The start of a new year is a great moment to set goals and embark on new professional endeavors. If one of your aspirations is to land a prestigious board position, we’ve got you covered with some expert advice. Bob Barker of BarkerGilmore shares his proven strategies for breaking through barriers and overcoming the “anti-lawyer bias” that can sometimes hinder attorneys from securing board roles.
“[Y]our goal is to shape your image—not as a skilled attorney—but as a knowledgeable, strategic advisor who happens to be an attorney,” he writes. Dive into his cover story for actionable tips on how to position yourself as the ideal candidate and edge out the competition.
Whether you’re aiming for the boardroom or pursuing other leadership milestones, one thing is clear: leadership skills are crucial. Mike Williams, also from BarkerGilmore, offers a compelling perspective on the difference between leading and managing. In his piece, he outlines 10 essential leadership behaviors every general counsel should embrace to rise to the next level.
One of those key behaviors? The art of setting and sticking to priorities. As any GC knows, this can be a challenge amidst the constant juggle of high-stakes responsibilities and budgets under pressure.
That’s where we come in—this issue is packed with insights designed to help you stay on top of your agenda. You’ll find practical advice on topics like the value of mediation, strategies to minimize risk in employee terminations, guidelines for thorough and fair internal investigations, and guidelines to safeguard yourself from personal liability
We hope this issue gives you the tools and inspiration you need to make this year your most successful yet. As always, be sure to check our website regularly, and follow us on LinkedIn and X for our latest thought leadership and analysis.
Wishing you a prosperous 2025!
Thanks for reading,
Amanda Kaiser Editor-in-Chief
Dispute Resolution Clauses
Harness the power of Artificial Intelligence with ClauseBuilder AI. Trained on almost 100 years of expertise, this free-to-use breakthrough tool utilizes generative AI language models based on a history of clauses to draft effective arbitration and mediation agreements tailored to your industry needs. With ClauseBuilder AI, the future of dispute resolution is here.
12
COVER STORY
COLUMN / CAREER COMPASS
12 How to Become a Board Member: A Guide for GCs and CLOs
By Bob Barker
Learn how to become a board member by shaping your image—not as a skilled attorney—but as a knowledgeable, strategic advisor who happens to be an attorney.
DECEMBER 2024/JANUARY 2025
Volume 21/Number 6
COLUMN / CAREER COMPASS
10 Mastering the Art of General Counsel
Leadership: Strategies for Growth
By Mike Williams
Ultimately, a good GC team leader is out in front but allows others to be out ahead.
COLUMN / EMPLOYMENT LAW IN FOCUS
16 Breaking Up is Hard to Do: How to Minimize Risk in Employee Termination
By Leah Stiegler and Emily Kendall Chowhan
Learn how to pursue a riskaverse employee termination and avoid the usual pitfalls.
16
14 Legal Evolution: How Generative AI is Shaping the Future of e-Discovery
As with any new technology or process change, corporate legal teams should approach generative AI with the same caution, identifying inherent risks and verifying outputs.
LITIGATION
18 Why GCs Should Pursue Mediation First, Not as a Last Resort
By Tyler Meade and Tom Wiegand
When businesspeople have a conflict, and cannot resolve it with their counterparts, positions can quickly calcify. Learn why you should pursue mediation first.
LABOR & EMPLOYMENT
20 How to Conduct a Fair and Accurate Internal Investigation of Employee Complaints
By Helene Horn Figman
The investigator must resist the temptation to corner an employee into a Perry Mason-style “I did it” confession.
22
How to Prevent Personal Liability for In-House Counsel During Financial Distress
By Kenneth A. Rosen
Learn how to balance legal responsibilities with the risks of personal liability while ensuring the company's interests are protected throughout the process.
MANAGING DIRECTOR OF CLIENT PARTNERSHIPS & INITIATIVES
Lainie Geary
WEB EDITOR
Jessica Bajorinas
ART DIRECTION & PHOTO ILLUSTRATION MPower Ideation, LLC
ACCOUNT EXECUTIVE
Stella Valdez
DATABASE MANAGER
Patricia McGuinness
EDITORIAL ADVISORY BOARD
Dennis J. Block GREENBERG TRAURIG LLP
Thomas W. Brunner WILEY REIN LLP
Mark A. Carter DINSMORE & SHOHL LLP
Jeffery Cross SMITH, GAMBRELL & RUSSELL LLP
Jamie Gorelick WILMERHALE LLP
Robert L. Haig KELLEY, DRYE & WARREN LLP
Robert C. Heim DECHERT LLP
Sheila Hollis DUANE MORRIS LLP
SUBSCRIPTION
Subscription rate per year: $199
For subscription requests, email subscriptions@todaysgc.com
David A. Katz WACHTELL, LIPTON, ROSEN & KATZ Nikiforos Iatrou MCCARTHY TETRAULT LLP
Steven F. Molo MOLOLAMKEN LLP
Robert A. Profusek JONES DAY
George D. Ruttinger CROWELL & MORING LLP
Jonathan S. Sack MORVILLO ABRAMOWITZ GRAND IASON & ANELLO PC
Victor E. Schwartz SHOOK, HARDY & BACON LLP
Jonathan D. Schiller BOIES SCHILLER FLEXNER LLP
REPRINTS
For reprint requests, email Lisa Payne: lpayne@mossbergco.com Mossberg & Company Inc.
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information or retrieval system, without the written permission of the publisher. Articles published in Today’s General Counsel are not to be construed as legal or professional advice, nor unless otherwise stated are they necessarily the views of a writer’s firm or its clients.
To submit an article, go to todaysgeneralcounsel.com/submissions
Mastering the Art of General Counsel Leadership: Strategies for Growth
By MIKE WILLIAMS
People become leaders for many reasons, but it is always a choice. An individual may become a leader because it is part of the job requirements or because they are told to lead. An individual may step up because no one else is available, and without a leader, chaos may ensue. Sometimes, a leader is chosen because they are the senior person in the room or an expert in a particular area. And finally, sometimes, an individual steps up as a leader because they love to lead. In any of these pathways to general counsel
leadership, the person accepting a leadership role is making a choice.
LEADING IS DIFFERENT THAN MANAGING
General counsel who earn a reputation as effective leaders understand the difference between leading and managing, which comes down to three key points:
• Leadership is doing the right thing, while management is doing things right.
• Leadership is making choices
to create a better future, while management is about being in the present.
• Leadership is conferred by the people who follow a leader, whereas management is conferred by a job title.
Ultimately, a good GC team leader is out in front but allows others to be out ahead. That is because a person leads by consent from the people they lead, not by command. It is about influence rather than authority. A leader gains influence
by actions demonstrating integrity, moral courage, and a commitment to putting the organization before their own needs. When someone demonstrates these characteristics, others decide that person is someone they want to follow: a leader.
10 CRITICAL LEADERSHIP BEHAVIORS FOR GENERAL COUNSEL LEADERSHIP:
1
Leaders fix problems rather than worry about who to blame. A good leader is like the little Dutch boy who, walking home one night, saw water pouring through a hole in a dike. The boy simply stuck his finger in the hole and fixed the problem. He did not call a meeting to say, “Who created d the specifications for this dike? Who built it? Who screwed up, and who do we need to sue?” Instead, he saw a problem and took immediate action to fix it.
2
Leaders prefer to do things right rather than right away. Effective leaders maintain high standards for themselves, their team, and their projects. They do not cut corners or look for shortcuts.
3
When given a task, leaders look at their watches, not a calendar. Although they maintain a high standard, leaders also know that a good plan executed today is better than a perfect plan executed tomorrow.
4 Leaders are proactive. It’s too late to think about digging a well when you’re dying of thirst. Good leaders are proactive, always thinking ahead and looking around corners.
5 Leaders know everyone makes mistakes. Leaders recognize they are not perfect, learn from their own mistakes, and continue forward. As a young lawyer, I once made a mistake in front of Sony Co-Founder
Akio Morita. He just smiled at me and said, “Michael, even monkeys fall out of trees.” Admit your mistakes, learn from them, but try not to repeat them.
6
Leaders set and maintain their priorities. One of the hardest jobs any leader tackles is setting and maintaining priorities. In some ways, though, this is the core of the job: to set the priorities and be in control of the strategy for executing them. There is a saying that if you are working from your inbox, you are working on other people’s priorities. The job of a leader is to have the organization working out of his or her outbox.
7
Leaders communicate clearly and concisely. The biggest complaint about people in leadership positions is they do not communicate clearly and concisely. When someone asks the time, a leader does not tell them how to build a watch. A leader answers the question. When asked for a recommendation or conclusion, a leader provides it as concisely as possible. If more information is needed, or knowing how a conclusion was reached is important, the person will ask. This does not mean leaders are pedantic or condescending.
8
Leaders trust people to do their jobs. In other words, good leaders do not micromanage, which interferes with the team’s ability to provide value to the business through their diversity of thought and expertise. If people need assistance, they will ask their leader for help or guidance. Some people want or need more details than others on tasks or projects, and it is okay to provide those to them.
9
Leaders know when to supervise. Good leaders are fluid,
Prefer to read this online? Click here.
know their people, and look out for their welfare. They balance not micromanaging with supervising. They also measure what is being done, whether it is being done well, and whether the group is succeeding or failing.
10
Leaders are trustworthy. Trustworthiness is part of a leader’s personal brand. It is a promise, comprised of credibility plus reliability, to perform any task taken on. Leaders understand the value of maintaining trust and are careful not to over-promise because trust is extremely difficult to get back if it is violated.
Whether your legal department consists of two or 25 people, effective leadership always requires a selfless approach, acting with greater concern for others than for oneself. A good leader is courageous, willing to say what needs to be said, to stand behind a solid set of values, and do what needs to be done. At all times, the best leaders are driven by integrity, always following a baseline set of values to guide and inspire the team and any other members of the organization.
Mike Williams served as Executive Vice President and Chief Legal Officer at Staples, Inc. Prior to that, he was Executive Vice President and General Counsel at Sony Electronics, Inc. He currently serves as a Strategic Advisor and Coach at BarkerGilmore.
COLUMN / CAREER COMPASS
How to Become a Board Member: A Guide for GCs and CLOs
By BOB BARKER
Ageneral counsel or a chief legal officer faces several challenges if they want to become a board member. First of all, there are a limited number of seats available. Plus, turnover is limited since many board members serve long tenures. Then there’s the anti-lawyer bias regarding the professional capabilities deemed most suitable for board roles.
It’s getting even tougher to gain a coveted board seat because the stakes for companies are rising significantly. “The demand for accountability at the board level, the visibility of who the board is, and what the board is doing, has changed dramatically,” says Laura Schumacher, a board member at General Dynamics and CrowdStrike. “Each board member needs to possess a basket of skills and experiences that advantages the whole company.”
Notwithstanding the struggle behind landing one of these positions, there are major career-boosting benefits of board participation. These advantages include increased business acumen, strategic influence, an enhanced professional reputation, and higher compensation and career advancement opportunities.
There are no secrets to landing a board position, as Kristin Campbell, a board member for Regency Centers and The ODP Corporation (Office Depot/ OfficeMax), explains: “There is no set recipe, and everyone has their own story on how they secured a board position. Your journey should always start by asking, ‘Do I really want to do this?’ Because it’s always a lot of work, and not for everyone.”
Shumacher, Campbell and other long-serving board members at respected companies dispensed advice at a BarkerGilmore event earlier this year entitled “How GCs Create Value in the Boardroom.” Here are some of the highlights:
FIRST CONSIDER WHETHER BOARD SERVICE IS RIGHT FOR YOU.
Examine whether you have the right temperament to serve as a board member. “If you’re someone who likes to get involved in tactics and dayto-day operational decision-making, then board participation may not be
right for you,” according to Campbell. “Conversely, if you’re more effective playing an active observer role, with your ‘nose in and fingers out,’ then you’re an appropriate candidate.”
COMPANIES ARE OPEN TO GCS AND CLOS AS BOARD MEMBERS.
Increasingly, intelligent boards want a diverse group of smart people around the table. They want candidates with proven experience in business strategy, risk/crisis management, leadership ability, personal gravitas, and a reputation as a team player.
Your success in bucking any sentiment against lawyers on boards involves how well you position yourself as an executive who can speak broadly and knowledgeably about market challenges and opportunities, the company’s strategic options, effective workforce management solutions, and other board-level concerns.
Cindie Jamison, who chairs the boards of Darden Restaurants, Inc. and Big Lots, Inc., and serves as a director for The ODP Corporation, notes: “Some lawyers do bring strategic thinking to boards, but I’ve experienced it with CFOs as well, where they can get down too deeply in the weeds. It’s a landmine that needs to be avoided. When
interviewing for a board position, your answers need to be very strategic, based on a multi-faceted perspective involving the entire company, and not focused exclusively on legal issues and risks. That can be a deal-breaker for candidates.”
PRIVATE COMPANY EXPERIENCE CAN BE OF VALUE, IF IT’S PROPERLY POSITIONED.
Private companies can provide significant opportunities to GCs who aspire to sit on corporate boards. Similar to the board members of public companies, board members at private companies deliver strategic and operational oversight, and leadership skills.
Start your search for a private company board position by identifying specific private companies – in terms of their industry, size, and complexity – that will give you experience directly relevant to the public companies on your wish list. Look for private companies that have influential directors who sit on multiple boards. A private company board position is an opportunity to build your reputation as a director who is proactive in addressing both risks and opportunities.
A COMPANY’S DIVERSITY GOALS CAN BE AN OBSTACLE TO A BOARD POSITION.
For a host of reasons, over the past few years many boards made diversity a board search priority. However, that pendulum has swung back a bit, and board selection criteria now reflects a more balanced perspective. Regardless of your diversity status, you should always lead with your business-based value proposition when seeking a board position. Companies are still seeking
boardroom diversity, but candidates with a well-rounded resume of experience, and a track record of relevant success, are always more likely to be offered board positions.
EXPERIENCE IN SPECIFIC DISCIPLINES CAN PROVIDE COMPETITIVE ADVANTAGE.
Some corporate functions — including finance and accounting, digital transformation, profit and loss responsibilities, human capital management — are considered necessary components of a wellrounded board. However, some companies are seeking more specific areas of high-demand expertise in areas like cybersecurity and data privacy, artificial intelligence, and digital marketing. If your legal career has provided experience in those areas, that experience might help you land a board position.
NETWORKING IS THE KEY TO SECURING A BOARD SEAT.
Aspiring board members can be reluctant to promote their availability. This stems from a fear of appearing overly aggressive. But it’s important to remember that most director candidates are identified by word of mouth — with referrals from current directors. If you’re reluctant to conduct your own networking campaign, it will be difficult for you to acquire a board seat.
Your networking should start with directors and senior corporate officers at your own company. Include a broad range of corporate influencers, such as outside counsel, audit partners at accounting firms, investment and commercial bankers, venture capitalists, board advisors, and senior corporate officers. Your goal is to be referred to a key
Prefer to read this online? Click here.
decision-maker, such as a board chair, a nominating / governance committee head, or a CEO.
If you decide to work with executive recruiters who specialize in board searches, be prepared to identify the types of companies where you can add value, and to provide a precise rationale for why you’re a viable candidate to become a board member.
FIND SOME WAY TO GET YOURSELF INTO A BOARD ROOM.
If you are the company’s GC, seek opportunities to showcase your expertise to the board or board committees on topics other than legal issues. Again, your goal is to shape your image—not as a skilled attorney—but as a knowledgeable, strategic advisor who happens to be an attorney.
“If you’re not the company GC, you can ask to be part of some conversations or presentations occasionally to get yourself into the board room,” explains Campbell. “When you’ll have the opportunity to observe and be seen by board members, and to gain a firsthand understanding of board dynamics.”
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.
Legal Evolution: How Generative AI is Shaping the Future of e-Discovery
Presented by EDISCOVERY
Generative AI is revolutionizing the legal industry by driving critical efficiencies in long-established processes. Doing more with less has historically been a challenge for in-house counsel, and teams are eager for new solutions, particularly in e-discovery. As documented in The General Counsel Report 2024, 80% of general counsel shared they are comfortable using AI for e-discovery use cases. Knowing where to start with generative AI can feel overwhelming,
especially with so many potential applications. To help narrow the options and derive the greatest value, in-house teams need to prioritize solutions that will have the most impact on how they work. For teams ready to apply generative AI directly to e-discovery, first-pass review has proven a great area to start.
WHY FIRST-PASS REVIEW
During a panel discussion at Relativity Fest 2024, in-house e-discovery leaders highlighted three key
reasons for why first-pass review is an ideal starting place:
• Optimize review workflows: Teams can determine their generative AI workflow and keep human reviewers in the loop. For example, Relativity’s generative AI-powered document review solution, Relativity aiR for Review can be used for first-pass review, followed by a second pass by human reviewers to confirm documents are responsive.
• Save time and money: Generative AI can analyze thousands of documents per hour, quickly identifying the most relevant content.
• Standardize document evaluation: Generative AI provides a consistent determination every time, unlike human reviewers who might code the same document differently. It doesn’t get exhausted through long documents and performs a full assessment every time.
TRUST BUT VERIFY
As with any new technology or process change, corporate legal teams should approach generative AI with the same caution, identifying inherent risks and verifying outputs. When evaluating the results of generative AI, teams can depend on the same best practice metrics used in e-discovery for the last 20 years: recall, precision, elusion rate and more. By adhering to these metrics for accuracy, teams can easily gauge the performance of their prompt input and compare results to current workflows.
Generative AI does introduce new types of risks, but these risks can be mitigated with appropriate technology parameters. For example, Relativity addresses the risk of hallucinations through a chain-ofthought approach, requiring that generative AI validate its citations in the source document it is analyzing.
When it comes to security and privacy with generative AI, organizations need to deploy strategies to prevent employee misuse. Public models like ChatGPT are constantly learning, and employees can easily input proprietary data into prompts that become part of the training data set for future outputs.
To help mitigate common risks, confirm that your generative AI tools don’t retain or store data and check settings for “abuse and harmful content monitoring” to ensure nothing is accessible by unauthorized individuals.
At Relativity, generative AI solutions are built with privacy and security at the core using a secure integration with Microsoft Azure’s OpenAI services. All data input into
• Relying on institutional knowledge and aiR for Review to classify documents, a global pharmaceutical company achieved over 90% recall without performing any manual review or document level QC.
• Using aiR for Review, a large multinational corporation cut their review time in half with cost savings of up to 60%.
• A service provider recognized large time and cost savings for their corporate client, achieving an average of over 96% recall and 71% precision with aiR for Review.
Prefer to read this online? Click here.
Relativity aiR stays within the confines of RelativityOne, and no data is stored or retained by Azure OpenAI. Additionally, all AI innovation rests upon Relativity’s AI Principles, which guide our everyday decision-making to ensure we’re creating technology that’s clear, fair, and gives our customers the utmost control.
STARTING YOUR JOURNEY
Like any journey, the beginning is the hardest part. Here are some tips to get started:
• Identify effective use cases: Determine where you are spending the most resources and your appetite for generative AI. For ideas, check out the AI Advantage Webinar Series to hear from your peers.
• Recognize the opportunity: Generative AI offers a unique chance to differentiate yourself as a leader and set your company apart from the competition.
• Collaborate for success: Partner with internal and external teams to identify avenues for enhanced productivity. For example, external teams can use generative AI to save you money on billable hours. Or, complete jobs in a fraction of the time
The next step to implementing generative AI into your e-discovery workflows is simple: set up time with the Relativity team to find the right solution or partner for your business.
COLUMN / EMPLOYMENT LAW IN FOCUS
Breaking Up is Hard to Do: How to Minimize Risk in Employee Termination
By LEAH STIEGLER AND EMILY KENDALL CHOWHAN
This article about the challenges of employee termination is the third in a series entitled “Employment Law in Focus.” You can find the first installment on workplace romance here and the second installment on resolving conflict in the workplace here.
“Hey, Babe, it’s just not going to work out anymore. It’s not you, it’s me.”
We’ve all heard this classic line. Occasionally, it works, and a couple parts ways amicably. For the most
part, though, vague reasons for breakups only lead the “ex” to question the real reason for breaking their heart. They may spiral, asking follow-up questions, reaching out to your friends, re-reading all your past communications, and looking for missed signs. (We swear we aren’t speaking from experience.)
An employee termination is no different. When an “ex-employee” starts questioning why you “broke it off,” they may even wonder if it was for an unlawful reason. That is what you want to avoid. A risk-averse
termination is one based on the employee’s conduct. This usually falls into two categories: misconduct and performance.
MISCONDUCT: KNOW YOUR DEALBREAKERS
Like dealbreakers in a romantic relationship, misconduct includes factors that lead to immediate termination. Just as you go into dating knowing what your dealbreakers are, such as wanting kids or someone of the same faith, you should know what they are in your workplace,
too. In your termination notice, you may want to include examples of the employee’s misconduct that would lead to immediate termination, regardless of any progressive discipline process.
For example, suppose an employee refuses to carry out key tasks, fails to align with the company’s mission, threatens other employees, violates the harassment policy, lies, steals, or cheats. (Okay, some of these are also good reasons for a breakup.) In that case, it’s time to let the employee go. When an employee engages in
A risk-averse termination is one based on the employee’s conduct. This usually falls into two categories: misconduct and performance.
such misconduct, you can point to the express policy language in the termination notice, describing how they engaged in the conduct and, hopefully, part ways with clarity.
Remember that this works only if you enforce it fairly for all employees. Otherwise, an ex-employee may try to argue that the enforcement of your misconduct rules was discriminatory, retaliatory, or unlawful in some way.
PERFORMANCE: GET YOUR DOCUMENTATION READY
Unlike misconduct, where the documentation that supports an employer’s defense against an
ex-employee’s claim may be limited to the termination paperwork, terminating someone for failing to meet performance expectations is a little more nuanced. Think of what your argument to a jury would be. Suppose an ex-employee sues you for retaliation, and you argue that you terminated them for misconduct, e.g., falsifying timecards. In that case, you can usually present a streamlined defense that includes a report showing their falsification of the timecards and the termination paperwork, which should agree. Smooth and hopefully unquestionable for a jury.
Defending your case when you terminate an employee for failing to meet expectations is more challenging. That is because determining whether someone is performing to expectations is often subjective. What one manager describes as failing to meet expectations may differ from another’s. (It may even be different for each juror!)
Further, your reasons for giving someone more chances may depend on business circumstances. You may keep a poor performer around because you are short-handed, or perhaps you know the employee isn’t meeting expectations, but they’re at least “better than the last.”
This may be similar to breaking up with someone because they are a poor communicator, or maybe you can’t put your finger on it but don’t feel secure, or you can’t imagine a future with them. (Okay, you’ve caught us: We speak from experience.). These breakups often lead to the “you’re just not a great fit” conversations, which are pretty hard to defend.
To prevent an ex-employee from thinking you’re ending things for
Prefer to read this online? Click here.
an unlawful reason, such as retaliation, you want to ensure that you have documentation supporting your reasons. A good defense would include a few write-ups that specify how the employee failed to meet expectations and summarize those expectations moving forward. An even better defense would include a performance improvement plan that the employee failed to comply with. A great defense would include examples of other employees you held to the same standard.
All in all, no breakup is easy — and neither are those in the workplace. You may do everything by the book in an employee termination, but the end is still messy. The best you can do is be prepared for any future defense after an employee’s termination by having documentation showing your effort to set expectations and the employee’s failure to meet them.
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,” which is available on YouTube
Why GCs Should Pursue Mediation First, Not as a Last Resort
By TYLER MEADE AND TOM WIEGAND
When businesspeople have a conflict, and cannot resolve it with their counterparts, positions can quickly calcify. Lawyers are added, and soon the parties are enmeshed in expensive and unpredictable litigation. To what end? The odds that one side or the other will be vindicated at trial are minuscule because almost all of business disputes eventually settle. Pursue mediation first. Spend a few days and a modest amount on a mediator trained in breaking
impasse. There are many misguided reasons companies fail to do this.
In-house counsel straddle a difficult line. They are responsible for protecting their company’s contractual and other rights. On the other hand, they are acutely aware of the high cost of litigation, and do not enjoy having to explain themselves when the legal team blows through its budget. Even so, counseling against prompt enforcement of a company right is distasteful to most general counsels. The path to
litigation is thus well-trodden.
The incremental short-term decisions are easy to understand. The cost of factual and legal analysis in drafting a complaint can be seen as a necessary cost of understanding the problem. Then armed with this knowledge, the “go/no go” decision of whether to file a lawsuit requires little immediate additional funds –indeed there often is a lull in legal expenses after a complaint is filed. And for those times when one party pauses to consider whether the
expense of litigation is worth it, they can be dragged into litigation if the other side files.
Before long, the post-filing lull ends. Discovery and motion practice ensue in the pursuit of not only better understanding facts and legal claims, but in competing with the other side to gain an upper hand. A staggering amount of work is done, at great expense, and yet businesspeople seeking vindication at a trial are likely to be disappointed.
Engage a neutral mediator to help find a solution at the beginning, shortly after lawyers are first contacted.
Lawsuits, especially over business disputes, almost always settle. Statistics published by the federal courts and in law journals show that less than 1% of cases reach trial. And when a trial does occur, half of the parties lose, and the winner often walks away with a more modest verdict than was imagined. Was the cost and the attendant delay worth it?
THINK ABOUT MEDIATION SOONER RATHER THAN LATER
There is a better way. Engage a neutral mediator to help find a solution at the beginning, shortly after lawyers are first contacted. This path is not pursued for a host of justifications that often fail when you look under the hood:
• “We need to litigate to get needed information” — No. Sometimes
facts are needed, but discovery is usually slow and too comprehensive. Mediators can be much more effective in obtaining early information exchanges, while avoiding the vast majority of deposition testimony, written discovery, and documents that end up on the cutting room floor. It is not unusual for the authors to persuade a party to share information in mediation that they initially refused to produce in discovery.
• “We need to litigate to hone legal theories” — No. If a specific legal issue truly is unknown, a former judge or professor can be jointly retained in a variety of ways. And while that is not determinative of the trial judge’s opinion on a novel issue, nor is the trial judge’s opinion predictive of the appellate court.
• “We need to litigate to learn what the case is worth” — No. Whether parties evaluate claims in mediation or litigation, much of the early-stage uncertainty remains on the eve of trial – the conclusions of juries, and trial and appellate courts, are not easily predicted.
• “We look weak if we are willing to mediate” — No. Being willing to talk shows confidence and strength, not weakness. It also provides the chance to show that your assessment is far more accurate. Meanwhile an unwillingness to listen often means fear of what might be learned.
• “The other party is being unreasonable” — So? The litigation process rarely causes unreasonable parties to find reason, and even drives them further afield as they filter developments through
Prefer to read this online? Click here.
partisan glasses. Breaking through this affliction is what mediators do, regardless of timing.
• “If we don’t settle now, we can always settle later.” Maybe — but at far greater expense. And maybe not — because circumstances change. To the extent a line of business can be salvaged, or a patent licensed, that is much more likely when the problem first arises. That line of business or patent may be worthless in a few years.
The cost of mediating is small, especially compared to the potential upside of avoiding the costs of litigation, and you are going to wind up doing it later anyway. Pursue mediation first; it’s a seriously good idea.
Tyler Meade is Chief Legal Officer of Gemini, which operates licensed, fully regulated digital asset exchanges in North America and Europe. Tom Wiegand is a litigation partner at MoloLamken. The two met through their shared interest in mediating complex commercial disputes.
LABOR & EMPLOYMENT
How to Conduct a Fair and Accurate Internal Investigation of Employee Complaints
By HELENE HORN FIGMAN
Litigation attorneys know there is an art to the opening statement, direct examination, cross examination, and the closing argument. Similarly, there is an art to conducting an internal investigation of an employee complaint.
Directing interviews in a timely manner is vital, as complaints of harassment are clearly time-sensitive, and a delay could imply that the company is apathetic. Because time has a way of erasing particulars that could be pivotal to the investigation, initiating the internal investigation as soon as possible also helps to ensure that all parties remember facts and details accurately.
Too often, even the most talented human resources professionals and astute members of a company’s legal team approach the matter as a case in controversy, making the interview seem like a cross examination. In other instances, the person making the complaint is instructed to “tell me everything that happened.” The complainant’s story is repeated by the investigator to the alleged harasser, who is asked, “What do you have to say to this?” This is a style of questioning that does not lead to effective fact-finding.
Although an investigator should ask open-ended questions, there needs to be a framework that
allows both the complainant and the employee accused of harassment to respond in a specific way that elicits key issues and provides the investigator with a basis for follow-up inquiries.
A good way to begin is to approach this as one might start a conversation, rather than jump into who, what, where, when and why.
Some suggestions:
• Sound appreciative.
“We’d appreciate it if you would provide some further information about your complaint, such as where you were at the time of the incident?”
• Use non-accusatory language. Rather than asking about witnesses or evidence, ask: “Did you notice if there were any other employees or customers within earshot?”
• Ask if the employee “remembers,” so that they are not embarrassed if their exact response is not on the tip of their tongue.
“Do you remember if you responded to the statement (or physical action) in any way?”
• Allow some leeway for additional information.
“Is there anything else you think is important to share that
might help in looking into this matter?”
• Take your cue from the information that you are receiving. If the employee has shared something they think might help, follow up. “In what way do you feel that relates?”
AVOID ANY SUGGESTION OF BIAS
Sometimes, internal staff can be too close to a situation. They may work regularly with the complaining employee or with the alleged harasser. At a result, an investigatory report may be questioned at a later date as being biased because of a perceived relationship with one of the parties. Effective strategies to avoid any suggestion of bias include selecting an investigator with no personal or professional connections to either the complainant or the accused; having a review process in place where findings and conclusions of the investigation can be reviewed by an impartial party; or using a neutral or third party, such as an external investigator.
The parties should not be told that the matter is “strictly” confidential. Instead, both the complaining individual and the accused should be advised that the investigation will be conducted in a manner that is as confidential as possible. Both parties should also be made aware that they may need to be contacted at other times during the course of the investigation.
The investigator is responsible for being an avid, but objective, listener, avoiding statements like, “I definitely believe you,” or “That doesn’t really make sense to me,” or “Why were you in that situation?” Investigators should use statements
that are neutral and focused on factfinding. As a starting point – to the complainant: “Thank you for coming forward; please be assured that we take your complaint seriously and will conduct a thorough investigation.” To the accused: “Please be assured that we are commencing the investigation with an open mind and very much want to hear what you have to say.”
DON’T MAKE IT AN INTERROGATION
A workplace investigation is not an interrogation of the alleged harasser. The investigator must resist the temptation to corner an employee into a Perry Mason-style “I did it” confession. While there may be instances where an employee does acknowledge responsibility for some or all aspects of an accusation, such acknowledgment should be elicited through non- accusatory skillful questioning. An experienced investigator might ask, as example, if there is any background information that they believe is important to the investigation. This allows the accused an opportunity to provide additional details.
In addition to the complainant and the accused, witnesses to the incident(s) must be interviewed to ensure all necessary information is gathered. Further relevant supporting documents should be collected — including emails and chat messages — to help establish facts and corroborate statements.
Once completed, the investigator submits a factual report to human resources or the relevant decision-maker in upper management. Depending upon the role of the investigator (which is decided in advance), the report does not
Prefer to read this online? Click here.
usually recommend what, if any, remedial actions should be taken, based on the investigation. Rather, the appropriate internal manager/ decision-maker will utilize the report as a basis for making their decision. Company policies may dictate the particular type of discipline (if any) to be implemented. Appropriate actions based on findings might include disciplinary measures, mediation, or training.
Thorough factfinding ensures a fair and accurate internal investigation. In the absence of this process, incorrect steps might be taken, opening a business to risk and/or liability. A commitment to taking complaints seriously sends a message to employees that the company is fully vested in safeguarding their rights and fosters a comfortable and positive workplace environment.
Helene Horn Figman is owner/founder of Workplace Awareness Training, which conducts investigations and specializes in educational programs for employees on areas such as antiharassment, anti-discrimination and bias. She can be reached at hfigman@ workplaceawarenesstraining.com
How to Prevent Personal Liability for In-House Counsel During Financial Distress
By KENNETH A. ROSEN
Whenever a company enters financial distress, there is a risk of personal liability for in-house counsel. Corporate counsel face significant challenges as they guide their organization through complex legal proceedings and manage potential personal liability.
ENGAGING IN WRONGFUL CONDUCT
Personal liability for in-house counsel can arise if in-house counsel engages in wrongful conduct, even if such actions are within their professional duties. They may be held accountable:
• If they are perceived as the “guiding spirit” behind such actions.
• If they oversee actions that violate the law.
• If they fail to take appropriate action in response to efforts by management to violate the law or breach contracts.
These actions can occur when a corporate officer (or in-house counsel) directs a corporate agent to engage in wrongful conduct, even if the officer or counsel does not personally engage in the conduct.
The corporate shield, which typically protects officers from personal liability for actions taken on behalf of the corporation, does not apply when the officer personally engages in wrongful conduct or fails to take appropriate action when aware of wrongful conduct.
Several real-world cases illustrate these risks. For instance, attorneys for Toys “R” Us were sued for allegedly failing to disclose the company’s financial issues. In-house counsel at WorldCom faced repercussions for their involvement in the accounting fraud that led to bankruptcy. In W.R. Grace & Co., the bankruptcy trustee sued in-house counsel for not disclosing asbestos liabilities, and former counsel for Washington Mutual, Inc. was sued for failing to inform the board about potential liabilities.
AVOIDING NEGLIGENCE CLAIMS
During financial distress, the duty of care and loyalty of in-house counsel becomes critical. Decisions can significantly affect the organization’s future, and failure to demonstrate due diligence and reasonable oversight can lead to negligence claims. Counsel must stay informed about relevant laws, management actions, and management inaction. They may
need to decline or oppose executive requests if they conflict with the company’s best interests or expose them to personal liability.
The role and responsibilities of in-house counsel increase in times of financial distress. Counsel must be vigilant against actions associated with preference payments, fraudulent conveyances, misleading information provided to stakeholders, or failure to provide information to stakeholders who need to make credit decisions. Given their proximity to corporate governance, in-house counsel may face personal liability under securities laws if they fail to ensure accurate disclosures or become involved in misleading investors. For example, negligence in ensuring compliance with SEC regulations can expose them to liability.
Acute awareness of management’s actions or inaction, both financial and operational, is essential to mitigate potential liabilities. In-house counsel must have a holistic understanding of everything that is happening in the company (not just in the legal department), an understanding of why it is or is not occurring, and an understanding of how creditors are likely to view actions or inaction with 20/20 insight.
THE ROLE OF THE CREDITORS’ COMMITTEE
In a Chapter 11 bankruptcy case, a US Trustee appoints a creditors’ committee. The committee aims to maximize the recovery for unsecured creditors, conducting forensic investigations to identify claims against third parties. Increasingly, when the creditors’ recovery is below reasonable expectations or when creditors are suspicious of pre-bankruptcy actions by the debtor, the committee looks to recover from officer and director liability insurance.
The committee may target C-suite executives, including in-house counsel, to obtain bargaining leverage regarding a reorganization plan and recovery of Directors and Officers (D&O) insurance proceeds. Often, the tradeoff is a larger recovery for creditors in exchange for granting releases under the reorganization plan. The foregoing emphasizes the need for counsel to understand actions that could trigger personal liability during and outside bankruptcy proceedings.
EXERCISING OVERSIGHT
External experts (bankruptcy or restructuring counsel, financial advisors, investment bankers, and chief restructuring officers) may be
brought in to assist and guide the company to a successful refinancing, reorganization, or restructuring.
• In-house counsel must retain oversight of their work. The board should mandate this oversight and require in-house counsel’s attendance at internal strategy meetings with senior management, meetings with external advisors, and meetings with creditor constituencies.
• In-house counsel also should review all communications with external parties, particularly lenders, bondholders, and vendors.
• In-house counsel must closely monitor the creditors’ committee’s investigation so they know where an investigation is headed, and how to protect the parties being investigated and preempt the assertion of claims.
NEGOTIATING RELEASES
Determining who receives a release from liability under an out-of-court restructuring or Chapter 11 reorganization plan is a pivotal aspect of the negotiation process. In-house counsel should be included in the company’s executive group that is being released. This message should
Prefer to read this online? Click here.
be sent to senior management and external professionals guiding the plan negotiations.
The creditors’ committee may deny releases to in-house counsel unless it is shown that such releases are necessary and beneficial. Therefore, the in-house counsel should demonstrate that they are integral to success. This is best achieved by in-house counsel’s full involvement in the restructuring or reorganization process.
CONCLUSION
In-house counsel play a vital role in navigating financial distress and bankruptcy challenges. They must balance legal responsibilities with the risks of personal liability while ensuring the company’s interests are protected throughout the process. By staying informed, exercising due diligence, and effectively communicating with all parties involved, they can help guide their organization toward a successful resolution.
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
AI and eDiscovery 2024 Year in Review: Key Trends, Legal Shifts, and What Lies Ahead for 2025 and Beyond
Stay ahead of the curve with our in-depth webinar exploring the evolving role of AI in eDiscovery. KLDiscovery’s Eric Robinson will examine all the significant developments related to eDiscovery and AI, including emerging trends, legal challenges, and new regulations shaping the industry, including:
• Emerging Trends in AI and eDiscovery
Explore how advancements in AI are transforming the way eDiscovery is conducted, from automation to predictive analysis.
• Legal and Regulatory Updates
Learn about new laws, regulations, and compliance requirements that have reshaped the eDiscovery landscape this year and what to expect in 2025, including with the new presidential administration.
• Challenges for Organizations and Law Firms
Understand the latest obstacles faced by legal teams and companies, and how AI is both solving and creating new challenges.
• Future Outlook
Get insights on what lies ahead in the near and long-term future for AI-driven eDiscovery.
How to Turn Your CLM Investment into a Streamlined Powerhouse
Many legal departments buy Contract Lifecycle Management (CLM) systems with an expectation that it will be a panacea for all contracts ills, right off the bat. It can, in fact, work magic, but ensuring it functions at an optimal level requires time and resources.
Despite the initial promise, some CLM implementations fall short of expectations, leaving legal teams with limited budgets to address gaps or inefficiencies that persist.
This session will cover actionable strategies to optimize existing CLM systems that can bring quick wins and long-term benefits. We will also walk through a proven, flexible approach that can begin at any point along the contract lifecycle to provide increased efficiency through technology or process improvements.
Join our experts as they discuss ways to make the most of your CLM investment with topics including:
• Identifying and addressing common pitfalls in CLM implementations to unlock the “magic” of these tools.
• Practical strategies for leveraging existing skills in eDiscovery or legal operations to improve contracting processes.
• Approaches for sustainable, continuous improvement that allow for growth and expansion.
