know what they are doing, and so can feel they must be doing “something useful” by intervening.  This can however represent a poor use of the lawyer’s skills and experience, and inevitably does not reflect the breadth of the role to which the GC was appointed.  While GCs here might be able to do a better job as a result of their extra experience, excessive intervention may amount to time spent reviewing work which is already fit for purpose, making the GC’s contribution less valuable than they may think.

There will be occasions where it makes sense for the leader to get involved in a matter because of its significance or complexity.  (And where the GC is, in effect, a one-man band, the options for handling BAU transactions are reduced.)  The “sense” however has to come from an overall organisational perspective, and not represent the GC’s “comfort factor” coming to the surface; nor should the GC fall into the trap of saying, or believing, that they need to continue to get involved in advising on BAU matters so that they retain their credibility (with their team and business colleagues alike).  However, there is no credibility to be had for GCs in doing a job that they should not be doing.

The best value that the leader can add in this area is in using their experience to look at BAU matters as a whole; to look for overall trends and patterns.  This a view which can be of significant value to the organisation – it can realise significant savings in time and cost in managing these matters, or help the organisation make a substantial step forward in the way it approaches these matters at an organisational as well as legal level.  These are contributions of enormous value which may not come from anywhere else.  So if there is a single way of capturing the GC contribution when moving into the BAU arena, it is to move away from doing the BAU, and to refocus on seeing the big pictures in BAU activity.

Keeping the lights on

“Keeping the lights on” is a way of referring to all of an organisation’s regular activities that are necessary for it to continue in operation, but which are not the things that the organisation does as its main purpose in life.  They constitute a critical facet of a legal leader’s role, which may cover a broad sweep of activities (on a regular basis, everything that isn’t BAU).  Issues such as company secretarial (or similar constitutional reporting and maintenance) activities, employment law advice and property transactions are common to most organisations, but unless they develop into significant issues with the capacity to damage or even bring about the end of the organisation, do not have an appreciable effect on the organisation’s direction or success.  One consequence of this is that, so long as nothing goes wrong, they have a limited profile in the boardroom; in that respect they resemble utilities like electricity which “just happen”.  No one got hired because they were great at ensuring the electricity supply worked, but some have been fired for failing to ensure that it continued to work.  In the same way, a GC is unlikely to prosper simply by keeping on top of the “keeping the lights on” class of activities; their success will be much more characterised by the strategic insight they bring to business as usual matters and to their skill and judgment in handling one-off issues.  But if the organisation suffers harm because the legal effort for one of these activities goes badly, the effect for the GC can be deadly.

General counsel have to navigate between a rock and a hard place in relation to keeping the lights on issues.  The rock consists in giving these issues a disproportionately high level of attention, often a temptation for those new to more general legal advisory roles and for whom the issues at stake may not have been encountered since they were training, if at all.  General counsel should bear in mind that the organisation’s profit or other success measures are unlikely to be significantly affected by whether these issues are given five-star legal advice or something lower.  But giving them too little attention – the hard place which opposes the rock – is to risk under-calling issues which have the capacity to move into the “bet the company” category.  In the employment realm, say, a grievance with the capacity to develop into industrial action or a costly or reputation-threatening unfair dismissal claim is typical of the type of event which has the potential to morph from an every day issue to one which dwarfs all other of the organisation’s issues – switching off the metaphorical lights.  Moreover the general counsel needs to be alert to the particular interests of the management he or she is working with.  If the CEO is a former HR executive, HR issues may gain a greater level of attention in the organisation’s operation than they strictly merit – but the general counsel who recognises this and stays on top of them will gain the ear of the CEO, and so heightened influence, than the general counsel who plays the issue on its strict merits.

There is no one size fits all prescription for handling these “keeping the lights on” issues.  Not only are organisations different, but in a single organisation, different issues may require different approaches.  However, these different approaches will usually be designed around achieving two principal strategic aims.  These are to ensure that the level of advice applicable to day-to-day instances is adequate and that the mechanisms for general oversight and for managing exceptions are sufficient, clear and exercised when appropriate.

Setting up the system for undertaking the day-to-day entails careful thought from the start (of the GC’s tenure or of the new system).  The GC needs to set an approach for handling issues within scope – whether it involves internal colleagues, external lawyers or other resources – for getting and handling advice correctly at the start, and then making sure that they get sufficient management information to discern trends in these issues and early warning of exceptional items.  If the system is well set up and there is a reliable practice to deal with exceptional items, the general counsel can then leave the system to do its work between periodic reviews.

Calibrating the point at which exceptions are identified, and keeping the calibration under observation, is key to the success of managing this kind of issue.  Placing too close a level of control will mean that more exceptions are identified, taking more of the general counsel’s time away from other categories of issue and beginning to defeat the object of handling the issues in this way.  Allowing too loose a level of control means that issues meriting the general counsel’s attention will not be identified, at least until they have assumed too great a profile for comfort.  Keeping the changing mix of resources, experience and, often, inclination of the parties involved under periodic review will enable the general counsel to have the best chance of calibrating the valve marked exception to best effect.

Betting the company 

“Bet the company” issues are the issues which make the headlines.  They defy general approaches.  They may sometimes have a unique character of their own, but are also often issues which are BAU or “keeping the lights on” issues but require special treatment because they have or acquire a distinctive scale or character.

Most issues of true significance do not quite raise the existential threat the description implies; they may have the capacity to damage the organisation’s reputational or financial position appreciably, but not to put it out of operation. These issues can, however, present an existential threat to the GC’s career with the organisation.  They can be generally positive (a transformational acquisition – although a bad acquisition can become a very dangerous thing very quickly), or dangerous (compliance challenges, product recalls, high stakes litigation).  They often involve external counsel (but not always – especially in larger teams with the capacity and capability to handle these issues internally).

In those cases which do not involve external counsel, the general counsel must take the role of principal legal lead within the organisation. The chief requirements of them in this situation are to be mindful of the level of legal knowledge and experience in such a matter which is necessary; and to ensure that the team members responsible for managing the issue on a day to day basis feel supported without feeling the pressure of the significance of the issue.  Acting as a heat shield can sometimes be the single most significant contribution the GC can make in this kind of situation.

However there will be other instances where the general counsel must recognise that more specialised knowledge or experience from external lawyers is required, and should not let personal pride, budgetary constraints or a misplaced sense of their own role in the matter to cloud their judgment and prevent them from appointing external counsel as promptly and as thoroughly as the issue merits.  In these cases, general counsel must quickly make a decision as to whether they are to operate in the first seat position – where the external lawyers provide support but the internal team leads – or second seat position, where the external lawyers are driving the strategic approach to the matter in hand. General counsel should always put their organisations’ needs first when deciding which of these roles to take; doing so will always, in the long run, be in their best interests too, even if in the short term they have concerns that they are no longer seen to be asserting personal influence and control over the situation.  In a case where the general counsel takes second seat and lets the law firm direct the response, they should be confident in their own decision and not seek to control all communications between the law firm and their colleagues as if they were some postbox.  If they have chosen the law firm well, that choice will be recognised to their credit, as will finding the most efficient way of harmonising the legal effort with the needs of the remainder of the organisation.

There will, in any event, be lots of other valuable opportunities for the general counsel to add value.  That might be managing the process of securing all appropriate internal approvals for an acquisition and gathering together market data for competition clearance matters; or keeping the litigation strategy continually reviewed against the organisation’s operational or business strategy.  In all cases there is a valuable role to be played acting as a bridge at a business level between the legal matters and other operational considerations.

Whatever the situation, any matter of this significance will be very likely to be outside the normal experience not only of the general counsel but of all colleagues in the rest of the organisation.  Freezing rabbit-like in the headlights of an issue on account of its difficult or essential character will not do the general counsel or the organisation any favours.  Everyone involved in an issue of this nature will be faced with their own limitations of experience or skills, so the well-advised general counsel will, while being aware of their own limitations, recognise that they are the person in charge and act with confidence.

As with the other two categories, each organisation brings its own distinctive requirements which can profoundly affect the analysis and approach.  However general counsel can find a welter of issues facing them in their roles and using a triage approach like the one described here may provide a route to prioritising issues by the means used to address them at a strategic level.

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