The stealth team.
The success of that transaction is due, largely, to the negotiating skill of Ronald A. Gray, a 40-year-old in-house lawyer.
As senior counsel, Gray is the legal adviser for the 11,000-employee American Express Travel Services Group and Travel Management Services (TMS). According to Business Travel News, TMS generated $4.5 billion in 1991 air sales for American Express, leading at least one company executive to nickname it "the stealth division." It may not be the most visible Amex entity, but it is certainly one of the most effective.
The same could be said of Gray and the estimated 75,000 lawyers who have chosen to develop careers on the corporate counsel track rather than in government investment banking or private law firms. Unlike many in those arenas, the attorneys hired by corporations to manage and staff in-house legal departments are rarely in the limelight Despite having taken on more crucial roles in recent years, often driving the transactions that are a growing company's lifeblood, traditional corporate culture still relegates in-house counsel to the wings. But there is not one significant business area or upper-management decision that escapes their input from the phrasing of the simplest bit of advertising copy to the complexities of launching a subsidiary in, say, Abu Dhabi.
The role of in-house counsel is intended to be proactive, as they attend to all of the regulatory compliance, licensing, trademark and contractual needs of their employers. Whereas outside counsel are typically hired in reaction to a problem, in-house counsel are hired to prevent problems. Usually answering to the demands of numerous clients, each representing a corporation's divisions or departments, in-house legal jobs are typically shaped around a dizzying array of responsibilities that incorporate a wide range of skills and knowledge, some of which have less to do with law than pure business sense. Here is just a sampling:
John Rose is vice president and general counsel of New York-based NBA Properties, the sports marketing arm of the National Basketball Association (NBA). His job encompasses marketing, television production and new business and sponsorship development responsibilities. But his primary role is to make sure that the innumerable proprietary rights for the NBA's 27 teams are registered, protected and appropriately exploited. During Rose's four-year watch, the NBA's product sales tripled to $1.4 billion in 1991.
Last August Joan Rector McGlockton, 34, became the first black corporate secretary of Washington, D.C.-based Marriott Corp. She acts as primary liaison between Marriott's board of directors and senior managers. She also coordinates and manages shareholder relations and maintains the company's corporate records as well as those of its 300 subsidiaries. McGlockton's colleague, Gregory S. Saunders, an assistant general counsel at Marriott Corp. in Washington, D.C., renders legal advice to the senior vice president of human resources and the vice president of the tax department on tax issues and transactions, government relations and employee benefits for Marriott's 200,000 employees. Saunders, 41, supervises a staff of two other lawyers and a paralegal.
As litigation counsel for CBS Inc., Beth Finley defends the television company against lawsuits such as one filed last year by George Holiday, the amateur photographer who videotaped the now infamous Rodney King footage. Finley, 34, also guards against lawsuits by reviewing scripts and videotapes of television shows such as Rescus 911, and fact-based TV movies to ensure against character defamation or other breaches that could spark litigation.
And then, there's American Express' Gray.
Helping Elephants To Dance
With a staff of four paralegals and five attorneys--including the general counsel of Lifeco--Gray provides legal advice and assistance in the development and management of services for American Express' Corporate Card, Business Travel, Retail and Wholesale Travel business. As the senior division attorney (two titles stand between his and general counsel, or chief legal officer, for the entire company), Gray commands a six-figure salary and administers a budget that he characterizes as "just north of $1.6 millions." In essence, his client is the travel division, personified most directly by its president Roger Ballou.
It is Ballou, Gray says, who makes his job "incredibly challenging, exhilarating. He wants more from his lawyer than just a reading of the law. Whenever he has a question regarding a proposed business deal, he wants know what I think from a strategic direction, not just the legal ramifications."
Gray is not only relied upon to review advertising copy to ensure against legal exposure, he has also participated in the drafting of advertising copy ensure that it pushes the right buttons with consumers.
Each year, Gray and his staff either negotiate or assist on roughly 900 contracts and agreements worth hundreds of millions of dollars of revenue to American Express. Gray must also play a role in debt collection at times. In early 1991, when a large Corporate Card client went bankrupt and fees owed to American Express stood in jeopardy, in a coup for the company, Gray negotiated a $1.8 million payout Later that year, Gray served as one of the architects of a program that would bring 600 U.S. offices of American Express into compliance with the requirements of the Americans With Disabilities Act which went into effect in early 1992.
Gray was a key participant in a joint venture between his division and AT&T, supervising the negotiations and trouble-shooting when things got sticky, as they usually do when two such mammoth corporations attempt a cooperative venture. In March, they launched the Corporate Link Program, which enables small businesses to combine the advantages of the AT&T Corporate Calling Card with the American Express Corporate Card. Standing on a ledge behind Gray's desk is an odd-looking memento of that deal: a glass elephant presented with AT&T's appreciation to Gray for "helping elephants to dance," a lighthearted reference to his role in getting the two elephantine companies to reach accord.
Much of the remainder of Gray's time last year was devoted to overseeing the integration of newly acquired Lifeco into his division.
Gray, a cum laude graduate of Ohio University and Case Western Reserve College of Law, cut his teeth in the U.S. Attorneys Office and the Federal Trade Commission (working under Leroy C. Richie, who is now vice president and general counsel for Automotive Legal Affairs at Chrysler Corp.). In supervising the work he sends out to private firm lawyers, Gray says he has come to appreciate the distinctions between his role and theirs.
"Outside counsel have very specific tasks," Gray says. "Outside, you never see the whole picture, you work on one small piece. Unless you're a partner [in a law firm] or, in some cases, even a senior partner, you may never see how all of the pieces fit together. I have a working knowledge of that big picture every day."
Gray is so pleased with that picture and his place in it, that about four years ago, he turned down an offer to move out of American Express' legal sphere onto the operations side as vice president of Business Services. While Gray insists that he is "still enjoying the practice of law" too much to relinquish his senior counsel position, he says, with pride, that the offer represented an affirmation of his business skills. It also "shows how much lawyers are considered a part of the team here," Gray adds.
The Road From Backwater To Sought-After
The satisfaction that comes from being an integral part of the team is a notion that surfaced repeatedly in interviews with more than a dozen African-American lawyers who work in-house at corporations across the country. Although in-house counsel account for only about 10% of the nation's lawyers, according to statistics gathered by Altman Weil Pensa Inc., a Newton Square, Pa.-based legal management consulting firm, their level of job satisfaction ranks among the highest.
The precise number of black lawyers employed in-house is not known, but a fledgling national network of minority in-house counsel, launched formally last fall, has about 150 members. William S. Noakes, a Troy, Mich., litigator, who has been a spurring force behind the formation of the group, says that the American Bar Association (ABA) has identified about 700 in-house lawyers of color in total.
Noakes, an attorney in General Motors Corp. (GM) until last May, says there is a sense that, despite widespread corporate downsizing in recent years, the number of African-American attorneys in-house is steadily increasing. Noakes, 36, says he recently joined the firm of Kemp, Klein, Umphrey & Endelman because he missed the thrill of hands-on litigation work, most of which GM distributes among private firms. But his four years at GM were extremely rewarding, says Noakes, giving him a chance to litigate and manage litigation in a practice that encompassed commercial, franchise, construction, breach of warranty and personal injury work.
During the last 10 years, a dramatic shift in the nature of in-house counsel work has occurred, giving that sector of the legal profession a much needed face-lift For decades, corporate counsel positions were considered a bulwark of law firm has-beens and Wall Street wannabees. The tendency was for in-house lawyers to be saddled with the dry work--routine review of endless streams of standard contracts, letters and other business documents--while most of the exciting, more sophisticated projects--mergers and acquisitions and other complex transactional work or high-stakes litigation--was sifted through to private law firms.
In 1982, when Noakes was considering the range of career possibilities he might pursue after graduating from the University of Chicago Law School, he was sure of just one thing, he says: "There was no way on God's green earth that I was going in-house. It was a backwater, a place for people who couldn't get jobs in firms."
Today, says Noakes, "you're seeing people who could pull down big bucks on Wall Street or in [law] firms going to corporations." Some of those are Leroy Richie, at Chrysler, Wanda K. Donson-Low, chief patent counsel at Hughes Aircraft Co. in Los Angeles; and Solomon B. Watson IV, vice president and general counsel of The New York Times Co. Their presence has helped 'change the nature of the work being done," says Noakes, "and the quality of the people being sought to do it."
Fueled by general economic conditions and skyrocketing law firm fees, in the early 1980s corporations began shifting much of what used to be sent "out-house," as some in-house counsel affectionately refer to firms, back inside. Corporations now demand more than ever before from their legal departments, including previous experience of three to five years. Thus, many corporate counsel have not only been employed by law firms, they have ultimately chosen to leave them. Correspondingly, in-house jobs today offer higher pay, more diverse and interesting work and better opportunities for advancement. While tides and hierarchies vary among companies, most commonly, the entry-level title is that of attorney, moving on to senior attorney, associate counsel, senior or assistant counsel, deputy general counsel and, finally, general counsel. The chief legal officer, or general counsel, is usually also an officer of the company.
The Bottom Line
None of the attorneys interviewed for this article agreed to reveal their salaries or the details of their compensation and benefits packages. Unlike most law firms, which tend to have a lockstep salary structure, in-house compensation is based largely on performance, both by the individual and by the company.
Surveys conducted by Altman Weil Pensa indicate that the average salary for a staff attorney in 1991 was $69,726. Salaries fluctuate widely among geographic regions and industries, says Ward Bower, president of Altman Weil. Telecommunications companies reported the highest in-house salaries (an average $80,696 for the typical staff attorney), followed by computer companies ($77,043) and petroleum, or what Altman Weil terms extractive companies ($76,660). Lowest on the list were banks ($59,543).
The average salary, taking into account all industries, for a corporation's chief legal officer in 1991 was $177,185.
While these figures fall short of the hefty salaries offered by major law firms, the benefits, bonuses and stock options offered by corporations can more than compensate. Benefits and potential bonuses alone typically add between 20% and 40% to a general counsel's salary, says Bower, bringing it to a level consistent with that of equity partners in major law firms. For example, a bonus of 26% boosts Altman Weil's average general counsel compensation figure to $224,471.
Factor in less demanding (or, at least more predictable) hours than firms require and no pressure to generate new business (in most in-house areas, there is more than enough to go around) and corporate counsel positions can be quite appealing.
Leveraging Client Power
For African-Americans, corporate legal departments hold yet another allure. They have proven more comfortable settings for many minorities than major firms. Even though glass-ceiling concerns still plague most corporations, companies are generally light-years ahead of law firms in addressing issues of diversity.
Beyond that, there is the issue of power. Corporate counsel have the unique privilege of servicing in-house clients while also acting as clients themselves, when hiring outside firms. The client status--not to mention controlling the corporate purse strings--is a tremendous leveraging tool that African-American counsel now have the numbers to wield with some effect
Cheryl Poinsette, senior counsel, managing litigation at the San Francisco-based pharmaceutical distributor, McKesson Corp., says she relishes that power. Poinsette, a 33-year-old army brat, who graduated from Howard University and Harvard Law School, spent four years at Heller, Ehrman, White & McAuliffe, a major San Francisco-based firm.
Although she was doing well there professionally, the distinct lack of a shared sense of values, goals and interests between herself and the firm's partners, drove her to leave in 1990. "The only glimmer of hope I see for firms," says Poinsette, "is if clients press them and say, |Now, wait a minute. You've got minority talent, don't you? And if not, what are you doing about it?' "
When a McKesson colleague raised this issue with a firm and got a song and dance about how difficult is to find qualified minorities, the firm was not hired. Explaining why, Poinsette says, bluntly, "We know that's not true, and it doesn't play anymore, especially with me. One thing firms ought to think about is that a lot of us who leave their ranks are going in-house, so they're still going to have to deal with us."
The American Bar Association (ABA), as well as the American Corporate Council Association and several local bar organizations, have gotten involved in a movement aimed at addressing the issue of underrepresentation of minority lawyers throughout the legal profession, while ensuing fair distribution of corporate work. Chrysler's Richie, who chairs the ABA's three-year-old minority Counsel Demonstration Program, says that about 150 major corporations have signed on to the program. But Richie says, 150 "is not enough. This continues to be a problem, and how to solve it is difficult. There are no major formulas. We just have to keep at it."
Among the most vigilant participants in the ABA program is Midland, Mich.-based Dow Corning Corp.
James Jenkins, vice president/secretary and general counsel of Dow Corning has been a leading participant in the program's effort. Jenkins and the 35 lawyers he supervises regularly send letters to the outside firms they employ, stating their position plainly: "At Dow Corning, we are committed to cultural diversity and would like to know the minority partners and associates in your firm. We also want to encourage their involvement in Dow Corning assignments. Please share with us your firm's endeavors to bring to fruition the goal of increased recruitment utilization, retention and promotion of minority lawyers."
That type of initiative from a $1.8 billion multinational company that manufactures 5,000 products, and from a man who oversees an annual legal budget in excess of $10 million, gets responses. And, just to make sure, follow-up letters go out, as do regular requests for updated information.
Jenkins, who joined Dow Corning in 1976, after a brief career as a criminal defense attorney at both the state appellate and federal levels, makes no apologies for his tenacity in this area. "What the company want is quality representation," Jenkins says. "I want the very best people doing our work."
"Because I know many minority lawyers who offer top quality work, I start from the presumption that all they need is an opportunity and that in the past too often, the door has been closed. This is not a favoritism program and there is no compromise of quality at issue. Its simply a question of making sure that all of the best have the opportunity to work focus, not just a few."
African-American lawyers, both in-house and out, are just now beginning to establish real networks, so that whatever else happens, they will know where and how to contact each other. Homer L Harris, a founding partner at Wood, William S. Rafalsky & Harris, the largest minority-owned law firm in New York State, says that Solomon Thompson, The New York Timed general counsel, has called his firm on several occasions asking about the firm's capabilities. "The problem," Harris says, 'is that we don't do First Amendment work, but Sol is conscious of us and sensitive to us and he keeps calling."
Chrysler's Leroy Richie is also known for his leadership in reaching out and making himself accessible to other African-American lawyers. Of Richie and Thompson, Harris notes, "They've earned what they've attained, but they don't put their heads in the sand. They don't say, 'Okay, I'm here. Now let me do everything I can to make people forget that I'm a general counsel who just happens to be black."
Beyond business development, such connections are crucial, says Noakes, for purposes of mentoring and, given the current market condition, job seeking.
The jury is still out on the relative security of in-house legal jobs compared to their counterparts in other arenas. Recent recessionary times have sparked massive layoffs in places previously considered to be untouchable. Lawyers, from government agencies to the nation's wealthiest firms, have gotten pink slips in droves during the last few years.
There is a prevailing sense in the corporate world that the legal staff is not an actual profit center, so, when if s time to make cuts, they are the first to go. Ronald David McCray, a counsel for corporate affairs at Kimberly-Clark Corp. in Dallas, takes issue with that view.
Last year, McCray led a team of real estate, environmental, finance, trademark, tax and intellectual property lawyers in the acquisition of a California-based breast prosthesis company valued at more than $5 million. The entire transaction, from letter of intent to closing, was done in-house. (Kimberly-Clark is a consumer products company; Kleenex, Huggies and New Freedom brands are among its most popular products.)
While McCray, 35, concedes that it can be difficult to quantify an in-house lawyer's contribution to the bottom line of a $6.7 billion company such as his, he has no trouble defining that contribution for his team: "I tell my department that we are contributing to the enhancement of shareholder value with the highest level of proficiency to be found and with the highest degree of knowledge, commitment and sensitivity to the company. We have that because we live here. To duplicate that by hiring outside counsel would be considerably more expensive. And almost impossible."
True enough, perhaps, but not enough for some. "To gain respect in any corporation, you have to be a player," says Humphrey P. Polanen, director of market development and ventures for the intercontinental division of Cupertino, Calif.-based Tandem Computers Inc. "As a lawyer within a corporation, you're really a coach to management not a player."
Polanen speaks from experience. Following Harvard Law School--where he was an editor of the International Law Journal--and a brief stint as an associate at the San Francisco law firm of Heller, Ehrman, White & McAuliffe, Polanen went in-house at Itel Corp., managing a staff of 10 in the data products division. He would become general counsel for Itel, moving on to the same post at National Advanced Systems (now Hitachi Data Systems), before joining Tandem in 1981 as a litigator. He moved up swiftly, becoming general counsel, Intercontinental Division manager in 1985. Polanen says he always planned to carve his legal experience into a business career, and he is not the only one. Although such advancements not, an option at all corporations, the legal department has been a proven springboard into high-level operational positions at many companies.
Among those who went in-house intending to stay there, however, not everyone is convinced that to find job security one must abandon the law. And as for being viewed as coaches rather than players, it wouldn't be the first time in-house lawyers were relegated to the sidelines. That make them no less essential to the outcome of the game.
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|Title Annotation:||includes profiles of Black lawyers; the importance of corporate lawyers in mega-deals|
|Author:||Clarke, Caroline V.|
|Date:||Feb 1, 1993|
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