Law Department Administration

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By: Andriana Georgallas, Weil, Gotshal & Manges LLP

Recently, in GSE Environmental, Inc. v. Sorrentino (In re GSE Environmental, Inc.), on a motion for judgment on the pleadings, the Bankruptcy Court for the District of Delaware held that the Chief Executive Officer’s claim for unpaid compensation payable in stock constituted an equity security rather than a general unsecured claim. The facts of GSE Environmental are an all too familiar story in the bankruptcy context: Company files for chapter 11, but certain employees, or in this case executives, were not paid their full compensation before the petition date. Whether such unpaid compensation is treated as a general unsecured claim or equity securities can have a tangible effect on the employee’s recovery in the case. GSE Environmental serves as one example of a variation of unpaid compensation that may be treated as an equity security.

Background

Charles Sorrentino served as interim president and CEO to the debtors, GSE Environmental, Inc. and GSE Holding, Inc., as of July 1, 2013. Pursuant to his original employment agreement, Sorrentino was earning $186,000 per month payable in cash. A month later, the parties amended his agreement to provide that $100,000 of Sorrentino’s monthly compensation would

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Continue Reading Get to the Back of the Line: Delaware Bankruptcy Court Holds C-Suite Stock Compensation was Equity Security Not General Unsecured Claim

By: Veta T. Richardson, Association of Corporate Counsel and Caren Ulrich Stacy, OnRamp Fellowship

At the entry level, men and women join the legal profession at the same rates, yet by the time they reach leadership roles, less than 20 percent of partners are women. Corporate legal departments suffer the same disparity. This leaky pipeline is partially due to women’s choice to set aside their careers for child-rearing. As a recruiter, Caren Ulrich Stacyrecognized that a highly motivated talent pool was not being tapped and created OnRamp Fellowship – now joined by OnRamp In-House, an initiative the Association of Corporate Counsel (ACC) has joined with – to reintroduce women lawyers returning to the field after an absence. Here, Stacy and Veta T. Richardson of ACC discuss the evolution the program and the depth of the need to address the root causes. Their remarks have been edited for length and style.

MCC: What is the mission behind OnRamp Fellowship?

Stacy: OnRamp Fellowship is a re-entry or “returnship” platform that offers opportunities for women lawyers interested in returning to the workforce after taking time off from their legal jobs in order to raise a family or pursue other

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Continue Reading An On-Ramp to the C-Suite: A joint initiative aims to return motivated female lawyers to corporate counsel roles nationwide

By: Matt Kivlin, ELM Solutions, A Wolters Kluwer Business

Last year at Legaltech New York I spoke to an in-house attorney about one of her worst days on the job. She was hard at work on litigation related to a compliance breach. The breach had occurred because the compliance staff mistakenly believed that a particular regulation did not apply to their business unit. There had been an internal investigation of the incident, but she was having difficulty verifying the steps the company had taken because the records were in disarray. Some of the investigation files were incorrectly moved into an unrelated archive, while other activities were undocumented altogether.

While trying to navigate the morass, she received a mass email from a colleague instructing everyone, incorrectly, that a certain regulation – yes, the very same one now making my friend’s life so difficult – was not applicable to the company. She feared that another breach could result and that she’d have to go through the process all over again.

Fortunately, the embattled attorney was able to quickly contact the right colleague and have a correction sent out. But she was understandably frustrated by the difficulties she’d encountered, particularly because she

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Continue Reading Tightening Up Links Drives Down Risks: Integrated infrastructure facilitates GRC-Legal compliance cooperation

By Joe Calve, Metropolitan Corporate Counsel

Altman Weil, a management consultancy dedicated exclusively to the legal industry, kicked off its “Law Firms in Transition” survey on the heels of the Great Recession. Now in its eighth edition, the survey, released earlier this month, reveals a frightening gap between lawyers and clients.

The gap is so wide that it seems to be spurring corporate law departments to throw up their hands in a manner reminiscent of the famously obnoxious 1960s TV commercial for Anacin pain reliever. A hovering mother tries to help her harried grown daughter with her household chores. Pushed to the edge, the daughter finally erupts:

“Mother, please, I’d rather do it myself!”    
Continue Reading Backstory: GCs Take Matters Into Their Own Hands – Literally

By Michael Stevens, AccessData
Keeping internal tech teams up to date on legal and compliance trends is a never-ending task for many corporate legal departments. But it remains an important one, as CIOs and CISOs developing technology plans for a company need to account for these requirements and more. Security threats, mobile employees and a changing regulatory climate can keep good general counsels awake at night. Along with their CIOs, GCs must look to update their technology and processes to steer the ship through these challenges in a rapidly changing information age environment.

How Secure Is Your Data?
There are many great lists that you would like to see your corporation listed on, but I will bet this isn’t one of them: Krebs on Security. How you interact with your CISO or CIO to manage your company’s security risks is crucial in keeping you off this dreaded list. You may think that you have everything locked down, but you are facing an indomitable foe every day – clever cybercriminals. Who is going to be responsible for handling the legal consequences in the aftermath of an incident? Just look in the mirror.

It is a heavy responsibility to keep customer, financial, intellectual property, personally identifiable and legal information safe from breach. Cisco’s Annual Security Report in 2016 said that 65 percent of organizations feel that they face a significant level of security risk. Additionally, Bomgar’s Vendor Vulnerability Report stated that 55 percent fear a breach resulting from vendor access will occur over the next year, while 20 percent believe the same will happen at any time after one year. A practical reminder – be sure your technical teams are requiring all vendors to adhere to the highest security standards and have a protocol to immediately inform you of any breach.

Creating a detailed map of all of the organization’s data repositories is critical. Unless the organization knows what it has, where it resides within the organization and who is responsible for the data, it cannot respond quickly or effectively to data loss. By creating a detailed data plan with your CIO, CISO and internal stakeholders, you can determine what types of information you have, where it lives and who has access to it inside and outside of your organization. If your organization doesn’t yet have an incident response (IR) plan, insist on it before you experience a cyber or other security breach. Part of that IR plan will outline what steps must be taken to rapidly investigate where and how the breach occurred; what data, if any, was compromised; if the breach is ongoing; and how to remediate it. This is where having a data map, including the locations of sensitive legal and matter, becomes critical.

BYOD: Your Recurring Nightmare
Continue Reading Are You and Your CIO in Sync?: Alignment on relevant industry trends significantly impacts IT’s capacity to satisfy a legal department’s needs

By: Rees Morrison

This article introduces a type of graph that shows multiple metrics of law departments on the same scale – probably a new graph for most readers – a parallel coordinate plot (PCP). We will explain the PCP1 using data from the General Counsel Metrics LLC benchmarking survey sponsored by Major, Lindsey & Africa.

To create the PCP for this article, we extracted data of law departments that participated one or more years over the past six years of the benchmark survey.  More specifically, the subset consists of U.S.-based companies in technology or telecommunications.  We then narrowed the group to companies that reported fiscal year revenue between $500 million and $5 billion.  The resulting 62 companies formed this article’s “tech” industry.

Establishing the tech law department data set is one step, but analyzing and presenting conclusions about its metrics is another.  One of the challenges of displaying benchmark data in graphs is organizing, on one chart, multiple metrics for each law department.  Making the challenge even harder is when the data comes in different scales such as single or double digits for head-count metrics, hundreds or thousands for patent records, millions for spend data, and billions…
Continue Reading Tech and Telecomm Benchmarks with a PCP

By Laura Kibbe and Shelley Brown, Esq., RVM Enterprises, Inc.

One of the greatest challenges facing in-house counsel today is the soaring cost of litigation. One of the primary contributors to those extraordinary costs is the ever-growing creation of data and data sources, resulting in the unpredictability of e-discovery. For years the e-discovery industry has been exploring alternative fee arrangements (AFAs). The AFA methodology was created to increase predictability in litigation-related spend. The foundation is simple: Provide cost predictability and the ability to create future budgets based on historical spend. While AFAs have certainly met their cost predictability goals, in an age of complex electronic discovery, it raises a question as to whether or not the model has sacrificed expertise and strategies that provide valuable, high-quality solutions for an overall lower cost. We think so.

Rather than relying upon AFAs alone as a solution to the budget problem, perhaps we should look toward the use of more strategic methodologies to better control costs. Strategic alternative fee arrangements (SAFAs) could be the answer. In the e-discovery world, AFAs often take the form of per document charges, an all-in processing flat fee or some combination thereof. But those AFAs do not incentivize the service provider to reduce volume (and therefore cost). Instead, we should look to implementing early case assessment and litigation readiness strategies to help mitigate e-discovery costs. At first blush, the higher initial spend in per hour analytics or consulting may seem counterintuitive to cost savings, but if the exercise results in a reduction of the reviewable universe by 40 to 50 percent, total case cost goes down. The perfect SAFA model would combine the cost-predictability goals of the AFA while encouraging new strategic approaches to traditional tasks, resulting not only in a lower total case cost but also in giving the case team a strategic advantage over their adversary. Knowing their case early on can direct case strategy.

Utopia or Reality: A New Approach

The traditional electronic discovery budget looks like a laundry list of unit prices and assumes, for the most part, that a linear process will be followed: collection, processing, search terms, maybe analytics and a review of the resulting data. In this model, ensuring that each unit price is as low as it can be will lower costs and create predictability, but at what effect on total case cost? What if the collected data contained information that was particularly harmful to your client’s theory of the case? What if the collected data does not include a key custodian? What if the collection was generally overbroad due to similarly overbroad corporate data retention policies or nonexistent litigation readiness plans? In failing to take a strategic look at what the case team hopes to accomplish in discovery, those unit prices often result in spend which could have been avoided altogether. In addition, that traditional model does not necessarily identify the key documents early enough in the case to assist the client in reevaluating its strategy.

The analytics tools that are available today make it possible to spend time and resources on a true early case assessment that can result in an overall lower total case cost. Ultimately even greater savings and efficiencies could be achieved. As with law firms, engaging an experienced partner early on to help formulate strategy is important. Delegating the execution of that strategy to more cost-effective resources and engaging a consultant with specific e-discovery subject-matter expertise (and likely a higher billable rate) broad enough to span information governance, litigation readiness and e-discovery can reduce downstream discovery spend.
Continue Reading Alternative Fee Arrangements: Panacea or Problem: Delegate strategically to reduce downstream litigation costs

By Lloyd M. Johnson Jr., Chief Legal Executive LLC

Four years ago, Susie Lees became general counsel at Allstate. She had been with the law department for 24 years, and she saw that it was time for major change. Costs were too high, and operations were inefficient. Thus began an odyssey as Lees set out to create the Law Department of the Future (LDF) as one of her highest priorities.

In previous columns, I have noted that the transformation of a law department is difficult whether it has 20 attorneys or 100 attorneys. Imagine the challenge of engineering and implementing the transformation of a department of 1,400 people and 700 attorneys. That’s what Lees faced.
Continue Reading At Allstate, the Future Is Now: One GC set out to create nothing less than the law department of the future

Interview with Brian Campbell, ACC New York City Chapter
The Association of Corporate Counsel (ACC) is a global bar association, promoting the professional interests of in-house counsel through education and advocacy. Via local chapters, the ACC offers its members resources for continuing legal education (CLE) credits and networking. The New York City chapter (previously called Greater New York) is led by DHI Group General Counsel Brian Campbell, who shares highlights from a recent event here, along with the benefits he has enjoyed through his participation in the chapter. His remarks have been edited for length and style.

MCC: This is your fourth year as a board member of the New York City chapter of the ACC, and your first as president. Tell our readers about the chapter. What are you hoping to deliver to your members?

Campbell: Our New York City chapter is one of the ACC’s largest at nearly 1,800 members. We serve the five boroughs of New York City, as well as Long Island. The board is made up of in-house lawyers, who are all engaged in and dedicated to fulfilling our chapter’s mission. Our programs and events are geared toward in-house counsel, and although law firms and service providers sponsor us, our goal is to provide members with opportunities to learn about what’s going on in the industry and to educate themselves on issues that come up in their day-to-day practice or in their own career growth and development, all in an environment in which they’re not subjected to a sales pitch. We also encourage engagement among members and want to bring them together to help one another advance their careers.

We regularly poll our membership via surveys and informal conversation to see what is piquing their interest, and through that we’ve enhanced our program offerings. We’re always coming up with new and creative initiatives to get our members what they need. We emphasize over and over that for less than $400 a year for an individual membership, in-house counsel can get all of their required CLE credits, without being charged any additional fees. They can also take advantage of social and networking opportunities with other in-house counsel.

And of course, there’s the ACC annual meeting, where for an additional fee in-house counsel can obtain all of their CLE credits in only a few days. On top of that, they can meet members from other chapters around the world and interact with their peers as well as top-level practitioners. For example, at the 2015 annual meeting in Boston, Ben Heineman, the former general counsel at General Electric, addressed other chief legal officers (CLOs). There were around a hundred CLOs in the room. Ben spoke to us and then stayed around to answer questions, and it was really a fantastic event – one of the highlights of my years practicing in-house. That’s something you don’t otherwise see outside of ACC, someone of the caliber of Ben Heineman connecting with in-house counsel on a personal level.

Also, ACC as a global organization has continued to expand and grow worldwide, with new chapters as far afield as Australia. ACC global also hosts conference calls and webinars and distributes literature and other resources.

MCC: What are some of the benefits of taking on a leadership role?  
Continue Reading ACC-NYC Offers Outreach and Opportunity: The regional chapter of a national organization can offer uniquely local networking and educational events

By: Lloyd M. Johnson Jr.

Recently, I was speaking with an executive recruiter about what it takes to be a successful GC in this era of the activist investor (see my column in the April issue of MCC). “If you don’t have managerial courage, you’re probably not going to be an effective general counsel – or even get the job in the first place,” she told me, drawing on years of experience placing GCs in major companies. And she’s not alone in believing that. Increasingly, executive recruiters are telling me that managerial courage is part of the GC’s job description. And that means the wise general counsel will include it in his or her leadership toolkit.

More Than Just Courage

At its heart, managerial courage is the willingness to raise difficult issues openly and honestly. It means putting the need to do the right thing ahead of personal concerns about career and advancement – saying what people should hear rather than what they want to hear. For the general counsel, it can also mean asking the tough questions of an especially tough audience. “When you’re talking about having that conversation with your CEO or board, and the…
Continue Reading Creating Transformation Through Managerial Courage: For a general counsel, demonstrating managerial courage can transform the entire organization.