Welcome back to Inside Track!

While it is not entirely common, in recent months there has been a trend of general counsel and chief legal officers becoming interim CEOs. The CLO of Fluor Corp., Carlos Hernandez, was named interim CEO earlier this month and some are speculating he will become the company's permanent CEO in the coming months. In March, longtime GC of Wells Fargo Bank, C. Allen Parker, was named interim CEO, though he will not be considered for a permanent position.

Jamy L. Sullivan, executive director of Robert Half Legal, said the insight a GC or CLO has from touching nearly every part of the business could give them the skills needed to lead a company. Sullivan further said the GC or CLO is often responsible for developing compliance programs in response to new laws and regulations. Someone who knows both business and compliance may be able to ultimately make the best decisions for the business.

“These increasingly complex regulations require that GCs and CLOs remain current with new and changing mandates as well as industry trends. They also need to proactively monitor and respond to these requirements, including helping to develop internal controls, processes and training to manage and reduce risk,” Sullivan said.

Is your goal to eventually move beyond the legal department and have a high-ranking position at a corporation? Let me know by emailing me at [email protected].

What's Happening

Whittling Down Firms

It's not unheard of in 2019 to greatly reduce the number of law firms your company works with. What is a little unorthodox is to demand large discounts of those firms in exchange for giving them a lion's share of the legal work.

That is exactly what Teva Pharmaceutical Industries hopes to do by the end of 2019. Last week ALM Editor-in-Chief of Legal Global Brands Gina Passarella and I spoke to David Stark, Teva's chief legal officer, about his initiative to reduce external legal spend.

Stark said he wants firms to handle near 80% of the company's external legal spend. He hopes that amount of work will result in a discount in the area of 30%. He said many of the firms he's worked with are not fond of what Teva is asking for in the request for proposals process.

While many in-house departments are debating over alternative fee arrangements, Stark admitted he does not want those.

“I've never been a big fan of alternative fee agreements,” Stark said. “We have very few. I'm a big fan of getting a reasonable rate for quality work.”

Keeping Government Out Of Internal Investigations

A federal court in New York recently held in United States v. Connolly that the federal government outsourced its investigation into individuals at the Deutsche Bank. Law.com report Sue Reisinger spoke to Milbank attorney James Cavoli on how the decision impacts general counsel.

Cavoli said the government needs to be more careful in how it conducts its investigations. He said the decision “gives general counsel and their law firms grounds to push back attempts by the government to micromanage their investigations.”

Cavoli said in-house counsel should begin to consider documenting a company's decision to investigate an issue. He also said companies should consider providing independent counsel to employees who are interviewed by the government.

The ruling in the case was a “perfect storm,” Cavoli said. He said the “level of prosecutor involvement in the bank's investigation was somewhat unique and a high watermark of government meddling in internal probes.”

False Claims

Last week the Department of Justice published a policy on what factors prosecutors can consider when determining to reduce civil penalties in False Claims Act cases. Law.com reporter Phillip Bantz wrote a story on the importance of the report.

▶ Clearer rules. With the rules laid out, defendants in FCA cases can now point to written policy to make sure “every possible factor is on the government's radar when a case is being resolved.” The guidelines show that the DOJ still appreciates the idea of companies blowing the whistle on themselves.

▶ Letting other agencies know about cooperation. Meredith Auten, a partner at Morgan Lewis, said in the guidelines the DOJ is incentivizing self-disclosure. Auten said besides prosecutors reducing penalties in those cases, the prosecutors will let other agencies that may be investigating your company know you're being cooperative.

What I've Been Reading

Tim Johnson, the general counsel of Peak Completion Technologies, told The Houston Chronicle that when his longtime friend, Ray Hofman, died in a plane crash, it was a defining moment in his life. He said that loss became harder when he discovered his deceased friend, the founder of Peak, was siphoning money from the company to pay for expensive habits. Johnson said after an investigation he led a $20 million suit against Hofman's estate.

There are some legal and ethical implications of using artificial intelligence when hiring employees, according to an opinion piece in The Seattle Times. Those issues include privacy relating to personal attributes, privacy relating to lifestyle and activities, and privacy relating to disabilities.

Bloomberg Law reported that workers may no longer be protected from a federal labor law if the National Labor Relations Board agrees with its general counsel. The NLRB's general counsel's office argued the National Labor Relations Act's safeguards for workers' group actions for “mutual aid or protection” do not cover litigating any non-NLRA claims.

Don't Miss

Tuesday, June 11 – Global Leaders in Law will be hosting a “Be the Change” event at Rosewood in Palo Alto, California. On Tuesday, June 18 GLL will be hosting a “Changing Corporate Culture” event at D.O.M. in São Paulo, Brazil. GLL is an invitation-only membership group offering general counsel a global platform for in-person collaboration to exchange ideas and receive advice and guidance from peers. For more information, contact Meena Heath at [email protected].

Tuesday, May 21 – Wednesday, May 22 – Corporate Counsel will be hosting the 19th Annual SuperConference at the Swissotel Chicago. The event will be attended by hundreds of in-house counsel and legal operations professionals. Speakers at the event will include John Albright, chief legal officer of HUB International; Heather Bardeleben, director of legal operations at Adtalem Global Education; and Kim Brown, global chief legal officer at Sedgwick.

Tuesday, June 4 – Friday, June 7 – Harvard Law School will be hosting a Leadership in Corporate Counsel program. The program offers in-house leaders' insights into the challenges of working for a corporate legal department.

On The Move

✦ Axalta ✦ Brian Berube will become the senior vice president, general counsel and corporate secretary of the Philadelphia-based commercial vehicle coating maker. Berube previously worked as the top lawyer of Cabot Corp. and will take the reins on July 15. He replaces Michael Finn, who left the company to become the top lawyer at Nouryon.

✦ Travelex North America ✦ Tania Ali, who joined the financial services firm in 2014 as senior counsel, was named the North American general counsel last week. Before joining Travelex, she worked in-house at Create Entertainment, a production house in New York.

✦ Life Biosciences ✦ Amit Shashank was hired as the general counsel to the biopharmaceutical company on Monday. Shashank previously worked as a lecturer at Columbia University and as a corporate attorney at Shearman & Sterling.