Driving Simplification in the Business of  Law

In this Next Normal podcast episode, Elevate’s Chairman and CEO, Liam Brown, talks with Elevate’s General Counsel and Secretary, Steve Harmon. A Co-founder of CLOC, Steve joined Elevate from Cisco in November of 2018.  

In this episode, you’ll learn of Steve’s journey to Cisco and Elevate.  His mission to push simplification and the importance of simplification in the business of law. Steve will elaborate on his non-legal duties as an executive leader – and offer insight into the CEO, General Counsel relationship.

Episode highlights include:

  • [01:43] – The road to Elevate
  • [04:07] – Make room for T-Shaped professionals
  • [06:52] – Supporting the CEO – goes beyond legal advice
  • [11:45] – Leadership beyond legal
  • [17:13] – Pushing simplification
  • [23:39] – Supporting digital from the inside
  • [25:41] – Balancing improvement and risk
  • [31:12] – Leadership in tough times requires…

Enjoy!

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Podcast Transcript

Note: This transcript has been adjusted to improve readability. Transcripts are generated using speech recognition software and human transcribers. The context and more than 95% of the actual transcript have been preserved. We strongly encourage you to listen to the audio file.

 

Nicole Giantonio: Hello, this is Nicole Giantonio, the head of global Marketing at Elevate. The podcast episode your about to hear is part of our Next Normal leadership series featuring Elevate’s Chairman and CEO Liam Brown talking with General Counsel from leading organizations, Law Firm Managing partners, and law company CEOs about leading during this time of change.

Today’s guest is Elevate’s own Steve Harmon.  A Co-founder of CLOC – Steve spent the bulk of his legal career at Cisco, joining Elevate as our General Counsel and Secretary in November of 2018. 

During this episode, Liam and Steve offer insight into the CEO  General Counsel relationship.  Steve elaborates on his non-legal duties as the executive leader providing oversight and leadership to our IT and HR functions.   Listen in as Liam identifies Steve as a T-Shaped General Counsel.

Liam Brown: Steve, welcome. I’m really excited about having an inside conversation with someone I know so well – or at least, I think I know well, so thanks for joining me today.

Steve Harmon: Pleasure to be here.

Liam: So, the conversations that I’m most interested in having are those that uncover leadership issues in law. I’d like to dive into those, but let’s start with the arch of your career that has led you to the role you currently have.

Steve: Happy to unpack that. I started my educational pursuits in the engineering field, so I thought I would be an electrical engineer. As part of that, I started a company with a couple of classmates. I quickly determined that I was the least talented of the three of us when it came to engineering. But I had some success in dealing with our investors, and so a decision was made that I should be the one to focus on a business degree so that I would deal with financial investors.

That translated into going to law school with a focus on becoming a patent attorney. I quickly learned that most patent attorneys are very similar to the engineers I went to law school to avoid. They were also better engineers than I was. It did give me a robust background for looking at technology applications for legal problems. I spent the vast majority of my professional career at Cisco where I had the opportunity to work with Mark Chandler, who is well known for prioritizing the application of tools and process optimization to legal practice and focusing on how the legal department can enable the business.

It’s interesting from a leadership perspective – he asked why do legal departments exist. Why have a corporate legal department? And what we settled on is that the reason an internal legal department exists is to enable the business to design, build, and sell its products in a legally appropriate way. That is a different lens than most general counsels approach the problem. They often focus on risk mitigation or bring the type of problem and solution setting vision they brought from the law firm, which is different from someone who spends a lot of time in the in-house environment where we need to enable the business.

The educational arch continued with some challenges around focusing on Cisco’s processes around legal optimization. I was able to apply my engineering background. It didn’t take much to be the best legal engineer, so I addressed some of those problems. That has led me to a very strong focus on approaching every legal problem through two key lenses. How do you enable the business? How do you make the business more successful in selling its products? That’s candidly how we all get paid. We get paid when the organization designs its products and sells them to customers.

So, how do we facilitate and make that happen, again, in a legally appropriate way? And then the second piece being, how do we do that as simply as possible? How do we minimize the overall burden of the legal function on the overall finances of the business?

“The reason an internal legal department exists is to enable the business to design, build, and sell its products in a legally appropriate way.​”

– Steve Harmon

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.

“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.​”

– Steve Harmon

Liam: It just occurred to me that I can start calling you a T-shaped general counsel.

Steve: I will take the compliment because if anyone wanted to go deep on any particular issue, many people could drag me to the deep end of the pool very quickly.

Liam: On the law department side of your responsibilities, what’s been the most challenging aspect of running a law department, in light of the disruption over the last six months?

Steve: We are fortunate at Elevate that part of our ethos and culture has always supported remote work. And so, we had the benefit of already being remote and working well in that regard. I anticipate that other organizations would struggle with some of the cultural challenges. Law can be a very collaborative environment, or it can be a very individual environment, depending on where people are on that T-shaped continuum. People that have narrowly focused subject matter experts don’t have the same dependencies on collaboration. But what I will say is it’s made it harder for us to make the progress we hope to make on simplification.

When you cannot have frequent, unstructured conversations, you sometimes lose the opportunistic data exchanges that drive creative thinking around simplification. And simplification is core to what I view my charter to be. Simplification is core to our company’s charter, as a law company helping our customers rationalize their problem-solving approach. And so, the last six months, where people have been even more isolated than they might otherwise be, it gets more challenging to complete the feedback loop. 90% of that loop is still there, but it’s challenging to pull the chain together and create a link after the chain gets cut.

Liam: I know that simplification has been at the heart of your leadership of our law department, and we’ve been a fast-growing, complex organization – I should say multijurisdictional, multi-geography, multicultural, at scale, multi-services. How’s the business responded to you driving as the lawyer? How’s the business responded to you pushing simplification and the importance of simplification? I suppose what I’m asking is how the business responded to a lawyer telling them, or asking them, to think differently?

Steve: I think it’s reasonably predictable. There have been instances where the business has embraced the simplification effort. No one likes to take time to negotiate contracts. A legal department that focuses discretely on cycle times and is very upfront about measuring how long things take will welcome identification of log jams and where the critical path items might be inappropriately slowed until you identify that they’re part of the problem. When you figure out that, wait. Part of our simplification requirement is we need to do a better job of scoping the solution set upfront.

It’s not enough to just say, “We need a sales contract with a customer.” We need to get better about defining the bill of materials and services that we’re providing to that customer to reduce the amount of legal negotiation time, as an example. So, they embrace it. They love it conceptually, but then when you say there’s more work you need to do upfront. It’s not enough to simply say, “Wow, legal’s difficult, and if we could just get them to agree.”

It’s trite, but you could be the most popular general counsel with a sale organization in the world if all you did were say, “Yeah, that looks good. Every contract looks great. In fact, why not – we don’t need a contract. We’ll be okay. Let’s just do it.” And I say that somewhat tongue in cheek, but it is a continuum. There is a continuum that you have to navigate.

And one of the novel approaches that we’ve been exploring is something that sounds counterintuitive to many business professionals and legal professionals, frankly. There might be an advantage to making more contracts instead of less, but contracts in a different form. And so, I’ll illustrate the underpinnings of our assumptions and why we’re testing out this model. Historically, many legal departments start with an assumption in the contracting space of a traditional parent/child relationship, some form of a master agreement with statements of work that get attached and appended to that parent agreement.

And the mental exercise seems quite simple: that you invest some effort upfront to create a structure. Subsequently, every N+1 – your next contract – will be significantly easier than the first contract. And that is how I started my legal career. That’s the way I was instructed. That’s the model under which I operated. I was content with it until I sat down and started to consider how the exchange of flows come – the exchange of redlines come – when parties are trying to negotiate this parent level agreement.

The challenge that I feel like I’ve identified is it puts the legal professionals in a situation where they have to anticipate the full breadth of engagements that the two parties might engage in. That’s very challenging for an organization with a broad product and solutions offering, where the initial engagement is typically in one area of the business. Then there’s a hope that that will expand into other areas of the business. So, as the seller, I’m motivated to keep my options open, and so I feel like I need to address, for example, the ability to terminate for convenience.

The other side might say, “Well, termination for convenience is very important to us in this particular engagement that we’re discussing.” And I look forward and say, “Well, what if we have to make a large investment in setting up a dedicated services center, for example.” We might not even be talking about that yet at our level of engagement. If I do make that investment in a dedicated services center, it would be challenging for me to accept a contract that allows termination for convenience.

But if, by contrast, I’m working on an engagement in the e-discovery context where we’re analyzing documents or helping assist with a document review, termination for convenience is imminently reasonable for the customer to expect. I could give multiple examples of this type of challenge, but you can hopefully anticipate these various tradeoffs at a macro level. So, the legal professionals in this parent/child contracting model start with an assumption that we need to cover all the bases.

The answers to all the base questions differ factually depending on the bill of materials and services that the two parties discuss. And so, we are adopting a model – we’re exploring and testing a model that says let’s get away from this parent/child relationship and contract. Instead, let’s focus only on the facts in front of us and the engagement we’re dealing with. And let’s be very, very concrete about the risk and the rewards and the probabilities associated with the engagement that we’re working on, acknowledging that we might be negotiation a services contract to do contact management.

Tomorrow we might be negotiating a contract to do a billing review and reviewing the bills between one of our customers and the law firms that support them. And then, a month later, we might be negotiating a software license agreement to take advantage of our contract life cycle management software. And that’s going to introduce all sorts of IP ownership questions and data protection issues that have no place in the discussion when you’re talking about the e-bill review. If we get narrow and focused, we can reduce the friction associated with business engagement.

Again, none of us are in the business of having long contractual discussions. So, as a GC and focusing on simplification, to the root of your question Liam, we’re looking at a different model, different approaches to enable the business.

Liam: Thinking about enabling the business, what does your company think about going digital? What is your company doing about that, and what does that mean to the law department?

Steve: Going digital means disaggregating the tasks, where portions of the tasks are done in an automated and routinized fashion.  Allowing you to continue to push decision-making authority more broadly and deeply within the organization. We’re all committed to this. To successfully go digital means to get discrete about defining the solution set, the required elements of support, automate and routinize that solution, and then use the technology set to facilitate that happening more rapidly, predictable, and repeatable.

Liam: That sounds quite commonsense. How do you think then about the distinction between innovation and improvement?

Steve: I sense that innovation and improvement fall along the same continuum. Improvement tends to get denigrated in some ways. There’s a lot of literature about the impacts of the amalgamation, the self-reinforcing aspects of marginal improvements. Once that gathering of those improvements – those marginal improvements – gets packaged up predictably, that tends to be called innovation. No innovation, in my mind, has happened without improvements underlying it. I understand that that’s a bit of an incrementalist approach. You can, and you should approach the problem from both ends.

There’s a danger in throwing out so-called minor improvements, as saying they’re not sufficiently exciting to be reasonable until you see the outcome of those improvements coalescing over time, and that tends to get blessed with the title of innovation after the fact. Innovation doesn’t happen prospectively. Innovation is a set of great improvements that have happened over time, that can then be categorized and amalgamated into a solution.

Liam: Well, it sounds like real support for improvements there, alongside excitement and innovation. How do you think about your role managing at this level? On the one hand, you have to manage at a level of improvement, as the law department is interfacing the business. And then, the other extreme – you have to manage your interface with the board and the risk committee. How do you span that? What sort of executive skills or executive functioning or capabilities do you have to have to operate in a board meeting in the morning and then drive a discussion about the law department’s improvement in the afternoon?

Steve: The executives that I’ve always admired the most are the ones that are most successful in building a unified view of purpose. It’s about identifying a set of objectives that create enthusiasm for doing small things – making the small steps, is my responsibility to communicate with the board and with the risk committee.  A big part of my focus and success is telling the story in a way that connects the dots between the incremental improvements we’re making and the long-term transformative changes that have happened.

There’s no substitute for doing the work. There are very few things that we can dramatically improve our performance by merely making a purchase, for example. You can’t buy a piece of exercise equipment and suddenly become fit and healthy. It’s the daily grind of getting on that device that makes the difference. It’s the same with our diet, the same with any talent we’re trying to develop. I’m not as talented as a musician, and I like to say that I don’t play the guitar because I just don’t have musical talent. The reality is probably a little bit more nuanced. I have not dedicated the time required and have not gone through the repetition to become talented or maximize the talents available to me.

When I think about my communications with the board, I go back to laying out a vision and helping them understand how the activities we’re focusing on today tie into that vision and how they connect to risk management’s overall objectives in the context of the risk committee. And then risk management ties into the overall goals of the company. Earlier, I talked about the interplay with the CIO organization and dealing with cyber risk. The risk committee is understandably very interested in our approach with respect to mitigating cyber risk.

Tying the story of the steps that we’re doing to how it will satisfy the requirement to mitigate our risk is a portion of the story. The next portion of the story is how our excellence in mitigating cyber risk translates to us being a better potential service provider and supplier to our customer base? It’s tying that end to end story together that I think is critically important to the general counsel skillset. You can’t just make it about ‘I see a risk.’ Everyone can see a risk. The next levels of maturity come as you focus on risk mitigation and how risk mitigation ties into the company’s overall business objectives.

Liam: I have two more questions. The second question I’m going to ask, so you can let it marinate in the back of your head, is to finish the sentence ‘leadership in tough times requires….’ The first question is, as your career has unfolded and you’ve worked with managers and mentors over the years, what’s the best book anyone has recommended or that you’ve read on leadership?

Steve: The best book that I’ve read on leadership is a book written by a couple of retired Navy Seals called Extreme Ownership, and Jaco Willink is one of the authors. And the reason that’s important to me is it clearly articulates the high order obligation that leaders have – you have to take less of the credit and more of the blame. One of the interesting things about leadership is that we often get recognized as the focal point for success. More often than not, those successes are deeply dependent on the teams that we work with. And so, I get to take credit for things that I didn’t do personally.

My responsibility as a leader, though, is to breed an environment where those successes can happen. To create an environment where people can take the necessary risks to do something unique and different. To support the people who may be flagging in their enthusiasm for a project when they feel that the day to day challenges are overwhelming the long-term outcome that they’re pursuing. So, that book just really resonates with me because the leaders that I’ve admired the most have all done an excellent job of owning things, beginning to end, and owning not only the successes but, importantly, the failures.

Liam: Okay, now you’ve had a chance to think about the sentence that I’d like you to finish. Hopefully, this will trip off your tongue leadership in tough times requires…

Steve: Visibly doing what is required to give others the confidence to know that they can be part of a successful team; obstacles can be overcome and the successes achievable.

Liam: I can see that in how you lead every day. Well, Steve, thank you very much for spending the time with me exploring leadership in law.

Steve: I’ve enjoyed it very much. Thanks.

About the Author(s)

Steven Harmon is the General Counsel and Secretary of Elevate.  The interview host is Liam Brown, Chairman, and CEO of Elevate.

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