September 21, 2021

Minne Sotais

Politics Loaded For Bear

The Practice | The General Counsel Elevation Sensation

Benjamin W. Heineman Jr., William F. Lee, and David B. Wilkins write in their seminal 2014 paper, “Lawyers as Professionals and as Citizens: Key Roles and Responsibilities in the 21st Century,” that “in some circumstances lawyers are required to go beyond simply providing expert legal analysis or even wise counseling about what is right.” They continue, “Certainly this is true of lawyers who work in . . . in-house legal departments, who are often charged with making decisions on a range of issues from tactical decisions about how to deal with opposing parties in litigation to setting up ‘private ordering’ regimes that will govern the company’s activities in areas where there is little or no relevant law.”

After the paper’s release, Harvard Law School’s Center on the Legal Profession continued to explore issues of professionalism in the law alongside the related changing role of the general counsel. As Heineman writes in The Inside Counsel Revolution, “there has been an inside counsel revolution of increasing scope and power. General counsel and corporate law departments in top global companies have become far more sophisticated, capable, and influential, transforming both business and law.” He goes on to write:

[T]he general counsel (GC) role inside the corporation has significantly grown in importance. The GC has often replaced the senior partner in a law firm as the primary counselor for the CEO and board of directors. The GC role has broad scope—beyond law—that includes ethics, risk, governance, and citizenship. The GC is a core member of top management, participating in decisions and actions about not just risks but also opportunities, not just law but also business, not just public policy but also geopolitics. The GC often leads units outside the legal department, such as public affairs, taxes, and environment. The GC is now often seen by directors, CEOs, and business leaders as having importance and stature comparable to the chief financial officer because the health of the corporation requires that it navigate complex and fast-changing law, regulation, litigation, public policy, politics, media, and interest-group pressures across the globe. As a result, the expertise, quality, breadth, power, and compensation of the GC and inside counsel have increased dramatically.

Building on this foundation, the Center is launching a new project focused on a growing trend in which general counsel are elevated into even more senior roles within their organizations—roles that often include leading functions beyond law, roles that are at the center of organizational responses to issues such as sustainability, social justice, health and safety, governance, privacy, and other defining issues of our day, and, quite simply, roles that often previously did not exist before. The project examines why such roles are being created, what these new positions are tasked with doing, and why general counsel—and the in-house legal departments that they lead—are at the center of these organizational responses. As companies consider their roles in society—as they consider how to navigate a money and meaning continuum—lawyers are increasingly at the center of these efforts.

Gutierrez emphasizes that the technology sector appears to be a leading indicator when it comes to the promotion of general counsel and chief legal officers to more expansive roles.

In this article, we take a first step toward exploring how and why in-house lawyers are taking on these novel positions within their organizations. First, we look at some examples of general counsel who have been elevated. Second, we offer an external perspective on what exactly these lawyers are doing. Finally, we open the door towards exploring why lawyers are the ones leading these charges in the first place. Put together, this article is the first step in a much longer conversation about not just how general counsel are being elevated to new roles in their organizations but also how in-house lawyers are helping such companies transform.

The Elevated General Counsel

On June 29, 2021, Horacio Gutierrez, head of global affairs and chief legal officer of Spotify, sat down (virtually) with the Center’s faculty director, David B. Wilkins, and EY’s global law leader, Cornelius Grossmann, as part of a webinar titled “The New Legal Function: 360 Degree Insights from Law Leaders” to discuss “The Transformative General Counsel: Increasing Roles in Business, Government, and Society.” Gutierrez has spent more than two decades working in-house in the technology sector—roughly seventeen years at Microsoft, eventually rising to general counsel, and now more than five years (and counting) at Spotify, where he was hired as general counsel and vice president of business and legal affairs. Initially, his role was relatively clear and common for a legal head in a large, complex company. In November 2019, however, Gutierrez was elevated to a then—and perhaps still—unusual role of “head of global affairs” and “chief legal officer” of the company. He was no longer just Spotify’s head lawyer (indeed, he hired a new seasoned general counsel). Gutierrez’s portfolio grew to encompass not explicitly law-related company interests like industry relations, public policy, and trust and safety (we return to his specific responsibilities below). Talking about the shift Gutierrez explains:

In the case of Spotify, our CEO and founder and myself were talking about these things and looking at the kinds of challenges that were emerging from a regulatory perspective, the policy discussions, the nature of the stakeholder discussion. It used to be that a company had to worry about their customers and their supply chain. Those were like 90 percent of the conversation. Then all of a sudden, you have to worry about regulators and policymakers. You have to worry about competitors in terms of non-market competition. You always have to worry about competitors in terms of their products and prices and their services and where they were doing well. But now you have competitors that are playing these non-market competition strategies, leveraging regulatory strategy, leveraging regulation and competition law enforcement and privacy enforcement, and the other things for competitive advantage.

 

 

While Gutierrez’s elevation within Spotify is specific to his organization (again, we return to what he is actually doing below), he is far from alone in his elevation above and beyond his company’s legal function. In fact, one thing Gutierrez emphasizes is that the technology sector appears to be a leading indicator when it comes to the promotion of general counsel and chief legal officers to more expansive roles. One need look no further, he notes, than Brad Smith at Microsoft and Kent Walker at Google.

When Microsoft CEO Satya Nadella emailed his employees to announce Smith’s elevation from general counsel to president and chief legal officer on a mid-September morning in 2015, the rationale Nadella gave foreshadowed aspects of other general counsel elevations that would follow. “Brad Smith is taking on the new title of president and chief legal officer, reflecting that his accountabilities extend beyond that of the General Counsel role,” Nadella wrote. “I’ll look to Brad to play a bigger role in strengthening our external relationships and representing the company publicly. I’ll also look to him internally to partner with others on the [Senior Leadership Team] to lead the work needed to accelerate initiatives that are important to our mission and reputation such as privacy, security, accessibility, environmental sustainability and digital inclusion, to start.” He added that “Brad’s current leadership team will assume additional day-to-day legal responsibilities to free up a portion of Brad’s time and focus,” while Smith would nevertheless remain the company’s top lawyer as chief legal officer. (At the time, Gutierrez was promoted to become the company’s general counsel.)

A few years later, Kent Walker was likewise elevated within Google from the role of general counsel to senior vice president of global affairs and chief legal officer to “oversee its policy, legal, trust and safety, and corporate philanthropy teams,” per CNBC’s Jillian D’Onfro in July 2018. “Internally, Walker has already been involved in many of the activities that his new role entails,” D’Onfro wrote at the time, noting Walker had helped draft ethical principles around Google’s use of artificial intelligence and had advocated publicly for reform in global surveillance law. “In this more public-facing position,” D’Onfro added, “his role will be similar to how former CEO Eric Schmidt often represented Google’s interests to governments.” Like Gutierrez and Smith, Walker too hired a general counsel who would report to him.

While this trend has clearly emerged in the technology sector—see also Kim Rivera’s 2019 elevation to HP’s president of strategy and business management and Amy Weaver’s recent move from president and chief legal officers to become Salesforce’s chief financial officer—Gutierrez notes organizations across the board are beginning to understand their own needs differently. “At the end of the day, companies need the ability to manage stakeholders and not only to comply with the law and ensure that they’re compliant with the law, but increasingly, the law is not written for the kinds of challenges that companies are facing today,” he says. “So more of the advice that a company needs strategically has to deal with things that are not clearly codified or not well understood.”

Are these new roles about consolidating existing functions or is this a more radical shift?

In this vein, in recent years we’ve seen lawyers being elevated to these higher roles beyond the technology sector. In the nonprofit world, in January 2019 the Mellon Foundation announced it was appointing its general counsel and secretary, Michelle Warman, to the additional roles of executive vice president and chief operating officer, with oversight over, among other things, finance and communications. “As COO, Ms. Warman will work closely with the Foundation’s president, Elizabeth Alexander, the Board, and officers, to advance a dynamic program strategy and align the Foundation’s operations to support its five core program areas: higher education and scholarship in the humanities; arts and cultural heritage; diversity; scholarly communications; and international higher education and strategic projects,” the announcement said.

In July 2019, Estée Lauder Companies promoted Sara Moss from general counsel to the newly created role of vice chairman with a number of new strategic focuses, including advising the company’s leadership on business issues and strategy, liaising between high-level stakeholders in the company, and advancing programs centered on promoting women as leaders. “Sara’s innovative leadership, strong business acumen and strategic guidance have proven to be invaluable to our business growth,” said Estée Lauder Companies president and chief executive officer, Fabrizio Freda, in a press release. “As our organization continues to grow and evolve, her expertise and judgment will be important to help position our company for long-term success.” Moss hired the GC of Thomson Reuters to step into her former role at Estée Lauder.

More recently, Mastercard elevated its general counsel, Tim Murphy, to a newly created role of chief administrative officer. In the role, Murphy oversees the company’s legal, franchise and integrity, and people functions. As quoted in the press release, Michael Miebach, chief executive officer of Mastercard noted, “We have a unique opportunity in bringing together the teams that care about our people, law, policy, security, franchise, compliance and inclusion. Tim is the right person to use this moment to advance the strategy Mastercard needs to thrive in an increasingly complex world.” Again, a new general counsel was named who would report to Murphy.

And even more recently, in May 2020, United Airline’s Brett J. Hart was elevated from executive vice president and chief administrative officer (which already included oversight of the company’s legal affairs) to president of the company. “As President of United, Hart will continue to lead the company’s public advocacy strategy including the Government Affairs, Corporate Communications, Legal and Community Engagement teams,” the company’s announcement said. “He will also continue to oversee business-critical functions like the Corporate Real Estate team and manage United’s industry leading environmental sustainability efforts. His responsibilities will expand to include managing the Human Resources and Labor Relations teams.”

While nuanced factors led to each of these elevations, it is increasingly difficult to ignore a trend in these lawyer leaders gaining new responsibilities that extend beyond the traditional reach of the in-house legal department. Nevertheless, questions remain. Where is—and isn’t—this occurring with respect to industry, sector, and/or geography? How often do elevated lawyers retain their old responsibilities all while adding new ones? How often do they shed them in favor of new ones? Above all, what are the underlying factors driving these elevations—and are we likely to see more of them in the future? These are just some of the questions the Center will seek to answer in the years ahead.

What’s my job?

It is one thing to offer a rough list of responsibilities in a press release and quite another to assume the day-to-day functions of a job that previously may not have existed. Another broad swath of questions the Center is tracking focuses on just that—what are these elevated lawyers actually doing? What needs—old and new—are they being tasked with? What does it mean to oversee the “global affairs” of a massive technology company? What does it mean to be both chief operating officer and general counsel—including overseeing the chief financial officer—in a large nonprofit? What does it mean to “strengthen external relationships and represent a company publicly” as president and chief legal officer? And, on the broadest level, are these new roles about consolidating existing functions like legal, human resources, government relations, compliance, and public relations under a streamlined superstructure? Or is it more radical, entailing redefining organizational lines and ways of doing business more generally?

For Gutierrez, his elevated role meant adding new internal and external dimensions in the areas of communications, corporate responsibility, and brand management. Externally, much of his time is spent as a powerful ambassador for the company’s interests. “I gave a presentation about a year ago on the topic of, I called it the hour of the corporate diplomat, which you could say in a sense it’s like an iteration of Ben Heineman’s ‘lawyer as a statesman’ kind of thinking in terms of how the role of the in-house general counsel has evolved over time and how these dimensions are there,” Gutierrez says. “And I used Brad Smith as the archetype of what I thought a successful corporate diplomat would be. In some ways, it is the model upon which our role of global affairs within the company was patterned, the same thing with Kent Walker and others.”

 

 

Gutierrez argues this interface with the public and with external stakeholders is perhaps even more pronounced for technology companies. “The kinds of challenges that tech companies and, more broadly, companies face are such where some of the biggest decisions that companies need to make strategically, it’s hard for them to find guidance in the legal structure,” he explains. “So while companies need to ensure they’re meeting the legal compliance bar, there is a much higher bar in terms of the expectations that society has with respect to these companies.” He goes on:

My current role involves not only the legal function. … [W]e have a business development function. We manage all the trust and safety issues, which are related to user safety and content moderation, and dealing with difficult issues about balancing the sort of free speech consideration with online harm and all those things.

With respect to issues of speech and online harm, he notes that the problems technology companies face requires an integrated, team-based approach of lawyers, communications, and many other trust-and-safety professionals that he leads:

[T]here’s no legislation anywhere in the world that tells you, “This is fine. This is not.” Everyone has an opinion and depending on who you ask, they will give you completely different opinions. [W]hatever decision you make, somebody is going to be really upset about the decision that you made. [So] then the whole PR and strategic communication function within the company is part of the team too. [E]ssentially, all the groups that have external stakeholder management functions… [are part of my team]

In a July 2021 memo, Brad Smith, Microsoft’s president and CLO, wrote that he was restructuring traditional legal practice groups (e.g., litigation) into teams formed around “three strategic pillars:” maintaining public trust, helping to build deeper technology solutions for customers, and using technology to address challenges.

This “societal” pressure extends inward as well, as Gutierrez must also focus his attention on the people within his own organization, also part of his core charge. “Now, not only do you have to worry about competitors, you also have to worry about your own employees,” he says. “Employees are vocal stakeholders, and they’re staging walkouts for reasons ranging from environmental protection to child labor to support for trans and other LGBTQIA+ causes to contracting and sales to the military establishment to all kinds of issues.”

The pandemic, he continues, hardly reduced these pressures. Rather, the continued importance of managing external and internal relationships has in many ways shaped Gutierrez’s experience in his elevated role, requiring a blend of big-picture thinking and strategic decision-making. He explains:

Even during the pandemic, there were virtual walkouts that employees were doing there. That’s a super interesting dynamic because then you have to have this two-way communication, and the company needs a way of thinking and tracking and engaging with stakeholders on a 360-degree basis and then translating that into strategy that has the right blend of elements that allows you to succeed and to manage those relationships as best as possible. That is not an easy thing. So in talking about these things, we recognized that this wasn’t really just a legal job. In fact, the law was just a foundation and there were a number of issues related to external relations and industry relations and things that we would call corporate affairs or government affairs, and a variety of these things, where the image and the branding of the company had a lot to do with how successful you would be and are you willing to look at these things holistically.

While Gutierrez offers insights into his particular role, it remains to be seen what broader trends (or lack thereof) will emerge regarding what elevated general counsel are doing beyond the press releases. One critical open question is to what extent are these elevations prompting wider and more radical organizational redesigns or are they simply consolidating existing functions under a new leader but otherwise not fundamentally changing organizational structures? Recent news out of Microsoft points to the former, and may presage what is to come down the road—not just for these new roles, but how their creation reverberates through an organization more generally. Specifically, in a July 2021 memo to his Corporate, External, and Legal Affairs (CELA) team, Smith wrote that the function that he oversees would undergo a complete redesign, restructuring traditional legal practice groups (e.g., litigation or transactional teams) into teams formed around “three strategic pillars:” maintaining public trust, helping to build deeper technology solutions for customers, and using technology to address challenges. Indeed, far from simply consolidating traditional organizational functions, Smith’s plan seeks to redefine the vast majority of Microsoft’s non-technical operations.

How these trends play out more generally remains an open question and is a key component of research going forward.

Why lawyers?

Finally, there is an important bucket of questions regarding why lawyers are often at the center of these roles. Some aspects of this may be relatively straightforward—problems intimately related to regulation and compliance might naturally be suited to an experienced and trusted lawyer. But these elevated lawyers are more than chief compliance officers—indeed, many of these organizations already have that role (For more, see The Compliance Movement). So, what about the lawyer skillset and their relationship to the organization renders them as qualified—even ideal—candidates for playing such a key role in their companies’ messaging and strategy?

To start, he notes, legal is one of the few functions that look across the company:

Smith’s 1,600-person team at Microsoft will reportedly grow by 20 percent—or around 320 people—over the next couple of years. How many will be lawyers?

What tends to happen in the traditional org structure is that other than the CEO, there’s nobody really who has the full left-to-right vision of the company strategy, the different touch points, and where the product roadmap is doing. You can get lucky and have a super thoughtful CEO that has the time to connect these things and think about these things. But the reality is CEOs have many pressures and many things that worry them on a daily basis. Maybe there’s a couple of others that tend to have that left-to-right view of a company… You could say finance has the pulse of how the business is doing and how revenue and profitability and sales are doing. But legal really has their finger on the pulse of partnerships that are being negotiated, contracts that are being signed, joint development deals that are being developed. [And] because of the regulatory aspects legal is uniquely positioned.

He goes on to note that legal’s role is particularly important in technology:

In technology, a company’s business rises or falls based on whether their stakeholders can trust them. The legal function has a tremendous role to play when it comes to that. It is not solely the responsibility of the legal function. Clearly, there are business decisions and strategies and product roadmap questions that have to do with that, but the lawyers in a company have not only the role of enabling the business and creating the contracting flows … but they’re also internal agitators and internal actors that ensure that the company’s thinking of these things in the proper way.

When it comes to specific skillsets, Gutierrez notes that the “people who have a legal training and worked in-house and have lived through this globalized regulatory environment for some time are very well equipped to deal with.”  He continues:

These are skills that a marketing manager might not have [and] a financial manager might not have. But general counsels and in-house lawyers in general…because of the evolution of these challenges around the world, have had to develop these skills over time. So, we’re well-suited to take on these broader things.

Gutierrez’s comments elicit larger considerations: How are the decisions to establish and fill these roles, including what skill sets and qualifications are most valued, made? To what extent are other types of professionals elevated to these new cross-functional positions? How much does industry impact the request skillsets needed for such roles? On a broader level, once established, what do their teams look like? For instance, Smith’s 1,600-person team at Microsoft will reportedly grow by 20 percent—or around 320 people—over the next couple of years. How many will be lawyers? Of those that are, what skills will be key to thrive in a function no longer organized along traditionally legal-function lines? Of those that are not, what skills might lawyers need to develop? These are questions that the Center will continue to pose as its research around this topic advances.

More questions than answers

Together these issues form the focus of a research project that will continue here at the Center on the Legal Profession in the months and years ahead. Why are lawyers being elevated to these increasingly influential roles? What are they doing individually and as leaders of their teams? Are these new roles simply consolidating existing functions under a new leader? Or, as the Microsoft example may foreshadow, are they part of a wider—and arguably more radical—organizational redesign? How are other parts of the profession going to be impacted, such as law firms (where many general counsel get their starts) and law schools (which train future leaders)? Even more fundamentally, what does all of this say about what “law” is and how legal expertise is increasingly consulted to solve the complex and multifaceted problems confronting individuals, institutions, and society today? These questions drive to the heart of what’s next, and we hope you will engage with us as we continue to explore these issues.