General Counsel in Practice

The position of general counsel (GC) has become increasingly important as large organizations move forward into a new world of technological change and globalized capital (see “The In-House Counsel Movement”). As part of this, GCs are compelled to wear many hats, including “cop,” “counselor,” and “strategist,” and they often face situations for which there is no handbook. How do GCs balance these different responsibilities? And how do they navigate the various ethical, legal, and financial practices of a shrinking world? As part of this discussion, The Practice recently sat down with two experienced GCs to get their take.

Horacio Gutierrez is the recently appointed GC of Spotify and former GC of Microsoft. During his long tenure at Microsoft (nearly two decades), Gutierrez oversaw many of the company’s major patent and antitrust cases. Ed Weiss is the GC of Fenway Sports Group, a company that includes the Boston Red Sox and the Liverpool Football Club. Prior to joining Fenway Sports, Weiss was senior vice president and deputy GC at Time Warner, where he managed all litigation, regulatory, and intellectual property issues across the company’s global operations. In this article, Weiss and Gutierrez share their perspectives on how the position has changed and what it takes to thrive.

A seat at the table

Even the most astute GC will not succeed if he or she, and his or her department, are not integrated into the organization. Gone are the days in which there were strictly “legal” and “business” matters—if such a division ever existed. Today, as businesses expand into areas where the law is blurry, at best, it is critical that GCs and their departments are involved in business development and strategy from the beginning. Speaking of his time leading Microsoft’s large and global legal department, Gutierrez stresses that his team was successful because it was embedded in every branch and group of the company.

At Microsoft, I managed lawyers who were part of not only my legal team but also the leadership that managed the product teams within the company. They were deeply integrated and involved in conversations at very early stages of products so that we were able to achieve that balance of having independence yet not missing a beat in understanding the business and helping guide them from a legal perspective. I refer to the lawyers as being embedded because they are literally sitting in the same spaces as the business groups. Particularly at a place like Microsoft, that proximity was important in terms of the hallway conversations and the dialogue going on regarding the state and direction of the business.

Gutierrez emphasizes that this integrated approach was due primarily to the initiative of the legal department, which demanded that its team members be involved. “The leadership of the legal department made it a principle that even those people who would rather not be close to their clients should—and must—be,” he says.

The general counsel never wants to find himself or herself as the one person in eight at the table saying no.

Ed Weiss, general counsel of Fenway Sports Group

Reflecting on his experience at Fenway Sports Group and Time Warner, Weiss echoes this sentiment. He points out that the most successful GCs are those who are closely involved with the business leadership and thus positioned to guide decisions early on.

The more you know about the business, the better able you are to render good advice. To be effective, the general counsel never wants to find himself or herself as the one person in eight at the table saying no. They always want to have internally ironed out a different way, a different answer, or a different path, and to have lined up usually the CFO, the corporate communications director, and certainly the CEO.

While being a part of the business leadership enables GCs to better do their jobs, it also increases their role in the success or failure of any strategy. As the saying goes, “With great power comes great responsibility.” The empowered position of the GCs means that they are not giving advice from the sideline but are a part of the team on the field. Weiss elaborates:

General counsel don’t have the space of the advice memo to say, “Well, we cautioned you on the risks—we told you if you did that, it could be bad.” This is good because you are closer to the ultimate products or business and have more of a say in how it’s done rather than just sending memos into the ether.

At the frontier of law

The constant introduction of new technologies and expansion of markets also means that the law is often playing catch-up with how businesses operate. Many practices have yet to be guided or regulated by legal frameworks. Others differ greatly depending on the particular part of the globe one is operating in (see “Going Global?”). GCs are therefore often faced with difficult questions without obvious answers. “In the regulatory world,” Gutierrez says, “the legal principles are not well settled.” He adds:

There are distinct differences between the way that data protection authorities in Europe, China, and the Federal Trade Commission think of these things. And these are important inputs as the businesses and tech groups are designing products and processes.

As a result of these challenges, Gutierrez stresses the need for business-legal integration:

The legal team must be plugged in to even the product-planning cycles really early in the planning process. You can’t wait until the product has been shipped, or it’s about to be shipped, and there is a threat of injunction. Some of these things involve significant judgment calls that have to be made by a partnership between the technology leaders, business leaders, and lawyers, and those judgment calls have to be made early enough in the project so that they know what product they are going to build and how they are going to build it.

The laws are being defined as we go.

Horacio Gutierrez, general counsel of Spotify

Gutierrez explains that the rise of new business models, such as cloud computing and e-commerce, has forced GCs to deal with unprecedented challenges. “The laws are being defined as we go,” he says.

At Microsoft, the business model was a lot simpler 15 years ago. The way the companies make money is very different, and you have the e-commerce aspects of the transaction-to-payment systems associated with providing these global services in different jurisdictions around the world. But now we are subject to the jurisdiction of new regulators, and the nature of the relationship with the customers and with the jurisdiction in which they sit is very different. The complexity of the analysis has become much more significant.

As GCs wade into uncharted territory, they are forced to think about what is good not only for the company but also for society as a whole (see “Speaker’s Corner”). For instance, they must consider the larger principles at stake, not just the immediate implications for the company they represent. Gutierrez explains:

Look at the battles in the policy space—whether about surveillance and privacy or the encryption spat between Apple and the FBI—and you see a generation of GCs who are not only excellent from a legal skills perspective but who also articulate their position in a way that goes beyond the company itself, making it about principles that are in tune with societal values. You see GCs whose jobs have evolved to encompass responsibilities beyond the traditional legal function. They are able to be influential thought leaders for particular industries and society as a whole.

Gutierrez’s point mirrors one of the central tenants of the inside counsel revolution—the increasing role of GCs in public policy and other types of governmental debates (see “The In-House Counsel Movement”).

Pace and pressure

Technology has changed not only the practices of business but also the nature of the work. This is true even for lawyers, who are often chided for being resistant to technological change. The ability to rapidly and constantly communicate over e-mail, phone, and social media has produced an expectation for quick decision making and action, even when such speed may not be in the company’s best interest. Dubbing it an “increased velocity of practice,” Weiss identifies this development as one of the biggest challenges for GCs today.

The velocity of practice has really increased in the past 20 years. You used to have time to think about the problems and try to come up with some nuance to meditate, advise, and communicate on it. That’s gone now. If you don’t answer an e-mail in 20 minutes, everyone thinks you’re on vacation! And e-mail is an incredibly poor device for handling legal advice.

Weiss emphasizes the role good judgment plays, and that it is important to not be guided solely by the pace of the business world. He emphasizes that this is especially true with social media, a platform in which things can quickly go viral and with which companies need to exercise caution.

I have a saying—“Resist the need to reassure”—because a lot of times you don’t know what the facts are. Until you know what’s in all the e-mails and text messages, you don’t know what happened. If something has happened, and you’re trying to get your arms around it, everyone wants you to say it didn’t happen. You don’t want to constantly be saying, “Well, we’re changing our statements.” Knowing what happened is becoming more challenging in a Twitter generation.

Diversity and local knowledge

One of the effects of the increasing responsibility and scope of GCs is that they are being asked to know more about more. Companies working across sectors and borders will run into different regulatory, financial, and cultural practices, and an effective GC has to provide guidance and answers to complex questions. Gutierrez emphasizes that this has less to do with a GC’s personal talents and more with his or her ability to create a strong, diverse team that is united around the shared principles of the organization.

General counsel need to surround themselves with people who have expertise and knowledge of the local contexts, markets, and regulatory issues. They need to remain informed while they develop their own judgment of the issues. They should also constantly impress on their team the company values and the principles of behavior everyone should uphold.

This need for breadth, not just depth, of knowledge is a prime reason why it is crucial for legal departments to be both diverse and inclusive of different perspectives.

A diversity of perspectives will allow you to properly analyze the data and make the proper decision. Diversity is not only the right thing to do, it’s the smart thing to do.

Horacio Gutierrez

Echoing the message of the Association of Corporate Counsel’s Call to Action, an effort to encourage in-house departments to prioritize diversity in their purchasing practices, Gutierrez describes the benefits of a diverse team.

From the perspective of both different ethnicities and different backgrounds, an inclusive legal department can enrich the way you act and view the world. It will make you smarter and better equipped to understand developments on the ground and to make the right decisions. When I talk about being surrounded by the right people, I don’t mean just in terms of the subject matter expertise. I also mean the diversity of perspectives that will allow you to properly analyze the data and make the proper decision. Diversity is not only the right thing to do, it’s the smart thing to do.

Future generation of general counsel

How can law students be better prepared for the challenges of in-house counsel? While some think the answer lies in exposing students to more training in business and financial practices, it may be equally—if not more—important for students to learn the intangible skills of good judgment, teamwork, and effective communication. Weiss believes that students can learn a lot of these skills through experience or through interacting with more practitioners.

It’s not easy for law schools to teach some of the skills that are important. Basic corporate finances, primers on crisis management, and corporate communications would be useful. But a lot of that is practice acquired. Good judgment is not a skill that law school is designed to train—and you could question whether it’s a trainable skill at all. I would find more opportunities for law schools to bring back established practitioners. Most law students are starving to find out more about what it’s really going to be like when you’re out there.

Gutierrez agrees that the emphasis should be on soft skills and the ability of individuals to navigate and lead within large organizations. He laments that law schools currently encourage competition and individual success rather than collaboration and teamwork.

In large departments, where there is lots of expertise, there is always the risk that silos will emerge and we will miss the forest for the trees. To get things done in that complexity, you need people who can go deep and have a breadth of perspective, a strategic view of the field, and a sense of direction. You also need people who know how to work in a large organization. And that requires a number of soft skills and a team mind-set, which is not something we emphasize enough in law school right now. Being able to get things done and to exercise influence in a large organization in situations where there is no formal authority is the difference between an effective in-house lawyer and one who will be forever frustrated.

The prominence of these soft skills—which are critical for success yet hard to define—may contribute to the persistent misconception within the legal profession that being a GC is easier than working in a firm.

A lot of partners at law firms just assume they could be a GC tomorrow. But not all of them have the skills for that job.

Ed Weiss

While the prestige of the position is rising within the field, many firm lawyers still believe they could always “fall back” by taking an in-house position. But, as Weiss points out, this view fails to appreciate the particular expertise needed to succeed as a GC.

The people who hold these jobs are generally among the very best of the best, and you wouldn’t expect otherwise, given the number of skills they need to have. A lot of partners at law firms just assume they could be a GC tomorrow. But not all of them have the skills for that job.

As the position of GC continues to rise in both power and prestige, it will be interesting to see how law schools respond. Some schools are beginning to offer courses, for both law students and practitioners, which tackle the challenges of leading in-house departments (see “In the Classroom“). However, there remains much that could be done to both expose young lawyers to this unique career path, and prepare them to succeed at the high-speed intersection of law and business.