The Risk Managers
The role of general counsel has become more demanding.
From the May 30, 2008 Philadelphia Business Journal.
Mark Hershey left the law firm of Stradley Ronon in 1999 because he had an interest in business and he wanted to branch out from his legal duties.
So he joined the in-house law department at IKON Office Solutions, Inc. in Malvern.
Six years later, when he was only 36, Hershey was appointed general counsel as well as senior vice president, and his role at the world's largest document management company expanded well beyond the legal world into all aspects of the business. Now he regularly meets with IKON's chief executive officer, the board of directors and senior management, and he helps guide the path of the international corporation with $4.2 billion in annual revenue.
"I can't conceive of the chief legal officer not being in a senior executive role in terms of advising the CEO on risks and advising the board," said Hershey. "I just think it's critical. That's certainly the trend these days."
That's not the way general counsels have historically acted.
As the corporate climate evolves, public scrutiny increases and the regulatory landscape constantly changes, the role of the in-house corporate counsel at many companies is growing into a position of greater prominence and responsibility.
Gone are the gravy train days of senior attorneys winding down their careers in nine-to-five corporate counsel positions where the majority of the heavy lifting is done by outside attorneys. General counsels and their in-house staffs now perform like traditional firms - with specialized attorneys working long, private practice-like hours.
"Overwhelmingly, the in-house practice has grown from something of a backwater for corporate lawyers," said Lawrence Hamermesh, a professor of corporate and business law at Widener University's Institute of Delaware Corporate Law. "It's grown from little, local offices where most of the work gets farmed out to large law firms to the point where - at least at larger corporations - the in-house staff is really a vital piece of the legal function of the organization."
The movement began more than a decade ago, experts say, but the real impact is only now being felt. In the post-Enron atmosphere, where transparency is mandated and corporations are still expected to generate strong returns for investors, the demand for steady, consistent legal guidance is more than just cost-effective.
A legal counsel with a business background is an absolute necessity, experts say.
"By combining this knowledge of the legal side of the business with a strong grasp for the business operations of the company, a general counsel can maximize their own value to the company," said Richard DePiano Jr., chief operating officer and general counsel of Escalon Medical Corp., and president of the Delaware Valley Association of Corporate Counsel. "That is the change I have experienced with Escalon. I was able to move from a strictly legal position in the corporation to one involving operations."
At WHYY, Philadelphia's public broadcasting outlet, Kyra McGrath serves on the executive staff as general counsel and vice president for strategic projects. Besides acting as legal advisor in a wide-variety of areas, McGrath also handles government relations and governance, as well as develops additional revenue streams for the non-profit corporation with an operating budget of around $28 million annually.
"If you play the GC role correctly, your role is about risk management," she said. "It's not about black letter law. You can always pay someone to give you the black letter law. You can't pay someone for the risk management or risk protection side of things."
Before McGrath arrived at WHYY in 1998, the company outsourced all of their legal needs. During her first year as general counsel - a position that didn't exist at WHYY until she came along - outside counsel fees dropped by 89 percent.
To reduce costs at many corporations, work traditionally doled to outside counsel has migrated inside in recent years. Securities and Exchange Commision filings, administrative proceedings, and mergers and acquisitions work are frequently being handled by corporate attorneys now.
Many companies have recurring issues that are more easily handled by one attorney or one team of attorneys consistently.
"At a pharmaceutical company, for example, you can bet they have lots of product liability claims," said Hamermesh. "There's a real virtue in having some kind of coordinated approach to those claims and increasingly, that supervisory action is being done in-house."
As in-house duties have increased, the individual attorneys working on in-house staffs have become more and more specialized, experts say. The general counsel, however, continues to be a well-rounded attorney with experience in different areas of law.
"It takes somebody who's got an ability to cover the waterfront in a very substantial way rather than just superficially," said Mark Kessler, Toll Brothers Senior Vice President, General Counsel and Chief Compliance Officer. "It's just an incredibly complex mix of disciplines that a general counsel has to have command of."
Kessler, who oversees a staff of 18 attorneys, helped prepare Toll to go public in 1986 while he was outside counsel working at Wolf Block. He left Wolf Block in 2007 after 22 years to join Toll.
He suggests that attorneys who aspire to in-house positions cultivate relationships with their current corporate clients.
"Develop an understanding over time of what your client's needs are so that if you ever wind up on that side of the tracks, you can kick right in," Kessler said.
Increasingly, the path to general counsel is through in-house positions rather than through private practice, experts agreed.
"The more senior the position, the more likely it is that the company will want somebody who is already been in-house," said Frank D'Amore, founder and principal of Attorney Careers Catalyst, a legal placement company. "The reason for that is you find people who come from law firms will have to adapt."
Where firm associates can study documents, review case law and confer with associate attorneys, when in-house counsel are asked questions from senior executives, answers are expected immediately.
"You can't hedge," D'Amore said. "You can't say you want to do some research."
And not everyone can handle that pressure.
The differences between inside counsel and private practice are disappearing, attorneys say.
"There has always been some notion that being in-house counsel is a much easier job," said A. Michael Pratt, chancellor of the Philadelphia Bar Association and partner at Pepper Hamilton. "That is not the case. Corporations are trying to be leaner and meaner and that means they are trying to do more work with fewer people. The expectations are high and demanding. You are on call sometimes 24 hours per day."