1025 Connecticut Avenue, NW, Suite 200 Washington, DC 20036-5425 Tel 202.293.4103 Fax 202.293.4701 www.acc.com
The Business Case for Having a Chief Administrative Officer in Your Law Department
Insights from Rick Palmore Executive Vice President, General Counsel & Secretary, Sara Lee Corporation* During the past several years, Sara Lee’s law department has been undergoing a ‘transformation.’ The newly transformed law department is now substantially leaner and the legal service delivery model has been dramatically redesigned. Part of this transformation included creating a new position within the law department—the Chief Administrative Officer (CAO)—to coordinate the efficient, effective and holistic delivery of legal services and to help ensure that the right initiatives are undertaken by the law department as a whole. Rick Palmore, Executive Vice President, General Counsel & Secretary for Sara Lee Corporation, explains “adding a position at a time when the company was not looking to increase headcount required implementing a thoughtful and formal process and presenting a business case to support the need. My decision to add a CAO was ‘spot on’ and has yielded terrific results.” Below are Palmore’s insights on value added by a CAO and tips to consider in creating the supporting business case. Sara Lee’s Law Department: Scope, Transformation & Global Challenges ‘Pre-transformation,’ Sara Lee’s law department included around 70 in-house lawyers. Today, Sara Lee’s global law department includes 45 lawyers—around 36% less than pre-transformation—with about twice as many lawyers located outside of the United States than within. Palmore lists a number of key challenges for this leaner, global law department with more lawyers located outside of the company’s headquarter-country than within: Communications: communicating across the entire law department is a challenge; time zones, language considerations, and customs require attention.
Functioning as a Single Team: with lawyers spread around the globe, good processes and communications are important to help the department function as a single team. Efficiency: the law department’s goal is to provide legal services with little duplication; this requires a coordinated effort and approach with good communications. Substantive Legal Areas Need to be Covered: attention needs to be paid to help ensure that all substantive legal areas that need to be covered are covered in the most appropriate way. Processes & Systems: one of the law department’s goals is to try to ensure at least some uniformity in the approach to providing legal services across the company’s businesses. Relationships with Law Firms: described as a ‘moving piece,’ monitoring relationships with law firms around the world—fees, substance, and the relationship generally—is a challenge that needs to be properly managed for a global law department servicing a global business.
*
Effective February 1, 2008, Rick Palmore will be leaving Sara Lee Corporation and joining General Mills, Inc., as of February 11, 2008, as Executive Vice President, General Counsel and Chief Compliance & Risk Management Officer.
Sara Lee’s Solution: Create the CAO Position & Staff it with the Right Person to ‘Advance the Game’ In order for the law department to tackle the above challenges ‘head on’ and to function as an efficient and holistic team, Palmore decided he needed to create the CAO position. “In a lean organization, every lawyer on the team has a heavy load. Requiring these lawyers to perform administrative functions that are critical to the effectiveness of the law department—in addition to their ‘day jobs’—just didn’t seem smart,” explains Palmore. The CAO position helps coordinate these important administrative initiatives and to ensure that the right initiatives are undertaken. Making the Business Case So, at a time when the company and the law department were in a ‘downsize’ cost-cutting mode, Palmore decided that the law department could not afford not to create this position. Palmore engaged the company’s CFO and CEO in a formal process to persuade them that adding the CAO position within the law department was the right thing to do. His ‘pitch’ included presenting a job description and business case. Important components of the business case included outlining: Kind of person (skills, experience requirements) he expected to hire
Cost Clear accomplishment expectations and how this ties with net benefits to the organization Deliverables schedule
Three key messages Palmore included in delivering the business case were: Although cost is a challenge, the law department can’t afford not to do this;
If the law department does the right things and finds the right person, we can ‘pay’ for this position within two years’ time; and Having the right person in this role can advance the game significantly (Palmore set short, medium and long-term goals so they could demonstrate some relatively quick wins and progress towards longer term goals along the way).
In addition to making the business case to the company’s executives, Palmore emphasized the importance of selling this position to the law department’s senior leadership team and helping them to understand—in advance of bringing this person on board —the advantages for the department as a whole. A key message here is that the CAO allows these senior legal leaders, including Palmore as CLO, to be more proactive and more focused on ensuring that they are doing the higher value things that they need to be doing as lawyers for the company. CAO Position: Portfolio components and organizational structure The Sara Lee law department’s CAO reports directly to Palmore and participates in the law department’s senior leadership team retreats. “Establishing the right official portfolio and the right profile within the organization is important. Having the CAO report directly to me as CLO gives the right profile within our organization from an effectiveness standpoint. The CAO has responsibilities across the entire legal team. There is no other position— other than CLO—that has this scope of responsibilities,” explains Palmore. The CAO’s portfolio includes two main components: a regular portfolio and a ‘special projects’ portfolio. The latter component is fluid and morphs with the changing needs and initiatives of the law department. Among the core responsibilities within the CAO’s regular portfolio are: Financial management & annual forecasting and budgeting
Organizational design: assessment and recommendations Staffing, including working with Human Resources personnel Insights from Rick Palmore, January 2008
Outside Counsel management Systems management for systems used within the law department Effectiveness and efficiency issues—are there proper processes and systems in place to support effective quality service delivery and do law department personnel have the tools and training they need, etc. Planning annual departmental meetings E-discovery management Records retention Liaison role to other key functions within the organization
Value for Sara Lee’s Law Department & Closing Insights Palmore shares that having a CAO has been a very positive step forward for Sara Lee’s law department: they’ve accomplished a number of ‘quick-hit’ initiatives and have several others underway. And, although they’ve had some significant short-term successes and cost savings results, he also emphasizes the importance of taking a longterm view of the opportunities and benefits to the organization.
Insights from Rick Palmore, January 2008