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St. John's Law Goes in the House

Alumni Take the Lead as General Counsel
Thursday, September 26, 2013

Over the past couple of decades, in-house legal departments have become the career destination of choice for more and more lawyers. Any legal recruiter can attest to the dramatic spike in the number of applicants for staff attorney positions in corporate law departments.

From the perspective of Denise F. Keane ’76, Vice President and General Counsel of Altria Group, her company and other leading corporations have an increasing number of top candidates applying for openings on their in-house legal teams. And the stack of resumes continues to grow. “In-house departments are magnets for really talented lawyers,” says Keane. “It’s become a very important career path.”

No question, it’s turned out to be a smart career move for Keane, who opted to go in house almost immediately after law school and has headed Altria’s legal department since 2008. She’s in very good company in the St. John’s Law community. Consider Steven M. Rapp ’83, Vice President and General Counsel of Unilever North America, a food and personal care consumer products company. Andrew Bonzani ’89 oversees a 60-lawyer legal department for global advertising giant Interpublic Group. And Elisa Garcia ’85, was recently promoted to Chief Legal Officer at Office Depot, Inc.

Running the legal departments of some of the biggest names in the Fortune 500 puts these lawyers in an elite club. As the top legal advisers for their companies, they face enormous challenges, including a barrage of new regulations stemming from Dodd-Frank, the Foreign Corrupt Practices Act, and HIPAA data privacy rules, to name just  a few. Unlike most lawyers in private practice, they need to be generalists. Indeed, their jobs require them to manage a wide array of matters. And given that these matters occasionally involve bet-the-company risks, in-house expertise in risk assessment and compliance matters has become more indispensable than ever. The stakes can be extraordinarily high.

Of course, all this variety helps keep things interesting. “It’s a very rich practice,” says Unilever GC Rapp, whose workload covers everything from M&A and marketing matters to environmental regulation and class action defense. He’s also a member of Unilever N.A.’s leadership team, which gives him a voice on key strategic planning decisions. “The in-house department’s handprint is on every important thing the business is involved in,” Rapp adds. “The sweep of it is impressive.”

An Expanding Role

Rapp and his St John’s colleagues aren’t just filling a critical role as legal counselors at their own companies. They are also leading the charge on efforts to transform the legal profession. All are convinced that the Big Law firms need to re-examine the way they have traditionally performed and priced legal services. As GCs, they also happen to have tremendous clout in the market, considering the hundreds of millions of dollars their companies spend on outside legal services every year. And they’ve been using that leverage to get outside law firms to rethink their outmoded business model. “I think the law firm industry has woken up to the fact that there are matters that don’t need three partners and two associates,” says Interpublic GC Bonzani. “They have to be more nimble or risk losing out to smaller regional firms.”

Along with helping to spur broader industry reforms, Rapp notes that he and other GCs have been playing a bigger part in shaping broader business strategy at their companies. “It’s no longer just a purely protective role,” he says. As a member of the company’s leadership team, Rapp is regularly asked to weigh in on potential expansion plans. His evaluation of possible risks is especially prized. “But they’ll also say ‘now let’s talk about how we grow the business,’” he shares.

Garcia, for her part, has also been pushing boundaries at Office Depot. Last year she served as the point person and chief strategist in the company’s effort to merge with rival Office Max. Unlike with Office Depot’s previous attempt to merge with Staples, when federal antitrust regulators refused to grant approval, last fall the Office Max deal went through. It was a definite coup for Garcia, who says “in the past, I don’t think you saw many GCs leading major transactions.”

The Recession’s Silver Lining

Of course, even as they continue to redefine the GC role, top in-house lawyers also have legal departments to manage. That, as Interpublic’s Bonzani observes, has gotten harder with the recent economic downturn. Like other corporate managers, GCs have been under non-stop pressure to slash costs. That’s the bad news. The good news is that all the cost-cutting pressure has forced them to take a hard look at their budgets, and particularly their spending on outside legal providers. As a result, Bonzani and his fellow GCs have re-thought the way they and their outside firms do business, including making more effective use of technology and alternative fee agreements to drive down costs.

Bonzani, for example, points to the new e-billing system that Interpublic’s legal department recently implemented, which, among other things, has made it far easier to track and analyze outside legal bills. This helps keep outside bills in check, and also helps Bonzani identifyareas where in-house investment makes sense, like his recent hiring of a Privacy counsel. The in-house department at Unilever N.A., for its part, is now deploying e-discovery software that allows for far speedier document searches, and reduced litigation costs, according to Rapp. To further reduce litigation expenses, Rapp is a proponent of what he calls “unbundling.” Instead of giving all the work in a major litigation matter to just one firm, he farms out document production or other time-intensive tasks to lower cost providers who specialize in those tasks.

Likewise, Rapp and his fellow GCs say that their use of alternative fee arrangements has been effective. This includes providing a single flat fee to outside firms for handling all matters in specific areas, such as corporate filings or governance work. There are also hybrid arrangements featuring discounted hourly rates along with “success fees” for positive results.

Bonzani doesn’t think that alternative fee agreements are going to upend the traditional law firm billing model anytime soon. “I can’t foresee a near-term or even a mid-term future without the billable hour,” he says. Still, given that these types of arrangements do help control costs and also make overall legal costs more predictable, he’s confident that their popularity will continue to grow. Altria’s Keane agrees. “When it [alternative fee arrangements] works, it really can work exceptionally well,” she says.

Office Depot’s Garcia is even more adamant. Indeed, her in-house department has been on a mission “to blow up the billable hour,” as she puts it, and has become a model in the corporate counsel community for its successful use of alternative fee arrangements. “You wouldn’t build a house based on an hourly rate,” says Garcia, who contends the billable hour only serves to incentivize inefficiency. “Why would you bill legal matters that way?”

Office Depot’s success on this front would seem to prove her point. Thanks to the alternative fee agreements Garcia has struck with outside firms, in just three years she has managed to achieve a 30% reduction in outside legal expenditures—a feat that has received industry-wide recognition. In all, Garcia estimates that roughly 60% of Office Depot’s outside legal work is now done on an alternative fees basis. In most instances, that involves paying a fixed fee for all work in, say, single-plaintiff employment cases and real-estate leasing matters as well as SEC filings and motions in class action defense. “Whether it’s 50 a year or 500 a year, it’s a flat fee,” says Garcia.

Along with the gratitude of her CEO and board, Garcia has won plaudits for her pioneering work on alternative billing from the Association of Corporate Counsel, which named her their 2013 “Value Champ.”

Broadening the Mix

Garcia and other GCs aren’t only interested in shaking up the legal industry’s billing structure. They are also committed to opening doors for more women and minority lawyers, so that the legal profession better reflects the rich diversity of the country as a whole. To that end, they have been nudging their outside counsel to hire and promote greater numbers of diverse lawyers. And they have been keeping tabs on progress made by asking for regular reports on staffing, associates, and partners. What’s more, they have made it clear that diversity is an important part of the criteria they use in hiring outside counsel.

They also practice what they preach. At Interpublic Group, for example, more than half of the in-house department’s New York-based attorneys are women, and roughly a fifth, including at least three senior lawyers, are ethnic minorities. Based in part on those stats and its overall commitment to promoting diversity in the profession, the New York Law Journal recently named Interpublic to its 2014 list of outstanding legal departments. Bonzani, who started with the company in 2012, gives his predecessor in the GC’s office a good part of the credit and says that the department’s commitment is reflective of Interpublic’s commitment. “There was already a strong commitment [to diversity] when I joined,” he says. “I plan to continue building upon that commitment.”

At Unilever N.A., approximately 60% of the attorneys in the department are women, and just less than half of the department’s senior attorneys are women. There are also a number of women and minority lawyers in house at Altria and Office Depot. “I firmly believe diverse teams give you better results,” says Altria GC Keane. “And you’re doing the right thing for the profession at the same time.” Garcia agrees, adding that diversity ensures a wider range of perspectives when it comes to tackling legal issues, and thus begets a more effective legal team. “The diversity of thinking you get is very important,” she says. “It leads to a much more creative approach to problem-solving.”

Both Keane and Garcia are working hard to spread that message, by taking on leadership roles with key diversity advocacy groups. (Keane serves on the boards of the Leadership Council on Legal Diversity and the Commission on Women in the Profession, while Garcia is a board member for the Institute for Inclusion in the Legal Profession.)

Still, while they do see some signs of progress, they lament that far too few minorities are attending law school. And the numbers suggest that many promising minority and women lawyers wind up frustrated and discouraged and exit the practice of law altogether.

At Altria, Keane has certainly been doing her part to develop training opportunities for diverse lawyers. She and her team have instituted a number of programs that are designed to support the hiring, retention, and advancement of women and diverse lawyers, both at the company and at their outside firms. They include internship programs for first-year law students, secondment programs for senior associates, and trial advocacy training programs for women and diverse lawyers who are potential candidates for their trial teams.

Promoting Pro Bono

Keane, Garcia, and their respective in-house teams also serve the greater good by regularly taking on pro bono matters, something that hasn’t been the province of corporate legal departments historically. Garcia, who sits on the board of the Pro Bono Institute, says she expects Office Depot lawyers to work on at least one pro bono or diversity-related project a year. “I think it really adds to who we are as a team,” she says.

Garcia traces her commitment to pro bono service back to law school and her work in St. John’s Street Law program, where she offered miniseminars in Spanish on tenant rights for low-income area residents. “You could see the benefit it brought to people,” she recalls.

Interpublic’s Bonzani also believes that lawyers should give back to their communities. His department’s commitment to service reflects his company’s unique position, with his attorneys supporting Interpublic’s agencies in their social responsibility and public service efforts around the world— ranging from education on local issues of train safety in Australia, to preservation of President Kennedy’s online library in the U.S.

Bonzani and his fellow GCs say that St. John’s helped them foster the practical skills and critical thinking they rely on in virtually everything they do. Garcia recounts that she knew how to handle a closing straight out of law school thanks to the course she took in real estate law at St. John’s. And Bonzani notes that his tough 1L contracts class turned out to be extremely formative. “The rigor of that class left me extraordinarily well prepared,” he says. Unilever’s Rapp has a similar outlook on his legal education and training at St. John’s Law. “It was a rigorous, fact-based, intensely practical way of looking at things, and all of those things have served me well,” he says.“It’s very translatable to what I do.”

St. John’s Leading In-House Lawyers

Joseph C. Benedetti ‘67UC, ‘68L
Senior Vice President and General Counsel
New Jersey Devils
Brian P. Campbell ‘88
Vice President
Business and Legal Affairs and General Counsel
Dice Holdings, Inc.
Eugenie M. Cesar-Fabian ‘04
General Counsel and Chief Compliance Officer
Palladium Equity Partners
Lawrence M. Egan, Jr.,‘88SVC, ‘91L
Vice President, Associate General Counsel
CA Technologies Inc.
Joshua P. Foster ‘00
Vice President and General Counsel
Honeywell Security Group
Honeywell International Inc.
Jonathan I. Friedman ‘95
General Counsel and Corporate Secretary
Sirona Dental Systems, Inc.
Gerard M. Gallagher ‘78
Senior Vice President of Business Affairs,
General Counsel and Corporate Secretary
1-800-FLOWERS.COM, Inc.
Pamela L. McCormack ‘96
Co-Founder and Chief Operating Officer
Ladder Capital Corp
William Thaddeus Miller ‘79
Executive Vice President,
Chief Legal Officer and Secretary
Calpine
Elizabeth D. Moore ‘78L, ‘89HON
Senior Vice President and General Counsel
Consolidated Edison, Inc.
Joseph E. Oliva ‘91CBA, ‘94L
General Counsel
St. John’s University
Reginald M. Rasch ‘95
General Counsel
Rakuten Marketing
Donald Rosenberg ‘75
Executive Vice President, General Counsel
and Corporate Secretary
Qualcomm Incorporated
Neil Rube ‘86
Senior Vice President and General Counsel
Raymour and Flanigan Furniture
Thomas G. Seaman ‘86
Senior Vice President, General Counsel
and Chief Compliance Officer
Teladoc, Inc.
Catherine Vaczy ‘88
Co-founder, VP and General Counsel
NeoStem, Inc.
Douglas G. Vetter ‘88C, ‘91L
Vice President, Associate General Counsel
and Assistant Secretary
Apple

Susan Hansen is a freelance writer and editor based in New York. Her articles have appeared in The American Lawyer, Corporate Counsel, and other publications.

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