Lenovo GC Jay Clemens on 'playing the zither to the cows'
Lenovo general counsel Jay Clemens on the challenges of being head of legal at a global consumer technology company
August 18, 2015 at 06:18 AM
8 minute read
Lenovo general counsel Jay Clemens sits in a suite at the Berkeley Hotel in Knightsbridge miming the playing of a zither.
"I am learning to play the qin, a 3000 year old instrument that you play like a zither," he says. "There is a four character Chinese expression, 'playing the qin to the cows (對牛彈琴)'."
It means speaking about high-level or complicated matters to people who are unable to understand, it is also used to advise people to consider their audience when choosing their approach to communicating something.
Clemens cites the expression as something that can spring to mind when attempting to communicate complex legal concepts to non-lawyers, particularly when talking to people who are not using their native tongue.
Consumer technology company Lenovo, which announced plans to cut 3,200 jobs – the equivalent of 10% of its non-manufacturing employees – after this interview took place, is an unusually multi-national and multi-cultural organisation.
Clemens points out that the executive board – a meeting of which is what brings him to London – consists of seven or eight different nationalities and that in day-to-day life it is not uncommon to be in meetings with people working in their second or third language. Thus the occasional moment arises when communication breaks down.
Technology company Lenovo was founded in Beijing in 1984 as New Technology Developer. It grew inside China, launching its first own-brand PC in 1989 and a PC targeting the consumer market in 1993. It listed on the Hong Kong stock exchange in 1994 and by 1999 the company was China's PC market leader with a 21.5% market share.
In 2004 Lenovo acquired IBM's personal computing division for approximately $1.75bn (£943m) in cash and shares, giving it control of the Thinkpad line of laptops and making it the third-largest personal computer company in the world. Further acquisitions include Medion, a German PC company in 2011; CGE, a Brazilian consumer electronics company in 2012; and in 2014 it acquired US-based mobile handset-maker Motorola from Google in a $2.91bn (£1.78bn) cash and stock deal.
Route to the top
Clemens' background is not necessarily archetypal for the general counsel of a cosmopolitan multi-national company. He grew up in the unglamorous surroundings of North Dakota and concedes that: "I don't think I saw a Chinese person until I was 19."
He chose to read Asian studies at university because he "wanted to study something interesting."
He spent time living in China and that was where he developed an interest in the law.
"In the 1970s and 1980s China was developing its legal system and I was interested in that process and the law," he explains.
Clemens later enrolled in a law school with a Chinese faculty before joining Baker Mackenzie's international trade practice group in San Francisco. After Chinese international trade work dried up in the late 1980s, he focused more on technology before moving in-house with electronic payments company Verifone in 1993.
Clemens says: "I had a client that I liked and I had just had my first child. I thought moving in-house would be a more civilised existence, which proved not to be the case."
In 1997 Verifone was acquired by Hewlett Packard in what Clemens describes as "one of the worst technology acquisitions of all time."
"They teach classes on it!" he laughs.
He spent a further year struggling with Verifone's integration into Hewlett Packard (it was sold again in 2001) before making the leap to eBay in 1999.
Clemens joined eBay in its early days, "I was about employee 200″, he says, staying 13 years and ending up as senior vice president and deputy general counsel.
He joined Lenovo in 2012 as senior vice president and general counsel.
Clemens' watch
On Clemens' watch Lenovo has been involved in a number of major M&A deals, most notably its 2014 acquisitions of IBM's x86 Server Business for $2.1bn (£1.28) and Motorola Mobility from Google for $2.91bn (£1.78bn).
Clemens turned to Weil Gotshal & Manges for the Motorola acquisition and Cleary Gottlieb Steen & Hamilton for the IBM deal.
Both were firms that he was familiar with from previous roles.
"They did an economical job for us on those transactions which you can't always say about the New York firms."
The acquisition of Motorola in particular has had a marked effect on Lenovo. Overnight the company had approximately 3,500 extra employees around the world, including about 2,800 in the US. Motorola's legal team was the same size as Lenovo's and Clemens cites its integration into the business as one of the biggest challenges he has faced.
He says: "Integrating the Motorola team has been a lot of fun but difficult because the two businesses and corporate cultures are different in many aspects. The Motorola team is not staffed as lean; it is nice to have the additional resource and expertise, but we are stretching them as well, they are doing a lot more."
The legal team also inherited Motorola's external advisers, of which there was little overlap with Lenovo's. When asked about external counsel Clemens says: "We have way too many!" Before adding: "Each company has its panel, there is not a lot of overlap, we need to make sound decisions, we can have a great conversation about which advisers we like, more of an informal conversation, then we will ask a smaller group of firms to make bids on a greater area of work."
In terms of what he looks for in external counsel, Clemens says: "Results are a must, plus good communication and strategic thinking at a high level." He adds: "I think a personal relationship is more important than the firm itself. Most GCs will say that you find someone that you are comfortable working with, who understands your business and you follow them."
Lenovo also uses local counsel around the world, including Travers Smith in the UK for employment work. For smaller acquisitions Clemens mentions Silicon Valley boutique Woodside Counsel who he describes as "very good and economical."
Don't feed the trolls
When it comes to litigation, Clemens says that 98% of the cases the company deals with are patent trolls. That is people or companies that hold patents they have little intention of using engaging in lawsuits against companies in an attempt to get financial settlements.
Lenovo uses a mixture of small and medium sized firms to deal with its litigation needs as "it tends not to be getting sued by Microsoft."
He cites US intellectual property specialist Kenyon & Kenyon as one go-to firm for IP litigation issues.
Despite the fact that Lenovo tends to avoid getting ensnared in large-scale messy litigation, Clemens still puts its litigation spend at $20-25m (£12.9m – £16.1m) in a typical year.
Challenges
When asked about the major challenges he faces Clemens is quick to list them off. They include the integration of Motorola; the IP issues faces by any global technology company; and the difficulties of handling complex and multi-jurisdictional M&A. He also mentions the challenging nature of the consumer technology sector where margins are low and competition is fierce.
"When I was at eBay we were growing at 200% a year and that can cover up a lot," he says.
The cut and thrust of the global technology market means costs need to be watched and any mistake can be punishing.
However, Clemens appears to thrive in the face of the challenge. "I like pressure and I probably do a lot of my best work when I am stressed and under the gun – that is the way I am," he says."
Visibly jet-lagged, Clemens also describes the travel as one of toughest aspects of the job, "I am on the road 70% of the time," he says.
However, despite the numerous difficulties Clemens faces as GC of one of the new breed of global corporations, his previous experience in-house and in private practice should put him in good stead.
The Chinese idiom 老马识途 is translated as "an old horse knows the way." It refers to the value of experience.
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