Wendy Hufford, deputy general counsel and assistant secretary at ITT, explains the ten questions every CEO needs to ask to take a pulse on the legal department.
1. How are you identifying and preventing litigation and regulatory risk?
At General Electric, the Fortune 20 company where Hufford invented and implemented an early warning system, she significantly reduced exposure and legal fees for the company. She says any general counsel can do the same. As strategic partners with the business and the resident experts of their respective problem areas, general counsel are in the best position to anticipate likely risks and address them before they can show themselves as lawsuits and regulatory investigations.
2. How are you contributing to the enterprise’s cost optimization efforts?
A general counsel’s responsibilities include proactively managing risk to reduce legal exposure and expense, as well as being a diligent steward of the department’s budget. One way to get a handle on outside costs, and which enabled ITT to reduce its expenses by 20 percent, is “convergence.” Using an RFP questionnaire, interviews, and a scorecard, ITT reduced its outside counsel pool from more than 100 firms to a lean 18. By creating competition between the firms, “We were able to get discounted rates, implement outside counsel policies that limited excessive fees and overhead expenses, and obtain free, value-added services while ensuring high levels of quality and service,” Hufford says.
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3. What are you doing to promote diversity within the legal department and among outside providers?
A legal team comprised of varied backgrounds provides different perspectives that lead to the best strategic outcome for a company. As a member of CPR Diversity Task Force, Hufford has witnessed the fruitful debate and interaction that diversity promotes. And while it’s important to seek a variety of voices in-house, executive leadership should also hold their general counsel accountable for building outside-counsel networks of firms that share those values.
4. How are you getting closer to the business units?
Pushing your general counsel to engage with the business units in the field will give them the insight into strategy they need to support both long- and short-term growth. “If the business wants to grow in a new global location, we can advise them of potential legal and regulatory considerations, as well as determine whether we need to line up outside counsel or establish an [on-site] in-house compliance representative,” Hufford says. The lead-time gained by simply understanding the trajectory and needs of the business translates into significant savings.
5. How are you leveraging legal technology?
A top-notch general counsel can’t be successful without a matter-management system, which provides access to the information most important to leadership: hard numbers. Tracking everything from new litigation to completed contracts, this system presents the big picture of where and how legal is creating value for the company and trends that can be promptly addressed.
6. What are you doing to improve processes in the legal department?
Room for improvement can usually be found in time management, how contracts are reviewed, and how new assignments are staffed. Hufford has been able to identify obstacles to productivity and propose process improvements each year that she’s been with ITT, and she encourages her team to do so as well.
7. Are you evaluating and resolving disputes early and effectively?
Taking the first step of evaluating the merits and projecting likely outcomes of a dispute can inform leadership’s decision to fight, mediate, or settle a case before a single hour of outside counsel time is ever billed. “If you nip it in the bud, you can save millions [of dollars] in legal expense and exposure, with the added benefit of preserving relationships that may have been damaged by a fight,” Hufford says.
8. How are you enhancing our compliance function?
A strong corporate foundation in ethics and compliance is key to avoiding regulatory problems. Leadership should be watchful that their general counsel is working closely with chief compliance officers to identify the critical regulatory issues costing the company money, people, and time.
9. What is outside counsel doing to identify global providers to offer support in local jurisdictions?
The worst situation a general counsel can face is to find themselves in a business crisis with a need to hastily cobble together a legal plan—especially abroad. “An experienced GC knows they won’t have the expertise to provide counsel all over the world,” Hufford says. “Therefore, a key priority should be to select high-quality outside providers where the business operates.”
10. How are you growing and developing your team?
A general counsel is only as good as their team, so it follows that a major responsibility must be to develop capable counsel. For Hufford, this plays out in mentorship and experiential learning for junior team members and continued training in new legal developments for senior team members.