Left to right: June Eichbaum, Selena LaCroix and Julie Goldberg
Photo by John Abbott Photography
Just as men and women of color have ascended into critical roles in the legal departments of America’s most prominent corporations, an increasingly diverse group of people are playing key roles in the hiring of the top legal talent. They are executive search professionals — “headhunters,” in the vernacular. While they are outsiders to any particular firm, they are insiders to industries and the legal profession, and are possessed with the knowledge of what breeds success in individuals and corporations.
Today’s leading executive search professionals include several women who left their law practices behind to help companies make the right choices when it comes to in-house counsel. Their targets are lawyers with qualities including regulatory knowledge, crisis management skills, and international experience. Several of these women shared aspects of their craft, and illuminated how the right hiring decision can lead the corporation to great global heights—and the wrong one can land it in a world of scandal.
Changing to a new general counsel is a high-stakes endeavor precisely because that position has really evolved over the last eight to ten years, says executive search consultant Julie Goldberg of Korn/Ferry International. “In the absence of a vigilant risk manager, a company can find itself in trouble with regulators and with damage to its reputation,” she says.
So it is not surprising that many corporations turn to professionals to lead the executive search when their existing general counsel retires, or when the company has a new CEO—or, all too commonly, when the corporation is in crisis and needs some new guidance.
Finding the perfect fit is the goal for executive search consultants like Goldberg, Catherine Nathan of Spencer Stuart, June Eichbaum of Russell Reynolds, and Selena LaCroix of Egon Zehnder International. Search professionals make it their business to know the strengths and weaknesses of potential candidates and their compensation expectations, and often can predict the list of qualities that the company will need in its general counsel. The guidance gives the company an advantage over one that decides to do a search on its own, or with the assistance of its outside law firm.
“I can have a true consulting role,” says LaCroix, who has been able to leverage her recent experience as a former Honeywell vice president and general counsel (Asia Pacific), “where I can be a thought partner to senior management in brainstorming their priorities and challenges. Knowing what good looks like, I am able to be effective in assessing talent in the market that I believe have the skills to help transform the company.”
In addition to knowing who “swims” in the finite pool of Fortune 500 company general counsel, search professionals need to be ever on the lookout for rising talent. “Our target group is people we decide might be very good potential candidates for the role based on what we know about them,” says Goldberg.
Nathan, whose clients include Procter & Gamble, Hewlett-Packard, and GlaxoSmithKline, explains that her firm maintains a comprehensive database of potential candidates, but she cautions that reliance on the data is not the end of the inquiry. “You want to always refresh your candidate pool, and clients are not hiring us to name the people we already know. They are hiring to us to be current, fresh, and to be always looking for people. It’s called ‘search’ for a reason.”
The advisory role of the consultant can be essential in a first-time search, or if the company profile or mission has changed since the last general counsel was hired. “CEOs are very experienced with CFOs and COOs and HR executives,” points out Nathan. “Most CEOs, however, have never hired a general counsel.” Nathan says her role is to assist clients in establishing the right priorities when launching the search, and to help the CEOs get comfortable hiring the lawyer who will be a key advisor if serious legal challenges develop.
For instance, a good general counsel is not only expected to have a good educational pedigree, excellent training, and developed managerial skills, but also to possess business savvy and to be very risk-focused, says Goldberg. “The leadership quotient is essential in today’s world. Once upon a time it would have been enough to be a great lawyer or technician. Today, being a great lawyer and a great technician is really just a threshold requirement.”
In today’s highly regulated atmosphere, knowledge of how to navigate the risk landscape and familiarity with regulations can give a company a competitive advantage. Because the best general counsel always has to be mindful of Sarbanes-Oxley, Nathan says, “You need to know what is going on at a granular level.”
Making the search all the more challenging is LaCroix’s observation that the “cutting-edge” companies have transformed the classic general counsel model into that of chief administrative officer, which requires a broader skill set.
As an example, she points to her client Nike, which expanded the role of general counsel to include responsibilities such as government relations, corporate responsibility and sustainability, real estate, facilities, and the Nike Foundation. When Nike hired her firm, Egon Zehnder identified the ideal candidate in Ron McCray, who gained that broad experience as head of the legal department at Kimberly-Clark Corporation.
In addition, hiring an executive search firm can guarantee that the slate of candidates is diverse. “Today, beyond looking for the best person for the job, most of the clients at a minimum are requesting that we make our best efforts to find diverse candidates,” says Goldberg, “and we believe like most of our clients that every organization today is served far better when there is diverse representation and when there are people who can help add different perspectives.”
Getting There from Here
The executive search fee agreements between the corporations and consultants vary in type. Nathan says that, in most cases, the executive search professional will be paid for services whether or not the placement is made, and that fee is usually one-third of the projected salary and bonus of the general counsel. At Egon Zehnder International, says LaCroix, “the consultants are all paid a salary and bonus in a structure that is analogous to a private law practice. We do not work on commission or a contingency—we have a fully retained fixed fee model.”
Nathan says that, in today’s market, the fees are rarely contingency-based. She explains that historically, contingency structures worked because multiple firms would compete to fill the same legal position, and “whoever got the placement got paid.” She explains that the executive search, in contrast, is a relationship that is no different than the company’s relationship with its accounting firm or law firm, and is contract-based.
Compiling a slate of candidates begins with a frank dialogue between the executive search consultant and the CEO. Eichbaum, who handled the search resulting in the hire of Steve Cutler at JPMorgan Chase, says, “I firmly believe the more substantive discussion you can have with the ultimate client at the front end of the search, the more efficient the process will be, the more consistently it will meet expectations of the client, and the happier the client will be at the end because the fit will be right.”
“The other thing I ask is ‘What keeps you up at night?’” says Nathan. “We try to test for whether this lawyer has the inner strength, and right attitude and ability to focus strictly on the best interests of the company, the CEO, and the board.” But, she points out, “In managing risk you always have to understand that the business has to go forward, and you can’t be too conservative. It’s always a delicate balance.” The compatibility and personal dynamic between the CEO and new general counsel is a factor that all the consultants agree is crucial.
The targets of today’s leading executive search professionals include lawyers possessing regulatory knowledge, crisis management skills, and international experience.
“When I meet with a general counsel candidate, I often evaluate them by asking myself, ‘Can I see this person sitting next to the CEO on a 15-hour plane ride?’” says Nathan. She explains that this test is very helpful to getting to the core of the search, which she believes relates to the candidate’s “empathetic qualities:” “You can click with a lot of people, but what you want is someone who knows when to be quiet, and when to honor someone’s space; having the ability to maximize your face time with the CEO, and knowing when to defer to others who also need to talk with him or her.”
The best candidates excel at being outwardly focused and proactive. “The ultimate distinguishing characteristic of the best of the best comes down to being proactive, being at the side of the CEO, being relevant and an advisor to the board,” says Goldberg. “When you get in-house as general counsel, it is not good enough anymore, like it might have been 20 years ago, to sit in your office and wait for the business leaders to come to you with a problem.”
The definition of the core competencies needed in the general counsel can vary depending on the reason for hiring a new general counsel. The consultant must assess the company’s obstacles to success, which may include regulatory, enforcement, and antitrust issues, or even activist investors.
In the case of a company embroiled in a scandal or accusations of corporate malfeasance, that may entail a search for a former judge or prosecutor; in another situation, companies involved in acquisitions on a global stage may benefit from hiring an antitrust expert. “Once a client has identified the key franchise risks that a general counsel needs to diffuse, the core competencies required to be successful in a particular position will become apparent,” explains Eichbaum.
On the other hand, a perfectly steady company might be looking for a change agent. Eichbaum recalls a search she led for Allstate’s CEO, Tom Wilson, who she calls a leader who values innovation and maximizing the performance of his team. She found him the perfect match in the dynamic Michele Coleman Mayes, who had been the general counsel at Pitney Bowes.
Another example was the executive search that landed former Department of Justice official Larry Thompson at PepsiCo. “He was a real coup for PepsiCo,” says LaCroix, “because they wanted a key partner within PepsiCo with a very strong social policy bent to ably represent the company and raise the profile of PepsiCo to various constituencies that are transforming social policies to legal requirements.”
Sealing the Deal
Next in the process is a complete background, credit, and reference check, as well as an Internet search for any negative press the candidate may have received. Executive search consultants also take the frontline position when negotiating the candidate’s compensation. “These are very successful people, and they are very well compensated,” explains Goldberg. “The clients and the candidates feel more comfortable airing their positions and perspectives through us, rather than getting involved in heated negotiations one-on-one.”
This vantage point also enables the consultants to advise aspiring general counsel on how to maximize their chances of ending up as corporate royalty. They frequently address these questions at seminars and conferences. Nathan suggests that lawyers make smart decisions and prepare to be lucky, and take advantage of opportunities to showcase their talent.
In addition, Nathan gives some practical tips: “Do not forget—from the moment you park your car and deal with the parking attendant, to the minute you walk out of that office—that you are making an impression. How you treat the receptionists and assistants reflects one’s total image. It’s all part of the picture of ‘Is this somebody I want to work with?’”
Eichbaum sees another trend in hiring: “The growth of the international markets has put lawyers with international experience at the top of many clients’ requirements.” She notes that, in light of the increasing importance of regulators outside of the United States, it is an asset if a general counsel speaks another language or has lived abroad. “Now, there is a multicultural sensibility, and the critical components are these soft skills,” she says.
LaCroix elaborates by suggesting that in-house lawyers take on an international assignment. “The other important aspect is the ability to lead and manage teams, and as lawyers we tend to be more individual contributors. They need to be involved in projects, and lead a cross-functional team to show that ability to pull people together and to motivate people to achieve a goal.”
To corporate leaders, Eichbaum has this to say: “The best new general counsel emerges in a succession planning effort that the existing general counsel undertakes in conjunction with the CEO. As general counsel, the strongest legacy you leave is that you’ve trained, developed, and brought along your successor.”
Still, there will always be the unexpected opening in the general counsel office, and executive search firms at the ready to assist in filling the void. “The most wonderful feeling is when a search results in a trifecta: creating a win-win for client and candidate; finding the optimal solution for the client through a creative, collaborative process; and adding diversity on the leadership team. For instance, when I introduced Don Liu to Xerox, it felt like a perfect world,” says Eichbaum. DB
Elisabeth Frater, Esq., specializes in business litigation in Napa, Calif.
From the May/June 2008 issue of Diversity & The Bar®