Breaking Down In-House Counsel Compensation Trends for 2024
• Analyzing the CrowdStrike
• Anticipating whistleblower claims
•
EDITOR’S DESK
How much are your colleagues from law school making? Even if you and your closest confidants have an open and honest exchange about your salaries and benefits, it won’t give you the broader picture.
Thankfully Bob Barker, Co-Founder and Managing Partner at BarkerGilmore, has broken down some of the biggest trends in BarkerGilmore’s 2024 In-House Counsel Compensation Report for our cover story
Encouragingly, the gender pay disparity gap is narrowing amongst general counsel roles. Also notable: fewer legal department employees are job hopping. “Only 9% of in-house counsel changed jobs in 2023, contrasting with the higher turnover rates observed in the previous two years,” he writes. These are just a couple of the key insights to emerge from the research. Read the story to glean all the insights and deftly negotiate your next package.
Whether you are staying put or looking to make a move to a new company, it’s important that you are up to speed on how to respond to whistleblower claims. In an exclusive piece for us, Justin Lugar of Woods Rogers provides key actionable intelligence for you and your team to help you navigate these claims and protect the company.
There are several other great reads in this issue including an analysis of the CrowdStrike outage that paralyzed businesses across the globe, a primer on how to handle infighting on your team, and a look at arbitration clauses in bankruptcy. We also have an exclusive interview with Keith Burke, Vice President of Global Channel Partner Sales and Legal Technology at KLDiscovery.
I’ll leave you with a reminder to check out Today’s Managing Partner, our new platform serving the law firm community. For this issue, Today’s Managing Partner Columnist Tracy LaLonde contributed a thoughtful piece about the business impact of purpose.
“Evidence suggests that a purpose-driven workplace not only enhances employee satisfaction and mental wellbeing but also significantly impacts productivity and the bottom line,” she writes.
That is certainly an idea we can all get behind, whether we are working in-house, at a law firm, or anywhere else.
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Thanks for reading,
Amanda Kaiser Editor-in-Chief
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8 Breaking Down In-House Counsel Compensation Trends For 2024
By Bob Barker
Read about the latest in-house counsel compensation trends to emerge from a recent
DATA PRIVACY & CYBERSECURITY
14 Measuring the Impact of the CrowdStrike Incident
By Beth Burgin Waller
Learn more about the CrowdStrike incident that affected airlines, communications, and businesses worldwide, its global impact, and its legal implications.
COMPLIANCE
16 How Your Company Should Anticipate and Respond to Whistleblower Claims
By Justin Lugar
Whistleblowing in an increasingly monetized high-stakes game. Learn more about the best way for your company to respond to whistleblower claims.
18 KLDiscovery’s Keith Burke Talks Strategic Partnerships and Legal Tech Entrepreneurship
Keith Burke, KLDiscovery’s Vice President of Global Channel Partner Sales and Legal Technology, shares his unique perspective and deep expertise in legal technology and building strategic partnerships.
LABOR
& EMPLOYMENT
20 What to Do When Employees Don’t Get Along: Takeaways from the Shaq/Kobe
Feud
By Leah M. Stiegler and Emily Kendall Chowhan
Consider the infamous NBA clash in workplace disputes when employees don’t get along.
PAGE 20
BANKRUPTCY
24 Are Arbitration Clauses Enforceable in Bankruptcy?
By Kenneth Rosen
Today’s General Counsel contributor Kenneth Rosen poses the question: “Are arbitration clauses enforceable in bankruptcy?” He provides a nuanced response.
THE ENGAGEMENT EDGE WITH TRACY LALONDE 22 The Business Impact of Purpose
What is the business impact of purpose?
Today’s Managing Partner Columnist Tracy LaLonde dives into how a purpose-driven approach can boost productivity and wellbeing in law firms.
Tracy LaLonde
Keith Burke, KLDiscovery
PAGE 18
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Breaking Down In-House Counsel Compensation Trends For 2024
By BOB BARKER
In-house counsel salaries are growing modestly, the gender pay disparity gap is narrowing, and fewer legal department employees are job hopping. These are just a few of the key insights to emerge from the BarkerGilmore’s 2024 In-House Counsel Compensation Report. As businesses navigate the complexities of a post-pandemic economy, understanding the compensation shifts is crucial for legal professionals and organizations
aiming to attract and retain top legal talent.
THE BIG PICTURE
BarkerGilmore conducted an online survey in March 2024 to assess in-house counsel compensation trends for 2023 and 2024. The online survey was administered to a random sample of in-house counsel at various levels of seniority within different sized organizations across the United States. The survey featured
multiple-choice and open-ended questions answered by over 3,700 individuals from various industries and practice areas. The data is self-reported.
The report reveals a moderate salary increase for in-house counsel across the board, with an average rise of 4.4%. Managing counsel received the highest salary increment at 3.8%, followed by general counsel at 3.2% and senior counsel at 2.9% from 2023 to 2024.
Bonuses also reflected notable trends. While bonuses were generally awarded at 95% of the target, Senior counsel often received slightly over their target at 101%. In contrast, general counsel received the lowest value of their target bonuses at 83%.
However, general counsel were the most likely to receive a sign-on bonus (28%) of an average $75,000. Twenty-seven percent of managing counsel received an average sign-on bonus of $30,000, and 23% of senior counsel saw an average sign-on bonus of $27,000.
GENDER PAY GAP IS NARROWING
There has been a promising trend of narrowing gender pay disparity in recent years for in-house counsel. This positive shift is especially notable among general counsel roles, where the pay gap has been a topic of concern and discussion.
In 2024, the gender pay gap among general counsel narrowed to 4.3% from 4.9% a year earlier, representing significant progress in the ongoing effort to eliminate gender-based pay disparities. While this figure still indicates existing disparities, it marks a step in the right direction toward achieving pay equity.
IN-HOUSE COUNSEL STAYING PUT
The report delves deeper into critical trends affecting the job market, highlighting a significant shift toward stability in job transitions among in-house counsel. Only 9% of in-house counsel changed jobs in 2023, contrasting with the higher turnover rates observed in the previous two years.
The macroeconomic environment spurred this shift. Companies hired fewer legal professionals as they tightened their budgets and faced challenging market trends.
Most notably, the technology sector laid off in-house counsel as businesses struggled or sought to tighten their belts to improve shareholder returns. Past demand for talent was stronger, driving up compensation and reflecting adjustments in certain industry sectors.
In tandem with this more cautious approach to career progression, in-house counsel are expressing gratitude for their compensation levels. Legal professionals are less likely to seek a new position in order to obtain more money. There has been a 22% decrease in the likelihood of legal professionals seeking new positions due to concerns over compensation. These findings underscore a significant change in the mindset and priorities of in-house counsel. Stability and job satisfaction have become increasingly crucial as the legal sector evolves in an economy still on the mend.
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STRATEGIC INSIGHTS FOR IN-HOUSE COUNSEL
The report provides strategic insights for in-house counsel evaluating their career paths. Moving into the general counsel seat typically provides a seat at the executive table and a sizable boost in compensation.
In addition to leading the legal function, many GCs take on additional responsibilities, and some are more lucrative than others. For example, a general counsel who takes on the additional role of government affairs can typically see their total compensation increasing by 35%. Similarly, those serving concurrently as chief compliance officers usually earn 25% more than peers without these added responsibilities. These and other findings in the report emphasize organizations’ high value
on diverse skill sets in the senior legal position.
The report also highlights which practice areas are the highest paying. Banking and finance, energy, and litigation practitioners are among the highest earners, consistent with previous years.
ADAPTING TO EVOLVING TRENDS IN IN-HOUSE COUNSEL COMPENSATION
The recent data on in-house counsel compensation not only offers benchmarks but also mirrors broader industry trends, such as the continuing efforts toward gender pay equity, the importance of holistic compensation strategies, and the increasingly pivotal role of in-house counsel as business enablers.
Looking ahead, it will be crucial
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for leaders to adapt to these changes. By refining compensation practices, they can ensure they attract and retain the expertise needed to effectively manage the complexities of the global business environment.
Bob Barker is the Co-founder and Managing Partner of BarkerGilmore. With over four decades of executive search and international business experience, Barker has successfully worked with mid-sized to Fortune 500 companies to build out their legal and compliance departments. He also leads the coaching and advising practice at the firm. Barker can be reached at robert.barker@barkergilmore.com.
& CYBERSECURITY
Measuring the Impact of the CrowdStrike Incident
By BETH BURGIN WALLER
On July 19, 2024, the world awoke to computers awash in bluescreens, caused by a single software update from the cybersecurity software provider CrowdStrike. Simultaneously, as multiple businesses across the globe reported serious and immediate outages to their own operations related to the CrowdStrike incident, a metaphorical bombshell exploded with possible legal implications.
CUSTOMER CLAIMS AGAINST CROWDSTRIKE
As with any outage or downed operations, the relevant contracts between the impacted vendor and your business are the first place to turn. In this case, CrowdStrike publishes its standard terms and conditions online. Some companies with sufficient leverage may have negotiated a variation of these standard terms or may, as is often
common with software agreements, examine these issues through the lens of a labyrinth of purchase orders with then-live links.
Standard terms often have a limitation of liability clause, which will govern unless a court holds it unenforceable. The CrowdStrike terms state they are governed by California law and leave the venue for enforcement of the terms solely in the state and federal courts of
Santa Clara County, California. The terms also state that neither party shall be liable for more than “an amount that exceeds the total fees paid or payable to CrowdStrike for the relevant offering during that offering’s subscription/order.” The terms also disclaim “lost profits, revenue, lost data, or special incidental, consequential, or punitive damages.”
Unless different terms were negotiated, any claims brought against CrowdStrike will be reviewed by a court in light of these provisions, which attempt to significantly block large-scale claims against CrowdStrike.
SHAREHOLDER CLAIMS AGAINST CROWDSTRIKE
In the immediate aftermath of the CrowdStrike incident, plaintiffs’ firms began advertising that they were investigating claims on behalf of investors of CrowdStrike. Those claims must, of course, secure a class, and then a determination must be made as to whether there are damages that flow from the incident.
IMPACTED BUSINESSES’ CLAIMS
AGAINST CARRIERS
Also looming is the possibility that a business that experienced the CrowdStrike outage may seek redress from its own cyber insurance carrier. Those claims would be viewed under cyber insurance policy provisions related to contingent business interruption or dependent interruption. Each policy would need to be reviewed in its totality, just like a contract, examining the words and phrases used.
Already, though, the cyber insurance industry is gearing up for what will likely be years of fights over whether these provisions were
intended to cover a simple software glitch versus a malicious event.
8K AND MATERIALITY
The day before the CrowdStrike incident, a U.S. district court issued a decision in the much-watched Securities Exchange Commission (SEC) lawsuit against SolarWinds and its Chief Information Security Officer for the company’s pre- and post-incident communications after its 2020 own cybersecurity incident. The cybersecurity industry closely watched the case as it placed preand post-incident public filings under a microscope with the SEC, and ultimately, the court.
The cybersecurity industry closely watched the case as it placed preand post-incident public filings under a microscope with the SEC, and ultimately, the court.
In a decision on July 18, ironically the day before CrowdStrike’s incident, the court dismissed the majority of the lawsuit brought by the SEC. Relevant to the CrowdStrike matter, the court held that after an incident, a business does not need to issue an 8-K after a material incident with “maximal specificity” but rather with enough detail to “convey the general severity of the situation.”
On July 22, CrowdStrike issued its own brief 8K stating that it “released
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a sensor configuration update for our Falcon sensor software that resulted in outages for a number of our customers utilizing certain Windows systems (the “event”). The event was not caused by a cyberattack. We urgently mobilized teams to support the security and stability of our customers.”
CrowdStrike noted in its 8-K how the issue was identified within 78 minutes but then stated only that CrowdStrike “continues to work with impacted customers to fully restore their systems” by providing updates to its blog and that “this is an evolving situation, we continue to evaluate the impact of the event on our business and operations.”
Only time will tell whether this 8-K meets the SEC’s guidance that materiality disclosures must “consider the immediate fallout” and disclose the “long-term effects on operations, finances, brand perception, and customer relationships” after an incident or the SolarWinds court’s requirement that an 8-K convey the severity of the situation. In the meantime, CrowdStrike’s CEO has been called to testify before Congress.
Beth Burgin Waller is a principal and leader of the Cybersecurity and Data Privacy Practice at Woods Rogers in Virginia. She works with businesses across industries to prepare for and, if necessary, respond in the wake of cyber incidents. She may be reached at beth.waller@woodsrogers.com
How Your Company Should Anticipate and Respond to Whistleblower Claims
By JUSTIN LUGAR
Whether you prefer the original 1959 Barrett Strong version, the 1963 Beatles’ rendition, or the more eclectic 1979 new wave take by the Flying Lizards, Berry Gordy and Janie Bradford’s “Money (That’s What I Want)” continues to ring true in 2024 in the world of whistleblowing. That’s why it’s critical for companies to know how to respond to whistleblower claims.
Although whistleblowers may be motivated by such factors as their conscience and a sense of duty, there are billions of reasons it makes financial sense for a potential whistleblower to put their job or reputation on the line. Both the United States and the United Kingdom are compensating whistleblowers in increasing numbers— a trend set to continue in the foreseeable future in other countries as well.
Knowing where and in what context information can be monetized is an essential first step for legal departments. Once legal departments understand the challenges posed by whistleblowers, they must develop a comprehensive strategy involving clear reporting protocols, robust record-keeping policies, and an executable response plan. Let’s examine the key whistleblower
programs in the US, followed by anticipated changes in the UK, and finally we’ll look at a threestep process to help build a sound response plan for whistleblower investigations.
WHISTLEBLOWING UNDER THE FALSE CLAIMS ACT
Since 1986, the Department of Justice (DOJ) has awarded whistleblowers nearly $9 billion under the False Claims Act (FCA) in awards for outing fraud, waste, and abuse. During the same period, the United States recovered over $75 billion in damages and penalties. Unsurprisingly, whistleblowers are filing cases under the FCA in record numbers and companies should expect an increase in investigations in the near term.
WHISTLEBLOWING TO THE SEC
The trends for the Securities and Exchange Commission’s (SEC) whistleblower program are similar: 2023 marked a 50 percent increase in the number of tips and the largest single fiscal year of fraud tips in SEC history. Whistleblowers filed 18,000 tips and the SEC paid its largest award yet to a single whistleblower ($279 million). Since 2011, the program has received 60,000 tips, collected over $6 billion in fines, and paid whistleblowers
just under $2 billion in awards.
WHISTLEBLOWERS UNDER THE CFTC
Since its first award in 2014, the Commodity Futures Trading Commission (CFTC) has recovered over $3 billion and paid out roughly $365 million to whistleblowers for tips regarding fraud in futures, options or swaps, and other violations of CFTC regulations. Like the SEC program, the CFTC received a record number of tips in 2023 amounting to an increase of 50% over 2020 and 2021.
IRS WHISTLEBLOWERS
Under the IRS’s whistleblower program, the number of tips has remained steady over the past five years, averaging between 4,000 and 5,000 tips per fiscal year. In the most recent reported statistics from 2022, the IRS paid whistleblowers 132 awards totaling $37.8 million.
Importantly, we are only beginning to see the impact of the Inflation Reduction Act (IRA)’s injection of $80 billion into the IRS’s budge t , much of which is targeted at investigating tax fraud for the wealthiest. Indeed, on July 11, 2024, the IRS announced it had already recouped
over $1 billion in back taxes as direct result of the IRA’s funding.
MOMENTUM AT HOME AND ABROAD
The trends are clear: the United States is receiving record numbers of whistleblower tips and is paying record amounts to whistleblowers across all programs. Indeed, even the Department of Justice is getting in on the whistleblower game: in March 2024, Deputy Attorney General Lisa Monaco announced a new program to compensate whistleblowers who share “significant corporate or financial misconduct.” Across all industries, then, the key questions is not if, but when will a company face a civil, criminal, regulatory, or administrative investigation. Not far behind, the UK is on the cusp of compensating whistleblowers for inside information. The recent public statements of UK Serious Fraud Office (SFO) in February 2024 capture a marked shift in thinking about whistleblowing, with SFO Director Nick Ephgrave noting that “[s]ince 2012, over 700 UK whistleblowers have engaged US law enforcement” in part because US laws compensate whistleblowers for valuable information. Ephgrave’s conclusion was clear: “I think we should pay whistleblowers.” Meanwhile, the Labour party’s landslide election win on July 4 suggests we’ll see an even stronger push for new whistleblower reward schemes
Put simply, there is growing momentum in the UK (which will likely influence the EU) to pass legislation to provide monetary incentives to whistleblowers. It is only a matter of time before incentive schemes similar to the FCA, SEC, DOJ and CFTC programs will generate thousands of new investigations internationally.
TAKE ACTION NOW
There are three key steps in-house legal departments should undertake in short order to provide layers of protection from unjustified (and justified) whistleblower complaints.
1. In-house counsel must establish and consistently reinforce clear reporting protocols expected of company employees. Employees should be provided with multiple, different channels for reporting, including hotlines, anonymous reporting, and options to report outside the direct line of supervision. Companies should consider imposing written policies mandating employees report concerns internally through one of these reporting channels (think post-9/11 New York City subway posters: “If you see something, say something” ad campaigns).
2. Companies must create and maintain clear records and document everything. If a company finds itself subject to investigation, having a contemporaneous record documenting compliance efforts, interviews with employees, internal inquiries about the factual basis for a complaint, and any remedial measures undertaken can have a profound impact on the direction of a government investigation.
3. Develop a written response plan for addressing whistleblower allegations. Create a checklist and decision tree for employees. Key actions include:
■ Take immediate action to document the specific allegations
■ Assess the credibility and severity of the allegations.
■ Assign responsibility for investigating early and take efforts to ensure the investigating parties
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are objective and impartial.
■ Bring in outside counsel as early as possible to advise on reporting obligations/options, to assess risk, to protect privilege and integrity of the investigation, etc.
■ Take (and document) action to insulate the potential whistleblower from possible retaliation. Seek outside legal advice on specific employment actions.
■ Communicate early and often with key stakeholders in management, and communicate clearly and often with the putative whistleblower—clear communication and a perception that the company is taking allegations seriously is the single best first line of defense.
Identifying the areas where your company may be vulnerable to whistleblower allegations and developing a robust plan to respond to whistleblower claims are essential steps to promoting a corporate culture of compliance. Proactive companies that develop a real response plan prior to facing the inevitable government inquiry virtually always fare better, save time and money, and avoid lengthy disruptions to the business.
Justin Lugar is a Roanoke, Virginiabased attorney with Woods Rogers. As a former Assistant US Attorney, Lugar led the Affirmative Civil Enforcement team in managing active fraud investigations. Lugar can be reached at justin.lugar@woodsrogers.com
KLDiscovery’s Keith Burke Talks Strategic Partnerships and Legal Tech Entrepreneurship
Read this exclusive Today’s General Counsel interview in which KLDiscovery’s Keith Burke talks about strategic partnerships and legal tech entrepreneurship.
Keith Burke serves as KLDiscovery’s Vice President, Global Channel Partner Sales and Legal Technology. Keith’s unique perspective and deep expertise come from his years of experience in legal technology and building strategic partnerships.
Can you elaborate on the various partner and franchise programs offered by KLDiscovery and how they cater to different types and sizes of businesses?
Keith Burke: At KLDiscovery, we offer various partner and franchise programs tailored to different business needs. Our partnership models include referral, reseller, and franchise options across both our KLDiscovery and Ontrack services.
Ontrack focuses on data recovery and data destruction, while KLDiscovery specializes in legal technology software and services. Partners can refer clients to us for services like data recovery, and we offer wholesale rates for reselling these services. For legal technology, we provide solutions such as Nebula® and other SaaS products, allowing partners to refer or resell these offerings as well.
We also have a franchise program, approved in all 50 states, which offers a deeper integration with our teams, systems, and marketing support. This premier partnership model provides comprehensive back-office, technical, and project management support.
Our flexible partnerships cater to various business sizes and capacities. For example, smaller firms or consultants who lack in-house resources can refer clients to us and receive commissions. Partners with in-house capabilities can use our technology independently, relying on us only for escalations or specific support.
We have over 150 developers and extensive service teams, providing everything from project management to forensic capabilities. This level of support is a real differentiator in the industry and allows partners to leverage our resources as needed, ensuring they can handle any data challenge efficiently.
How does KLDiscovery’s franchise program help entrepreneurs overcome barriers in the eDiscovery market and what benefits can franchisees expect?
Keith Burke: By partnering with KLDiscovery, they gain access to a comprehensive suite of services and support, enabling them to build successful businesses while maintaining flexibility and control.
We offer entrepreneurs a streamlined entry into the market by significantly lowering startup costs and providing extensive support. For a minimal franchise fee, less than the cost of hiring a single employee, franchisees gain access to KLDiscovery’s comprehensive business systems, including marketing, operations, security, and managed review teams.
This program is ideal for individuals with industry experience and a client base who want to leverage KLDiscovery’s resources without the financial burden of traditional startup costs like brick-and-mortar expenses. Franchisees can work remotely, utilizing KLDiscovery’s advanced technical infrastructure and project management support to serve their clients from anywhere.
Franchisees also benefit from the ability to bring in clients while KLDiscovery handles the execution, from
project management to technical support. This allows entrepreneurs to focus on client acquisition and relationship management. Our franchise model even caters to those with expertise in various data-related fields beyond eDiscovery, such as information governance and contract lifecycle management.
What level of customization is available with the KLDiscovery partnership programs and how can partners transition between the different programs as business needs evolve?
Keith Burke: We offer extensive customization to fit varying business needs, with flexible options for resellers and referral partners. For Ontrack data recovery, signing up is free with no minimum requirements. Partners simply refer projects to us, and we customize pricing and services to their needs.
We also provide flexibility with our Nebula platform. Partners can choose cloud-based services, behindthe-firewall solutions, or consumption-based models, avoiding long-term contracts. This approach allows newer partners to adopt our technology without hefty commitments. We are nearing 20 active Nebula SaaS partners globally, mostly operating independently, with our support available as needed.
Our customizable support includes assisting partners with client calls or acting as an extension of their team. We respect partner-client relationships, only engaging directly with clients as preferred by the partner. This ensures seamless service without overstepping boundaries.
As partners grow, they can transition from consumption-based models to subscription plans, benefiting from cost efficiencies. This adaptability ensures partners can scale their operations smoothly, leveraging KLDiscovery’s resources and expertise to meet their evolving business needs.
How did your background as a business owner in the legal industry prepare you for your current role in managing KLDiscovery’s partner and franchise programs, and what unique insights do you bring to the table?
Keith Burke: I understand firsthand the challenges and needs of entrepreneurs and small to mid-market providers. This experience enables me to support our partners in a way that is both practical and empathetic.
As someone who has navigated the complexities of managing multiple applications and dealing with
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inefficiencies, I can offer solutions to streamline operations. For example, many business owners I speak with are using several different software applications, leading to higher costs and operational inefficiencies. I help them consolidate these into a single, cost-effective solution with our Nebula SaaS program, enhancing their overall efficiency.
My direct experience—processing data, managing projects, and running operations—resonates with C-suite executives, CEOs, and business owners with whom we work. They appreciate knowing I have been in their shoes, dealing with the same late nights and technical challenges. This shared experience builds trust and comfort, demonstrating I am not just selling a product but offering genuine support based on practical knowledge.
I prefer a hands-on approach, guiding partners from start to finish, rather than simply passing them off to another salesperson. This method ensures our partners receive consistent, high-quality support tailored to their specific needs, ultimately optimizing their performance and reducing costs. My goal is to help them succeed by leveraging my unique insights and experiences.
How do your certifications from the Nebula Academy enhance your ability to support KLDiscovery’s partners?
Keith Burke: I actively use the platform myself to ensure I am thoroughly familiar with the product. By obtaining these certifications and regularly engaging with Nebula, I can provide practical insights and educate partners from a position of firsthand experience.
Having hands-on familiarity allows me to demonstrate the platform’s features and usability effectively. I can relate to partners’ experiences and guide them through the platform with ease, highlighting its strengths and addressing any potential challenges. This approach ensures partners can fully leverage the technology, making their operations more efficient.
By staying current with the latest software features and courses in Nebula Academy, I am always up to date with the most advanced functionality. This enables me to offer informed and relevant support to our partners, helping them maximize the benefits of using Nebula in their workflows.
LABOR & EMPLOYMENT
What to Do When Employees Don’t Get Along: Takeaways from the Shaq/Kobe Feud
By LEAH M. STIEGLER AND EMILY KENDALL CHOWHAN
This article about what to do when employees don’t get along is the second in a series entitled “Employment Law in Focus.” You canreadthefirststoryabouthowto handle workplace romances here
“We don’t know how to handle it when employees don’t get along. We have two great members on our team, but they just don’t click with one another.” It’s a refrain we hear over and over from legal departments and human resource (HR) leaders.
One of the most memorable employee disputes happened in the NBA in the late 1990s and early 2000s. Two competing GOATs, Shaquille “Shaq” O’Neal and Kobe Bryant, were each vying for attention and
MVP slots on the Los Angeles Lakers. Shaq, a more senior player, thought Kobe played selfishly, hogged the ball, and took poor shots. Kobe felt undervalued by Shaq. Fans chalked it all up to Shaq being jealous that Kobe was stealing his spotlight and selling more jerseys.
Despite the feud, the Lakers franchise consistently took home the championship trophy.
In most businesses, this would be rare. Organizations often experience lower productivity from employee disputes. Low morale impacts engagement, and employees are less likely to help each other. In fact, in response to a question from the press about why Shaq was not mentoring Kobe during a rough season, Shaq was quoted saying something like, “I try not to help guys out too
much. . . . Experience is the best teacher.” Not exactly the words you want your senior managers to say to your newbies!
Employee disputes often lead to increased turnover, and organizations lose high-performing workers. After eight seasons and unresolved animosity between the two, Shaq requested a trade and left the Lakers for the Miami Heat.
TAKEAWAYS
What steps can your organization take to address employee disputes before one of your MVPs goes to a competitor?
Step 1: Create separation. Sometimes employees need physical space to reduce tension, reflect, and reset. Have them work from home, alternate days in the office, or — depending on how bad the dispute is — put them on some form of leave.
Step 2: Talk to their direct manager or next-level supervisor. Getting an objective, third-party perspective of the dispute and its resulting impacts on the team and organization provides a great basis for the talking points you’ll use when addressing the employees individually.
Step 3: Have one-on-one conversations with the employees. Get them in a private setting where they feel comfortable, perhaps at a coffee shop or out for a walk. Ask openended questions, such as “Tell me what’s going on between you and so-and-so,” to understand each side of the dispute. You don’t have to be ready to advise them on your next steps or even affirm they will still have a job after this is all said and done. This step is all about understanding their perspectives.
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Your options here may include discipline, coaching, further suspensions, transfers, or even mediation with a neutral third party. If the dispute appears to have tainted the whole team, initiate culture surveys or plan a team-building retreat with an outside facilitator.
Organizations often experience lower productivity from employee disputes. Low morale impacts engagement, and employees are less likely to help each other.
Organizations often experience lower productivity from employee disputes. Low morale impacts engagement, and employees are less likely to help each other.
(Oh, and remind them that we learned from Shaq that dumb comments to the press are not helpful, so they certainly should not post anything on social media or gossip about the situation to other employees.)
Step 4: Do an internal regroup with their manager or next-level supervisor. Determine whether additional information, such as speaking to their peers or other third parties, could be helpful. Then, it’s time to decide the next steps. Keep in mind that if Plan A fails, you can always move to Plan B, C, and so on, so it’s okay to take an approach that may not immediately resolve the problem.
Step 5: If Plans A through C fail, it may be time to consider termination and make room for new energy. Remember, once Shaq left the Lakers, it freed up a slot on the team for the real GOAT: LeBron James.
As with any discipline, you don’t want employees to perceive your actions as discriminatory or retaliatory, so it is always better to run your game plan by legal counsel first.
Leah M. Stiegler is a principal, and Emily Kendall Chowhan is an associate in the Labor & Employment practice at Woods Rogers PLC in Richmond, Virginia. They advise company leaders and their human resources departments on compliance with employment laws. They host the biweekly video series “What’s the Tea in L&E,” available on YouTube
THE ENGAGEMENT EDGE WITH TRACY LALONDE
The Business Impact of Purpose
By TRACY LALONDE
In the world of law, where the focus is typically on billable hours , client retention, and matter results, the notion of finding fulfillment and purpose in day-to-day tasks can sometimes fall by the wayside. After all, what is the business impact of purpose? However, law firm leaders may want to take note: increasing evidence suggests that a purpose-driven workplace not only enhances employee satisfaction and
mental well-being but also significantly impacts productivity and the bottom line.
Recent studies show that purpose plays a pivotal role in attracting and retaining talent. According to an in-depth Gartner analysis, modern employees, including lawyers at every level, want to connect their personal values with their professional endeavors. When the workforce sees meaningful outcomes from their
efforts, they are more likely to stay committed and invested in their roles.
This is crucial in the high-turnover environments often seen in demanding sectors like law.
The statistics on the business impact of purpose are telling: a Harvard Business Review study points out that 40% of employees feel isolated in their jobs, significantly decreasing engagement and
productivity. Moreover, the 2023 Work in America Survey by the American Psychological Association reveals that 92% of workers consider it important to work for an organization that values their psychological well-being, closely linked to finding a meaningful purpose in their work. For law firms, where the pressure is high and the job can be draining, fostering a sense of purpose could be the key to maintaining a resilient and thriving team.
MAKE PURPOSE VISIBLE
For law firm leaders, it’s important to ensure that purpose infuses your strategies and that it’s visible and tangible for every member of your team.
By actively incorporating and highlighting purpose, you’re not just improving the workplace environment but setting your firm up for real success.
Here are some practical strategies to help partners reinforce a sense of purpose for their team members:
REGULARLY ANSWER THE QUESTIONS OF “MATTER” AND “IMPACT”
As a leader, it’s beneficial to frequently engage with your team members to address questions like “How does what I do matter here?” and “Does my work make a difference?” These
questions tap directly into the core of individual purpose. For instance, when an associate contributes to a case, explain clearly how their work has directly influenced positive outcomes, such as a client’s satisfaction or a precedent-setting legal decision. This helps tie their day-to-day tasks to tangible, impactful results, underlining the importance of their contributions in the bigger legal landscape.
COMMUNICATE THE ‘WHY’
Beyond the ‘what’ and ‘how’ of tasks, it’s critical to clarify the ‘why.’ When assigning tasks or discussing projects, always take a moment to outline the bigger picture. Whether it’s a litigation case, a corporate merger, or a pro bono assignment, explaining the broader context of how their work fits into the client’s and firm’s goals and values can transform their perspective on the assignment. For example, in a merger, illustrate to your team how their meticulous preparation and keen insights are crucial not just for the transaction’s success but for paving the way for future opportunities and security for all involved parties.
Embracing and showcasing a purpose-driven approach within your law firm goes far beyond boosting morale. It plays a crucial role in constructing a resilient, engaged, and innovative team ready to exceed the conventional boundaries of legal practice.
By actively incorporating and highlighting purpose, you’re not just improving the workplace environment but setting your firm up for real success. You’re making it a place where top talents want to be, and clients want to take their business. In straightforward terms, a strong
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focus on purpose isn’t just the right thing to do; it’s your firm’s competitive edge in the fast-evolving legal landscape.
Tracy LaLonde helps managing partners and law firm leaders generate better engagement through effective people management. With over 30 years of experience in training, consulting, and professional development, Tracy is on a mission to change how law firms engage with their teams. She may be reached at info@joychiever.com
This story was originally published in Today’s Managing Partner, our content platform serving the law firm community.
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Are Arbitration Clauses Enforceable in Bankruptcy?
By KENNETH ROSEN
Are arbitration clauses enforceable in bankruptcy? Not always.
The enforceability of arbitration clauses in bankruptcy cases depends on factors such as the nature of the proceeding and the statutory claims involved. Enforcement is subject to a balancing test between the Federal Arbitration Act (FAA) and the Bankruptcy Code. The FAA establishes a liberal federal policy favoring arbitration agreements. This mandate may be overridden, however, when arbitration would conflict with the Bankruptcy Code.
The potential conflict of arbitration with the goals of the Bankruptcy
Code often arises in cases involving “core” bankruptcy matters, which include issues like claim allowance, avoidance of fraudulent transfers, and property turnover. Bankruptcy courts have greater discretion to refuse to compel arbitration of core bankruptcy proceedings. Courts are more likely to enforce arbitration clauses in non-core proceedings, as these do not directly impact the central administration of the bankruptcy case.
The question posed earlier on arbitration clauses is important because the cost of resolving contested matters with traditional courtroom litigation is often disproportionate to
the likely recovery, while arbitration is less expensive. There are other benefits to arbitration as well:
• Arbitration often can resolve disputes more quickly than traditional courtroom litigation.
• Arbitration allows for more flexible scheduling and procedural rules, and the discovery process is usually more limited than in litigation.
• Arbitrators with specialized knowledge in the specific industry that is involved can lead to more accurate and fair outcomes for the parties involved.
• Arbitration proceedings are typically private, allowing debtors and creditors to keep their financial and business information confidential.
• Arbitration decisions are binding and offer limited grounds for appeal.
PUBLIC POLICY CONSIDERATIONS
Bankruptcy courts also will consider public policy considerations such as:
1. Whether the efficiency of the bankruptcy claims-allowance process would be undermined if arbitration results in piecemeal litigation.
2. The aims of the Bankruptcy Code
for a centralized resolution of disputes related to the bankruptcy estate, minimizing costs and ensuring equitable treatment of all parties.
3. Diversion of resources away from the estate and further complication of the equitable distribution of assets.
4. Power to enforce its own orders by the bankruptcy court. Arbitration of disputes that directly implicate bankruptcy-specific rights, such as automatic stay and discharge injunctions, undercut the court’s ability to effectively manage the bankruptcy case and protect the rights of the debtor and creditors.
5. The ability of parties opposing arbitration to show that Congress intended to preclude the waiver of judicial remedies for the statutory rights at issue.
For instance, in the Highland Capital Management v. Dondero (In re Highland Capital Management) case, the court found that enforcing an arbitration clause would conflict with the objectives of the Bankruptcy Code. The court noted that the arbitration agreement had been part of a rejected executory contract and enforcing it would interfere with the centralized resolution of the debtor’s estate, which is a core function of bankruptcy proceedings. An executory contract is a contract where parties have continuing obligations to perform, and unperformed obligations remain on both sides.
Similarly, in In re Acis Capital Management, L.P., the court declined to compel arbitration despite a valid arbitration agreement. It concluded that enforcing the arbitration would disrupt the core bankruptcy functions, such as the equitable and
expeditious distribution of the debtor’s assets.
In summary, when a bankruptcy court is asked to enforce an arbitration clause, it must carefully weigh the policy favoring arbitration against the specific objectives and policies of the Bankruptcy Code, including the efficient administration of the bankruptcy estate, the centralized resolution of disputes, the protection of the estate and creditors, and the enforcement of bankruptcy-specific rights and orders.
TIPS FOR ENFORCING AN ARBITRATION CLAUSE
1. Assess whether the dispute is a core or non-core proceeding. Highlight the non-core nature of the dispute.
2. Arbitration is more likely to be approved where the judge does not have the requisite specialized expertise to resolve the dispute.
3. Develop a plan for fast-track arbitration, which may give the court more comfort that arbitration will not cause delay.
4. Emphasize that any exceptions to the FAA mandate should be narrowly construed.
5. Demonstrate how arbitration will not conflict with the central purposes of the Bankruptcy Code, such as the equitable distribution of assets, the debtor’s fresh start, and the efficient reorganization of the debtor.
6. Consider the timing to bring the dispute to a head. The earlier, the better to avoid the court finding that arbitration could unreasonably delay the case.
7. Show that arbitration can be conducted in a way that complements the bankruptcy process and does not undermine the centralized
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administration of the bankruptcy estate. Demonstrate that enforcing the arbitration clause will not negatively impact other creditors or the overall administration of the bankruptcy case.
8. Demonstrate how the arbitration can proceed independently without interfering with the court’s oversight of the bankruptcy case.
9. Argue that arbitration can be a more efficient and cost-effective method of resolving the dispute, potentially benefiting all parties involved, including the bankruptcy estate.
10. If appropriate, propose conditional enforcement where certain issues are resolved in arbitration, while others remain under the bankruptcy court’s jurisdiction.
11. Ascertain whether the judge’s calendar already is backlogged. If so, the bankruptcy court may favor arbitration because its own calendar cannot accommodate a multi-day trial.
Kenneth Rosen advises on the full spectrum of restructuring solutions, including Chapter 11 reorganizations, outof-court workouts, financial restructurings, and litigation. He works closely with debtors, creditors’ committees, lenders, landlords, and others in such diverse industries as paper and printing, food, furniture, pharmaceuticals, health care, and real estate. He can be reached at ken@kenrosenadvisors.com
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• Maximize Your Investment: Discover how to choose a CLM solution with real-world scenarios that truly meets your business needs and delivers long-term value.
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In this webinar, Tom Mighell, Esq. and Mark Diamond, CEO of Contoural, the largest independent provider of Strategic Information Governance Consulting Services, will discuss key records management concepts and offer actionable insights, including:
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• Understanding legal, regulatory, and other recordkeeping requirements.
• Best practices for creating or updating a records retention policy and schedule.
• Real-world strategies for executing a records program.
• Identifying who typically owns records management.
• Realistic approaches for getting employees to follow recordkeeping rules.
Enhance Your Legal Research to Power Your Practice
In this 30-minute session, we’ll share how the intuitive interface of PLI PLUS and user-friendly design make it easy to access resources on current critical legal issues and showcase insights from respected authorities. Join us to:
• Explore practical resources from experts in the field that provide incisive legal analysis and context around primary sources.
• Learn about flexible access options to focus on the most relevant content for your practice.
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