You have learned that if you want some time to think, you need to get into the office early. So, you arrive one morning at 6:30 am, Starbucks in hand, follow the path dimly lit by the emergency lights and make it to your office. You don’t turn on your computer, because you know there will be a queue of email messages waiting for your attention. Instead, you pull out a pad of paper and a pen, take a sip of your coffee, and think.
The Information Dilemma
As general counsel of the corporation, you have a long list of issues to address. One issue in particular has been bothering you for a while and your quiet time this morning is devoted to that issue. As your client and employer has expanded globally over the past decade, the legal ecosystem in which it operates has become more complex. Compound that by the general growth of the business and its expansion into new product and service markets, and you have a legal tiger by the tail.
While this complex beast raises many challenges, one fundamental challenge is building a system to keep you and the members of your in-house legal team aware of legal developments that could affect your client. Many years ago you worked for a large retailer. You remember how you and other employees would manage to wander through the store operations area of headquarters, typically before a weekend or holiday. In StoreOps, they had large TV monitors strategically placed around the offices. The monitors showed The Weather Channel. StoreOps team members constantly monitored weather activity so they could anticipate where bad storms would affect sales and potentially shutdown stores. The Weather Channel was the early warning system for StoreOps and the corporation.
It would be great to have an early warning system for the law department. If you could find out what laws, cases, and other developments were in the pipeline that might significantly impact the business, your team would anticipate legal issues and provide preventive advice. You had checked the ebilling system the day before and found an invoice for €50,000 from the law firm that handled the corporation’s EMEA legal work. The invoice was the agreed upon fixed fee to resolve a regulatory issue in an EU country. The issue could have been avoided, or at least mitigated, if anyone realized how the new regulation would affect the corporation, but no one saw it coming.
An Unsolved Problem
Years ago, it seemed like putting together an early warning system would be easy. The corporation operated mostly in the United States, with some manufacturing in China. You could identify the key substantive areas most interesting to the corporation. It seemed like someone should be able to monitor those areas and pull together a newsletter once a month that identified developments in those key areas and how they might impact the corporation’s business. You talked about it with law firms and publishers, but nothing ever happened.
Instead, what you got then and what you get today is what you call the “after-the-fact” warning system. The law firms send you newsletters letting you know about the case that was decided last month (the really eager ones get the newsletter out within a week). The newsletter follows the typical law school case analysis format. Then, at the end and presumably to show the firm is business focused, someone tucks in a paragraph with helpful advice. Your favorites are “time to review your policies” and “time to update your contracts.”
Some partners try to show they are marketing, or at least attempt to convince themselves they are marketing, by sending these newsletters with a personal note. “Ken – Saw that our environmental law group just came out with this update and I thought you might find it interesting.” Since the topic is an update to the regulations in Germany on the use of hazardous chemicals in electronic manufacturing and your corporation is a retailer with no manufacturing operations anywhere in the world, probably not.
You admit that the firms have gotten better over the years. But still, the information flow is mostly a blast of data with no real attempt to tailor it to your corporation. The same is true with the legal publishers. They put out substantive area newsletters (all you want to know about tax-free property exchanges), but nothing tailored to your corporation or even its industry. The theory seems to be that you should subscribe to 20 of these updates from publishers and then scan them for issues relevant to your business. Even when you do find a nugget somewhere, most of what you get is a data dump: this is a list of all the relevant bills pending organized by state. As if you or anyone else in your department had the time to look at each pending bill.
Of course, there are always the trade associations. They do a much better job of watching for industry relevant information. They understand what companies in the industry do and are sensitive to the big issues. Your industry’s trade association has a legislative group that pays attention to what is happening in the United States, but it picks up only a bit of the EU and nothing from other countries. The idea is that if you have operations in those other geographic areas, you will belong to trade associations covering those countries. Doing so is very expensive. Even if your corporation does join a few organizations, there are still large gaps. The trade associations don’t cover court cases or other data sources that could affect legal risks, and they aren’t good at translating from potential legislation to preventive actions.
The Information Need is Greater Than Ever
You are shooting at a moving target. Even assuming you had gotten your early warning system 10 years ago, it would be out of date today. Since you didn’t get that system, you need something today that will give you what you needed 10 years ago, but rolled forward to what you need today. Seems like the legal industry just keeps falling behind on some critical things clients need.
Ten years ago, knowing a legal storm was going to hit soon would have been great. Today, you need to know about that legal storm much earlier so you can guide the business around it or at least chart the best path through it.
You pick up an article the CEO sent yesterday to all of her direct reports. It is easy to find since it is sitting on a six inch stack of legal industry newsletters you still haven’t read. The World Economic Forum published the article. You read the title again, “5 things every CEO must do in the next era of globalisation.” The CEO’s assistant put a cover memo on the article notifying the CEO’s direct reports the article would be a topic covered at the Executive Leadership Team meeting next week. To emphasize her focus on one issue covered in the article, the CEO had written a note in the margin next to the discussion. It read:
Ken – This is a critical issue for us, and one where I feel we are too far behind. In my executive sessions with the Board, it is an issue that has come up more than once during the past few months. I am looking to you to take the lead in this important area. I know that you will bring us up to speed quickly. Let’s sit down next week after the ELT meeting and discuss how you plan to tackle this one.
You have read the article a couple of times, but you go through it again.
Hans Paul Bürkner, the chairman of The Boston Consulting Group wrote the article. It starts with the provocative claim, “The huge wave of globalization that took place over the last two decades has come to an end.” As Bürkner goes on to explain, it isn’t that globalization is dead, rather, it has morphed into a more nuanced form. The question a CEO should ask herself, says Bürkner, is not whether she should take her company global, but “How can I go global in a successful and sustainable way?” To answer that question, Bürkner says the CEO must address five dimensions: “the company’s geographic position, the rapid pace of change, the company’s organization model, its culture, and the CEO’s own personal leadership.”
Your CEO’s note to you appears next to the article’s discussion of the second dimension, “How to Deal with Rapidly Changing Conditions Around the World.” In the discussion, Bürkner makes the point that companies are comfortable with their home markets, finding them stable and familiar. Foreign markets are another matter. According to Bürkner:
They are ruled by uncertainty, subject to rapid change, and harder to influence. New governments may impose higher taxes, expensive tariffs, or laws and regulations that limit the movement of goods, services, people, and capital. Political tensions can lead to sanctions or boycotts. Wages may sharply rise and alter the economics of your business.
These are issues you have been grappling with, along with your peers on the ELT, for many years. There isn’t anything particularly new here, but it helps to keep the issues at the forefront. It is what Bürkner says a few paragraphs further into the discussion that caused the CEO to write her note to you:
“[Y]ou should have some kind of corporate radar that constantly monitors conditions around the world. This could be a simple monthly reporting system of key economic, political, legal, and social indicators. But it could also be a sophisticated “war room” showing all your operations in real time. In this era of big data and advanced analytics, you have no excuse not to have the very latest information at your fingertips, as well as contingency plans for key incidents so that you can make any necessary adjustments to your business.
The article and the CEO’s note to you triggered your early morning think session. You have some ideas about how to deal with several of the issues. There are plenty of sources for economic, political, and even social indicators. The issues in those areas are not so much getting the data feeds as tuning them to be relevant to the business. Getting the legal issues feed is the area that still stumps you. You gulp down the last of your coffee and turn on your computer. The first email, with an URGENT heading in the subject line, tells you it will be another not-so-productive day: “Hey Ken, we have a $25.82 miscellaneous charge that is hitting our account. Can you jump on this right away and tell me what it is for and the details behind it?”
Time to Fix the Problem
Data, analytics, information. You can’t turn in any direction without seeing the buzz about them. It seems logical that lawyers would be information vacuums, taking in as much as they can to analyze and address client problems. But, that isn’t the case. If anything, lawyers almost ignore information streams outside of the law. As the story above illustrates, general counsel can’t afford to have that narrow focus and yet today, they have few options to broaden their view. This is another area where the legal industry is falling behind its clients at an increasing pace. As I note above, we can get economics, political, and social indicators information, but not the information about developments in and related to law so that we can complete the picture. How can we expect our clients to look to us for vision and foresight when we are the last to know?