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As Part II of this four-part series illustrates, most C-suites and boards exempt the corporate law function from accountability for anticipating, preparing contingency efforts against, and decisively neutralizing — legal and regulatory dangers that have not yet mutated into full-blown lawsuits, agency enforcement actions, or some other catastrophe. In each of Boeing’s 737 Max crashes, General Motors’ ignition switch tragedy, and Blue Bell Creameries’ listeria outbreaks, this appears to have been the case.

The result in each situation was a gaping legal and regulatory hole in what should have been a comprehensive shield of company-wide, managed compliance. Leaving senior leadership open to being blindsided by devastating surprises.

In commenting on the General Motors ignition switch tragedy, former GE General Counsel Ben Heineman, Jr. has called this as the “ignorance defense”. Continue reading

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Part I of this four-part series concluded: “So there is a gaping legal and regulatory hole in what should be a comprehensive shield of company-wide, managed compliance.”

Without experienced business leadership taking charge and managing compliance across the enterprise, and overseeing the systems and processes this requires, Legal is not accountable for any failure here. C-Suites and boards exempt their corporate law functions from any duty to anticipate, to make timely contingency efforts against, or to decisively neutralize, early-stage legal and regulatory risks. This allows such risks to mutate into full-blown lawsuits, agency enforcement actions, or other legal catastrophes before Legal turns its attention to them. Blindsiding senior executives.

Former GE General Counsel Ben Heineman, Jr. calls this the “ignorance defense”.

Consider three illustrative cases: Continue reading

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Corporate law functions engage with critical enterprise risk in the same spontaneous, one-off manner that most individual lawyers do their work: ad hoc, case-by-case reaction to what someone else has already put in front of them. And that typically after an incipient problem has become a full-blown lawsuit, agency enforcement action, or other legal or regulatory catastrophe. (Attorneys can be brilliant, even heroic, at such fire-fighting.)

But unless a likelihood of calamitous lawsuits or crippling government corrective measures has been expressly red-flagged to the general counsel or some other lawyer, few C-suite teams or boards hold Legal accountable when they are blindsided by devastating legal and regulatory surprises. Former GE General Counsel Ben Heineman, Jr. calls this the “ignorance defense”. (In contrast to their dramatic and well-paid rush to a blazing building, lawyers don’t care as much about the hum-drum (and less well-paid) replacement of batteries in a smoke detector.)

So there is a gaping legal and regulatory hole in what should be a comprehensive shield of company-wide, managed compliance. Continue reading

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Yesterday I was privileged to hear Jordan Furlong, a globally renowned expert on the legal profession, take up this question in addressing Canada’s National Legal Innovator’s Roundtable: How long does it take to make a competent lawyer?

Over the years he’s asked accomplished attorneys just how long it took them to know what they were doing in the courtroom, drafting transaction documents, or counseling businesspeople.

Their consistent answer: 3 to 5 years. Continue reading

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The Point

Too often the legal profession uses its power to regulate the competence of its service providers (a good goal) simply to protect lawyers from unwanted competition (a bad goal).

Medical authorities have developed care specialties performed by professionals outside the category of licensed physician, who are highly trained — and who do their work without micro-management by MDs.

The legal profession should take a lesson from medicine’s pursuit of operational efficiency. But, more often than not, state bar organizations fiercely resist such a step, citing”legal ethics” and “protection of clients”. Continue reading

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The Point

Primary responsibility for settling conflicts between your company and a party outside of it should lie squarely with the executive who runs the affected business unit or corporate function:

“Businesspeople need to resolve the disputes in which they are involved.” “Give it to the lawyers” should be a last resort.

But for now, “give it to the lawyers” is the go-to move that prevails in most American companies. Continue reading

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The Point

“B2B litigation is a sign of business failure”.

So writes Patrick J. Lamb, a distinguished corporate trial lawyer, who, along with another prominent trial attorney, Nicole Auerbach, founded Valorem Law Group in 2008, now ElevateNext Law. Their innovation: Ditch the billable hour, and bring alternative fee arrangements to the mainstream, as they defend in court companies that have been sued. Continue reading

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The Point

An earlier generation was raised on the saying: “Nobody ever got fired for choosing IBM”.

It still holds sway among too many general counsels I’ve known in their strong prejudice favoring AmLaw 100 or AmLaw 200 law firms as a hedge against second-guessing if something goes wrong on their watch.

Ben Heineman, Jr., legendary general counsel of GE from 1987 to 2005, disagrees. While careful to avoid a simplistic, sweeping endorsement of boutique law firms and condemnation of BigLaw, Heineman cautions against the opposite error — a widespread prejudice among general counsels. Continue reading

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The Point

As I wrote in my previous post, the U.S. legal profession confines its formal training to a theoretical knowledge of law (J.D. from a law school) and an academic test of memorization (the bar exam). Licensed attorneys’ grounding in practical skills consists almost entirely of unsystematic, on-the-job improvisation. Ad hoc “qualification” whose adequacy is never reviewed by any objective or authoritative third party.

In the U.S. system, once a law firm associate passes the bar, their employer-law firm can start invoicing their hours to corporate law departments willing to pay for them.

To move from this ad hoc and casual acquisition of practical lawyer skills to organized and rigorous training, the U.S. legal system could look to three qualification models:

1. Physicians,

2. Airline pilots, and

3. Solicitors and barristers in England and Wales. Continue reading

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The Point

Physicians and business lawyers: The work of both professions is consequential for those they serve. On the capabilities of the first group depend life and death of their patients — literal, personal health outcomes. On the capabilities of the second group depend — if not life and death and personal health — people’s livelihoods in the form of the company’s health and well being, and the jobs, share price, and pension holdings related to the company.

High stakes in both professions. Medicine is standardized and precise in physicians’ practical training and skills development — and accountable to formal third-party validation for quality. But lawyers’ formal, third-party validated preparation is confined to theoretical knowledge acquired by reading and classroom instruction in law school; confirmed by a bar examination that tests academic memorization.

Attorneys’ practical training and skills development are left almost entirely to unsystematic, on-the-job improvisation — whose adequacy is neither reviewed nor confirmed by any objective or authoritative third party. Continue reading

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