31 May 2010

Manage Real Risks, Not Theoretical Ones

It’s not that I don’t care about the difference between contributory negligence vs. comparative negligence, it’s just that the lawyer I had been negotiating with on the phone for the last hour was fixated on that issue as the key element in deciding on the choice of law provision in our contract. At least it was his key element.

Me? I could not imagine the distinction was ever going to be a meaningful issue. In the end, while he got what is law training taught him to get, I got what my client needed.

In my last post, I talked about wanting business people who know a lot about the law rather than lawyers who know a little about business. My contributory negligence friend is a perfect example of why. As a businessperson, your General Counsel will spot the real risks that need to be properly accounted for, while the other lawyer is caught up in the minutia chase. Your GC is spending her time is getting it right on the real issues, the ones that matter to the client in a dollars and cents fashion, not the theoretical ones. A lawyer focused on winning the legal negotiations rather then creating a successful business deal is not the lawyer you want as your GC.

If there are five theoretical risks and two real risks (let’s call them “deal risks”) in a given transactions, it seems a fair trade from a contract negotiation standpoint to get the deal risks covered for my client at the cost of taking some theoretical risks. Some argue that you cannot or should not make these kinds of distinctions but as lawyers we make these kinds of distinctions all the time. Treating all risks as equally important is equally risky - and is not why our client hired us.

Managing “deal risks” is hard, and it does not mean you don’t pay attention to the minutia, the theoretical or the unlikely. It means you have to understand the business, the deal, and the real transaction risks.

You need a General Counsel who manages real risks and not just theoretical ones.

Ask your next GC candidate these:

  1. What was your role in the last significant transaction you were involved in?
  2. What were the key issues that you advised on?
  3. Why did you consider them key?
  4. What was your client’s reaction to your input?
  5. How were they resolved?

Thanks for reading!

Richard Russeth

[This is Pt. 3 of "Good GC or Great GC: The Seven Characteristics That Make The Difference", a series of seven weekly blog posts discussing what makes a great GC] 

26 May 2010

The Best Mentoring That $265,741.44 Can Buy

Back in 1983 when I was all of one year out of law school, my boss in the Pillsbury Legal Department gave me an assignment with our IT group (though it had some more cumbersome acronym back in the day) to help them negotiate a contract for some custom software – which was kind of a big deal at the time.

The lawyer (me) knew little about computer software contracts, the negotiations proved to be difficult, the owner of the software company we dealt with exceedingly paranoid, and the IT guys more than a little uncertain about what they needed. What could possible go wrong?

Six month later the software company sued us for allegedly ripping off their source code; their settlement demand was $125,000 ($265,741.44 in today's dollars).

After reviewing the demand letter, my boss studied the contract carefully for a day or two, and then called me into his office.

“Richard, “ he said. “Have a seat.”

Flipping through the very long contract, he said: “This is not a very good contract for us. I think we’re going to settle the case for their demand.”

Then, looking over his reading glasses at me, he said: “And then we’re going to find a good CLE course for you on negotiating software contracts.”

And then he said: “You got lunch plans?”

Thanks for reading.

Richard Russeth

23 May 2010

A Great GC Knows Its Not Just Risk Avoidance

In my post, “Six Rules for a Successful Legal Career,” I left out a key mentor: Jerome “Jerry” Jenko. If my first legal mentor, Ed Stringer, was a lawyer’s lawyer, then Jerry was a businessman’s lawyer. Jerry replaced Ed Stringer in 1989 as the General Counsel of The Pillsbury Company after a hostile takeover by Diageo (all booze, all the time).

The first thing he ever said to me was: “Be the businessman who knows a lot about the law instead of the lawyer who knows a little about business.” His point being that if you’re just going to be a lawyer, your company may as well hire the lead corporate practice partner from Big, Local and Firm when needed, instead of having an in-house General Counsel.

A good General Counsel will learn your business, but a great General Counsel will learn your balance sheet, your competition and the industry, and then help you craft strategy, goals and vision in a way that uses the law as an asset in achieving them, not just a risk avoidance tool.

A great GC appreciates the opportunities presented by the lawsuit, deal, M&A, marketing campaign or the bull session in the C-Suite. A great GC knows that the successful business law counsel can’t be gleaned from the Restatement of Contracts 2nd, the USCA, or the UCC; rather, it’s the accumulated wisdom from thousands conversations with thousands of business people on how to achieve their goals, not how to avoid risks.

Three questions (out of hundreds) to help find your great GC:
  1. What is the role of the GC as part of the C-Suite? if you get risk management and “chapter and verse” from him vs. “driving business success,” place a call to Big, Local and Firm.
  2. What was the most interesting marketing/advertising campaign/product roll out you’ve been involved in? Look for passion, verisimilitude and a sense of ownership in her discussion.
  3. What is your role in creating a company’s vision? If he only vetted it after it was written... well, you know what to do.
  4. If you'd like more examples, let me know - I've got a list!
Thanks for reading.

Richard Russeth 

[This is Pt. 2 of "Good GC or Great GC: The Seven Characteristics That Make The Difference", a series of seven weekly blog posts discussing what makes a great GC]

20 May 2010

Six Rules For A Successful Legal Career

I owe my success in the law to three mentors and one piece of advice received early in my career.

I graduated from the University of Minnesota Law School in 1982, and immediately went to work for Stringer, Lund and Schneider in Minneapolis, MN. You will not find that law firm listed anywhere in Martindale — even if you managed to go back in time to 1982 — because those men were lead in-house counsel for The Pillsbury Company. Ed Stringer was the General Counsel, Ron Lund was the Deputy General Counsel, and Mahlon Schneider was the Assistant General Counsel. The “firm” had about 20 lawyers, 4 paralegals and a slew of administrative assistants.

Ed Stringer came out of Briggs & Morgan and ran the Pillsbury Legal Department like a law firm. Ed was so convinced that the legal department needed to function like a law firm that we even had an “in-house law firm letterhead.” Some of you will recall that in the 1980s law firms still had letterheads that attempted to list all the partners, which often resulted in the first page of a letter having all of one complete paragraph on it due to space constraints. I don’t think I’ve ever been so proud as when my name was added to that letterhead. But I digress.

Each of these men took the time to train me and mentor me in the practice of law. They were mentors before anyone thought to make that a standard buzzword in management-consulting circles. They were not concerned about whether I was going to make them a buck; they were concerned that I become a good lawyer.

Ed Stringer taught me to be rigorous in my analysis and ethical in my practice. He did not stand for sloppy work or thinking, or ethical shortcuts. Ed was razor sharp in wit, deed and thought, and you had to work to keep up. That was the point. Ed went on to be Attorney General for the Department of Education under Bush I and later served as a Justice on the Minnesota Supreme Court.

Ron Lund taught me not to be an asshole. Ron was kind enough to explain to me (three years out of law school) that when a client asked why they should do what I recommended, the correct answer should not imply: “Because I’m the lawyer and I’m smarter than you.” Ron was a gentleman in word and deed. He kept his word. Woe to you if you did not. Ron went on to be General Counsel for Medtronic.

Mahlon Schneider’s lesson might have been the most important of all: “Be generous and take pleasure in the success of others.” He taught that by how he handled himself every single day. He was generous with time, advice and his lake cabin. He went on to be General Counsel for the Hormel Company.

Another piece of good advice? As I started into the business world, my father told me: “Always hire people that are smarter than you.” This, in fact, may be the biggest reason why my career has stayed on track over the years.

To sum up the six rules:

1. Be Rigorous.
2. Be Ethical.
3. Don’t Be An Asshole.
4. Be Generous.
5. Take Pleasure In The Success Of Others.
6. Always Hire People That Are Smarter Than You.

I’ve found that success is hard work even when you do follow these rules, but it’s almost impossible when you don’t.

Thanks for reading.

Richard Russeth

16 May 2010

More Sheriff Taylor, Less Wyatt Earp

The subtitle of this blog is “The legal generalist is the new specialist.”  The law has become so specialized, so complicated, that no specialist can truly advise the CEO or the Board on the wide scope of law that impacts every act of a corporation in the 21st Century.  The CEO, the Board and the executive  team desperately need their General Counsel to be a  true generalist.

Not a “jack of all trades, master of none” but a master of the breadth, height and depth of the law., its reason and its wisdom. She sees the forest. She sees the trees. She sees all the little pieces of the deal/business/environment, the mosaic they create, and, as a result, what needs to be done, the specialists needed, the knowledge to be tapped.  She brings ethics, finesse and wisdom to her counsel. She is a counselor at law.

In short, she is channeling Andy Taylor; not Andy Taylor of Duran Duran  --  Sheriff Andy Taylor of Mayberry.

Andy was the consummate generalist. He really didn’t know the specifics of the law all that well (though Officer Fife could often quote chapter verse, for what its worth). He knew everyone in town. He networked at the barber shop (which was the pretty much the executive suite in Mayberry). He let his subordinate be himself and learn in his own way but kept him from hurting himself (you’ll recall he never let Barney actually carry more than one bullet) or anyone else for that matter.

In fact, Andy never carried a gun. Ever. As he explained it: “When a man carries a gun all the time, the respect he thinks he's getting might really be fear. So I don't carry a gun because I don't want the people of Mayberry to fear a gun. I'd rather they respect me.”

Wikipedia describes Andy has having “a level-headed approach to law enforcement [that] makes him the scourge of local moonshiners and out-of-town criminals, while his abilities to settle community problems with common-sense advice, mediation and conciliation make him popular with his fellow citizens.”

Mediator, conciliator and commonsense adviser.  A lawyer with those abilities you should hire in a heartbeat to be your General Counsel.  In most cases, she can only have those qualities if she has practiced law at length, paid her dues in a multiplicity of legal disciplines and positions, developed a healthy respect for her own ability to be wrong, and agrees with Abraham Lincoln (not Shakespeare): 

“Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker, the lawyer has the superior opportunity of being a good man. There will still be business enough.”

Of the seven characteristics that make for a Great GC, this one is the keystone - you don't get to be a Great GC without it!

[This is Pt. 1 of "Good GC or Great GC: The Seven Characteristics That Make The Difference", a series of seven weekly blog posts covering one characteristic per week.]

14 May 2010

Good GC or Great GC: The Seven Characteristics That Make The Difference

A good General Counsel is a step ahead when it comes watching over the legal challenges of your business; unlike the situations outside counsel often find themselves handed, he doesn’t just sweep up the mess, he helps prevent it in the first place.

But a great General Counsel? She finds the business advantage in the prevention; suddenly that corporate compliance program you thought was overpriced is winning you raves from customers looking for ethical companies with which to partner.

Its not just law, its business, and unless your GC is savvy enough to realize that, you may as well just outsource your legal work to the local offices of Big, Law and Firm (BTW, my favorite law firm name is Smart & Biggar from Canada; how could your clients not be confident?).

In my view, there are seven characteristics that make a great General Counsel; make sure yours has at least five of these seven:

  1. She's more Sheriff Andy Taylor, less Wyatt Earp.
  2. He is a businessman who knows a lot about the law, not a lawyer who knows a little about business.
  3. She manages real risks, not theoretical ones.
  4. He knows the best legal solution is not always the best business resolution.
  5. She realizes that over-lawyering and under-lawyering are equally expensive.
  6. He knows more about doing deals, and has done more, than anyone on your team.
  7. She proselytizes for an ounce of prevention over a pound of cure.
Every Monday for the next seven weeks, starting Monday, May 17, I will be blogging about these characteristics, one at at a time.

I hope you will come back and engage me in a discussion!

Copyright 2010 Richard Russeth. All rights reserved.

Who I Am According To Wordle

Professionally speaking at least, this is how Wordle describes me when I input my resume. You have to click on the word cloud to really get the full effect.