Inside Track: How Origination Credit Affects In-House Diversity Efforts. Plus, Growing Pay Gap For GCs.
Origination credit structures at law firms may deter in-house counsel's diversity efforts when hiring outside counsel. The gender pay gap between male and female GCs is widening, a recent survey found. Also, the Steve Madden GC talks about how his legal department is working around the U.S.-China trade war.
September 04, 2019 at 06:05 PM
7 minute read
Welcome back to Inside Track!
This year, Corporate Counsel has reported a lot on general counsel and chief legal officers becoming interim CEOs, permanent CEOs or being promoted to more business-facing roles within the C-suite.
For John Rakow, formerly the general counsel and interim CEO of uBiome, the role came at a time when the company was being investigated by regulators for its billing practices. In an interview, he said whether a company is in a crisis or not, a good CEO should first be an effective communicator.
"I believe that from working with good CEOs. That communication and the delegation of responsibilities is important," Rakow said.
He said when he became interim CEO he thought of all the CEOs he's worked closely with and what made them lead successful companies.
"I've worked with some great CEOs and worked with others that were not as successful. I would watch them articulate some very clear goals which resonated with the employees," Rakow said.
In July, Rakow stepped down as the interim CEO of uBiome. He said one thing he took away from the experience is the role the CEO plays in company culture.
"I have learned to drill down more into the company's core values," Rakow said. "I think it's important to see that the CEO or founder is truly living those values."
As in-house counsel, what qualities do you think CEOs should have that lead to a company's success? Let me know by emailing me at [email protected].
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What's Happening
Origination Credit May Hurt Diversity Focus
Over the past year, in-house counsel have pushed their firms to do more with diversity and inclusion. However, who receives origination credit at law firms can hurt in-house efforts to promote diversity and inclusion.
Jeanine Wright, chief legal and administrative officer at Simplecast, said she keeps that in mind when hiring outside counsel. While she was the GC at ZestFinance, she sent a survey to her firms asking lawyers if they identified as a person of color, veteran, openly LGBT or disabled and asked which lawyers received origination credit.
"Two [firms] included people on the list that I had never heard of that were getting origination credit for my matters, so I was surprised by the category column in particular," Wright said.
Patricia Gillette, a former partner at Orrick, Herrington & Sutcliffe, said the system of the origination credit "creates silos instead of teams."
"You can get credit for the rest of your life; it doesn't give room for others. Women and minorities may be on my cases, but I get the credit. It's been a big issue," Gillette said.
To get transparency on who receives compensation for matters, in-house experts say GCs have to ask their firms for information rather than assume their relationship partner is being given origination credit.
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Pay Gap Keeps Growing
Equilar's latest General Counsel Pay Trends study shows that male GCs earned 18.6% more than their female counterparts. That is the largest pay discrepancy since Equilar began studying GC wages in 2014.
From 2017 to 2018, the median pay for male GCs jumped from $2.52 million to$2.63 million. In the same time period, female GC pay dipped from $2.44 million to $2.21 million.
Despite the pay disparity, John Gilmore, managing partner at BarkerGilmore, said "clients are out actively trying to attract more women and minorities to the GC ranks."
Gilmore also said the majority of GC roles at larger companies are held by men. According to the report, the top six highest-paid GCs are men, while there are only four women in the list of the top 20 paid GCs.
"Why aren't more women or minorities being prepared as successors for those Fortune 50 companies that are paying the most money? That's a good question," Gilmore said.
A Sense of Humor
Michael Paradise, the general counsel of Steve Madden, said in an interview with Corporate Counsel that he leads the legal department with a combination of being personable and having a good sense of humor. He spoke about the legal department's role in the footwear industry, China, and protecting intellectual property. Below are highlights from that conversation.
➤ Leaving China. Paradise said the Steve Madden legal department has had an ancillary role in the company's decision to move some production outside of China. He said through negotiations the U.S. and China can resolve the matter. Ultimately, he said, if the trade war continues, prices will rise.
➤ Philosophy on IP protection. Paradise said the legal department has streamlined its IP group and is now in the process of adding trademarks. The company has taken a "somewhat aggressive stance" against those who have sent frivolous demand letters alleging trade dress rights in products that are "more functional than specialized."
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What I've Been Reading
The Orlando International Airport hopes to bring on a staff attorney in the wake of outside counsel Marcos Marchena's resignation from the airport. According to a report in The Orlando Sentinel, the new position will provide an "orderly and measured transition" from Marchena's firm. Marchena served as outside counsel and tendered his resignation in August. He will continue to serve in that role until the end of the year.
Oracle is appealing a ruling on a $10 billion JEDI contract, according to a report in the San Francisco Business Times. In July, a federal court ruled Oracle did not meet the minimum security requirements to bid on the Joint Enterprise Defense Infrastructure contract. Oracle's general counsel, Dorian Daley, said in a statement that a conflict of interest exists in the JEDI bidding qualifications. "The opinion also acknowledges that the procurement suffers from many significant conflicts of interest," Daley said. "These conflicts violate the law and undermine the public trust."
Simon Fish, the executive vice president and general counsel at BMO Financial Group, wrote in The Canadian Lawyer that legal operations functions are needed more than ever. He said Canadian companies have been slow to implement legal operations functions, which could free up time for in-house attorneys to do more complex work.
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Don't Miss
Wednesday, Sept. 25 to Thursday, Sept. 26 – Corporate Counsel will be hosting its annual General Counsel Conference at the New York Marriott Marquis. Speakers this year include Peter Gyr, global general counsel of wealth management at JP Morgan Wealth Management; Graham Luce, general counsel at BJ's Wholesale Club; and Megan Ryan, general counsel at NuHealth.
Monday, Oct. 7 – American University Washington College of Law is hosting a Corporate Counsel as Business Leaders event from 10 a.m. to 1 p.m. Topics will include the GCs positioning as part of the C-suite, the regulation of GCs and in-house counsel and views on GC and legal/business ethics.
Monday, Oct. 14 to Wednesday, Oct. 16 – The Minority Corporate Counsel Association will be hosting its Creating Pathways to Diversity Conference in New York at the New York Hilton Midtown. The MCCA will host a Diversity Gala on the last night of the conference at the American Museum of Natural History.
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On The Move
✦ Guggenheim Partners ✦ Robert Khuzami has been made the chief legal officer of Guggenheim Partners. He most recently was a partner at Kirkland & Ellis and has previously worked as general counsel for the Americas at Deutsche Bank.
✦ New York Jets ✦ Hymie Elhai has been promoted from his role as the team's general counsel to its president. Elhai has worked with the company since 2000 when he was hired as an intern.
✦ Pangea Money Transfer ✦ Alex Levine was made the general counsel and chief compliance officer of the mobile money transfer platform. He most recently worked as the chief regulatory officer and head of legal at Trusttoken. He also held in-house roles at LedgerX and The Options Clearing Corp.
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