Dancing on the ceiling
5 February 2001
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moving in-house has always been a popular goal for lawyers, often from day one of their training contract. A two-year stint in private practice to earn your spurs and then off to that sexy in-house post to deal with real people and real problems.
That is the theory, but for the very ambitious there is a problem: in the past, it was tacitly acknowledged that career progression for in-house lawyers stopped with the posts of head of legal or general counsel; at this point lawyers reached a glass ceiling which was impossible to pass, the effect being to draw many senior practitioners back into private practice and back on the partnership trail.
However, there is growing evidence that this trend is being reversed, that lawyers are challenging the barriers which are barring them from the most senior management positions.
Paul Meadows, legal director at Coca Cola Enterprises UK, says: "There are increasing examples where the glass ceiling is being broken. It's increasingly recognised that commercially-orientated lawyers can bring more than legal advice to the board table, which is being driven partly by the legal framework in which many companies work. This is becoming more complex, so they must consider the legal and regulatory issues very early on."
Technically, there is no reason why lawyers cannot lead a company rather than a department. Mark Oldham, director of legal affairs at United Biscuits, says that a lot of the qualities possessed by lawyers would be very useful for senior level positions, specifically negotiation skills, the ability to get involved in detail and to switch from level to level. "Lawyers can bring a very unique perspective to a lot of things in a company," he says. "They are a depository for corporate information." Whereas the transition to senior executive has always been open to finance directors, Oldham argues that there is a large overlap between legal and finance functions and that the two go hand in hand.
Historically, lawyers may not have reached the highest echelons within a company for of a variety of reasons. According to some lawyers, there are functional barriers in place designed to prevent them from emerging into more commercial positions. In contrast to Oldham, Richard Bennett, group general manager for legal and compliance at HSBC, says: "Accountants are better qualified for board and managerial positions than lawyers and are maybe more suited. Lawyers are trained to be lawyers and are effective in strategic positions, but not in running a business."
Other in-house lawyers believe that the previous lack of lawyers in top positions is a chicken and egg situation. Being able to think outside of their legal box and make business judgements makes in-house lawyers more valuable to their companies, but they are unlikely to volunteer anything more than commercially-geared legal advice without knowing that the advice will be welcomed.
Others feel that lawyers are very commercially-minded but do not receive enough credit for it. In order to get to the top of the career management tree, some argue that they have to change their career direction because it cannot easily be done as a lawyer. Of course, there is also the fact that many lawyers want to practise law, which they cannot do at the very top of a company. Head of group legal services at Sainsbury's David Thurston says the key problem is that not many people want to make the great leap. "They are very happy heading the legal function and don't want to make the move into the more commercial side of the business," he says. However, he adds that for those who do, there are far more opportunities than in the past.
This is particularly evident in the US, where lawyers who have succeeded in taking the helm of companies are more widespread. Rick Cotton has recently become president and managing director at media company CNBC Europe. Before that, he was vice-president and general counsel for media company NBC. Cotton believes that there are two ways for lawyers to reach board level in the US. Early or mid-career, some lawyers transfer to the business side of the company and work their way up from there. By way of example, Cotton mentions the president and chief executive officer (CEO) of NBC Bob Wright, who succeeded by this path. The other route is for the most senior legal person in the company to be promoted to CEO.
Cotton says that the skills of a general counsel are different to those of a chief executive, as it is important to "develop the ability to go across the organisation and work to support each of its functions. The general management role forces you to draw on a wider variety of skills because you're engaged with the entire breadth of the organisation. You cover the whole gamut of the functions that must all be performed well for the organisation to be a success."
Tom Glocer, group CEO of Reuters from July 2001, acknowledges that in the UK, accountants progressing to finance director and upwards is common. But he says that in the US, being an accountant rather than an investment banker is less appreciated. "In the US, being a lawyer is easier and less disadvantageous; also, because it is a very litigious society, there are more lawyers around," he says.
Jane Stables is head of legal, and unusually personnel, at United News & Media. She is heavily involved in the business side and has a small department, comprising 11 lawyers around the world. Consequently, she tends to "buy in legal services, interpret the legal advice and make judgements about what the appropriate thing to do is in the business". She says that by being in charge of personnel, she "can't help but know what the company is doing". An M&A lawyer with experience in employment law, Stables was asked specifically to take on the personnel role. In her view, getting the "human issues" right is fundamental, and she now sees any issue from two angles, one as a corporate lawyer and the other as head of human resources.
Bob Ayling was the legal director at British Airways before he took on other senior management roles within the organisation. Marjorie Scardino, chief executive of media company Pearson, was a partner in a law firm in Georgia from 1976 to 1985, and moved from being a lawyer into the world of media and publishing. The influence of global progress is also having an impact. Henry Fan Hung Ling, managing director of investment company Citic Pacific in Hong Kong, practised law as a barrister. Greg Terry, managing director and CEO at Brierley Investments, was an international partner at Baker & McKenzie in Hong Kong for a while. While these latter three examples were not in-house lawyers, they do show that lawyers can make the transition to the very top positions.
Ironically, a company that never adhered to the glass ceiling theory is UK-based manufacturer Pilkington. Company secretary John McKenna explains that Leslie Wall, his principal during his articles, was in charge of the legal department and went on to become deputy chairman of the company in the 1970s. McKenna himself was originally group legal adviser and company secretary. The role was then split, and McKenna retains the company's secretarial functions.
Company secretary work often enables in-house lawyers to attend board meetings and gain regular access to management activities. A CSS (the company secretarial arm of recruitment consultancy Beament Leslie Thomas) market survey for company secretaries 2000-2001 concluded that demand for company secretaries is increasing. The number of companies combining the roles of in-house solicitor and company secretary and those where the roles are separate are roughly equal. Meadows, who is company secretary for some of Coca Cola's enterprises, says that combining the role can be an efficient use of resources given that legal training covers company secretarial aspects.
Carol Williams, head of the legal department at Northern Foods, reports to the company secretary, who is a lawyer and who originally held Williams' position before moving to an operational role and then to company secretary.
Denise Jagger, company secretary and corporate counsel at Asda, says that she enjoyed having both roles. As Asda is no longer a public company, being wholly owned by Walmart, the company secretary aspect is not as relevant now as it was before, when sitting around the board table as a lawyer meant that she had a different perspective to her colleagues.
Whatever the previous remit of an in-house lawyer, it is appreciated that they deal with a variety of evermore general commercial issues. The functions of in-house lawyers are therefore widening as they knock away at that glass ceiling. n