Liam: What happened after Cisco?

Steve: After Cisco, I had a great opportunity to come to a company that shared my vision. So, I will share with our listeners that Liam and I had crossed paths multiple times throughout our professional careers. We had a shared view on the approach to the problem. We recognized that there is absolutely a place for legal practitioners and highly skilled practitioners with deep subject matter knowledge and expertise. It’s not an efficient allocation of resources for us all to try and develop that deep subject matter knowledge.

So, there’s a place for the law firm, and it’s critical to have the law firm engagement and have that resource available. Similarly, in the in-house environment, there is a different set of challenges. They’re legal challenges, but you can’t solve them the same way you would solve them in the traditional law firm approach. So, we developed the notion over the years of this T-shaped professional concept – the idea that there’s a place for those that go very deep and narrow, and it’s an important skillset.

When I have brain surgery, I don’t want to have a general practitioner physician opening up my skull. At the same time, I don’t need to pay for a brain surgeon’s expertise to diagnose a skin condition that I’m dealing with. So, there’s a place for the operational efficiencies that we drive. There’s a place for the law firm. There’s a place for law companies. And so, as I looked at the evolution of law and the practice of law in the market, I saw the growth of law companies being the inevitable step. I viewed Elevate as being in the best position to leverage that market. I was very attracted to the opportunity, and I’m thrilled to be here.

Liam: How have the last few months changed the way the CEO thinks of the law department?

Steve: There’s no question that the world events we’re dealing with have changed the requirements for a legal department. Do you have tactical things like how do you address the challenges of moving people to remote work? That’s an infrastructure problem, but it’s also a policy challenge for a legal department. You have to decide what level of oversight you’re going to put over people that are not sitting in an office. You no longer have the ability to go down the hall and tap someone on the shoulder or evaluate someone’s throughput or look at their ability to produce results.

So, there are those tactical challenges. I think there have also been widespread challenges on the compensation end. There’s an unfortunate reality that many organizations are having to downsize their business very, very aggressively. We are fortunate at Elevate that we haven’t been required to do that to meet our financial plans and goals, but being prepared for that as a legal practitioner, you need to be in front of that. You can’t respond to that reactively. You’ve got to be in front of that.

Supporting the needs of the CEO includes modeling out scenarios for situations where you have large possible attrition. If you have to reduce salaries, you’re not allowed to do that prospectively in some jurisdictions. What level of risk are you going to be comfortable with, knowing that many organizations are going out of business potentially and unfortunately? And how do you balance that against the risk of unemployment action when you’re attempting to make a modest salary reduction, for example? Modeling out those potential outcomes – anticipating those is a key part of the general counsel’s job, in my view.

Liam: Listeners won’t necessarily know that’s one of the things that we considered pretty much immediately upon the arrival of COVID.  Together as an executive team, we thought about what might come downstream, and we sort of predicted the economic ramifications. That led to exploring a 10% company-wide pay reduction. Can you share how you participated as General Counsel in those conversations? And are there any lessons that you’d share with other executive teams and CEOs if we had an opportunity for a do-over?

Steve: I think the level of transparency is incredibly important. It’s important to put the risks on the table. The existence of a risk does not answer the question entirely any more than any black letter law questions on the bar exam can reflect the business impacts that you might have when responding to a fact pattern. The starting analysis is to identify the existence of those risks and figure out what the code requirements are, what the labor requirements are in the various countries where you do business. As an international company at Elevate, we’ve got employees in multiple jurisdictions. We have to address all of those from a factual perspective, and ask what does the law require at that point?

I think the next level of sophistication comes when you start to analyze the human impacts, such as treating different employees differently? The disparate impact of treatment for employees simply because the law might allow it in one jurisdiction and not another – how are you going to advise your CEO about the potential impacts of that? There’s also the magnitude of the lost portion of this. I tend to subscribe pretty strongly to the Chicago view of legal practice. Every risk needs to be analyzed in conjunction with the probability and the magnitude of the loss associated with that risk.

There might be, on paper, some black letter law challenges with doing some of the actions that are required to be assessed, but you also have to assess the impacts of those. Is it better to go to an employment tribunal and make the case that a 10% reduction was required under the circumstances, even if the regulations might introduce some challenges to doing that? And have that remain a concern, and continue to pay 90% of the salaries for people rather than – in the worst-case scenario – go out of business and cannot contribute to the economy at all?

We had some difficult decisions to make, and hopefully, we did a good job of balancing them. Part of the reason that we’ve had success – and it’s too early to declare victory, but we understand what our long-term implications are going to be – is because we were very careful to communicate transparently with our employee community. We prospectively went out and asked for permission from our employees to cut their salaries – to reduce their salaries for a period of time with an eye towards returning that to full salary as soon as the business circumstances allowed. We were transparent in asking for that permission, and our employees stepped up.

Even in countries where they might have a legal basis to push back, they willingly accepted those changes knowing that it was best for the company’s long-term prospects and colleagues. No one wanted to retain 100% of their salary because they had legal protection that entitled them to do it and watch some of their colleagues in a separate jurisdiction be disproportionately impacted. They knew that it wouldn’t be best for the company. It wouldn’t be best for their ability to meet their own professional goals.

It does me no good to have my sales peers, for example, lose their jobs because the legal protections are different in their country. And so, we had a tremendous outpouring of confidence and togetherness that came through that transparency. If I were advising other general counsels and CEOs, I would strongly advise that you give your employee community credit. You always have outliers. You’re going to have people in special circumstances – individuals that have unique hardships that need to be addressed. But those unique hardships are no different than any other time.

We have unique hardships outside of COVID, and we respond to those individual situations. And our employees just did a fantastic job of stepping up to the plate. I couldn’t be more proud of being part of this community.

Liam: Your role is beyond the law department. Does that help you in your general counsel role? And does your general counsel experience help you with these other roles and responsibilities that you have?

Steve: I think so. Just to be clear for our listeners, the other areas of responsibility that I have are to lead our IT organization, so our CIO and that department are part of my remit. In addition, the People organization – our HR function at Elevate – is my responsibility as well. So, I’ll try and approach the question from both directions. I would say I bring an understanding of what the black letter legal requirements are to the People function. I can speak about – or I have access to – the professionals in the T-shaped environment that we just described. I know how to get answers to very specific questions as required to support the People function.

And I’m able to help analyze the risk. Now, I’m not particularly good at analyzing the risk of how employees will respond to certain actions. Our professionals in the People organization are much better at that than I am, but I can press them to ask the questions. Every symbiotic relationship requires each side to contribute. I’m able to go to our People organization, and the simple answer in the case of COVID might’ve been to say, “Oh, we can’t talk about a salary reduction in certain countries.”

And, candidly, People, or any human resources professional, would be thrilled to hear that answer if they only looked through that lens. As long as there’s enough cash on the balance sheet to pay the salaries, any rational professional in the people organization is going to say, “Great. We don’t have to worry about that country. We don’t have to worry about the morale in that country because we’re going to continue to pay full salaries.” As a legal professional, the skillset there is to come in and say, “Let’s look at all the various options that are on the table. Let’s not allow ourselves to be predisposed to our initial reaction.”

Coming to the other direction, how does it help? I’ll use an example with the IT organization. I get to have very robust conversations with our Chief Information Officer about cybersecurity risk and the balance of reasonable behaviors to undertake concerning cyber risk and privacy compliance. Now, all compliance is important. All compliance should also support the overall objective of enabling the business, once again, to design, build, and sell its products in a legally appropriate way.

I need to preserve the organization’s ability to operate safely, and so taking that feedback from the CIO to say, “Hey, have you thought about what our multifactor authentication strategy should be for our remote users?” That’s a particularly relevant issue when we’re talking about COVID. And we have a large influx of people working remotely who were not working remotely previously. How do you deal with data backups for people that have not historically worked from home?

Having those conversations with the CIO from a legal perspective has been helpful.  It’s not enough just to go in and say, “The law requires us to comply with the privacy shield in this way or another.”  Or to say, “Here are the latest ramifications of several of the European Union members states questioning whether or not the privacy shield offers adequate protection to their citizens, given that U.S. courts have taken the position that any data owned by the organization is at least potentially accessible by the organization through a U.S. subpoena.”

There are legal issues, and there are IT issues – they overlap substantially. I think organizations can accomplish this through open and transparent communication at the executive level. I have the advantage of having that remit as part of my explicit area of responsibilities, and so it makes me tuned in to those issues.

Liam: What happened after Cisco?

Steve: After Cisco, I had a great opportunity to come to a company that shared my vision. So, I will share with our listeners that Liam and I had crossed paths multiple times throughout our professional careers. We had a shared view on the approach to the problem. We recognized that there is absolutely a place for legal practitioners and highly skilled practitioners with deep subject matter knowledge and expertise. It’s not an efficient allocation of resources for us all to try and develop that deep subject matter knowledge.

So, there’s a place for the law firm, and it’s critical to have the law firm engagement and have that resource available. Similarly, in the in-house environment, there is a different set of challenges. They’re legal challenges, but you can’t solve them the same way you would solve them in the traditional law firm approach. So, we developed the notion over the years of this T-shaped professional concept – the idea that there’s a place for those that go very deep and narrow, and it’s an important skillset.

When I have brain surgery, I don’t want to have a general practitioner physician opening up my skull. At the same time, I don’t need to pay for a brain surgeon’s expertise to diagnose a skin condition that I’m dealing with. So, there’s a place for the operational efficiencies that we drive. There’s a place for the law firm. There’s a place for law companies. And so, as I looked at the evolution of law and the practice of law in the market, I saw the growth of law companies being the inevitable step. I viewed Elevate as being in the best position to leverage that market. I was very attracted to the opportunity, and I’m thrilled to be here.

Liam: How have the last few months changed the way the CEO thinks of the law department?

Steve: There’s no question that the world events we’re dealing with have changed the requirements for a legal department. Do you have tactical things like how do you address the challenges of moving people to remote work? That’s an infrastructure problem, but it’s also a policy challenge for a legal department. You have to decide what level of oversight you’re going to put over people that are not sitting in an office. You no longer have the ability to go down the hall and tap someone on the shoulder or evaluate someone’s throughput or look at their ability to produce results.

So, there are those tactical challenges. I think there have also been widespread challenges on the compensation end. There’s an unfortunate reality that many organizations are having to downsize their business very, very aggressively. We are fortunate at Elevate that we haven’t been required to do that to meet our financial plans and goals, but being prepared for that as a legal practitioner, you need to be in front of that. You can’t respond to that reactively. You’ve got to be in front of that.

Supporting the needs of the CEO includes modeling out scenarios for situations where you have large possible attrition. If you have to reduce salaries, you’re not allowed to do that prospectively in some jurisdictions. What level of risk are you going to be comfortable with, knowing that many organizations are going out of business potentially and unfortunately? And how do you balance that against the risk of unemployment action when you’re attempting to make a modest salary reduction, for example? Modeling out those potential outcomes – anticipating those is a key part of the general counsel’s job, in my view.

Liam: Listeners won’t necessarily know that’s one of the things that we considered pretty much immediately upon the arrival of COVID.  Together as an executive team, we thought about what might come downstream, and we sort of predicted the economic ramifications. That led to exploring a 10% company-wide pay reduction. Can you share how you participated as General Counsel in those conversations? And are there any lessons that you’d share with other executive teams and CEOs if we had an opportunity for a do-over?

Steve: I think the level of transparency is incredibly important. It’s important to put the risks on the table. The existence of a risk does not answer the question entirely any more than any black letter law questions on the bar exam can reflect the business impacts that you might have when responding to a fact pattern. The starting analysis is to identify the existence of those risks and figure out what the code requirements are, what the labor requirements are in the various countries where you do business. As an international company at Elevate, we’ve got employees in multiple jurisdictions. We have to address all of those from a factual perspective, and ask what does the law require at that point?

I think the next level of sophistication comes when you start to analyze the human impacts, such as treating different employees differently? The disparate impact of treatment for employees simply because the law might allow it in one jurisdiction and not another – how are you going to advise your CEO about the potential impacts of that? There’s also the magnitude of the lost portion of this. I tend to subscribe pretty strongly to the Chicago view of legal practice. Every risk needs to be analyzed in conjunction with the probability and the magnitude of the loss associated with that risk.

There might be, on paper, some black letter law challenges with doing some of the actions that are required to be assessed, but you also have to assess the impacts of those. Is it better to go to an employment tribunal and make the case that a 10% reduction was required under the circumstances, even if the regulations might introduce some challenges to doing that? And have that remain a concern, and continue to pay 90% of the salaries for people rather than – in the worst-case scenario – go out of business and cannot contribute to the economy at all?

We had some difficult decisions to make, and hopefully, we did a good job of balancing them. Part of the reason that we’ve had success – and it’s too early to declare victory, but we understand what our long-term implications are going to be – is because we were very careful to communicate transparently with our employee community. We prospectively went out and asked for permission from our employees to cut their salaries – to reduce their salaries for a period of time with an eye towards returning that to full salary as soon as the business circumstances allowed. We were transparent in asking for that permission, and our employees stepped up.

Even in countries where they might have a legal basis to push back, they willingly accepted those changes knowing that it was best for the company’s long-term prospects and colleagues. No one wanted to retain 100% of their salary because they had legal protection that entitled them to do it and watch some of their colleagues in a separate jurisdiction be disproportionately impacted. They knew that it wouldn’t be best for the company. It wouldn’t be best for their ability to meet their own professional goals.

It does me no good to have my sales peers, for example, lose their jobs because the legal protections are different in their country. And so, we had a tremendous outpouring of confidence and togetherness that came through that transparency. If I were advising other general counsels and CEOs, I would strongly advise that you give your employee community credit. You always have outliers. You’re going to have people in special circumstances – individuals that have unique hardships that need to be addressed. But those unique hardships are no different than any other time.

We have unique hardships outside of COVID, and we respond to those individual situations. And our employees just did a fantastic job of stepping up to the plate. I couldn’t be more proud of being part of this community.

Liam: Your role is beyond the law department. Does that help you in your general counsel role? And does your general counsel experience help you with these other roles and responsibilities that you have?

Steve: I think so. Just to be clear for our listeners, the other areas of responsibility that I have are to lead our IT organization, so our CIO and that department are part of my remit. In addition, the People organization – our HR function at Elevate – is my responsibility as well. So, I’ll try and approach the question from both directions. I would say I bring an understanding of what the black letter legal requirements are to the People function. I can speak about – or I have access to – the professionals in the T-shaped environment that we just described. I know how to get answers to very specific questions as required to support the People function.

And I’m able to help analyze the risk. Now, I’m not particularly good at analyzing the risk of how employees will respond to certain actions. Our professionals in the People organization are much better at that than I am, but I can press them to ask the questions. Every symbiotic relationship requires each side to contribute. I’m able to go to our People organization, and the simple answer in the case of COVID might’ve been to say, “Oh, we can’t talk about a salary reduction in certain countries.”

And, candidly, People, or any human resources professional, would be thrilled to hear that answer if they only looked through that lens. As long as there’s enough cash on the balance sheet to pay the salaries, any rational professional in the people organization is going to say, “Great. We don’t have to worry about that country. We don’t have to worry about the morale in that country because we’re going to continue to pay full salaries.” As a legal professional, the skillset there is to come in and say, “Let’s look at all the various options that are on the table. Let’s not allow ourselves to be predisposed to our initial reaction.”

Coming to the other direction, how does it help? I’ll use an example with the IT organization. I get to have very robust conversations with our Chief Information Officer about cybersecurity risk and the balance of reasonable behaviors to undertake concerning cyber risk and privacy compliance. Now, all compliance is important. All compliance should also support the overall objective of enabling the business, once again, to design, build, and sell its products in a legally appropriate way.

I need to preserve the organization’s ability to operate safely, and so taking that feedback from the CIO to say, “Hey, have you thought about what our multifactor authentication strategy should be for our remote users?” That’s a particularly relevant issue when we’re talking about COVID. And we have a large influx of people working remotely who were not working remotely previously. How do you deal with data backups for people that have not historically worked from home?

Having those conversations with the CIO from a legal perspective has been helpful.  It’s not enough just to go in and say, “The law requires us to comply with the privacy shield in this way or another.”  Or to say, “Here are the latest ramifications of several of the European Union members states questioning whether or not the privacy shield offers adequate protection to their citizens, given that U.S. courts have taken the position that any data owned by the organization is at least potentially accessible by the organization through a U.S. subpoena.”

There are legal issues, and there are IT issues – they overlap substantially. I think organizations can accomplish this through open and transparent communication at the executive level. I have the advantage of having that remit as part of my explicit area of responsibilities, and so it makes me tuned in to those issues.

About the Author(s)

Monica Risam is Group General Counsel and Company Secretary of Lombard International.   The host of this interview is Liam Brown, Chairman, and CEO of Elevate.