IN-HOUSE TOM: Chapter 1.6 Legal business leadership is not billable by the hour; ergo it’s not rated & not taught at law school

I’m writing a book with the working title: IN-HOUSE TOM: a new target operating model for law departments – initially as a series of blogs.

You can follow the full index of the blogs as they build here: IN-HOUSE TOM: INDEX

Chapter 1.6 Business leadership is not billable by the hour; ergo it’s not rated & not taught at law school.

The fifth, of seven weaknesses, in the current in-house target operating model is that since law firms, in which crucible most in-house lawyers thinking was forged, cannot bill leadership and the art and science of business by the hour it follows that lawyers – apart from the most “a-typical” (ibid) – do not rate or value business leadership and consequently law schools don’t teach it. In the UK, it’s not even a module for the new SQE.

Since business leadership is a key strategic resource in any business target operating model – and law departments are internal businesses – it follows that the current in-house target operating model cannot be strong if this key strategic resource is not rated, valued and understood.

Although I have worked with in-house leaders and teams for over 15 years, it took me some time to figure out that antipathy towards business leadership and knowledge was at the heart of the dysfunction in the function.

Lawyers are invariably bright. Often stunningly bright. But their high IQ frequently cloaks mind-blowing gaps in knowledge and awareness.

A few experiences convinced me that the legal emperors had few business or leadership clothes:

  • One senior GC, when I suggested to him that “Legal should be run as a business, not like one”, replied: “Frankly I think that’s too simplistic”. I took that to mean that Legal was “above” business.
  • One law firm equity partner of not insubstantial fee-earning numbers, when I extolled the value of marketing as an art and science, snorted “What’s all this fuss about marketing, eh? All one needs is a hefty wodge of tickets to Wimbledon!” [Full disclosure: slight, but only slight, literary license used in this story]
  • When facilitating a lawyers’ business board meeting, it became clear to me that no one, but no one, around the table, understood the difference between a strategy and a plan, nor cared less. It was as shocking as it was dangerous.

I believe this weakness is the most difficult of all seven to fix because it’s so embedded in the lawyers’ culture.

Culture is a function of a host of factors which bolster identity. There’s no doubt, in my mind at least, that lawyers’ identities are in no way connected to their prowess as business leaders.

This is problematic because law departments need strong business leaders, especially the larger ones, not strong lawyers. And since organisations tend to promote the best lawyers and not the best leaders to GC roles, the problem becomes almost intractable.

Almost. As I will set out later, the problem is remedial, but first we need to confront how bad it is now.

There are vast volumes of academic material available to support this assertion. I particularly like this excerpt from Legal 500 GC Magazine Winter/Spring 2020 Edition sent to me, very helpfully, by a GC client:

“If asked to describe the ‘typical’ lawyer, the person on the street might have a few ideas. Popular culture is strewn with stereotypes of lawyers, some admirable, many not. But is it possible to truly make generalisations about the typical personality traits a lawyer might have?

Yes, according to psychologist (and former trial lawyer) Dr Larry Richard. After ten unhappy years in practice, Richard followed his heart into psychology. But far from leaving the law behind, he remains fascinated by it – or by one aspect, at least.

‘Having put in all that time and grown up with my colleagues in law school and practice, I said “I’m going to study us and find out what makes lawyers tick”,’ he explains.

At his Pennsylvania-based consulting firm, LawyerBrain, Richard applies neuroscience, social psychology, positive psychology, leadership science, and a variety of other social science disciplines to lawyer performance.

‘Lawyers are the most atypical occupation on the planet. We are more different from the general public than any other occupation since data has been published. We are the original outliers,’ he says.

Among 21 traits measured on a standard personality profile, Richard’s research shows that lawyers’ average scores for seven of these are dramatically atypical compared to the general public (it’s considered unusual for even one trait to be atypical in most occupations). According to his research, lawyers score highest on scepticism, as well as on need for autonomy, urgency (read impatience) and ability for abstract reasoning. So far, so predictable, perhaps. But he also found that lawyers score low on sociability, psychological resilience, and cognitive empathy.

Richard argues that scepticism is particularly encouraged at law schools, which, he says, attract candidates already predisposed to this trait and then train them to be even more so.

‘The training that we have as lawyers trains us to look for the negative. We are trained to look for problems, what could go wrong, what is wrong, what’s not ok – we ignore the 95% that’s working. Whenever anyone else makes an assertion, we’re trained to always question the underpinnings of what they’ve said: never accept, never give the benefit of the doubt, always challenge. We’re trained to be vigilant about hidden motives, what do you really mean by that, what’s your agenda – it’s that kind of hidden, almost paranoid mindset. All of these things make someone a very competent lawyer, because the better you can do these things, the more you’re going to protect your client from a host of unseen potential problems,’ he explains.

‘But there is a price to pay and here’s the built-in tension. All the other roles that we ask lawyers to play these days require just the opposite, because almost all the other roles are founded on relationships.’

In Richard’s view, supervision, mentoring, managing, leading, being collegial, innovative – all important roles for lawyers as they climb the career ladder, particularly in-house – could be made more challenging by legal training.”

Convinced?

Ciarán Fenton

IN-HOUSE TOM: Chapter 1.5 Litigators at heart, omertàesque silence & no #lawyersbacks

I’m writing a book with the working title: IN-HOUSE TOM: a new target operating model for law departments – initially as a series of blogs.

You can follow the full index of the blogs as they build here: IN-HOUSE TOM: INDEX

Chapter 1.5 Litigators at heart, omertàesque silence & no #lawyersbacks

The fourth, of seven weaknesses, of the current in-house target operating model, is that in-house lawyers are litigators by training and therefore by instinct. This skill is mostly useless in dealing with the business of law.

They also maintain as, one in-house lawyer put it, an almost omertàesque silence about what is “going on” in business. This undermines their current target operating model, business and society.

The profession is systemically adversarial. There is no culture of “having each other’s backs” in a career sense, trained as they are as lone wolves in law firms where dog eats dog in the service of the billable hour which remains, despite all the huffing and puffing about “disruption”, the God/Goddess of the legal sector. 

When I say they, I mean all but the most a-typical lawyers. This is an important caveat as it’s only a-typical lawyers who can save the profession from its impending nemesis. 

The problem with their litigator-as-a-default training is that they see everything as an opportunity to win arguments so that when they need to sell messages, which is what the business of law is about, they’re lost.

To be fair to their trainers, most lawyers are brilliant not only at ensuring that they win, but that the other side loses, badly. Winning arguments has become part of their identity. Without an adversary, they lose confidence. 

This weakness is ruthlessly exploited by “the business” which understands selling. 

Equally and as damaging, in-house lawyers view “the business”, albeit unconsciously, as an adversary. This is a massively self-defeating strategy and cripples their current operating model.

Their “omertàesque” silence on what is “going on” in business is a major undermining problem because “the business” knows that it has Legal in a headlock, knows it will not squeal to the outside except in extremis and so “the business” keeps on tightening its lock. Why wouldn’t it? 

Some in “the business”, I’m sure, may view some in-house lawyers as people who otherwise would have to “cut it” on the billable hour treadmill in law firms, have sold their souls for a good salary, five weeks holidays, a bonus/potential LTIPs and, if they behave, some power over other lawyers.

I generalise and exaggerate, but only a little.

But by far the biggest flaw in their current TOM is their refusal/inability to back each other publicly.  

This refusal is understandable. Why would any in-house lawyer stick their neck out in what only the most myopic amongst them know is one of the few remaining unreconstructed sectors in business and which has managed an ongoing Big Bang bypass despite rumours to the contrary?

And those that do stick their neck out get them chopped off not just by the business, but by their fellows. 

And woe betides anyone who calls out this societal deception playing out in plain sight. 

When, in 2016, UCL published its Moral Compass Survey (ibid) there was a furious reaction not from “the business” who are blissfully unaware of the problem because lawyers talk only amongst themselves about their problems but from miffed inhousers at the language used by the authors in describing them. 

The authors of the survey found that there were four categories of in-house lawyer: 

  • the capitulators
  • the coasters
  • the comfortably numb and
  • the champions.

The report had a mixed reaction to say the least. Rhymer Rigby wrote in the Financial Times at the time of publication:

A recent piece of research from University College London on in-house lawyers, Mapping the Moral Compass, has caused a stir in the legal community. It identifies four main ethical groups of in-house lawyers: the capitulators, the coasters, the comfortably numb and the champions. Perhaps unsurprisingly, some general counsel have taken exception to these characterisations.

Rhymer does a good line in understatement.

While I have experienced some hostility towards me and my views, generally speaking, I receive huge support, privately of course, even by those in-house lawyers who disagree with some of my views.  

Their pain is painful to witness.

In 2019 I ran a six-month trial which I called #lawyersbacks. I chaired a fortnightly anonymous conference call for lawyers who could speak openly, safely and with other lawyers about their experiences under pressure. 

The calls were heartbreaking to hear mainly because some lawyers were gobsmacked that their experiences were shared by others and that mutual support was possible in what is often a “macho” environment where being the brightest is what counts and emotions eschewed. The loneliness came over like a scream though no lawyer would ever reveal this publicly. 

In this regard – a reminder of the three key elements of any target operating model: needs, strategic resources, processes. 

Lawyers are the main strategic resource in the current in-house target operating model. 

Given the evidence above, how could the current IN-HOUSE TOM possibly be “fit for purpose”. How?

Ciarán Fenton

IN-HOUSE TOM: Ethical pressure, chilling fear & breathtaking acquiescence

I’m writing a book with the working title: IN-HOUSE TOM: a new target operating model for law departments – initially as a series of blogs.

You can follow the full index of the blogs as they build here: IN-HOUSE TOM: INDEX

Chapter 1.4 Ethical pressure, chilling fear & breathtaking acquiescence

The third, of seven weaknesses, in the current in-house target operating model is the vulnerability of in-house lawyers to ethical pressure, the fear that this generates and, for me at least as a “non-lawyer”, the breathtaking acquiescence with which this beating is absorbed by the profession.

“Ethical pressure” and “chilling fear” are not my words.

In “Mapping the Moral Compass” report published by the UCL Centre for Ethics and Law in 2016 as part of its Ethical Leadership for In-House Layers Initiative the headline findings included:

  • 10–15% experienced elevated ethical pressure;
  • 30–40% sometimes experienced ethical pressure;

The authors note that “…a number of our interviewees suffered exposure to what the following interviewee termed the “shouty man syndrome”. IHL24 wraps up, rather nicely, the desire to be seen to be adding value, to not being a deal blocker, as a “helpful’ part of the team:

The problem we face is what I call the “shouty man syndrome”, which it doesn’t matter how much we agree this is the right way to go, if you’ve got a client, an internal stakeholder, shouting at you to get something done because it’s urgent and you just don’t understand why legal is being so difficult? You end up defaulting to all too often being helpful even though long-term that’s the wrong answer. [IHL24]” (In-House Lawyers’ Ethics Ibid page 67)

Professor Stephen Mayson, in his Interim Independent Legal Services Regulation Review Report (2019) deals with in-house lawyers in Section 5.8 on page 70.

The section is notable as much for its implicit commentary on the current context in which in-house counsel operate as it is for its specific proposals and questions regarding changes in regulations.

“These are not simply private or commercial matters. As we have seen recently, corporate failures can lead to consumer and societal detriment, and in-house lawyers have to be able to sound alarm bells without the chilling effect of potential reprisal. The public interest in effective and fearless legal representation is engaged in much the same way as it is with private practice.”

That said, I required neither the Moral Compass Report nor Professor Mason’s Interim Report to convince me of the vulnerability of in-house lawyers.

In my leadership consulting practice in which I have worked with hundreds of house lawyers over 15 years I witnessed corporate brutality mercilessly dealt out to in-house lawyers at close quarters.

Not that I did’t witness, or experience, corporate brutality meted out to “non-lawyers” in my 15 or so years in corporate roles. I did.

The difference is that society has come to expect, at times, appalling behaviour towards “non-lawyers” by bosses with low EQ but it does not expect, nor is it fully aware, that Officers of the Court are routinely “bludgeoned” by the C-Suite. Bludgeoned is my word.

None of this is a surprise and I suspect, at this stage, many in-house readers will be sniffling a yawn. Heard it all before, mate. Plus ça change, as the say on the in-house conference circuit.

It’s this breathtaking acquiescence by the profession that I hope will cause some a-typical in-house lawyers, with higher than normal EQ, to pause and apply their razor sharp intellects and high IQ to the implications of this acquiescence.

Typical lawyers, bless them, will continue to think that just because the water around them doesn’t appear to have changed temperature, much, that it will never boil.

But the societal waters are warming around them and one day lawyers will wake up because, and just as Mr Weinstein has landed in jail because people came together to say “enough it enough”, a high profile business bully will “go down” for “doing in” a GC.

When it happens, remember where you heard it first.

Ciarán Fenton

IN-HOUSE TOM: Chapter 1.3 In-house independence is a contradiction in terms

I’m writing a book with the working title: IN-HOUSE TOM: a new target operating model for law departments – initially as a series of blogs.

You can follow the full index of the blogs as they build here: IN-HOUSE TOM: INDEX

Chapter 1.3 In-house independence is a contradiction in terms

The second reason, of seven, as to why the current target operating model is not working is because in-house lawyers, by definition, cannot “act independently” as required by the regulator and as needed by society.

The term “in-house” contains the clue to the conflict. 

The independence regulation is unenforceable because through custom and practice a myth is comfortably perpetuated by business, by the profession and by the regulator that in-house and out-of-house lawyers are “the same” and that there is no difference between them in their obligation and reasonable ability to act independently.

Everyone knows this isn’t true.

Everyone is let off the hook because the onus in the regulations is on the individual lawyer to raise concerns. But turkeys don’t vote for Christmas, generally speaking, so concerns are raised by them only in extremis, a poor basis for any workable model.

This untruth, that dare not speak its name, causes three serious systemic problems concerning the current in-house target operating model:

  • “the business” suffers because it needs its in-house lawyers to be independent – some would say only when it suits – and so the woolliness in their status creates a serious conduct risk for the business
  • society suffers because the deception hoodwinks it into thinking that it has “cops on the inside” when it doesn’t 
  • in-house lawyers suffer because they are neither wholly independent nor wholly dependent; neither fish nor fowl, hence their Cinderellaesque status (see Chapter 1.2).

Legal academics acknowledge the evidence for this inherent flaw in the system:

Richard Moorhead, Steven Vaughan and Cristina Godinho helpfully and clearly set out the tortuous situation in “In-House Lawyers’ Ethics – Institutional, Legal Risk and the Tournament of Influence (Bloomsbury, 2019; pages 90-91) “…lawyer independence comprises at least four facets: first, being prepared to say ‘No’ to a client; second, an acceptance that independence may, in some situations, mean taking decisions that have negative financial consequences for the solicitor; third, a need for a solicitor to avoid becoming overly reliant or close to any given client; and finally, a recognition that, in litigation, individual lawyers are professionally responsible for their handling of cases (ie they cannot simply rely on acting in accordance with the client’s instructions to justify questionable tactics). On the third point, it might be said that having but one employer, this aspect cannot apply to the in-house community. [my Bold] However, an alternative is to see this as putting an obligation on in-house lawyers to manage more carefully for independence given the risks of having a single employer/client: to ensure they do not forget or avoid their professional obligations. This is consistent with the SRA’s recognition that the clients of large law firms pose specific risks to independence, such that they, ‘must resist client pressure which may adversely compromise their professional independence’. Only belatedly does the SRA add, though that, ‘Maintaining independence is also relevant to inhouse lawyers, who may come under pressure from their employers.”

A Curious Martian – a rhetorical device I frequently use in speeches and writing on this subject – with instant access to terabytes of data, were they to land on Earth, might ask the regulator, business and society that permits it, in respect of the above extract:

  • is it reasonable to expect earthling inhousers to say “no” to their bosses on all appropriate occasions when those bosses carry out their annual reviews, rank them, control their promotion, pay and bonuses? *&%?*!!! – Martian for WTF?
  • isn’t the biggest “negative financial consequence” for any earthling in-house solicitor in taking a decision, er, is to lose their jobs, complete with elegantly written NDAs?
  • how can earthling solicitors, in-house and out, have the same independence obligations if they are required “to avoid becoming overly reliant or overly close to any given client”? Aren’t earthling employment contracts, cleverly crafted by other earthling lawyers, as close as earthlings can get to anyone in a work environment?  
  • if “on the third point it might be said that this aspect cannot apply to the in-house community” why then does the earthling regulator insist that there is no difference between in-house and out-of-house earthling lawyers if it “must be said”?
  • is there not something inherently contradictory in the use of the term “employer/client”? how can earthling lawyers have clients who are also their employers and “manage more carefully for independence given the risks of having” such a combination?
  • do the authors imply by the words “given the risks of having” that it’s a case of “caveat emptor” for those lawyers who choose that role when in fact the profession actively promotes in-house as a career path?
  • is there not a significant difference between the independence risks faced by earthling law firms and in-house lawyers because of the difference in, er, dependence?
  • why does the SRA say in-house lawyers “may come under pressure” when they must know that they do so because everyone knows it. My computer banks tell me, for example, that Professor Moorhead and others wrote a Moral Compass Survey in 2016 that confirmed that earthling in-house lawyers experience significant ethical pressure and frequently “elevated” ethical pressure?
  • why did the SRA add it “belatedly”? Does this mean that “in-house” is a regulatory afterthought?
  • in earthling terms, what does the word “elevated” mean and what might “elevated pressure” mean for the earthling in-house lawyer and how might the fear of it compromise their independence?
  • and finally, isn’t the current earthling in-house target operating model and culture designed precisely to encourage them to “forget” their obligations to become “business people first, lawyers second…commercial…and, er, ‘pragmatic’?.

No other member of the “C-Suite” – CEO, CFO, CMO, CRO, CTO or HRD – has to suffer this systemic undermining.

Yet the C-Suite is the GC’s “client” and they usually “report” either to the CEO or CFO.

No wonder the Martian is confused.

Ciarán Fenton

IN-HOUSE TOM: Chapter 1.2 Cinderellas of the boardroom & denial

I’m writing a book with the working title: IN-HOUSE TOM: a new target operating model for law departments – initially as a series of blogs.

You can follow the full index of blogs as they build here: IN-HOUSE TOM: INDEX

Chapter 1.2 Cinderellas of the boardroom & denial

The first problem with the current in-house target operating model is that:

  • the “C-Suite” frequently treats in-house lawyers as “Cinderellas” of the boardroom
  • lawyers are in denial about this
  • worse, one points this out at one’s peril

After a speech on the oppression of in-house lawyers which I gave at an in-house conference, one lawyer, carefully and in commendably restrained language, gave me written feedback:

“On oppression, it may be that [your] lead language causes a reaction that limits the ability of the audience to give the remainder of the message due consideration…the language of oppression is reserved for slavery and other elements of serious abuse of human rights. This is not something that most lawyers would identify with applying to them and so an instant barrier can come up…Most lawyers would also likely see themselves as individuals within a privileged elite rather than an oppressed body… these absolutes work well with business people who operate in short-hand, for the detail-orientated lawyer they are a point to take exception to…”

That was polite and very helpful. 

But I have received aggressive, if passive, feedback which reassures me that I’m onto something important. 

Both responses leave me with a problem which I hope to resolve while writing this book: how can you help someone who doesn’t feel they need help?

It’s not about lawyers

My immediate answer is that this debate is not about lawyers but about the society they serve.

The reason there is no “disruption” in legal services is that lawyers are debating with themselves as if the issue is about them and not clients, business and society.

Society is unhappy with the legal profession and, ultimately, that’s where the market need in the target operating model lies.

Once society at large “cottons on” to the fact that the practice of commercial law is in many respects, if not all, a “stitch-up” it will start calling for change.

Once society starts calling for change, seriously, things will change. And it will be that and no words of mine that will incentivise lawyers to change their behaviour.

The #MeToo movement

The #MeToo movement is an example of society saying “enough is enough”. And Harvey Weinstein is in an orange jumpsuit today. That outcome was as unthinkable five years ago as the notion that lawyers could transform – in its full sense – business, society and their own sense of career fulfilment. 

Meanwhile, I hope to help prepare lawyers for this inevitable outcome. All I ask is that you keep your jury out on my suggestions, analysis and new target operating model construction until the end of the book.

This chapter

This chapter will focus on the evolution of the role of in-house counsel and the evidence which supports my “Cinderella” assertion. 

To be fair to Cinders, when told to scrub the kitchen floor by the Ugly Sisters she didn’t say “Oh ok, do you want me to do the stairs as well?”.

Cinderella wasn’t invited to The Ball (the boardroom) but she did get there, admittedly through processes not set out in any recognisable conduct manual or workflow, and a handsome Prince did save her from her lot.

 Who is “the Prince” here?

Spoiler alert: the “C-Suite” is the Prince. 

Why?

Because, as we say in Ireland, the C-Suite knows “on what side its bread is buttered”.

If law firms and law departments came together with the C-Suite in response to society’s tumbrils rolling towards them, as surely they are, everything is possible. 

Ciarán Fenton

IN-HOUSE TOM: Chapter 1.1 What is an IN-HOUSE TOM?

I’m writing a book with the working title: IN-HOUSE TOM: a new target operating model for law departments – initially as a series of blogs.

You can follow the full index of blogs as they build here: IN-HOUSE TOM: INDEX

What is a target operating model?

A target operating model (TOM) links needs, resources and processes to create a model to execute a commercial organisation’s strategy to achieve its purpose.

An IN-HOUSE TOM links the legal counsel and process needs of the organisation with the resources and processes of the legal department to create a model to meet those needs to execute a commercial organisation’s strategy to achieve its purpose.

So far, so simple.

How does a TOM relate to Legal?

The problem is that each of the terms in the definition is currently unclear, subject to debate and questioning within each organisation:

  • What is the purpose of any commercial organisation?
  • What is the purpose of your organisation?
  • What is your organisation’s strategy?
  • What are the legal counsel and process needs of your organisation?
  • Who decides?
  • What is the purpose of any law department?
  • What should the strategy of any law department be?
  • What are its strategic resources?
  • What are its strategic processes to apply the resources to achieve the needs?

Here’s one set of answers, based on my 15 years’ experience working with law departments, which some readers may recognise:

  • The purpose of any commercial organisation is to make money for its shareholders
  • The purpose of our organisation is to make loads of money
  • Our organisation’s strategy is (say) growth through aggressive global acquisition
  • Our organisation needs Legal to anticipate risks and sort legal process, fast and cheaply
  • Our CEO decides, everything.
  • The purpose of any law department is to help make loads of money for the organisation without anyone going to jail
  • The strategic resources are very bright lawyers
  • The strategic processes can be boiled down to “the diving catch” by lawyers to get stuff done because “that’s what we’re trained to do”

Is this familiar?

The future

The purpose of your organisation drives its strategy which, in turn, drives how Legal responds in target operating model terms to enable that strategy.

In many organisations that response is driven by a wish to please the CEO and “the business”.

What if?

  • what if the legal profession were to help shape the purpose of any commercial organisation post-Global Financial Crash (2008) and post Covid-19 (2020)?
  • what if the law department told, not asked, the CEO what legal counsel and processes the business needed to achieve its strategy?
  • what if law departments were run like internal break-even businesses with the appropriate target operating models?

I believe that if these three “what ifs” happened then society, business and lawyers would be better served.

This book sets out how.

Ciarán Fenton

IN-HOUSE TOM: INDEX

I’m writing a book with the working title: IN-HOUSE TOM: a new target operating model for law departments – initially as a series of blogs.

You can follow the index as it builds here:

INTRODUCTION

CHAPTER 1.1 What is an IN-HOUSE TOM?

CHAPTER 1.2 Cinderellas of the boardroom & denial

CHAPTER 1.3 In-house independence is a contradiction in terms

CHAPTER 1.4 Ethical pressure, chilling fear & breathtaking acquiescence

CHAPTER 1.5 Litigators at heart, omertàesque silence & no #lawyersbacks

CHAPTER 1.6 Legal business leadership is not billable by the hour; ergo it’s not rated & not taught at law school

Ciarán Fenton