Taught leaders – executive training for the ambitious GC

Leadership training has until recently neglected the growing ranks of GCs. To begin our Insight special with Reed Smith, we assess the educational options for in-house counsel striving to meet growing skills demands

In 2012 the MBA degree established itself as the most popular subject of postgraduate education in the US, accounting for more than a quarter of all enrolments according to the US Department of Education. Along with the usual diet of macroeconomics, management theory and financial accounting, MBA programmes have ensured that those who seek to carve out a corporate career focus on one quality above all others: leadership.

To say that there is now a full-blown leadership industry would put it mildly: over 30,000 books on the subject are listed on Amazon and, according to Neil Hamilton, professor of law at the University of St Thomas in Minnesota, there are more than 1,500 definitions of leadership and dozens of distinct theories of how to lead, each with their own champions.

Yet there is still little on the subject specifically for lawyers, and the literature and training that exists tends to focus on private practice. While the leadership industry has seemingly passed in-house counsel by, it is not for lack of appetite on their part. As Penny Dudley, general counsel (GC) of Bupa, points out: ‘Most in-house lawyers would love some sort of programme that addresses the issues they will face as they become more senior.’

Despite a lack of leadership theory for lawyers, a number of books highlighting the importance of broad skills in the GC role have appeared in recent years, most notably former General Electric GC Ben Heineman’s The Inside Counsel Revolution, which argues GCs will find themselves working increasingly at the intersection of law, politics and a range of other areas that require non-legal skills, while the legal and evaluative skills of GCs will become more important to large businesses.

The need for legal skills at senior management level is underlined by the appearance of executive programmes teaching the fundamentals of law to other business leaders. MIT Sloan Executive Education now offers ‘Essential Law for Executives’, a course that familiarises members of the c-suite with the legal and regulatory issues they will increasingly encounter, while in mid-2016 Columbia Law School announced it would begin offering similar courses to non-lawyers. If executives are discovering they need elementary legal grounding, the premium on GCs with executive training is surely set to rise in the next decade.

Another reason why the absence of leadership training for senior counsel is surprising is that, as Tamara Box, Reed Smith’s managing partner for Europe and the Middle East, puts it: ‘Lawyers like leadership. If you listen to any junior lawyer you’ll note how excited they are when they become the lead on a transaction. It’s a natural component of lawyering, but it doesn’t come naturally to everyone and law schools don’t prepare you for what it will take to become a partner or to go in-house and rise up through a department.’

But what does leadership mean for in-house legal? And why has such a core element in the modern lawyer’s skillset been overlooked?

For this Insight report we teamed up with Reed Smith to ask GCs and in-house legal counsel what skills the GCs of tomorrow will need to lead and what the future holds for in-house leadership training.

Level best

‘Managers rise to the level of their incompetence.’ So states the oft-cited Peter Principle, formulated in the 1960s by organisational theorist Laurence Peter.

As Peter’s now infamous case studies showed, institutions reward staff for successful performance by promoting them into roles that require skills not previously demonstrated. The upshot is that staff spend less time doing the job that got them promoted while senior positions end up filled by people not cut out for them (at which point they will be deemed to have reached their level of incompetence and rise no further).

The rise of the MBA and formal leadership training has made the principle less relevant in major corporates, but the technical professions – medicine, engineering and, especially, law – have yet to fully grasp its significance.

As Manfred Kets de Vries, professor of leadership development and organisational change at INSEAD, points out: ‘The most common cause of failure in a human capital business like law is micromanagement, which is the most difficult cause of failure for lawyers to overcome. Leadership is a completely different ball game and lawyers are not very good at it because they never got trained in it.’

Coping with the shift from a technical role to a general leadership brief is a problem that has not been lost on GCs themselves. Louise Pentland, GC of PayPal and former GC of Nokia, has seen the Peter Principle affect a lot of her peers. ‘What got you to that senior position was your abilities as a lawyer, then you go through this weird period where you do less of that and more people management. For a lot of lawyers, focusing on the technical side of things is a good defence when they are asked to perform a role they have never been trained in.’

While self-teaching has historically helped GCs learn to lead, boards are increasingly expecting their lawyers to

take up senior roles with these skills already in place. Joost Maes, principal at Egon Zehnder, created the executive search firm’s legal, regulatory and compliance practice group ten years ago and has since overseen hundreds of senior in-house appointments. He says there has been a big change in the level of leadership skills and communication skills boards are looking for in a GC. However, the statistics do not paint a positive picture of senior counsel’s preparedness for the top role.

‘In almost 50% of cases, the in-house team will contain no viable candidate to assume a leadership role.’

Maes believes the lack of executive training among in-house lawyers is now playing a big part in the decision to recruit externally.

If this trend is concerning for GCs, for more junior lawyers it should represent a wake-up call. John Amer, who runs the Legal Center of Expertise at executive search firm Korn Ferry, puts it bluntly: ‘When a new GC joins they replace the majority of their team within three years. Likely it is because they are brought in to create a certain culture that requires people to demonstrate competencies they did not learn at law school. There is a premium on well-rounded in-house lawyers and they tend to rise very quickly in their companies.’

Misha Patel, assistant GC at KPMG, has seen this same change at the front line. ‘It is getting difficult to recruit lawyers who truly get what the in-house role involves and who can operate at a multi-faceted level with the right skillset. That is why there is so much of a need for training courses teaching it in the market now.’

Learning to lead

Overcoming the psychological barriers facing technical specialists is just one challenge in-house lawyers face. Another obstacle is finding a course that teaches the right skills in the first place. Universities have, until recently, paid almost no attention to the likely career paths of their legal graduates. Even fundamentals like the difference between working in-house and in private practice have fallen outside the scope of most courses. However, things are slowly changing.

The appearance of leadership training as a fitting subject for law schools began in earnest with the publication of a 2007 report by the Carnegie Foundation for the Advancement of Teaching. The report noted the ‘increasingly urgent need to bridge the gap between analytical and practical knowledge’ in legal education and called for schools to commit to building non-technical competencies in their graduates. In November 2006, acting on his own initiative, Heineman spoke on law and leadership at Yale Law School (Heineman has since taught courses on the subject at a number of law schools).

In response to the Carnegie report, the University of Maryland School of Law received $1.6m in funding from the Fetzer Institute in 2008 to launch its Law, Leadership and Professionalism Initiative. The initiative canvassed the profession to establish which core practical competencies lawyers would need from a formal programme of study.

From these ventures arose a handful of elective courses in leadership at US law schools. In 2012 Colorado Law began a series of round tables looking at the organisational and leadership challenges its graduates would encounter and, in 2013, launched an action plan to address the role of teaching in meeting these challenges. Leading law schools such as Yale, Harvard, Georgetown and Stanford have since introduced electives with leadership components to help their graduates develop executive and managerial skills, though efforts to broaden the curriculum are still in their infancy.

According to Deborah Rhode, professor of law and director of the Center on the Legal Profession at Stanford University, US professors will discuss steps to ‘jumpstart the field’ of executive education for lawyers at the Association of American Law Schools’ annual meeting this month. Rhode, whose 2013 book Lawyers as Leaders was one of the first systematic studies of legal leadership, also notes that leadership is the subject of this year’s Stanford Law Review symposium as evidence of the subject’s steady rise into the mainstream of legal education. However, she acknowledges that law schools have been slow to act. ‘Clearly, we’ve come late to the parade. This is a $45bn industry and very few law schools have any systematic curricular coverage of these issues.’

For those already in practice, the options are more varied. A number of law schools now run short executive education programmes for private practice and in-house lawyers – essentially, mini-MBAs – and, according to those we spoke to, a number of new programmes will launch in the coming year. As part of its continuing education programme, the Association of Corporate Counsel (ACC) has also run its own mini-MBA at the Boston University School of Management since 2010.

One of the most developed offerings is Harvard’s Leadership in Corporate Counsel course, which David Wilkins, professor of law and faculty director of the Center on the Legal Profession at Harvard Law School, says is a response to the gap in legal training. ‘We found GCs were going to business schools to learn leadership skills because they weren’t getting it from the law schools, but that didn’t seem to work, because lawyers are a unique animal in terms of their relationship to the organisation.’

The costs of attending these courses are generally low as far as executive education programmes go (see box, page 38). Even at the upper end of the spectrum the cost is around that of mini-leadership programmes at leading business schools, which typically range from $9,000 to $15,000 for a week-long course.

Outside the US, leadership training for in-house counsel is also starting to take off. Perhaps the most substantive recent attempt to address the issue has been the General Counsel Executive Programme, launched in January 2016 as a partnership between the Rotterdam School of Management at Erasmus University and General Counsel Netherlands (GCN).

The UK market for in-house training has traditionally been led by consultants rather than law firms or universities, though the tendency to partner with academic providers and law firm sponsors is growing. Winmark, which has been running a chief legal officer network for around 15 years, recently cut a deal with London’s Queen Mary University, while the Global Leaders in Law network now runs a mini-MBA at Somerville College, Oxford and LBC Wise Counsel, one of the more respected in-house networks, has been running LBCambridge at Queen’s College, Cambridge since 2006.

A growing number of law firms are also moving to offer training for GCs, generally partnering with business schools. Reed Smith has also developed a number of sector-specific offerings aimed at in-house counsel just below GC level. For example, its Executive Essentials leadership programme developed with the University of Cambridge’s Møller PSF Group offers executive training to GC-nominated senior counsel in the media and entertainment sector.

Reed Smith’s global director of learning and development Nigel Spencer says the decision to focus on senior counsel rather than GCs was a response to client demand for more rounded teams. ‘GCs tend to be in charge of such wide remits that they really need the team underneath them to develop and take ownership of more non-legal work. Even before they reach the level of GC, counsel are now working with all areas of their business, including the board.’

‘GCs were going to business schools to learn leadership, but that didn’t work. Lawyers are unique in the organisation.’
David Wilkins, Harvard

A big incentive many of these courses offer attendees is continuing professional development (CPD) accreditation. As KPMG’s Patel comments: ‘A lot of providers have cottoned on to the fact that mandatory continuing legal education is better directed to the non-legal skills that in-house counsel are in search of, which is why many of the firms are now offering some form of leadership course with CPD credits.’

The appearance of leadership training for in-house lawyers over the last few years has been accompanied by a parallel shift within internal learning and development functions. Access to internal training used to be severely limited for in-house lawyers, mainly because many such programmes were closed to support functions.

This too is starting to change. As Suzanne Wise, group GC and company secretary of Network Rail, notes: ‘When I started as an in-house lawyer, we had to fight to get onto big company leadership programmes because it was seen as a waste of a place to have a lawyer on the course. Now I am just as able to put my bright stars from the legal team forward as anyone else.’

‘When I started, we had to fight to get onto leadership programmes. Now I am as able to put my stars from legal forward as anyone else.’
Suzanne Wise, Network Rail

 

 

The skills gap

With the leadership industry waking up to the opportunities available for in-house training, the question is: what skills do GCs need to become effective leaders? Here the answer is likely to be a mix of operational skills and people-influencing skills, with a slight emphasis on the latter.

First, the expectations of technical competence placed on GCs will likely get more demanding in line with growing corporate complexity. While GCs themselves often take it as a given that anyone who has risen to a senior position in-house will have absorbed the necessary technical training, mastery of even these skills is becoming more of a challenge. Reed Smith’s Box says: ‘You can’t know everything as a GC anymore, and if you try to do it all yourself you will drown. Learning how to delegate effectively and implement sound processes are the first things I would teach any senior counsel who doesn’t want to be drinking from the fire hose all the time.’

There is also likely to be a growing board-level emphasis on recruiting GCs with high levels of financial literacy. Reed Smith global managing partner Sandy Thomas, who has worked with many high-profile GCs, has seen a big change in boards’ expectations. ‘A more tangible appreciation of the financial performance of the department is used to distinguish GCs now,’ he says. ‘That is a relatively new phenomenon but it is certainly the case that GCs are expected to take ownership and leadership of their department’s performance versus budget and gain efficiencies in their use of outside counsel.’

While board-level demands for GCs with more refined finance skills will continue to grow, the so-called soft skills are likely to be of more use to those seeking promotion. ‘There are a number of dimensions of leadership recruiters look at when evaluating a candidate,’ says Maes, ‘but the most common thing that holds candidates back from a GC role is a lack of people-leadership skills.’

‘In almost 50% of cases, the in-house team will contain no viable candidate to assume a leadership role.’
Joost Maes, Egon Zehnder

But, as Kets de Vries argues, at a certain level of professional development the distinction between hard and soft skills may no longer be useful. ‘The hardest skills for senior leaders to master are the softest skills: how to get the best out of people, how to run great teams and have a strong culture and how to forget your own hubris and see the way you come across to others.’

Does this define leadership in the GC role? According Harvard’s Wilkins, the search for a definitive answer is futile. ‘I could give a hundred plausible definitions of GC leadership, but there is no good concise definition apart from the common sense one: you need people who can direct increasingly complex global businesses and you need to be able to integrate what you’re doing with what the business wants.’

It’s a simple but important lesson for GCs. Korn Ferry’s Amer has an even simpler one: ‘Learn to lead or get stuck where you are in the corporate hierarchy.’ LB

james.wood@legalease.co.uk

For further reading, please return to the menu for Leadership and the modern GC.