So, You Want to Go Global?

Charlie Gray, general counsel of Teradyne, explains why a flexible legal department might be the most important prerequisite for international expansion

Charlie Gray's legal insight: “Focus on what legal needs your company has, then find the right legal resource to deliver that service to your company.”

Boston is the undisputed birthplace of the American Revolution. What most people don’t realize, however, is that it also was a major landmark in the computer revolution. In the ’80s and ’90s, the city was teeming with electronic innovation, and by many accounts still is. Although Charlie Gray didn’t seek a career in technology, it seemed inevitable that a career in technology would eventually seek him—and in 1996, it did.

A graduate of the University of California, Berkeley, Boalt Hall School of Law, Gray was working as a trial lawyer at the Boston law firm Hale and Dorr when a former colleague invited him to join the in-house legal department of Wang Global, a large technology firm that had been the world’s leading manufacturer of word processors. Because boardrooms look nothing like courtrooms, it was a bold move, to be sure. But also smart, as it marked Gray’s entry into both technology and corporate law, which put him on the trajectory to assume his current position as vice president, general counsel, and secretary at Teradyne, a North Reading, Massachusetts-based company that manufactures automatic test equipment for use in testing consumer electronics and semiconductors. Teradyne’s customer base is largely overseas, and Gray is laser-focused on the opportunities and challenges created by globalization. During a recent conversation, he explored both.

For a company like Teradyne, globalization is obviously ripe with opportunity. But does it also present a challenge?

Charlie Gray: Last year, more than 80 percent of our revenue was outside the United States. Asia, in particular, is where much of our business is, where many of our customers are, and where most of our services are provided. That definitely presents a big challenge. We’ve moved certain functions and activities closer to our customers in Asia, but the nerve center of the company is still here in Massachusetts, where the company was founded 54 years ago. So, our challenge is this: how do we support a business that is largely in Asia, sitting here in Massachusetts?

How does that challenge extend to the legal department in particular?

Gray: In legal, we’re subject-matter experts tasked with managing the legal work for the company globally, but because our company is in so many countries, we can’t actually be experts in the laws of every country or be everywhere our company does business. As a result, we have to work with our employees in the field to help us with the legal and compliance issues facing the company. For example, our human resources team works with us on local employment issues and our logistics and service teams assist us with trade compliance.

How have you structured your legal department in response?

Gray: Our strategy is to do as much in house as possible. One, we are closer to the business than anybody outside it, and two, it’s cheaper and more efficient. We use outside law firms or alternative legal service providers for nonstrategic, routine, repetitive work, as well as legal work that requires special expertise, like cross-border mergers and acquisitions or international patent prosecution. The goal is to have the best, most efficient legal resource manage each legal service provided to the company.

Clearly, working at Teradyne has taught you a lot about managing a global business. What have you learned about doing business in Asia, especially?

Gray: You can’t view Asia in the aggregate; you really have to take it country by country, and each country has unique challenges with respect to doing business and getting legal work done. We have more than 500 people in the Philippines, for instance, and doing business in the Philippines is much different than doing business in China, where we have more than 400 people. You have to understand the major and also the subtle legal and cultural differences in each country.

The legal and cultural differences impact negotiating contracts, protecting intellectual property, managing employees, and complying with regulations in each country. The challenge of doing business in China while complying with the US Foreign Corrupt Practices Act has been publicized well, but there are other, equally important and less-publicized daily challenges in doing business not only in China, but throughout Asia. US-trained lawyers need to be sensitive to the historical and cultural views in each country. These daily challenges make the practice of law in a global company such as Teradyne so rewarding.

Working in Asia is challenging. As a business environment, is the United States more hospitable?

Gray: Many general counsel conferences I attend focus on how complex the regulatory environments are in other countries, but doing business in the United States is also incredibly difficult, and it’s becoming more so every day. The employment environment here in the United States, for example, is arguably more complex than in almost any country in the world. The United States government is becoming increasingly active, and many laws vary by state. California, where we have a large employee population, is a very difficult place for employers to do business. Massachusetts is as well; we have complex data privacy rules, wage and hour requirements, and independent-contractor requirements. Risk is actually greater here than in many countries simply because it’s so litigious. You might have complex regulations in certain countries, but they’re not enforced as aggressively as they are here. One small slipup here could result in litigation, negative publicity, or a government fine or penalty. We have to be very, very careful.

What’s the secret to delivering legal services within and across borders?

Gray: The lesson I have learned, and the lesson I would pass on, is to have a maniacal focus on determining the best resource for delivering a legal service your company needs. It could be a lawyer in house. It could be a nonlawyer in house. It could be someone in house that works in Asia. It could be a large law firm that specializes in a certain functional area and has a global footprint. Or it could be an alternative legal service provider that does things at a much lower cost. Whatever it is, once you’ve established what you think is a very effective way of delivering quality legal services to the company, you have to continually reevaluate it to be sure it’s the best, most efficient way of managing the company’s legal needs.