🧾 5 Key Takeaways: How to Build a Compliance Team
Unfortunately, legal isn’t always about laying down slick one-liners in court or winning million-dollar settlements (thanks, Suits). At the beginning (and end) of the day, legal’s job is to protect the company. And, one thing the legal department definitely does not want is for the company to do something illegal or fall foul of regulations. But with a constant avalanche of new rules and requirements, different frameworks in different jurisdictions, and C-suites with shallow pockets — the compliance function is not easy.
We spoke to Natalie Hallerby, Head of Compliance at Found, Adam Van Wagner, Chief Legal Officer at MoneyLion, and Andria Jones, Head of Legal Compliance at Cloudflare to pick their brains on planning out a compliance strategy, who to hire first, and when to use outside counsel.
ICYMI, here are our top 5 takeaways.
🥣 Can I have some more please, C-Suite?
As you know all too well, legal is often seen (incorrectly) as a money vacuum. Compliance is no different. So how do you get the budget to get stuff done? You need to make the case that putting a good compliance team in place is going to:
- Protect the business.
- Create savings down the road.
- Help the company build better products.
- Create new business opportunities.
It could make it possible to do things that generate revenue like:
- Get government contracts.
- Build out data centers safely.
- Partner with banks.
🐘 It’s just like eating an elephant
6:20 – 12:12 & 21:16 – 24:09 & 46:08 - 49:14
Building a compliance team is a daunting concept. It’s less scary if you think about it like eating an elephant: you have to do it piece by piece. So where do you start? To design your strategy:
- Figure out who your regulators are.
- Take an inventory of regulations that apply to you.
- Identify your highest-risk processes (you’re a lawyer after all).
- Ask yourself: How do we mitigate this?
- Tailor your solution to your company.
If you’re in fintech, you’ll probably need someone who knows about the Bank Secrecy Act and, well — money laundering. Some candidates will be better suited to the mayhem of the startup environment while others will have what it takes to navigate a huge corporation.
Your perfect hire might be:
- An attorney.
- A non-attorney compliance expert.
- A program manager.
- Someone internal who knows the business well.
You need a good ratio of operational people to people with specialist knowledge. For your second hire, you may want someone who can do the work you’ve been farming out to outside counsel, a regional expert who can help you move into a new jurisdiction or a slick administrator.
If you can’t find good talent, think outside the box. If someone is good with data, collaborating with other departments, and building systems, you can always teach them about compliance.
🧂 Sprinkle outside counsel sparingly
No matter the size of your team, an $800 bucks/hour bill – as Will Ferrell would say – gets you right in the jejunum. Outside counsel is as expensive as it is essential. They’re particularly handy for:
- Explaining regional regulatory systems.
- Taking on work you don’t have the bandwidth for right now.
- Specific areas like tax.
But sometimes it’s better to bring things in-house. If something is part of the day-to-day operations of your business and will be around for the long term, you probably want to do it internally. You can always get outside counsel to show you how it’s done first but ideally, they should be an intermittent resource.
Also, you’d be wise to do the math. Work out the cost of outside counsel vs a new hire or a freelancer (ahem) and figure out what’s most cost-effective. Hint: there’s a good chance a freelancer is the most cost-effective option. Plus, hiring a freelancer is a great way to test out the possibility of a new hire.
If you do need outside help, don’t assume you need a top-tier firm. Instead, look for a firm or staffing agency (ahem, ahem) that specializes in your problem. Networking is a great way to get outside counsel recommendations (and advice on all kinds of things). You can build your community by:
- Attending trade shows and conferences.
- Getting in touch with a compliance association.
- Interacting with other compliance pros on LinkedIn.
🚧 Be a crossing guard, not a roadblock
In an ideal world, compliance should be involved in every part of the business. But, just like teens with strict parents, if people see you as the folks that always say no, they’re going to jump out the bathroom window after you go to bed. You need to build trust and let people know that you’re a resource … someone who can help them get stuff done. We won’t sugarcoat it - getting cross-departmental buy-in is tough. But you can put your best foot forward by:
- Having a collaborative attitude.
- Saying “here’s how” instead of “no” whenever possible.
- Hiring nimble, friendly people.
- Understanding other departments’ goals.
- Creating accessible “how to” documents.
- Offering training, like a workshop updating HR on hiring regulations.
You should also think about sitting in on different departmental meetings or getting involved early on in the lifecycle of new products or marketing campaigns.
👀 Keep an eye on new regulations
Just like the seasons (or interest rates at the moment) regulations are constantly changing. Your team should keep on top of the news and know what’s coming down the pipeline. But sometimes that’s not possible without a crystal ball — like when lockdowns are announced or Putin invades Ukraine.
You can react to sudden regulatory changes by:
- Watching how other affected companies react.
- Taking advantage of free advice put out by law firms.
- Having a conversation with the regulator.
It usually doesn’t make sense to hire someone new to deal with a regulatory change until you can work out how much of an impact it’ll have on your business. In the meantime, leverage outside resources like outside counsel, compliance specialists, and freelance legal pros.
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⚙️ 5 Key Takeaways: Legal Ops 101
You’ve heard the hype. Legal ops is transforming the legal department and making a positive impact on just about every other department too. But how do you get started? How will legal ops fit into your team? And will the C-suite buy in? Whether you’re looking to make your first legal ops hire, or you’re interested in a career in legal ops, we’ve got answers for you.
In our latest panel discussion, moderator Eric Frank, Legal Ops Consultant at Lawtrades, spoke with Janine Dixon, Legal Operations Manager at Meta and CLOC Washington DC Regional Group Leader, Neshade Abraham, Global Head of Legal Operations at Etsy, and Cindy Kaneshiro, Director of Legal Operations and Chief of Staff at Nutanix. They shared a ton of wisdom and practical advice.
In case you couldn’t make it, here are our 5 key takeaways.
💼 Know your business
Legal ops can only be successful if it aligns with the priorities of the biz. Take note – it’s good to water the lawn but not when the house is on fire. There’s also a good chance that you’ll be short on resources so you’ll need to figure out how to optimize what you have.
Here are seven steps for developing a legal ops strategy:
- Get to grips with the business goals for the next quarter, year, or even five years.
- Have a tight hold on your own departmental goals.
- Meet with stakeholders and understand their pain points.
- Ask attorneys to estimate how long they are spending on different administrative tasks (But don’t try to get them to record their hours. That’ll go down like a concrete dinghy).
- Check for redundancies – multiple people responsible for tasks that only require one.
- Look around and see where there’s room for improvement.
- Take a peek at the 12 functional areas of legal ops, according to CLOC, the Corporate Legal Operations Consortium, and decide which one/s to prioritize. These include things like financial management, technology, and program/project management.
💸 Pay the bills and they’ll love you
Cue Pink Floyd, ABBA, and The Notorious B.I.G. because it’s all about the money. All of our panelists said they recommend a legal billing specialist as your first legal ops hire. Along with that, your first legal tech buy should be a billing system. Why? Because you’ll very quickly be able to show your attorneys and your C-suite the tangible financial benefits.
These include:
- Attorneys wasting less time doing billing admin.
- Statistics on what is handled internally vs externally.
- Better enforcement of outside counsel billing guidelines.
All of this can translate into savings that will help you get buy-in for your next hire. Another possible option for your first hire is a legal ops jack-of-all-trades (or Jill, or Zainab) — someone who can address a variety of problems. This is particularly good for fast-evolving, dynamic teams.
When it comes to the type of person you should hire, there’s no one answer. Paralegals, attorneys, and project managers all make good legal ops pros depending on the skills you need. It’s an advantage if they understand attorneys, their gripes, their attitude to change, and what makes them tick.
For your second and third hire, you’ll need to assess the team and your overall strategy. You could consider someone to deal with:
- Outside counsel spend optimization
- Technology
- Contracts
- Project management
🗣️ Speak their language
Having all the answers is pointless if you can’t communicate those ideas and get both attorneys and the C-suite to buy in (not to mention give you some budget). The first step is making sure that the legal team feels included in the decisions that are happening and that their problems are being addressed. The next step is to take your strategy on a roadshow. If you can show attorneys that you’re taking something off their plates, their faces will light up like a kid at Christmas. The same goes for the C-suite and anything you present that will save them money, free up resources, or improve efficiency.
Use any data you can gather to back up your case (CLOC resources help here) and make sure you’re talking their language. If the C-suite loves to talk about data-backed decision-making or ROI, use those terms. Think about what they care about. For example, can you get contracts moving faster, automate NDAs, streamline billing, or shorten SLA time? Tell them how that will help the business reach its goals. It will help if you can situate the ops team so that they report directly to the GC. That way you’ll have top-down buy-in from the get-go.
Of course, all of this is not a once-off process to get the legal ops function off the ground. You’ll need to keep showing off your value, taking the pulse of what the department needs, and demonstrating your impact with data. That being said, be careful not to overcommit or promise things you can’t deliver. You’ll regret it later.
🏈 Go long
Once you get the legal ops function off the ground, you can start to think about the long term. It’s good to have an ambitious strategy that aligns with the business but you do need to be flexible. Something new could pop up that requires loads of outside counsel. Remember that little blip that started in March 2020 and had everyone pivoting? Things can change in a heartbeat. You’ll constantly be balancing triage with working towards a loose long-term vision. Keep checking in with all the stakeholders so your strategy stays current.
As part of your long-term strategy, make sure that you are developing your legal ops (dream!) team and facilitating their growth. The more skills and experience they can gain, the stronger they’ll be in the future.
With time, legal ops will also start to build cross-function with other departments. Sales, finance, and marketing will all have interactions with legal ops and probably use you as a conduit to interact with (intimidating) attorneys. So make friends. You’ll need them.
👫 Don’t be a stranger
You might be the only person pushing for the ops function in your business, or perhaps you’re the first legal ops hire and you’re trying to figure it all out. But that doesn’t mean you’re alone. The legal ops community is full of helpful, friendly people who have been in your shoes. So reach out.
CLOC should be your first port of call. They have useful resources and events as well as an active messageboard with a search function for quick questions. There are also smaller networking groups like Link, ACC Legal Operations, and the Legal Value Network. You can build your network via LinkedIn or even start your own regional legal ops group.
If you can’t find what you need through networking, there are also consultants and experienced legal ops freelancers you can bring on board to help you get going (hello, there 😀).
Finally, don’t forget to pay it forward and offer your wisdom to others once you’re a pro.
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👋 The team at Lawtrades
P.S. we’ve been working on something huge. If you’d like to download an exclusive, practical guide on how to build and scale your legal ops function from the ground up … register for the waitlist here.
💥 Taking Flexible Legal Work to the Next Level
The past couple of years have been a wild ride, and it’s been amazing to see the world reimagine the way we work and live. Some of us moved out of cities, some moved across the country, some of us jumped out of planes (or was that just me?) and many of us took a closer look at our current job situations.
From the Great Resignation to the Great Reshuffling to today, it seems like we’ve finally settled into a new understanding of what work can – and should – look like moving forward.
This reckoning has been no different for the legal industry. As law firms struggle with staffing shortages, and the majority of lawyers under 40 are looking for new opportunities, we’ve seen a windfall of interest in a new, better way to be lawyer.
Our community now includes over 2,000 highly-skilled legal pros who have logged nearly 150,000 hours and earned $16+ million in wages. As they continue to prove themselves and the power of this model, our client roster has jumped to more than 100 companies – including Epic Games, Airbnb, Pinterest, etc. I’m also so proud to say that in August, we hit a monthly revenue record of $1 million – and it could not have been done without this dream, between all of us, to imagine something better for the legal industry.
To further build on our mission to make work as convenient and transparent as possible for Lawtraders and clients alike, we’re super excited to announce the launchof a new Lawtrades mobile app that simplifies our experience even more.
For Lawtraders, the app makes it simpler than ever to find the next gig and crush it – whether it’s exploring job opportunities on the way to the gym, setting project hours during morning coffee, or submitting invoices on the way to the airport. And for clients, managing projects and collabs with Lawtraders just got even easier.
Just like our platform overall, the app works around your life, rather than work dictating it.
It’s on Google Play and in the App Store now, so check it out.
Also, keep an eye out for an article about us in Fast Company (once they’re no longer under siege by hackers) and take a look at our new and refreshed website. Lots of good stuff happening.
I can’t wait to hear what you think.
– Raad, CEO
🪢 5 Key Takeaways: Creating Your Professional Network Online
If you think LinkedIn is just a place to store your resume, then you’re missing out. There’s a whole world of legal pros engaging in fun, meaningful, and professionally beneficial interactions online. How do you get involved? We’re glad you asked. We spoke to Heather Stevenson, GC at Red Cell Partners, Kyle Robisch, Litigation Associate at Bradley Arant Boult Cummings LLP, and Brittany Leonard, Chief Corporate Counsel at Civix, about their online community-building journey and their best tips for building your own.
In case you couldn’t make it, here are our top 5 takeaways.
💬 It’s all about the comments
If Netflix documentaries have taught us anything, it’s that we shouldn’t trust people we meet online. When it comes to professional networking, however, we wholeheartedly disagree. The pandemic accelerated a shift from in-person to online events and interactions and revealed that - as it turns out - you can make real, authentic connections through platforms like LinkedIn.
These connections can lead to:
- Thoughtful online conversations about your industry
- Stronger bonds with coworkers
- Offline friendships
- New clients
- Employment opportunities
Being online can also expand your network geographically, from just the same old faces you see in the office or in court to like-minded people all over the world (Psst … they don’t even have to be lawyers).
But if you want meaningful discussion and real connections, clicking that like button just won’t cut it. And lurking silently will get you about as far as hiding behind a pot plant at a conference. So dive into the comments and get talking.
😡 Your boss will love it … or maybe not
It’s fair to say there are a few partners and CEOs out there who’ve been around longer than Stephen Breyer and wouldn’t know a TikTok dance challenge if it cha-cha-slid right into them. So it’s understandable if you feel a little apprehensive about how they’d react if you became the next Alex Su.
Here are 2 things to think about:
1. Suss out the vibe
There’s a good chance your boss and coworkers will love your witty Tweets and hilarious gifs but some firms and companies think it’s unprofessional to share anything other than news articles, press releases, and promotion announcements (yawn). Gauge your environment. No meme is worth losing your job over (or if there is one that good, send it over to us stat).
2. Think before you post
Even if the CEO puts your memes in his Powerpoint presentations, proceed with caution. Steer clear of talking about real cases, clients, and colleagues in a way that makes it obvious what you’re referring to. If you make a joke about an anonymous paralegal who recently returned from maternity leave, chances are they can join the dots. When in doubt, leave your draft to one side overnight and make a call in the morning. The same goes for comments. If you do want to call someone out, be prepared to live with the consequences.
🙅 Forget the haters
Posting online can feel a bit like public speaking. You might be nervous about what people think about you. The truth is, if people aren’t interested in your content, they’ll probably just ignore it — which is really not so bad. There will be others who relate to your message and, if you keep posting, those people will find you.
The bigger you get, the more criticism and negative comments you will attract. Most of us focus on negative feedback, even if it’s only 1% of what’s coming our way, but try to keep your attention on the likes and positive comments. Besides, going viral and getting lots of followers is not the most productive goal. Focus on finding and nurturing the right audience and creating real engagement, even if that means you have a smaller network.
🛀 Get personal?
People connect to content that feels personal and authentic. Those are pretty vague terms but the long and short of it is that generic, corporate stuff, buzz words, and cliches aren’t particularly relatable. That being said, you don’t necessarily need to get personal personal i.e. photos-of-the-kids-in-the-bath/update-on-your-IBS personal. Digital marketing experts will tell you to pepper in personal content with your professional stuff but that could just mean a photo of your home office setup or an anecdote about your career.
Ultimately, it’s your choice. You can establish ground rules for yourself, like no photos of your significant other, or you can set up separate social media accounts for personal content. Maybe you’re happy to share it all. Either way, remember to think about safety. It’s not smart to share your current location, for example. And if you share information about someone else, be mindful of their privacy.
📬 Just post it, already!
Don’t wait around until you’ve thought of the perfect post. You don’t need to share a deep, original insight or a genius joke. Just get started. It’s easier than you think.
If you don’t know where to begin you can:
- Try out popular formats such as “Here are 3 things you probably don’t know about me.”
- Share a bugbear, a memory, or an interesting statistic.
- Talk about something that happened this week at work.
- Praise a colleague.
- Create a poll.
- Comment on the news.
- Share a quote from a Lawtrades event or Deep Dive.
- Turn your skills and knowledge into some quick tips.
- And don’t forget to get involved in the comment sections on other people’s posts.
So what are you waiting for? Get networking.
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👋 The team at Lawtrades
🤿 Sunday Deep Dive: Will Filing Foil the 45th?
It’s hard to find someone with as much longevity in the public sphere as former President Donald Trump. From scandals involving pornstars, tax fraud, and profiteering off foreign governments to claims of election interference and, most significantly, allegations that he incited an insurrection — the 45th has had no shortage of controversial headlines and potential legal downfalls.
As you most likely know, Trump is facing an investigation into presidential records found at his residence at Mar-a-Lago. Potential jail time is not out of the question. His lawyers are calling it a “document storage dispute that has spiraled out of control.” While we don’t know exactly what the FBI found in his basement, we do know that this is not just a case of cool mementos (like White House dinner menus) getting mixed up by the movers. The stakes are much higher. The government asks if state secrets were made vulnerable and investigators actively misled.
For legal pros, it will be fascinating to watch the country’s political future play out in the courtroom in a case that is a major test of the legal system’s impartiality. Here’s a close look at everything that’s happened so far, the legal arguments at play, and what it could mean for the in-house legal department.
Lost in the Move
When Trump left office in Jan 2021, he took a number of boxes from the White House to his home at the Mar-a-Lago Club, a sprawling estate and exclusive members club in Palm Beach, Florida. The former president is known to have treated Mar-a-Lago as an extension of the White House. He entertained world leaders there and even approved a military strike from the estate (just your typical holiday home activities).
Living in 2 states seems to have complicated his already dodgy approach to filing. Former aides say “a small storm of paperwork often followed him wherever he went.” Politico reported that Trump regularly tore up papers when he was done with them. In the hours before he left the presidential palace, aides say there was a mad rush to get everything Trump wanted packed up.
Being disorganized may be an irritating trait but it isn’t against the law. What is illegal is mismanaging government records. The Presidential Records Act (PRA) makes it pretty clear that official presidential records:
- Are the property of the United States and not the private property of the President.
- Must be stored separately from the President’s personal records.
- Automatically transfer into the legal custody of the National Archives and Records Administration (NARA) when the President’s term ends.
In May 2021, NARA noticed that some presidential records were missing and reached out to Trump’s team. They went back and forth for months. It wasn’t until this January that NARA was able to recover 15 boxes from his estate, containing “dinner menus, letters, a cocktail napkin, briefing papers — the archival equivalent of a yard sale” as well as records marked as “classified”.
The Investigation: Full Chronology (so far)
If you’ve managed to miss the headlines, frankly, we’re impressed. The details are a little harder to keep track of. Let’s dive into exactly what happened and when.
May 11 – The DOJ issues a subpoena for all classified documents at Mar-a-Lago.
May 16-18 – The FBI reviews the recovered boxes and finds “184 marked classified, 67 marked confidential, 92 marked secret, and 25 marked top secret.”
May 22 – A former White House aide claims that Trump declassified the documents.
May 25 – Trump’s attorney, Evan Corcoran, tells the DOJ in a letter, that:
- Certain secrecy laws do not apply to the president.
- Trump had “absolute authority to declassify documents.”
- Criminalizing Trump in this case “would implicate grave constitutional separation-of-power issues.”
He does not actually say that the documents are declassified.
June 3 – The DOJ Chief of Counterespionage meets with Trump’s lawyers. Corcoran surrenders a folder of classified documents. A member of Trump’s team provides a signed declaration that says that a search has been conducted and all official documents have now been returned.
June 22 – The DOJ subpoenas security footage from Mar-a-Lago. This footage along with witness testimony is enough to justify a search warrant.
Aug 8 – The FBI raids Mar-a-Lago and 26 boxes are recovered including 25 sets of material marked as classified.
Aug 9 – Republican politicians denounce the raid. Trump calls it “prosecutorial misconduct” and the “weaponization of the justice system.” There is a spike in Tweets mentioning “civil war”.
Aug 11 – A man wearing body armor tries to breach an FBI field office and is shot dead by police. Investigators suspect he was present at the Jan 6 Capitol attack.
Aug 22 - Trump’s lawyers ask the judge to appoint an independent arbiter, known as a special master, to review the seized documents to identify any protected by executive privilege.
Aug 26 – A redacted affidavit is released which confirms that Trump stored national defense records at Mar-a-Lago.
Aug 30 – Following a tussle in court, a 36-page DOJ court filing is released, revealing evidence of a “likely” effort to hide classified documents and mislead investigators. It includes a photograph that shows documents with top secret markings spread out on Trump’s floor. His supporters claim the photo is staged.
Sep 5 – US district court judge Aileen Cannon, a Trump appointee, grants Trump’s request for a special master and halts the FBI review of the documents for the criminal investigation.
Sep 6 – Former Attorney General Bill Barr says Cannon’s ruling is “deeply flawed”. Others describe it as political.
Sep 8 – The DOJ asks for a stay on the Judge’s order to halt the review of the records.
Sep 15 - Judge Cannon approves Senior Judge Raymond Dearies as special master and gives him until Nov 30 to conduct the review. He is widely regarded as a fair choice. The DOJ’s request to resume the criminal review of the documents is rejected.
What’s next? The government is currently fighting to exclude 100 classified records from the special master review. Here’s a head-scratcher: the special master has said that the government cannot rely on the fact that the documents are marked as classified to prove that they are in fact classified.
The Warrant
Investigators are looking for evidence of violations of 3 laws:
- Section 793 of the Espionage Act relates specifically to defense information. This law covers the stuff we typically associate with espionage (i.e. passing defense secrets on to foreign nations), but the bit the DOJ is likely interested in says that whoever has lawful possession of a national defense record and “through gross negligence permits the same to be removed from its proper place of custody…or to be lost, stolen, abstracted, or destroyed” shall be fined and/or face up to 10 years in prison.
- Section 2071 of Title 18 of the U.S. Code says that “Whoever willfully and unlawfully conceals, removes, mutilates, obliterates, or destroys” any government record shall be fined or imprisoned for up to three years, or both.” In addition, those who break this law “shall forfeit his office and be disqualified from holding any office under the United States.”
- Does that mean Trump could be barred from running in future elections? Probably not. According to The New York Times, if he were convicted under 2071, voters or rival candidates could challenge his eligibility but ultimately Trump has a case that disqualification from office is unconstitutional.
- Section 1519 of Title 18 of the U.S. Code (aka the anti-shredding provision) is one of 21 different federal crimes relating to obstruction of justice. It’s part of the Sarbanes-Oxley Act which was enacted following the Enron and Worldcom scandals. Section 1519 states that anyone who knowingly conceals a record “with the intent to impede, obstruct, or influence” an investigation shall be fined and/or imprisoned for up to 20 years. The declaration signed by Trump’s representative will likely be important evidence, as will the security footage.
None of these laws specifies the classification status of the records.
Trump’s case
It’s still early days but several arguments have already been put forward by Trump’s team.
Personal and privileged
Two claims have been made about the nature of the documents at Mar-a-Lago. The first is that they are personal, or at least that Trump has the power to deem official documents his own personal property. The second is that the records are protected by executive privilege, “a doctrine that permits the president and executive-branch officials to shield some of their records from the other branches of government (Congress and the courts).”
The DOJ says that Trump’s team has contradicted itself. Personal items are never protected by executive privilege so they can’t have it both ways. Plus, the PRA makes it pretty clear that presidential records are not personal property. What’s not yet clear is whether former presidents are protected by executive privilege once they are no longer in office.
Can a president declassify documents via thought?
Trump’s lawyers claim that a president has the power to declassify documents. Trump himself said he had a “standing order” that documents moved to Mar-a-Lago were automatically declassified (a claim White House staff deny).
Well, it turns out presidents can declassify documents. But experts say that the idea of declassifying documents without informing the relevant people, putting that action in writing, or changing the classification markings on the documents is “borderline incoherent.”
Bill Barr says that if Trump simply “stood over scores of boxes, not really knowing what was in them and said, ‘I hereby declassify everything in here,’ that would be such an abuse and that shows such recklessness that it’s almost worse than taking the documents.”
Either way, the state’s case doesn’t rely on the documents being classified.
The DOJ is partisan?
Trump says he is being treated differently from how Hillary Clinton was treated during the email saga in 2016. An FBI investigation found that Clinton had used a private email server to conduct official business when she was secretary of state but concluded that, while she was careless, it was unreasonable to bring a criminal case against her. In August, Senator Lindsey Graham told Fox News, “if there’s a prosecution of … Trump for mishandling classified information after the Clinton debacle … there’ll be riots in the streets.”
Speaking of riots …
As if all that wasn’t enough, Trump is implicated in 5 other investigations:
- A federal investigation into the January 6 attack on the Capitol.
- A criminal investigation into election tampering in Georgia.
- Two separate cases (one criminal, one civil) in New York investigating whether he fudged his companies’ finances to get loans or dodge tax.
- A defamation lawsuit initiated by writer E. Jean Carroll.
These matters are deepening the political rift between the so-called MAGA movement and the rest of the country. A poll suggests that 58% of Americans think the MAGA movement is a danger to American democracy. Seventy-five percent of Republicans claim Trump bears no blame for the violence on Jan 6th while 19% say his actions on that date threatened the country’s democracy.
After the FBI raid, phrases like “lock and load” trended on social media sites like Gab and Telegram which are popular with Trump’s supporters there were even threats of violence against law enforcement agents. The Washington Post went so far as to say that “It’s easy and logical to conclude that the United States today stands as close to the edge of civil war as it has since 1861.”
This raises the question of whether pursuing a criminal prosecution of Trump is a smart idea. The New York Times notes that doing so could “entrench support for him … play into the conspiracy theories he has sought to stoke … inflame the bitter partisan divide, even to the point of civil unrest [and] undermine confidence in the rule of law.” On the other hand, making an exception for Trump sends the message that the powerful are above the law thus undermining confidence in the rule of law in a different way.
Where does that leave us?
You might think this has nothing to do with the legal department or your businesses in general but keeping quiet on political issues carries its own risks. Speaking out can be an opportunity to engage with stakeholders and develop your brand.
Take Dick’s Sporting Goods, for example. In 2018 after the Parkland shooting, Dick’s destroyed $5m worth of guns from their shelves. In 2020, they committed to selling even fewer guns. The announcement caused their stock to jump up by 13%. Or consider Nike’s choice to feature football player and activist Colin Kaepernick as the face of an advertising campaign. Their share price dropped, fans burned sneakers, and public figures praised and criticized them but it’s a move that could well stand the test of time as American culture changes.
🤑 5 Key Takeaways: Mitigating Litigation Costs of Outside Counsel
Litigation has a funny way of sneaking in fast. It also has a funny way of sneaking up on your legal budget — fast.
Don’t sweat it, we’ve got some tips for you. We were joined by Andowah Newton, VP of Legal Affairs at LVMH, Zac Henderson, Head of Legal and DPO at Levels, and Greg McLaughlin, VP and Head of Litigation at Kyndryl, who shared practical, cost-saving strategies so you can reign in that cash-hungry litigation beast before it gets out of control.
👫 Assemble the (affordable) dream team
Okay, you have a litigation matter. Not necessarily the news you’re looking for. You’re going to need a kick-ass team to deal with it. At the same time, you know the execs are going to want you to explain every penny. So where do you start? There are a few ways to find your dream team.
- The usual suspects: If there are existing vendor relationships that were established before you even started in your role, you might want to stick with them, but if you don’t think they’re right for the matter, (in the words of Jay Z) on to the next one.
- Study buddies: Hit up your law school classmates. If they can’t do the job themselves, they might have some five-star recommendations.
- Window shopping: You can speak to a few different firms and send out an RFP to get an idea of what they can offer. You might want to present your CEO or CFO with a cheaper option (like an ALSP) and a pricier option and let them make the call.
Get strategic. Trial counsel is your most important decision. They are the person who will run the show and set the narrative. Here quality should take precedence over price, as far as possible. With other vendors, it will be all about price. Most will be a balance between the two. Remember to look at the individual people who would be dealing with your matter. Even within a firm, different people can have very different approaches. If you opt to work with freelance legal pros, you’ll always know exactly which individuals you’re working with.
🏈 Get in the game
14:05 – 21:15 and 27:55 – 32:30
Even a teeny tiny litigation matter can be super time-consuming. We all have our Boston Legal fantasies, but most of the time it’s not a great use of your time to handle litigation internally, even if it seems thrifty. Plus, bringing on outside counsel sends a message to the counterparty that you mean business. Nonetheless, you’re going to want to be as actively involved in the matter as your schedule will allow so you can:
- Guide the strategy and make sure it’s on-brand
- Set expectations (both for outside counsel and your own exec team)
- Keep your hands on the purse strings
- Hold outside counsel accountable
- Pre-empt problems
- Justify and explain things to your executive team
- Make sure outside counsel gets access to the relevant facts and documents as efficiently as possible
- Learn more about litigation (if it’s not your specialty)
All of this will ensure you’re getting the most bang for your buck.
🗃️ Go full Marie Kondo on your billing
Being disorganized is a huge cost. We’re not suggesting you hold your contracts in your hands to check if they spark joy (unless that’s what gets you going in the morning) but we do recommend taking a leaf out of Kondo’s book when it comes to getting organized. You should be able to say to your outside counsel, “All documents relating to x live here.” And if you’re a big company with a slew of litigation matters, you should have the data to say, “Matters like this usually cost x and last y.” You also need to be able to warn your CFO, “Hey, this is how much we need to fork out at the end of the quarter.”
Luckily there is tech that can help you out. Workflow software like Notion and billing systems like Bill.com can be game changers. If you’re not into tech, a good Excel spreadsheet will get you along just fine. Or you can get your outside counsel to run the numbers – after all, you’re paying them enough.
🌤️ Get a forecast (or two)
Budgeting for litigation is a bit like budgeting for a child – they might be born sideways and no one knows how much orthodontics will be necessary. You should, however, ask your outside counsel to:
- Give some indication of what they think things will cost
- Flag where things might veer off course
- Lay out how they will try to economize if costs start stacking up
That way you’ll have something to work off and something to hold them accountable to. You can even ask for two budgets: a best-case scenario budget and a worst-case scenario budget. That way you can give your exec team a heads-up that each strategic decision comes with a cost.
🔎 Inspector Bill, on the case
As any pro wrestler will tell you, laying down ground rules saves everyone a lot of pain. Provide billing guidelines that let outside counsel know in advance if you won’t pay for business class travel or if you expect a phone call regarding costs above a certain threshold.
Once the bill is in front of you, take a good hard look. You don’t want to see:
- Names of associates that you’ve never heard of
- Partners working on things that are paralegal territory
- Paralegals working on things that are partner territory
- Billing for time spent emailing to set up a meeting
- Any obvious cheeky add-ons
Good systems will save you time and money with this too. An electronic billing system will let you approve who can bill hours and, if you’re bold, edit items e.g. swap a first-class flight for the cost of an economy ticket.
The bill is never set in stone but you have to balance cost-saving with managing your relationship. Taking a red pen and crossing stuff out could make you unpopular. Sometimes a hard ball approach is necessary. Other times, a phone call and a few polite queries will do the trick. It could be strategic to say nothing at all.
Of course, you can always cut your bills and get more control over your spending by using ALSPs instead of a law firm.
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👋 The team at Lawtrades
🤿 Sunday Deep Dive: The ABC of ESG
It used to be easy to be a “good person.” Say please and thank you. Don’t break the law. Maybe help the occasional old lady across the street. Now we have to worry about how far our avocados have traveled to get to our toast, whether the farmers who grew the beans for our coffee were fairly compensated, and whether the tip we leave the server is dependent on any underlying prejudices. And that’s just breakfast. The standards are getting higher for businesses too.
Corporate accountability programs are not a new invention but there is a new kid on the block: Environmental Social Governance. ESG can be described as a way to measure whether a business is a “good person.” Blame globalization. Blame the internet. Blame millennials. Whatever the reason, it’s becoming more and more important for businesses to show that they are at least trying to up their ESG credentials.
What does the legal department have to do with it? You’re about to find out.
First, the basics
The idea behind ESG is that metrics for good (ethical, eco-friendly, fair) business practices are used alongside financial metrics to measure the value of a business. One lawyer talks about something they call the “grandma and media test.” When the business asks the legal department for advice, you should ask not only whether an action is within the law but whether you’d be happy to tell your grandma about it or have it visible on social media for years to come. That’s useful but kinda vague. Let’s get a bit more specific.
🌲 E is for environmental. If it keeps David Attenborough up at night or sets Greta Thunberg’s teeth on edge, it falls into this category. In practical terms, improving your E creds could mean reducing food waste in your office cafeteria, cutting down on business travel, or changing the way your products are packaged.
🤝 S is for social. This is where we (hopefully) show that we’ve improved a bit since the Dark Ages. Tackling the S could involve choosing suppliers that provide good working conditions for their workers, protecting your client's data, reporting on the gender pay gap, or making sure your delivery drivers are obeying the speed limit.
💼 G is for governance. Here we’re talking about what the suits get up to behind closed doors. Nepotistic hires, suitcases of money exchanged in hotel rooms, backstage passes to Michael Bublé gifted to regulators right before some allegations disappear. Well, not all governance matters are quite so juicy. G covers everything from board structure to ethics policies and anti-bribery and corruption measures.
Why is there a spotlight on these three areas? Well, there are a bunch of reasons but the scary reality of climate change and the flourishing of global activism following the murder of George Floyd definitely played a part.
The Boohoo boo-boo
One reason why legal should get involved with ESG is that it involves a lot of risk management (and we all know lawyers and risk go together like PB & J). Companies with bad ESG risk serious reputational damage that can translate to revenue loss. Those risks come from four main sources.
Regulators
Take Boohoo for example. In 2020, the UK-based fashion retailer was found to be associated with factories that used slave labor (“boo-boo” is a major understatement here). Overnight, their share price crashed by 20%. Now they're facing a ban on imports to the US, which may affect over a fifth of their revenue.
Laws that deal with hiring practices, bribery, and other ESG areas have been around for ages but regulation in this area is climbing across the globe.
Examples include:
- California’s Climate Corporate Accountability Act
- The SEC’s proposed climate disclosure rules
- The EU Taxonomy (also a climate disclosure rule)
- Germany’s Supply Chain Due Diligence Act which requires companies to root out human rights abuses in their supply chain.
Potential Investors
VCs have hopped on the ESG train too. Last year Uber Eats competitor Deliveroo had “one of the most disastrous IPOs in memory” (ouch!) after investors noted that its employees are “treated as disposable assets.” Some private equity companies, such as BlackRock, insist that their portfolio companies have ESG creds. The UN Principles for Responsible Investment has 7000 corporate signatories in 135 countries. Number one of its six core principles states: “We will incorporate ESG issues into investment analysis and decision-making processes.” In other words, if you’re failing the grandma test, good luck raising capital.
Existing Shareholders
The number of shareholder activist campaigns with ESG objectives doubled between 2016 and 2021. Take the shenanigans at ExxonMobil for example. In 2020, a hedge fund called Engine No 1 bought 0.02% of the company and launched a campaign to change the company’s approach to the climate. After winning over larger shareholders, they ended up with several seats on the board and a mandate to set sail for a greener destination. Similarly, shareholders booted the CEO of Rio Tinto after the mining company damaged a site of Australian aboriginal cultural significance. Shareholders care about ESG and they will rock the boat if the company is off course.
Client, consumers, and employees
An ESG PR disaster is the business equivalent of that nightmare where you realize you’re at work with no clothes on. When the public learns of dodgy dealings or planet plundering, it can lead to lost clients, consumer boycotts, social media scandals, employee walkouts, and lawsuits. On the other hand, good ESG creds can help you attract and retain employees, make employees feel more fulfilled at work, and create a loyal consumer base.
Think about:
- Netflix’s commitment to share stories about Black and LGBTQ+ characters
- Ben & Jerry’s social justice-themed ice cream flavors (Change the Whirled, anyone?)
- Mercedes Benz’s decision to stop launching gas and diesel vehicle models by 2025
- Airbnb’s offer of free temporary housing for up to 100k Ukrainian refugees
Compare that to:
- United Airlines’ violent removal of a passenger from a flight
- VW cheating on emissions tests
- Purdue Pharma’s role in the opioid crisis
- McKinsey’s corrupt contract in South Africa
- And Facebook’s use of data (76% of Americans think Facebook is making society worse.)
Suffice to say, ESG is about so much more than warm, fuzzy feelings. It’s about who a company is. And the consequences are concrete. But don’t take our word for it. Larry Fink, CEO of BlackRock, recently wrote, “We focus on sustainability not because we’re environmentalists but because we are capitalists and fiduciaries to our clients.” And according to the experts at McKinsey, better ESG scores correlate with a 10% lower cost of capital because of lower regulatory, environmental, and litigation risks. They should’ve taken their own advice.
How to get started
At Lawtrades, we’re all in favor of taking ambitious steps to make the world a better place. But how the heck do you get started? For those of you at companies that are yet to jump on the ESG bandwagon – or are still in the early stages of that journey – here’s our five-step guide to building an ESG strategy.
1. Get together.
Find the people who are interested in getting involved and start a conversation. It might be someone on the board, one of the founders, or a project manager in another department. These things have a way of stagnating if no one takes ownership so seeking out some enthusiasm is a great first step. If you can get someone in the leadership team excited, all the better.
2. Decide on a vision.
Are you in this just to mitigate risk and tick the boxes? Or do you want to make a real difference? Do you want to future-proof the company or be reactive? Is there a specific area where your company is having a negative impact that you’d like to change? How ambitious do you want to be?
In an ideal world, this should be a long-term vision that the company adopts across all departments and at the highest level. If you don’t have that kind of influence, start small and focus on what’s realistic – even if it’s just those annoying sensor lights you have to wave at if you’re still for too long.
3. Evaluate.
This is where things get really tricky. Before you try to cut your emissions or push for diversity, you need to evaluate how you’re doing now in a quantifiable way. For the environmental category, that means measuring scope 1, 2, and 3 greenhouse gas emissions.
Scope 1 and 2 emissions are those that come directly and indirectly from the company – like emissions from its factories or from turning on the lights at the office.
Scope 3 emissions are those created by people up and down the supplier chain. It’s how people dispose of the batteries in your products and how your suppliers’ suppliers commute to work. These are super tough to measure and really important. It’s estimated that the average company’s total emissions are 5.5x higher than just their scope 1 and 2.
If a professional ESG auditing service is out of your company’s/department’s budget (sigh), start by putting in place procedures for gathering more easily accessible data such as the average salary for employees of different races. You could also gather information by talking to members of your team about how they experience working for the company or set up a Google Form where staff can submit details about how they commute.
4. Set targets.
Set measurable short and long-term targets. Don’t be scared to be ambitious. BP hasplans to get to net zero by 2050 – and they’re an actual oil company. If you don’t have the buy-in for something on that scale, start with low-hanging fruit. Projects like cutting down on printing or electricity use have an associated cost-saving which makes them easier to motivate for. Get your team involved in brainstorming so you have buy-in from the get-go.
Figure out your strategy for reaching those targets and who is going to do what. This is where someone with project management skills (ahem, legal ops) will come in handy. Make sure you have a way to monitor how things are going.
5. Be Honest.
Get with the times! Let your employees, shareholders, consumers, and even the public know how things are going. Being transparent about your ESG failings shows a willingness to change. Plus, reporting on carbon emissions is fast becoming de rigueur. Check out how Slack and Salesforce report on their diversity progress here and here, or take a look at the global Reporting Initiative.
The role of legal
ESG and legal happen to make quite the fitting match. Not only is ESG a risk-mitigation tool, but it’s also an opportunity for the legal department to embed itself into the core operations of the business, collaborate with other departments, play a role in establishing the identity of the business, and add even more value (go legal!).
Here are just some of the ways that legal can take ownership of ESG:
- Risk mapping: Do a full assessment of the ways that your company is vulnerable to ESG-related risks so you can nip them in the bud.
- Due diligence: Incorporate ESG into your due diligence when you’re checking out possible new vendors and partners.
- Contracts: Write contracts that hold your supply chain accountable to your ESG goals. The Chancery Lane Project has loads of templates of climate-aligned clauses for your use.
- Upskill: Educate yourself about ESG. Christine Uri, who is the GC and Chief Sustainability Officer at Engie Impact, writes regular helpful content on LinkedIn with the hashtag #sustainablecounsel. You could take time to read a book about anti-racism, or gender bias.
- Join the dots: Legal deals with every department so you’re well placed to act as a liaison. Use that power to connect every part of the business to the overall ESG goals.
- Liaise with industry: ESG is still a kinda vague space without standardized expectations of how far companies should go. Engage with other companies in your industry and with others in the legal field to stay on top of ESG best-practice.B Corp certification is one attempt at standardization that’s worth looking into. You can also read sustainability and diversity reports from other companies to see what they’re up to.
- Liaise with the board: In order for an ESG strategy to really succeed, it needs to be on meeting agendas. There need to be people (or even a dedicated committee) on the leadership team who are invested in the goals. Some companies even link executive compensation to ESG metrics.
- Write living breathing policies: Do what you can to make sure ESG policies written for the company aren’t a load of legalese that rots away in a drawer. Create a readable summary or even a video. Distribute them to staff. And put them somewhere easily accessible.
- Practice what you preach: You can apply ESG principles to the everyday running of the legal department. That could mean remembering to wish a colleague of a different faith happy holidays or choosing meat-free catering for a department event.
It all comes out in the (green)wash
Going green can help you bring in the “green.” But doesn’t that set up some perverse motives? Mark McAteer writes in The In House Lawyer, “Excuse me for sounding a little jaded. It’s just that we’ve been here before with the three little letters: CSR [corporate social responsibility]. At first, that was all about good intentions … but it soon descended into a cynical PR exercise.” There’s certainly good reason to be skeptical. One study found that fund managers who signed the United National Principles for Responsible Investment attracted an influx of investment as a result but did not follow through on their commitment to ESG.
- There’s also a risk that companies are tempted to overstate their ESG credentials. Pretending to be greener than you really are is called greenwashing and it’s a really bad idea. The Securities and Exchange Commission has a newly formed ESG Task Force which is prioritizing investigations into false ESG claims. The Federal Trade Commission also has its nose to the ground. In April, it hit Walmart with a $3m penalty over false claims that some textile products were made from bamboo. And in July, German police raided the offices of Deutsche Bank over accusations that it exaggerated the ESG creds of its investment portfolio.
- It’s also worth mentioning that not everyone thinks ESG is a good strategy for making the world a better place, even if companies don’t cheat. Tariq Fancy, an ex-BlackRock investor turned outspoken anti-ESG commentator, calls ESG “a dangerous placebo that harms the public interest.” His arguments are lengthy but the core idea is something like “Nice idea. Doesn’t work.”
While we’re being negative, sticking to good intentions is only likely to get harder. Part of the downfall of CSR was the global financial crisis. It’s tough to think about the larger community when you’re struggling to survive. And let’s be honest. Surging oil prices and high-interest rates aren’t helping the case for current ESG funds.
Being a good person is not always easy (sometimes you’ve gotta put your chair all the way back on a flight even if the guy behind you is an NBA shoo-in). Neither is a large-scale rejigging of your supply chain or a sustainability-focused product overhaul. But sometimes the toughest things are the best things for the business. Legal gets that. Legal departments can think long term, anticipate risk, and take note of all the stakeholders – even when stocks are tumbling. They’re well placed to take on the role of moral compass.
The ESG trend may or may not last. But doing the right thing never gets old.
🪜5 Key Takeaways: The Path from Paralegal to Legal Ops
Legal Operations. It’s as mysterious and intimidating as US Special Ops. Well, not quite. But it is the most in-demand position in legal! So what is it exactly, and how can paralegals transfer into this world? Lawtrades Head of Community Matt Margolisspoke to Carl Morrison, Director of Legal Ops at MGM Resorts International, Deisha Vazquez, Director of Legal Ops at Benevis, and Tom Stephenson, Director of Legal Ops at Credit Karma. They told us how they made the jump and went on to whip their legal departments into shape.
In case you missed it, here are our top 5 takeaways.
💼 The COO of the legal department
Much like Lady Gaga, the legal ops role has been evolving and growing in popularity since the mid-2000s. It’s fast becoming a must-have as legal departments realize they’re a total game changer. So what does legal ops do exactly? They act as a revenue protector, making sure the C-suite are getting maximum bang for their buck out of legal. They do so by looking at the business operations of the in-house legal department and figuring out how they can be improved.
Confusing intake systems. Bottlenecks in the contracting process. Attorneys’ time is wasted on non-legal tasks. Legal ops takes all that off the lawyers’ plates. Legal desperately needs someone with those skills because let’s be honest, attorneys don’t necessarily know the first thing about business or project management. Legal ops also keeps an eye on the greater mission, so lawyers can focus on putting out fires. In other words, if GCs are Neil Armstrong, legal ops is Houston.
📅 A day in the life
So that’s the teaser trailer. Now here’s the behind-the-scenes footage. The day-to-day work of a legal ops pro might include:
- Chatting to colleagues to gauge the appetite for change.
- Implementing legal tech, systems for gathering data, and workflow solutions.
- Making data-driven decisions.
- Using performance data to show how legal is killing it.
- Pushing for a bigger tech or talent budget.
- Liaising with ops teams in other departments.
- Growing and shaping the team.
- Providing business advice to the GC.
Basically, they’re the glue that holds the legal department together. They are nimble and their role can be shaped to meet a legal department’s needs, no matter the size or budget of the department, or the industry in which it operates.
🦘 Making the jump
If you’re thinking of making the jump from paralegal to legal ops, there’s good news. You’re probably better equipped than you think! You can stick a different label on it, but lots of paralegal work is operational in nature. It could be billing, budget management, vendor procurement (e.g. finding the best court reporter), or finding ways to speed up the process of dealing with intake forms. Sure, there will be other areas where you have no experience at all but there’s always room to learn. So many paralegals have taken the same journey. Just don’t wait for an opportunity to fall into your lap.
Here are some of the ways you can move towards a legal ops role:
- Educate yourself. Take a look at the job description of your dream role then head to the University of YouTube to learn as much as you can (but we didn’t tell you that 🤫).
- Skill up. Take on more operational tasks within your current role.
- Get networking. Reach out to legal ops pros on LinkedIn. Or check out CLOC(The Corporate Legal Operations Consortium).
- Advocate for yourself. Let the higher-ups know your goals. Ask for opportunities to upskill. Let them know how you can better serve the department in an operational role.
- Impress. Being good at what you do now is a great advert for what you’ll do in a new role.
If a lack of confidence is holding you back (don’t sweat, we’ve all been there), look for inspiration. Deisha, for example, started out her career with a high school diploma and a paralegal certificate. Since then she’s:
- Built an entire legal department from scratch.
- Run a legal department while the GC was on medical leave.
- Brought in $11M by implementing a contract management system.
If that doesn’t inspire, we don’t know what will.
🛒 Can I get you a cart for that ego, sir?
32:24 – 39:35 and 49:35 – 56:10
Attorneys have hurled curses, insults, and even physical projectiles at our panelists. Yikes! But, unfortunately, it happens. Being a superstar attorney can lead to an oversized ego (and, well, sleep deprivation). First off, where possible, find a work environment where you’re surrounded by people who will help you succeed and grow. We spend way too much time at work to be dealing with toxic people.
If you do find yourself working with Johnny Bravo, confidence is your friend. Project the image of a highly valuable professional (that’s what you are after all) and others will see you that way too. Sometimes you will have to just put your head down, get the work done, and let the bad behavior roll like water off a duck’s back. At other times, you need to draw boundaries. If necessary, take an attorney aside and let them know, in a polite and professional manner, that their behavior made you uncomfortable. In short, confidence + boundaries + EQ = win.
🤖 A future-proof career
More and more companies and even law firms are saying of legal ops “Where have you been all my life?” Efficient operations and revenue protection will sound even sweeter if we find ourselves in (whisper it) a recession. Our panelists predict that the profession will be elevated. Legal ops will be brought more into the C-suite and the board of directors as well as private practice. The only way is up.
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👋 The team at Lawtrades
🤿 Sunday Deep Dive: The Bar and Why It’s So High
Trigger warning! Contains content about … the bar exam.
Law grads across the country are in a state of anxious anticipation as they wait to find out if they’ve passed last month’s bar exam. Failing could mean an extended period of unemployment, additional exam fees, mounting student debt, and rescinded or downgraded job offers - not to mention even more grueling studying. “But, hey,” say some lawyers, “we’ve all been there. Some things are tough for a reason.” There’s a growing collection of voices who disagree.
So for today’s multiple choice section, is the bar exam a) a time-honored rite of passage that protects the public and maintains a high standard for the profession? b) a sadistic hazing ritual that reinforces inequality and has very little to do with being a good lawyer? or c) “What bar exam? I’ve repressed that memory.” Don’t worry. We’ve got the Cliff Notes on this one.
Ye Olde Bar
According to this potted history of the bar, up until the mid-1800s, would-be lawyers trained by doing apprenticeships and qualified by taking an oral exam, which was usually given by a judge. It seems like the oral exam was pretty lowkey. One candidate was asked what he knew on a particular topic and replied “nothing.” He passed. Abraham Lincoln is even said to have examined a candidate from the comfort of his bathtub (“You pass the bar … of soap, please.”).
Not everyone had an easy ride. Clara Foltz (having written the amendment to the law that allowed it) became the first woman admitted to the California bar (and an absolute legend) after a three-hour grilling. It was not the first time the bar was used to exclude all but the elite. And it wasn’t the last (more on that later).
In 1855, Massachusetts became the first state to introduce a written element to accommodate those who couldn’t sit the oral exam. And then in the 1870s, Suffolk County, Massachusetts, and New York introduced a compulsory written exam. In 1931, the National Conference of Bar Examiners was founded with the goal of creating a uniform standard of eligibility for admission to the practice of law. A lot has changed since then.
The Bar Is Raised
As many of you know all too well, the bar now takes two days to sit, requires 400-600 hours of studying, and is – according to the Twitterverse – an all-round nightmare from hell. Around 20% of candidates do not pass the exam the first time around, meaning they have to repeat the whole nasty business. Six months later. Which is a super long time to be stuck in career limbo.
As if that wasn’t enough, because this is ‘Merica, the whole process has been successfully monetized. The bar exam is thought to be a $30B industry. Wannabe lawyers face a pretty serious shopping list which can include:
- Application/registration fees ($150 – $1,300)
- Bar prep courses ($1,000 – $4,000)
- Private tutoring (~$150/hr)
- Fees for additional tests such as the MPRE ($125)
- Miscellaneous admin fees such as fingerprinting fee ($135)
Yep, that’s a potential total sum of more than $5500 per test! Of course, there is also the cost of covering your basic living expenses while studying takes control of your life. And let’s not forget that most candidates have a massive load of debt hanging over their heads.
The Bar Goes Viral (Literally)
In 2020 and 2021, many states moved the bar exam online to limit the spread of Covid-19. It was, by all accounts, a nightmare. Every cohort tested online reported technical problems, from the software crashing and the screen going blank, to facial recognition, and an anti-cheating feature that didn’t work for Black faces.
In July 2020, Examplify – the software used for remote bar exams – crashed during the Michigan bar. California bar officials report that 31% of people who took the exam in July 2021 experienced technical problems. For the October 2020 New York bar, that figure was 41%. These issues were still not resolved by this July, leading Bloomberg to publish the headline “Oh You’ve Got Tech Woes? Try Taking the Bar.”
In addition to those disrupted, many more were understandably affected by anxiety surrounding the glitches. Some were incorrectly flagged as cheaters. Those that were in-person had their own problems too. Exams were delayed and canceled. That’s on top of the fact that students were at risk of catching the virus.
Some states took a different approach. Washington, Oregon, Utah, Louisiana, and the District of Columbia put in place “emergency diploma privilege” rules which allowed 1k+ candidates to become licensed to practice law without taking the bar. Emergency diploma privilege was also instituted during the California earthquake in 1906, World War II, and the Korean War. Prior to Covid, the only state that offered diploma privilege as an alternative to the bar was Wisconsin (and to a lesser extent New Hampshire). Wisconsin’s diploma privilege system only applies to graduates of ABA (American Bar Association) accredited law schools within the state. It is something of a relic – in that Wisconsin simply kept theirs while other states adopted the bar – but it’s a product of the state’s confidence in their schools. In fact, experts argue that the system encourages the judiciary and legislature to work more closely with schools to ensure they are providing an appropriate, top-notch education.
Earning their license in this unorthodox way doesn’t seem to have hindered the progress of the 1k+ lawyers mentioned above. Five were hired by century-old law firm Davis Wright Tremaine, which says the absence of a bar exam result was “not a concern” and that the associates had “established their capabilities.” Washington State, Oregon, North Carolina, and Hawaii even lowered the cut score (pass mark) for the state bar in 2020.
The Covid-era shake-up has sparked some serious beef about the bar and left some in the legal community wondering if it’s really necessary at all. Calls to #abolishthebarwent viral on Twitter. Activist groups started popping up, including United for Diploma Privilege, “a grassroots coalition of recent law graduates, lawyers, law professors, and legislators pushing for attorney licensure reform that would do away with the bar exam.” Experts published by The Washington Post, the Wall Street Journal, and Above The Law chirped in on the movement too.
Bar-riers to Entry
In 1912, (ABA) accidentally admitted three Black lawyers as members. Thereafter, they made sure to check applicants’ race and gender before admitting them. That overtly discriminatory practice stayed in place until 1943. In the ‘60s and ‘70s, the NAACP and ACLU argued that bar exams were being used to prevent Black candidates from becoming lawyers. Concerns that the bar reinforces inequality continue to this day.
In 2020, 66% of Black candidates passed the bar on their first try, compared to 88% of white candidates. Possible explanations include bias in the test, unequal standards of pre-law-school education, and financial challenges such as higher student debt and the higher likelihood that Black students have to work while studying.
The unequal pass rate for minorities translates to underrepresentation in the profession. Black Americans make up 13% of the population but just 4.7% of lawyers are Black.
Great Bar Score = Great Lawyer?
Another major complaint about the bar is that it doesn’t test whether candidates are fit to be lawyers. The test is all about memorizing loads of things whereas real-life lawyering is all about critical thinking and a great deal of looking stuff up. If anything, going off memory is more likely to result in some kind of malpractice. Plus, the law changes. The bar also fails to test other skills like negotiation, composing letters, and interviewing clients. And it does little to prepare lawyers for an in-house role where a basic understanding of business and finance is essential.
Moreover, there’s little empirical evidence that the bar is a useful test for weeding out people who aren’t cut out to be attorneys. Malpractice is not more common in Wisconsin. Complaints and disciplinary actions are not more common in states with lower cut scores.
The complaints don’t end at high costs, racial discrimination, and, well – pointlessness. Economists worry that a challenging bar exam could be abused to, “create an artificial shortage [of lawyers], reduce competition, drive up prices, and drive down the quality of services.” Meanwhile, 80% of civil legal needs are going unmet.
Law firms are struggling with staff shortages. And an international survey found that 20% of lawyers under the age of 40 are thinking of leaving the profession. Plus in-house legal teams have a growing need for talent as their role within businesses expands. Companies are leaning more on legal for business advice and to help them deal with increasingly burdensome responsibilities like ESG compliance, privacy, and new territory like the metaverse.
Propping Up the Bar
Okay, so the bar isn’t perfect but it’s gotta have some pros right? Sure. The truth is that plenty of university degrees don’t teach the practical skills required for a career in the field. It’s pretty hard to know how good a lawyer someone will be until they actually start practicing. The bar acts as an imperfect but helpful proxy to make sure that only smart, hardworking people end up with a license.
Secondly, not all law schools are created equal. They’re certainly not equally regarded by employers. The bar creates a level of standardization that, in theory, can reduce discrimination against strong candidates from less prestigious colleges.
The National Conference of Bar Examiners (NCBE) says it is “confident in the validity, reliability, and fairness of the exam because it has been carefully developed and vetted to meet professional testing standards.”
A Case of Snowflake-itis?
Isn’t this just another case of snowflake younger millennials complaining that life is too hard? If they don’t have what it takes to write a challenging exam, they won’t be able to cope with the challenges of a legal career, right? Maybe. But if there is a more affordable and effective way to evaluate would-be lawyers, it seems worth exploring. Putting students through a financial and emotional ordeal just because “we had to do it when we were their age” seems cruel. And if the profession really requires a strong tolerance for suffering, maybe it’s time to change the profession.
The Alternatives
What if it is time to say adios to the bar? We still need some way of deciding who is able to practice the law. Here are some possible reforms.
Wait for the new test
- The NCBE is designing a new test they’re calling the Next Gen Bar Exam which is set to be on desks in 2026. The new test is supposed to focus less on memorizing stuff and more on legal skills such as legal research, legal writing, and client relationships, although it’s not really clear how the heck they will go about doing that.
- An exam redesign volunteer suggested that test-takers could be given a transcript of a client counseling session to crit. It’s an interesting idea but it will be several iterations of the iPhone before we get a chance to judge the execution.
Lower cut score
- In 2020, California’s Supreme Court lowered the passing score for the California Bar Exam to 1390 from 1440. The next round of exams saw a 10%+ increase in the pass rate, especially for underrepresented test-takers. In October 2020, compared to July 2019, 28.5% more Hispanics, 25.8% more Asians, 23.9% more Blacks, and 20.8% more Whites passed. Rhode Island has since lowered its own state cut score and at least 3 other states (Texas, Arizona, and Michigan) are considering following suit.
Expand the UBE
- Some reformers are keen for states to move over to the Universal Bar Exam, rather than each offering their own test. The UBE is accepted in nearly 40 jurisdictions meaning that, regardless of where lawyers sit the test, they can practice in many parts of the US (at least for a limited period of time).
- State-specific bar exams are more restrictive. The UBE is also easier to pass than a state exam which means it’s less of a burden on test-takers, especially those who can’t afford to be unemployed while they prepare.
Diploma privilege (DP)
- The rest of the US could follow in Wisconsin’s footsteps and license law grads without requiring them to pass a bar exam. After all, the President of the NCBE got her license through diploma privilege (such juicy irony).
- DP could even be offered as a voluntary alternative to the bar. States could institute additional requirements for licensure, such as a set number of supervised practice hours, CLE courses, and character fitness tests. States could even create a “learner’s permit,” like the kind given to new drivers, which would allow grads to fulfill some legal duties, but not others until they can parallel park without scratching up their moms’ cars (metaphorically speaking).
- These are not just pipe dreams. In Minnesota for example, the State Board of Law Examiners has announced that it will “take two years to study the bar exam … and the impact of being a state that admits lawyers based on their scores.” They will be investigating alternatives to the bar, including diploma privilege.
You may be smiling smugly as you read this, enjoying the fact that you paid your dues and passed the bar a long time ago. But the #abolishthebar movement raises questions that are relevant for the entire industry.
1. Let’s start with inequality. Legal departments can’t do much to change who becomes licensed to practice but there are lots of things that in-house teams can do to tackle this problem. You can make sure that interview panels are diverse, track diversity metrics, allow flexible and remote working, and get educated about unconscious bias.
2. Then there is the matter of practical skills (which the bar is clearly not great at testing). Freelance attorneys would be wise to bulk up their resumes with CLE courses (like Hotshot which we provide to all our wonderful Lawtraders) and even non-legal-specific skills, such as management and data analysis. Companies can offer paid work experience to law students and grads who are waiting to take (or retake) the bar. And in-house teams would be wise to skill up their legal pros so that they can take on more generalist roles, especially if you’re part of an early-stage start-up. Generalists will be extra valuable if we do end up in a recession.
3. Finally, not every legal task requires an attorney. Don’t forget about all the fabulously talented legal pros who never took the bar. After all, non-JDs can save you time and money.
♀️5 Key Takeaways: Challenging the Gender Pay Gap in Legal
Beyonce was right when she answered her own question: “Who run the world? Girls.” Or at least they do when no one is standing in their way. But payslips don’t always reflect the contribution women make. Lawtrades’ Lauren O’Neill talked to #bossladies and women-in-legal champions Karla Pinckes, Senior Director, Corporate Legal & Securities at Viavi Solutions, and Maureen Frangopoulos, Senior Legal Director at Uber, about equal pay and how to get it, as well as tips for leaders who want to promote a fairer work environment.
These ladies have serious cred on this topic. Maureen manages over 65 legal professionals and views herself as their chief advocate. Karla is involved in two female-focused organizations - Sunlaw, a community for women in-house counsel, and Girls Inc, a non-profit that works with underrepresented teenage girls to help them be brave, bold, and healthy.
Here are our top takeaways from the event.
💰 It’s not all about the money, money, money.
As we explored in this deep dive, female legal professionals are (still!) getting short-changed. The average weekly income for female lawyers is $1,878 while male lawyers earn $2,202. And women acting as general counsel make ~$100k less than men (sigh). But that’s not the only unfairness faced by the so-called fairer sex. Legal, like many industries, also has plenty of old-school attitudes that deserve a wince, a headshake, and a major update.
Challenges faced by female legal professionals include:
- Exceptional women are sometimes overlooked in favor of mediocre male colleagues.
- Behavior that’s seen as a display of leadership qualities by Jim, is described as bossy when Jill does the same thing.
- A global survey of legal workers found that 1 in 3 women had been sexually harassed in the workplace.
- Mothers are penalized for parental commitments in a way that fathers are not.
Maureen appeared in court in a pantsuit only to be told by the judiciary to “Come back when you’re in a skirt.” And Karla was asked about her “child plans” in a job interview (which is illegal btw). Seriously, legal? It’s 2022! 🙄
🌪️ Hold on to your hats, fellas. Change is on the horizon.
27:11 – 28:40 and 33:00 – 37:20
Diversity and equality are no longer “nice to have.” Failing to address the wage gap can:
- Put off investors, especially as ESG reporting becomes standard practice.
- Send female employees packing, especially as more companies are making public commitments to do better (e.g. including salaries on job posts, publicizing wage gap figures, or ensuring there are women on interview panels).
- Invite lawsuits (and expensive ones too).
- Alienate younger talent.
Gen Z cares more about their employers’ values than previous generations and talks more openly about pay so the clock is ticking for companies to get with the program. Besides, research shows (picture a white coat) that a diverse workforce can only make companies more successful.
🦸🏾♀️ Be the #bosslady (or boss gent) you wish you’d had.
If you’re in a leadership role, advocate for the women in your team. Put measures in place to ensure you are treating everyone the same e.g. everyone gets the same amount of one-on-one time to discuss their career. You can also use LinkedIn or other social media to promote content that shows your commitment to equality and fairness.
⬆️ Lead upwards.
11:30 – 12:20 and 30:40 - 32:00
If your manager/GC/partner/client isn’t making equality a priority there are strategies you can use to advocate for yourself.
- Make sure your manager sets out objective criteria and goals by which you will be evaluated. That way it’s less likely that unconscious (or conscious) bias will creep into promotion/raise negotiations.
- Start conversations with the higher-ups about equality and diversity.
- Get good at negotiation. Some of us feel nervous about being pushy or think it’s impolite to talk about money. Do your research or seek mentorship on this topic and don’t be afraid to advocate for yourself. You know the guys are doing it!
🤔 Be picky
If all your best efforts to push for fair pay seem to be an uphill battle, it may be that you’re at the wrong place. Hey, not all employers deserve fabulous female talent. Startups with a less developed leadership team, for example, might not have good structures in place to mitigate unconscious bias such as measurable objectives with defined assessment structures. Check Glassdoor for reviews of the company. Look at who’s on the board. And ask questions about the company’s compensation philosophy, diversity policies, and potential career progression in the interview. But stay cautious. It’s easier to talk the talk than it is to walk the walk.
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👋 The team at Lawtrades
🤿 Sunday Deep Dive: The New Era of SCOTUS
Public opinion of The Supreme Court of the United States is shifting. Only 25% of Americans now have confidence in the institution. Commentators are declaring that the court is in crisis, questioning its legitimacy, and even calling for an end to SCOTUS in its current form. One of SCOTUS’ own judges, Justice Sotomayor, described the court as “restless and newly constituted” — implying that over 200 years of tradition and precedent are slipping out of focus. The debate came to a blistering head on June 24 when the court overturned Roe v. Wade, widening a rift in the nation. The nation stands divided but one thing all sides can agree on is that SCOTUS is generating more legal drama than a Judge Judy marathon. We take a close look at the cases defining the new era of SCOTUS and how the court’s decisions might impact everything from who you can marry to how you vote. Here’s what you need to know.
How did we get here?
The current court is swinging further right than it has in at least 75 years. Out of 9 justices, 6 are currently conservative. Here’s how it played out.
- Gorsuch for Scalia: When the hard-core conservative Justice Scalia passed away, President Obama still had just under a year left of his term. Republican senators kiboshed his plans to fill the vacancy on the basis that it was an election year and voters should first have a say. Trump went on to fill the vacancy when he appointed Justice Gorsuch in 2017.
- Kavanaugh for Kennedy: Trump’s second SCOTUS appointment was Justice Kavanaugh who replaced Justice Kennedy — a conservative who nonetheless sidedwith liberal judges on a number of issues, including same-sex marriage and abortion. The appointment followed a brutal confirmation hearing in which Kavanaugh was accused of sexual assault at a high school party.
- Barrett for Ginsburg: In 2020 (the year of the presidential election), staunch conservative Justice Amy Coney Barrett replaced Justice Ruth Bader Ginsburg (aka The Notorious RBG), a liberal icon and women’s rights activist. It was this third Trump appointment that seemed to signpost the start of a new era for the court. Ginsburg’s dying wish was that she was not replaced until a new president was sworn in but Republican Senators failed to apply the “no new appointees in an election year” rule that had stymied Obama.
The End of Roe v. Wade
The background
In 1973, a pregnant woman with the alias Jane Roe filed a lawsuit against the state of Texas with the aim of getting abortion legalized. At the time, abortions were only legal if performed to save the mother’s life. The Supreme Court ruled in favor of Roe, basing their judgment on the “right to privacy” which is not explicitly stated in the US Constitution but has been recognized as a right since, well, 1891. The ruling did not provide an absolute right to abortion so states were free to put some regulations in place. The court also noted that there was no precedent for recognizing unborn people as legal persons. Interestingly, the number of abortions performed in the US in the years before and after the ruling was pretty much the same. Women were simply able to access the service legally.
It’s almost hard to believe, but in 1973, abortion was not a partisan issue. In fact, fourof the judges that presided over Roe v. Wade were Nixon appointees. But abortion has increasingly become a dividing line between Republicans and Democrats. Over the years, many red states have introduced laws that come close to banning abortion by making it expensive and super complicated to access. For example, before this June’s ruling, there were six US states that had only one abortion clinic and five states that banned abortion before 6 weeks (which, by the way, is before many women are even aware they’re pregnant).
Dobbs v. Jackson Women’s Health
At face value, the case concerned the constitutionality of a Mississippi law prohibiting most abortions after 15 weeks of pregnancy but after failing in the lower courts, Mississippi took the case to The Supreme Court and asked them to overturn Roe.
Despite being given a preview of the bombshell ruling in the form of a leaked draft, the world was shocked when SCOTUS rolled back the constitutional right to abortion and overturned Roe in a 5-4 split decision. The ruling leaves states to decide whether or not to allow abortion and offers up no exceptions — even for rape, incest, or cases where going ahead with the pregnancy endangers the mother’s life.
The court justified its decision by saying that the word ‘abortion’ does not appear in the Consitution. Justice Alito argued that when the 14th Amendment (which protects liberty) was ratified, the people who did so did not intend for the amendment to cover abortion.
The dissent on the other hand says sorrowfully, “After today, young women will come of age with fewer rights than their mothers and grandmothers had.” The dissenting justices argued that giving women the choice of whether or not to have a child is essential for respecting their bodily autonomy.
The impact
Following the announcement, abortion clinics across the country shut down overnight. Thirteen states had in place “trigger laws” which came into effect automatically after the ruling. Abortion is now banned or close to being banned in 60% of US states.
Thousands protested and many celebrated when the news was delivered. President Biden decried the ruling calling it an exercise in “raw political power” by “an out-of-control Supreme Court, working in conjunction with extremist elements of the Republican party.” In one extreme example of the passion surrounding this issue, an armed man was arrested near Justice Kavanaugh’s home. He had planned to kill the judge and then himself over the overturning of Roe.
The legal impact
Dobbs v. Jackson Women’s Health shows that the court is not scared to overturn precedent. Liberals are freaked out, concerned that this puts other freedoms at risk. Neither contraception nor same-sex marriage is mentioned in the Constitution. Like abortion, both are protected under the 14th amendment — which turns out to be a shaky foundation. Plus, the court could go a step further than overturning Roe v. Wadeand actually enact a federal abortion ban.
The Case That Doomed The Climate
The background
Get comfy. This is a saga. It all began when the Obama administration introduced the Clean Power Plan (CPP) which aimed to shift US energy generation towards renewables and cut greenhouse emissions from the power sector by 32% by 2030 from 2005 levels. The policy was to be administered by the Environment Protection Agency (EPA), which claimed the authority to do so through Section 111 of the Clean Air Act — a broad and kinda vague piece of legislation that leaves gaping room for interpretation.
Unsurprisingly, oil and coal-producing states were not thrilled about the idea and challenged it in court. Once the policy came into effect, it was almost immediately put on hold by SCOTUS in a split decision led by conservative judges. This was seen by some as a crazy move by the court, given that the CPP was never implemented and had not been through any lower jurisdictions.
When the Trump administration came into power, it tried to rescind the stayed CPP, claiming the EPA had overstepped its statutory authority and went on to introduce far more lax environmental regulation. Following legal action from blue states, the DC Circuit invalidated both of those actions.
When Biden came to power, the EPA indicated that they did not plan to implement the CPP but instead would introduce their own new climate regulations. That didn’t stop red states from approaching the courts again and asking them to re-rescind the Obama-era CPP (yep, that old thing that no one plans to use) and restore Trump’s regulations. Confused yet? The ultimate goal of this legal challenge is to pre-empt new policies from the current government which could force energy plants to shift towards renewable generation.
West Virginia v. EPA
When the case came before SCOTUS, the court ruled in a 6-3 split that EPA did not have clear congressional authorization to enact the CPP and that regulation of this nature needs to come from Congress rather than a government agency. The judges that represented the majority opinion were all nominated by Republican presidents. Likewise, all the judges that sided with the dissent were nominated by Democrats. In short, it’s pretty clear that SCOTUS has been acting politically.
The direct impact
Although the Biden EPA never planned to use the CPP, this ruling is a huge deal. It’s hard to see how the agency can do anything that will have a meaningful impact on global warming without the court getting in the way. And Congress, the only viable alternative route to regulation, is unlikely to save the planet while in a constant state of deadlock. President Biden promised the rest of the world that he would halve US greenhouse gas emissions by 2030. West Virginia v. EPA has made that promise impossible to keep.
The legal impact
The court justified its decision using an expanded version of something called the major questions doctrine (MQD) which states that “courts should not defer to agency statutory interpretations that concern questions of ‘vast economic or political significance.’” In other words, agencies — like the EPA — should stay in their lane and not exercise their power beyond specific instructions from Congress.
This little-used doctrine has found its way into the spotlight during this new era of SCOTUS. It is only supposed to be used in exceptional cases, but the court has handed it out like candy as of late. For example, during the pandemic, it was used to block a vax-or-test mandate for employers with 100+ workers.
The problem with using the MQD in this way is that it calls every regulation into question. As Bloomberg Law put it, “Nearly every nationwide agency regulation has deep economic and political significance. From rules on food safety, to workplace conditions, to rules governing union elections, to false advertising, to net neutrality, to opening gas pipelines and electric transmission lines used by the owners’ competition — the list is almost endless.”
And very few agency regulations will be based on a clear, specific authorization from Congress. Mandates handed down to agencies are intentionally broad to allow them to respond to new and changing issues.
The fear is that majority judges can use the MQD to block just about any kind of regulation from any agency, transforming this relatively obscure little piece of text into a political weapon. The question is whether SCOTUS has the will to do so.
The Vote Against Fair Elections
Next up is a case that critics fear will threaten free and fair elections. Moore v. Harper is scheduled to go before the court in the coming term. What’s at stake, according to NPR, is “a legal theory that would give state legislatures unfettered authority to set the rules for federal elections” without any checks or balances.
The background
The case stems from a quarrel in North Carolina where the state supreme court revoked a gerrymander of the state’s congressional map that gave Republican candidates a major leg-up. In other words, Republicans had redrawn the map to maximize the number of red voters in each electoral constituency and the court said, “nice try.” Republican legislators responded by saying that neither state courts nor state constitutions had any authority over how federal elections are run.
The legal basis
Legislators have based these claims on constitutional provisions that give the legislature of each state the power to regulate federal elections. Or rather, as The Atlantic put it, they’ve based them on a “stark misreading” of those provisions. There is a huge body of scholarship discrediting the so-called independent-state-legislature theory and critics say that the clauses are not intended to give the legislature exclusive control of elections.
This isn’t the first time in recent history that the theory has raised its head. It was used in legal challenges that hoped to overturn the 2020 presidential election result. SCOTUS rejected those challenges. Yet if they get behind the theory in Moore v. Harper it will add fuel to the feeling that the court’s conservative majority is interpreting the law as it suits them.
What this means for in-house teams
Regardless of where you stand politically, it’s important for in-house legal teams to understand the cases on the SCOTUS docket. That’s always been true but it’s even more important in an era when a single ruling can overturn decades of precedent and call into question huge swathes of legislation.
It matters to your employees. People care about the stance their employer takes on issues like abortion and the environment. In fact, just 1 in 5 Gen Z workers say they would work for a company that didn’t share their values. Dozens of companies are now offering to cover employees’ costs if they have to travel to access an abortion. Companies with a liberal outlook could be called on to provide more support to their employees in the future. For example, if SCOTUS rolls back the right to access contraception, companies could cover travel costs for employees who have to go out of state to do so. And if SCOTUS fails to protect same-sex marriage, companies could support LGBTQ+ employees by helping them relocate to different states. It sounds outlandish but everything seems to be on the table in the new era of SCOTUS.
It matters to your customers. Post pandemic, 42% of people have changed their consumption habits because of their stance on the environment. Customers want to support businesses that share their perspectives on things like global warming, affirmative action, and gun control — all of which have come before the court this year. In fact, as one crisis communications expert put it, “Companies are realizing there’s a risk to not engaging” on hot button topics. And as we all know, where there’s risk, there’s work for GCs.
It matters from a compliance perspective too. If the EPA case is anything to go by, the regulatory landscape could have some serious changes in store. And if power continues to shift away from the federal government, it could create an America where there are even more vast regulatory differences from state to state *insert sarcastic woop woop*, which could impact the way your company does business.
So keep your eyes on SCOTUS. If you’re anything like us, you’ll find it hard to look away.
🖲 5 Key Takeaways: Let’s Talk Legal in Esports
Tammy Brandt’s job is not what most people picture when they think of a lawyer. She wears a T-shirt and running shoes to work. There’s a basketball court and a skateboard ramp outside her office. And she spends a good chunk of her time talking to teen gamers. It’s all in a day’s work for the Chief Legal Officer of FaZe Clan, a lifestyle and culture brand with its roots in esports. In this Innovator’s Series event, Lawtrades’ Matt Margolis talked to Tammy about her career and what it’s like to be a lawyer in this niche. In case you missed it, here are our top 5 takeaways.
💥 Esports is blowing up (but it’s got some issues).
Esports is organized, competitive video gaming and it’s a huge industry. Much like traditional sports, esports has hundreds of millions of viewers, high-value endorsements, and professional players who earn multimillions every month. And it’s set to grow.
Kids are getting into gaming at a younger and younger age and they’re sticking with it. Gen Z is more into gaming than millennials and Gen Alpha will likely follow suit. Plus, because it is internet-based, the potential audience includes, well, most of the planet. At least it should …
Esports is currently not as inclusive as it should be. Women are regularly harassed on gaming and streaming platforms. These spaces need to be safe for everyone or the growth of the industry will be limited. Game creators have a role to play too (we’re pretty sure armor that looks like a bikini is not much use in battle).
😎 You can have a cool job too.
8:19 — 16:16 and 23:41 — 25:21
You don’t need to be an expert in esports to work in esports. Some of the biggest legal issues facing FaZFe Clan are things like privacy, data management, and IP which apply to every industry, so it doesn’t really matter what your background is. If you have a passion for the industry, that can only help you but what really matters is that you’re good at what you do.
The same applies to any cool, new industry. Cryptocurrencies, NFTs, and the metaverse are all coming for the mainstream in a messy hurricane of regulatory challenges. And where there’s a mess, there’s a need for lawyers.
🕙 It’s time to talk.
About the gender pay gap in legal. Yep, it’s still here, and nope we’re not ready to stop talking about it. But what can we actually do about it?
Join us next Thursday, Jul 28th, at 3 pm ET to hear from legal pros Karla Strotz Pinckes from Viavi Solutions and Maureen Frangopoulos from Uber as they discuss how we can challenge the status quo pay gap in legal, with practical tips and takeaways
👉 RSVP here.
🤝 How to network like you’re 5G.
Networking groups are a great way to make connections. The best group for you will likely depend on where you are in your career, and who you’re looking to connect with. Tammy’s favorites are Tech GC, The Association of Corporate Counsel and Chief, a private network that connects women in leadership roles and supports them as they smash the glass ceiling. Our favorite, of course, is the Lawtrades community.
Attending events, writing articles, and maintaining your social media presence are also all good ways to build your personal brand and make sure you’re moving and shaking with the right people.
🎮 Get into multiplayer mode.
As a GC you need to understand the risk tolerance of the company you’re working for. FaZe Clan has a high-risk tolerance. Startups in spaces like the metaverse, NFTs, and other emerging industries will also most probably have a big appetite for risk. A GC needs to be viewed as a business partner, as does any outside counsel. Don’t be a ‘no’ person, be a ‘let me think how we can do this most safely’ person. Otherwise, the business folks might just go ahead and do all sorts of stuff without telling you — and leave you to pick up the pieces.
🤳Get down with the kids.
Unless you’re under 24 yourself, you might find the up-and-coming generation a little baffling. It’s not always useful to generalize but it’s safe to say that boomers and zoomers do things a little differently. If you’re dealing with Gen Z at work for the first time, be open-minded. Just because someone does things differently from you doesn’t mean their way is worse. In fact, you might be able to learn a thing or two from your younger colleagues’ approach.
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See you at the next one,
👋 The team at Lawtrades
💹 5 Key Takeaways: How Legal Can Prepare for an Economic Downturn
The word “recession” is floating around again. For those of us who survived 2008, and even 2020 — just the thought makes us shudder. Our own Matt Margolis spoke with Jared Mermelstein, Matt Lubniewski, and Eric Fisher about the lessons they’ve learned from previous downturns and what legal can do to prepare. In case you missed it, here are our 5 key takeaways.
🦆 Don’t be a sitting duck
3:25 - 14:55 and 49:53 - 50:45
In uncertain times, legal’s role is to spot problems before they happen. We don’t know for sure if a downturn is coming but we can’t wait around to find out.
Here are some action steps you can take right now:
- Figure out where you’re flexible and what a downturn strategy would look like.
- Do your homework before setting up relationships with customers and vendors e.g. credit checks, and background checks.
- Pressure test existing agreements e.g. will this client still exist in 6 months? What are our obligations if things go south? Do we want to renegotiate terms?
- Keep an eye on the big picture. Legal has sight across the organization. Make sure the right-hand knows what the left hand is doing.
- When hiring, look for complementary skills e.g. an attorney who’s worked in government could help with government affairs in lean times.
🛤 Say yes, with guardrails
Legal is sometimes seen as the department that says ‘no’ when all the higher-ups want to hear is ‘yes’.
When bad days are on the horizon, it’s important to:
- Make the higher-ups listen even when they don’t want to.
- Find creative ways to get to yes.
- Let the business folks know you want to help them reach their goals.
- Be transparent and communicative.
🦹♀️ Back your tribe
21:22 - 25:33 and 42:00 - 44:10
If cuts are coming, you’ll want to fight for your team. Don’t be shy about it. Sing their praises. Show off that performance data. And highlight all the ways you bring in/save money.
When the economy tumbles, you can expect morale to do the same. If cuts are coming, honesty is the best policy. Be open and tell your team as much as you can. Let them know you’ve got their backs. Roll up your sleeves and get stuck into new challenges so they know that you’re all in this together. If team members are let go, offer to write them good references and assist wherever you can. That sends a strong message that you appreciate your team’s contributions. Not to mention, you never know when you need a contact in the future.
🤝 We’d like you to meet someone …
- Meet Tammy! Chief Legal Officer and Head of Business & Legal Affairs of LA-based esports organization FaZe Clan. She’s never been one to shy away from cutting-edge organizations in emerging industries. Throw being a huge sports fan in the mix, and you could say her current role suits her quite well. Join us this Thursday to chat over the ins and outs of the esports industry, how FaZe Clan is building a lifestyle brand for Gen Z, and where her legal team fits into it all.
👉 RSVP here!
💪 Get scrappy
If you’re resource-poor you’ll want to cut costs and make the most of what you’ve got.
Some things you can do to achieve that are:
- Renegotiate outside counsel rates.
- Use smaller (more economical) law firms or firms in geographically cheaper areas.
- Use freelancers (ahem, Lawtrades 😉)
- Take a class on a specialist area (e.g. privacy) so you can take on more in-house.
- Cross-train your team: If you can get your IP lawyers on board with contracting, you can get more done with fewer people and help your staff grow while you’re at it.
😬 Avoid a PR horror show
Public mass layoffs can be a PR disaster, especially if Zoom recordings are leaked and founders pen grossly insensitive Tweets.
So what can legal do about it?
- Make sure all layoffs are legally compliant. Nobody wants an unfair dismissal suit in boom times, let alone in a dip.
- Get to know your HR, PR, and comms teams so you’re kept in the loop.
- Offer advice on press releases. You don’t want your company to come across like a bunch of insensitive you-know-whats.
Enjoy these recaps? Share them with your network!
See you at the next one,
🫶 The team at Lawtrades
🤿 Sunday Deep Dive: Recession or Not - Legal is Here to Stay.
If it were the year 2000 or perhaps 2007, you’d be chatting about it around the water cooler. Or maybe sending a few texts on the topic from your slide-up Nokia. Now the threat of a recession is a hot topic at every tech firm’s kombucha station and Friday night Zoom drinks. Will we? Won’t we? How bad will it be? Does the Fed know what the heck it’s doing? Why does a tank of gas cost more than my law school debt? And why did I not appreciate it more when things were normal back in 2019? These are all good questions without clear answers. We’ll try to answer them as best we can. Plus, we’ve got a few tips for getting through it.
Wait, why are we talking about a recession?
In 2020, the US government released the largest sum of federal money in recorded history. Around $5 trillion went to households, businesses, local governments, and healthcare providers to help them cope with the impact of the pandemic. Amidst all the uncertainty, penny-pinching became the norm. Many held onto their federal checks. Plus, with restaurants shuttered and borders closed, people who didn’t receive anything from the government saved too — after all, one can only spend so much on pet food subscriptions, craft kits, and home gym equipment.
This period of saving was followed by a spending boom as the economy opened up and wages surged. In 2021, spending in major US cities was up 15% compared to 2019. But Covid had stuck a wrench in the works of the global supply chain and getting things back up and running again would not be as simple as tightening things back up. Demand exceeded supply, pushing up prices. The conflict in Ukraine sparked the flames further by creating even more shortages. Shipping costs ballooned by 350%. Wage growth continued to skyrocket. And, as you will no doubt have noticed, consumer prices have rocketed.
Enter the Federal Reserve. One of the Fed’s responsibilities is to manage inflation. Their target for inflation is 2% (a stark contrast from a rate of 8.6% this May). One of the levers they can pull to lower inflation is to increase the interest rate. Last month, they did exactly that. In fact, it was the biggest interest rate rise in almost 30 years — from 1.5% to 1.75%. The Fed indicated that further rises are due-up, with hikes of up to 3.4% by the end of the year.
Well, is there a plan?
So the goal is to lower inflation. In practice, the Fed is on a precarious teeter-totter. Keep interest rates too low and inflation will continue, making it difficult for consumers to afford the things they need. Push interest rates too high and the economy could be pushed into a recession like the one in 2008. Spending will slow, the economy will contract, and millions will lose their jobs.
A third possibility is a “gentle mini-recession” which is, as New York Times journalist Jim Tankersley put it, “almost like putting a patient in a coma temporarily” to save its life. In that ideal, likely fictional scenario, inflation would slow, the economy would be in negative growth but you wouldn’t see a major spike in unemployment and the slow-down wouldn’t be tangible for the average American.
Nobody knows which of these scenarios is coming. Betting on the middle-ground, The Economist says, “Given the strengths of the economy today — flush consumers, solid businesses and safe banks — the next downturn ought to be mild.” The White House is optimistic too. Biden is backing the Fed, saying he’s confident it can find the right balance. But the market is not so sure.
Investor pessimism has manifested in a bear market (i.e. when stocks crash by 20% or more from a recent peak). In June, the Nasdaq Composite index dropped faster than during the 2000 dot-com crash and the 2008 financial crisis, falling by more than 30% compared to November 2021. Tech stocks were particularly badly impacted. In other words, investors see a recession coming. But investors have been wrong before.
That’s enough Econ 101. What about my job?
With all this negative energy around, hiring is slowing down. But the picture is complicated. May saw the lowest monthly job growth since early 2020 yet the job market remains hotter than expected. The news from the tech sector seems more sobering. Meta, Amazon, Uber, and Robinhood made headlines by revealing hiring freezes or major layoffs. These announcements seemed to indicate a general trend in the sector. Commentators claim that tech is a bubble that’s long been due to burst and that tech firms over-hired during the pandemic when money flowed from government coffers and tech stocks were robust. A hiring slowdown could also be attributed to an uber-conservative VC environment, as investors prep for a recession. Despite all that, however, experts claim that headline-making hiring policies are not an indication of a wider trend in tech. Major changes to hiring strategies may in fact be isolated incidents.
If there is a cooldown in the job market, nobody told legal. According to Law.Com, we’re “in the midst of an in-house legal talent-hiring spree.” There are a number of reasons why this is happening.
- The endless stream of new tech start-ups keeps flowing and they all need GCs.
- We’re in a fast-changing regulatory environment with rapid developments in areas like data privacy, anti-trust enforcement, crypto, and ESG. This makes it more important to have good legal advice on hand.
- Inflation and the impending recession may be pushing some businesses to expand their in-house teams to cut down on outside counsel spend.
- Legal teams are starting to play more of an active role in business strategy which means they’re an even better ROI.
- Lawyers have more options and the Great Resignation has changed people’s mindset when it comes to work. Platforms like Lawtrades, which offer flexibility and autonomy, are putting pressure on the traditional in-house model.
If a recession does come, companies’ legal needs are going nowhere. They will just get more creative in the way they meet those needs.
Freelancers for the long-haul
We might see more of a shift to freelance contractors, as companies try to remain agile amidst uncertainty. Freelancers are cheaper, more flexible, and allow companies to increase/decrease spend as needs arise. In the 2008 crisis, law firms pushed up their rates to compensate for the lack of work. If this happens again, contractors and in-house hires will only start to look more attractive.
Tech take-up
A recession environment could also accelerate the adoption of legal tech and automation to reduce the payroll bill. Bloomberg Law reports that the number of organizations that report increased efficiency due to the adoption of legal tech rose by 50% between 2019 and 2020. And 91% of law firms are adopting tech to help cut costs. Automation can be particularly useful for speeding up time-consuming, high-volume, repetitive work in areas like contracting.
Bye-bye flexi work?
Recessions typically mean layoffs which means the power in the job market shifts towards employers. If that happens, it could give companies the ability to force employees back into the office. But we’re in a different situation now than we were in previous recessions, with twice as many job openings as there were prior to both 2001 and 2009. Leaders in the legal industry say that office reopenings could in fact slow in the case of a downturn, which makes sense given that office space is a major expense and, unlike in previous recessions, remote working is now fully tried and tested. This one remains a question mark.
How else will this impact legal?
Cutting the budget
In the case of a recession, or even simply with the threat of one looming, in-house legal teams will be asked to cut their budgets. We’ve already mentioned making use of freelancers and incorporating legal tech and automation into your workflow. Prioritization is another budget-cutting strategy. Teams can identify high-risk and high-revenue areas of the business and focus attention on those while parking expensive, lower-revenue, or lower-stakes projects.
GCs should make sure they are in close communication with the C-suite to ensure that prioritization decisions aren’t top-down without insight from the legal department. Legal ops specialists should conduct regular internal reviews on your workflow to ensure that you are making the most of your current spend.
Countercyclical practice areas
Some areas of law tend to see more action during a downturn. These include:
Litigation law
When times are tough, individuals and businesses are more likely to use legal means to recoup money or avoid paying money. This includes commercial litigation and regulatory actions - all of which could potentially impact tech companies. Companies can prepare by:
- Ensuring relationships are founded on clear, watertight contracts
- Encouraging transparency with clients and suppliers to avoid surprises
- Making sure they’re covered by insurance
- Finding non-legal ways to resolve disputes
Labor and employment law
If businesses are forced to downsize rapidly, this can invite employment-related claims, especially if former employees are unable to find a new source of income. Businesses can prepare by:
- Crafting clear, watertight employment contracts
- Planning ahead and limiting hiring rather than issuing dramatic mass layoffs which stress out your workforce and cause brand damage
- Looking at furloughs and hours reductions as alternatives to layoffs
- Communicating with employees so they feel included
- Fostering good relationships with employees so there is no resentment festering if they do get fired
- Finding smart ways to minimize risk - such as hiring freelancers and adopting automation instead of locking into employment contracts that could end in redundancies.
Restructuring and insolvency
Hopefully, your in-house team won’t be involved in this practice area but if the you-know-what does hit the fan, this is another area that might keep lawyers busy.
As always, the best advice for legal teams is to get educated and think ahead. Keeping on top of the latest developments and reading up on the legal impact of previous recessions can help you provide helpful answers and reassure the C-suite when they approach you with concerns. Anticipating risks and shielding the company from them as best you can will make legal an invaluable asset in uncertain times.
According to research conducted by Bain, the top 10% of companies saw their earnings climb during the Great Recession in the late 2000s and continue to climb afterward. What these companies had in common was good preparation. They had plan Bs. They had talked through the what-ifs. Nobody wants a recession but when the going gets tough, the tough get going.
🍪 Sunday Deep Dive: Are the Cookies Crumbling? Privacy Law and What You Need to Know
You’ve heard the warnings: Companies are stealing your data. And yet, if you’re anything like most people, you keep using your smartphone, sharing your location with apps, and typing your details into websites without so much as blinking an eye. Short of returning to a medieval way of life, it feels like we have no other option but to leave a trail of data for processors to gobble up or sell to other data-hungry organizations. US businesses have for the most part been spared from privacy regulations like those in Europe, but the cookies are finally showing signs of crumbling. Lawmakers are taking action with a host of confusing and controversial laws. Here’s what you need to know.
Why consumer data is a big deal
The average human generates data almost constantly. Everything — from the embarrassing reality TV you watch on Netflix, to the food in your online grocery shop, and the gross medical questions you search on Google — is recorded, analyzed, and used to sell you things. Often that data is sold on or shared with third parties. It can be stored indefinitely on servers that could be vulnerable to leaks and hacks.
It might not seem like the end of the world if Amazon knows how many pairs of Spanx you own but what about when the data concerned is a record of abortion patients, bank details, or your precise geolocation?
There have been some egregious consumer privacy blunders in the last few years.
- Hospital websites sent sensitive medical data to Meta.
- A Catholic priest was outed as gay because of data from the dating app Grindr.
- Race data were used to offer minority customers higher interest rates on mortgages.
- The U.S. military gathered user location data through a Muslim prayer app.
- Opioid addiction treatment apps accessed and shared sensitive user information.
Some violations are entirely unintended.
- Apple AirTags inadvertently enabled stalking.
- The personal information of 500m customers was breached between 2014 and 2018 when hackers accessed the Mariott International systems.
Big Tech’s rampant data gathering is also facilitating monopolization and allowing companies like Meta and Amazon to gain enormous control over our lives and economies.
As the so-called internet of things expands, cars, watches, thermostats, and even insulin-delivery pumps have been added to the list of devices that gather our personal data. That list is only getting longer and as more of our work and personal activities are conducted online, data privacy has become an issue affecting almost every consumer-facing business in every industry.
Why companies should care
Privacy screw-ups can be expensive. According to IBM, the average cost of a data breach in 2020 was $4.2m. That figure is on the uptick. Companies that fail to correctly manage data can fall foul of 2 groups: consumers and authorities.
Consumers care about privacy. In 2021, 96% of iPhone users opted out of being tracked when that choice became available with a new iOS update. According to a survey, 88%of consumers won’t use a brand they don’t trust with data and 39% have lost trust in a company due to a data breach or misuse of data. That sentiment will likely increase. Gen Zers are far more mistrustful about their online privacy when compared to older generations.
Dissatisfied customers can also take legal action. In May, Facebook sent out compensation checks to the sum of $650m after a class action lawsuit found that they were using facial recognition data without consent. And this month, Canadian financial services cooperative Desjardins Group settled a class-action lawsuit for $155m after an insider stole and sold the personal details of 4.2m customers. Those price tags don’t take into account the cost to brand reputation.
And then there are the authorities. This January, France hit Google and Facebook with $170m and $68m fines respectively for violating EU cookie consent rules. Since new privacy laws came into effect in California in 2020, authorities have recorded 27 casesof enforcement action — although the companies in question were allowed to remedy their errors without paying a fine.
As consumers become increasingly aware of the dangers of sharing their data and more privacy legislation is passed, that risk is only getting higher.
The law on privacy
Let’s set it straight. Most US companies are pretty much unregulated when it comes to privacy. They can use, share or sell your data — any data — without telling you. So can any third party that gets ahold of it. And there’s no federal law requiring them to inform you if that data is breached or leaked. But that’s starting to change and it’s happening fast. Here’s a snapshot of the existing and anticipated privacy legislation you need to know about.
European law
If you were in Europe in 2018, you would have heard people complaining. Mostly because the news wouldn’t stop talking about Brexit but also because every company behind every website they ever visited was emailing them at once to ask if they could keep their data. That was the initial impact of the General Data Protection Regulation (GDPR), the EU law that is the gold standard and progenitor of privacy law internationally.
GDPR covers personal data which includes names, locations, and usernames as well as IP addresses and cookie identifiers. It applies to companies based in the region as well as companies based outside the EU that have consumers in Europe (meaning it kept a lot of attorneys very busy, well beyond the shores of the Mediterranean). Individual countries may have slightly adjusted versions of the law but the core principles include:
- Collecting the minimum amount of data needed
- Satisfying the legal basis for processing data
- Good security practices
- Keeping records of how data is handled
The law also gives consumers the right to access their data and allows authorities to fine companies for failing to comply — although the latter happens rarely.
GDPR gave the US legal faculty the heebie-jeebies. When it came into effect, the National Law Journal wrote that US attorneys were aware of the new law in “the same way that a child knows about the boogeyman. They know it’s out there, and they know it’s scary — but when you get down to specifics, things get hazy fast.” Now the US has a boogeyman or two under its own bed.
State law
GDPR has been in effect in Europe for four years already but only five US States have successfully passed laws protecting consumer privacy. Here they are, in order of when the law came/comes into effect:
- 2020: The California Consumer Privacy Act (CCPA)
- March 2021: Virginia’s Consumer Data Protection Act (VCDPA)
- July 2023: Colorado Privacy Act (CPA)
- July 2023: Connecticut Privacy Act (CTPA)
- Dec 2023: Utah Consumer Privacy Act (UCPA)
Thirty-one other states, including North Carolina, have privacy laws in the works. The laws introduced in each state are different but the general idea is the same across the board. In short, customers are being given the right to know what information companies have about them and how it is being used. They also have the right to opt-out of some types of data collection.
Businesses, on the other hand, have a duty to provide customers with information about their stored data and to take reasonable steps to keep data secure. Additional rules apply for sensitive data such as biometric data, immigration status, and precise location. These laws are largely enforced by state attorneys in general. And some states (controversially) are giving customers the right to take civil legal action against companies that violate their privacy.
Let’s talk about California. California’s CCPA, which is the strictest state law, is similar to GDPR but differs in some crucial ways.
- Scope. The CCPA applies to companies earning significant revenue, processing large amounts of consumer data, and/or making most of their money from consumer data. GDPR applies to companies of all sizes — although small companies have reduced compliance duties.
- Legal basis. While the EU requires companies to provide a legal basis for collecting data, the CCPA allows businesses to gather data without justification, so long as customers can opt out of the sale of personal information.
- Size of fines. In California, civil penalties are $2.5k per unintentional violation or $7.5k for intentional violations. In Europe, fines can be as high as €20m or 4% of annual revenue.
Privacy advocates have welcomed new state laws but most people agree that a patchwork of different and complex laws is a nightmare for companies that operate across state lines. Experts are calling for a national privacy framework that would make everybody’s lives a whole lot easier.
National law
There are some existing federal laws governing privacy. The Health Insurance Portability and Accountability Act (HIPAA) covers communication between customers and medical providers but not others who gather medical data such as Fitbit or employers with vaccine mandates. FERPA, FCRA, GLBA, ECPA, COPPA, and VPPA (say that five times fast) are all acts that cover specific types of consumer data — from student education records to credit reports and VHS rental records. But there is no national law covering privacy for all types of data. The only federal laws with major reach are actually counter-privacy. For example, federal law requires that US-based software companies provide authorities with access to all stored data.
There have been several attempts to pass more extensive national privacy legislation over the past few years but lawmakers have always failed to agree on a solution. That may be about to change.
At the beginning of June, a bipartisan group of lawmakers published a draft bill: the American Data Privacy and Protection Act. The bill draws on many of the principles of EU privacy law and includes provisions for:
- Better child protections
- Limits on targeted ads
- Limited private right of action
- A requirement that companies minimize data collection
- A chief privacy officer requirement for some organizations
A U.S. House Committee hearing on the bill took place last week and reports were largely positive but there were some doubts about the proposal, including concerns about:
- Creating an excessive compliance burden
- Stymying innovation
- The potential for excess litigation
- Enforcement loopholes
- Questions around state preemption i.e. whether companies will still have to follow individual state privacy laws
- Consumer experience or “more policies to read, more cookies to consent to” as Sen. Brian Schatz put it
If passed, the bill would be enforced by the Federal Trade Commission (FTC) but federal regulators and state attorneys general would have the right to sue companies that misbehave. Either way, we shouldn’t have too long to wait. Experts anticipate that a compromise must be made before Congress’s August Recess if the bill is to have a realistic chance of passing.
Everywhere else
Around 137 countries around the world have passed laws designed to protect consumer privacy. Many of them draw on the principles of the GDPR. New laws are on the way such as in Canada where federal legislation is currently being considered.
So we’re all safe now, right?
The spate of new laws might make it seem like our privacy is being protected. But not everyone feels that way. Privacy advocates argue that the law does not go far enough. There’s still a big gap between US law and the stronger protections in the EU. Virginia’s new act has no opt-out provision and no private right of action — which may be because the law was heavily influenced by Amazon. Preventing private legal recourse is not necessarily a problem if authorities enforce the law but some say that enforcement agencies are seriously underfunded.
Where opt-out provisions do apply, some privacy advocates say that consumers have to go out of their way to protect their data. They would prefer that consumers were required to opt-in before data can be collected, with privacy being the default. Others are concerned that current legislation is not forward-looking because it doesn’t focus on newer technologies like facial recognition and artificial intelligence as well as areas like algorithm transparency.
Privacy best practices
Companies tend to take one of two approaches.
- State-by-state: applying different practices for each state or jurisdiction. This is complicated and time-consuming but it allows companies to take advantage of more lax regulations.
- The highest common denominator: applying the strictest state law to all customers, regardless of location. Microsoft, for example, is applying California’s CCPA regulations to all US customers.
There is a possible third approach. Companies could take a uniform approach across all jurisdictions that pre-empts future regulations and takes into account what consumers care about most. A survey by McKinsey (see below) found that customers trust businesses that build privacy into their brand. Research also found that 75% of companies that invested in improving customers’ privacy experience saw benefits in terms of customer loyalty and trust.
If customers are given a sense of control and can easily see what they’re sharing and what they get in return, they may even be more willing to provide their data.
More specific actions that companies can take include:
- Data mapping. Keeping records is essential for knowing what’s going on.
- Identifying any unnecessarily gathered data and minimizing what’s gathered in the future.
- Implementing secure data storage systems.
- Internal access policies. A third of data breaches come from insiders. Limiting and keeping track of who accesses data can reduce risk.
- Setting up a data breach action plan. Consumers appreciate it when breaches are acted on quickly and transparently.
- Setting up good systems for dealing with customer queries, complaints, and requests relating to privacy.
- Allocating an adequate budget to cyber security and compliance.
What this means for legal
GCs can help businesses navigate fast-changing laws, meet compliance duties and mitigate privacy-related legal risks. Here are 5 ways to get on top of privacy.
- Keep tabs on new and pending regulations. You can use the International Association of Privacy Professionals’ US State Privacy Legislation Tracker.
- Draft contracts with third-party data processors to ensure compliance.
- Don’t be Captain No. If you want buy-in from other departments, seek solutions before shutting down ideas or projects with a privacy-related element.
- If you’re at a company with international operations, complete the CIPP training courses to become a European data privacy regulation pro.
- Get to grips with the tech. Depending on what kind of business you’re in, a basic understanding of things like cookies, IDFAs, MAIDs, Meta Pixels, ransomware, facial recognition, GPS tracking, and/or eye-tracking technology could help you understand the privacy challenges your business is facing.
It turns out the little private detective icon was lying all along. Incognito mode is not enough to keep our data safe. New laws may be more like net curtains than steel walls but they are a sign of changing times. Businesses and legal departments need to get with the program or prepare to be classed as the peeping toms of the digital age.
👾 5 Key Takeaways: Let's Talk Legal in Crypto
On Thursday, Matt spoke to Drew Morris about a niche that’s desperate for legal talent. Drew is Senior Legal Counsel at TRM Labs, a blockchain intelligence company that offers compliance and risk management solutions for companies in the crypto space, with the goal of building trust and safety into the crypto ecosystem. He’s also a pretty big deal on Twitter. Here’s what he had to say about getting into crypto as a legal professional.
1. Crypto needs more “boring” people.
06:45 - 10:00 and 37:30 - 40:38
Just because crypto is a new and innovative space doesn’t mean companies don’t need traditional financial services, like lawyers, accountants, and compliance experts. If anything they need them more than other companies. Crypto is now at a stage where there are lots of real, traditionally-structured companies that need corporate, employment, and tax lawyers - just like any other company in any other industry.
Product lawyers are a potential area of growth, especially in companies that are developing new crypto products, like FTX and Robinhood. Specialist legal roles focused on specific products are not popping up yet but they are likely to appear in the coming years.
2. More regulation is in the works.
12:35 - 15:36 and 36:28 - 37:30
The crypto space is still more or less unregulated. So far, most of the regulatory discussion has been around the question of what does and doesn’t qualify as a security, but regulators are getting more involved in a range of issues - from marketing to insider trading (you can read more on the latest regulatory action here). For example, prosecutors have laid the first-ever charge for NFT insider trading.
Not all players in the crypto space dread these changes. In fact, lots of people would welcome more clarity. Companies will need lawyers to steer them through this phase of increased regulation.
3. How the heck do I become a crypto lawyer?
23:45 - 27:35 and 40:51 - 46:30
Crypto is a super fun and exciting industry to work in but lawyers who are interested in crypto may not feel comfortable moving into that space. They might be worried that they don’t have a solid, complete understanding of how it all works. It might feel foreign or intimidating. Drew has a few tips for getting to grips with crypto and making the leap:
- Get online (more on that below).
- Reach out to lawyers in the space. They’re usually willing to talk.
- Jump first, learn later. As long as you have a general understanding of the space, it’s okay to learn on the job.
- Be proactive. You won’t naturally be funneled into this space.
- Work at a law firm that is active in crypto.
- Work on developing a unique skill set.
Off the (block) chain …
If you liked this event and would love to see more, check out what’s coming up in the next few weeks.
June 28th | Legal Freelancer Bootcamp: How to Interview Successfully
- Join our experts Matt Margolis (Head of Community, Lawtrades), Aaron Diek (Sr. Account Executive, Lawtrades) & Aaron Kornblum (Global GC, BYJU's FutureSchool) as they talk you through how to successfully interview for that freelancer engagement.
- 👉 RSVP here
July 7th | How Legal Can Prepare for an Economic Downturn
- We’ll be joined by experts Eric Fisher (DGC, Gopuff), Matt Lubniewski (AGC, Zynga, and Jared Mermelstein (DGC, Evergreen Trading) about what legal can and is doing to stay ahead of the economic downturn.
- 👉 RSVP here
4. Filter out the noise.
18:00 - 20:53 and 23:00 - 23:45
Twitter is a great place to find opportunities, join discussions and connect with useful contacts in the crypto space. A lot of the industry’s zeitgeist is captured on the platform. Podcasts are another excellent way to get educated and keep up to date. But be picky. There’s a lot of clickbait out there. Stories about the decline of a crypto token or firm are the Depp-Heard trial of the financial system. They draw interest but they’re not necessarily providing quality information. Plus, there are plenty of Tweeters talking a load of nonsense. Try to look at what companies are actually doing and find the voices online that provide trustworthy content.
5. The future looks more promising than you think.
Sure, crypto will have more growing pains. Real-world use cases have not yet manifested as early adopters hoped. Token prices will go nuts in every direction but tech stocks and other industries have their ups and downs too. Yes, there are scammers and other criminal elements, but that’s true of every field, from doctors writing dodgy prescriptions to insider trading in the traditional financial system.
Drew is optimistic that crypto will ultimately become a fully-fledged financial system. There’s a lot of talent and energy moving into the space. Venture funds have recently raised blockbuster funds that they are going to be allocating into the crypto and web3 ecosystem. It will take a few years for those enterprises to grow and mature real use cases but they could drive the next bull run.
Enjoy these recaps? Share them with your network!
Catch you at the next one,
🤩 The Lawtrades Team
🤿 Sunday Deep Dive: Crypto’s Downfall - Where Legal Fits In
Financial reform always seems to follow a screw-up. The Glass-Steagall Act and the U.S. Security and the Exchange Commission (SEC) both came about in response to the devastating Wall Street Crash of 1929. The reformative Dodd-Frank Act followed the financial crisis of 2007/2008. Experts are wondering if the crypto crash of 2022 will be the event that triggers industry reform and fast-tracks regulations that authorities have been threatening to introduce for years.
Big changes seem imminent but what exactly they will be and how they will impact the crypto industry is not yet clear. Companies who engage with crypto will be looking to their legal teams for guidance on navigating this high-risk, fast-evolving, and sometimes unchartered territory. One legal recruiter says that 10-15% of all recent placements have been in the crypto or fintech sectors as firms scramble to deal with new regulations. Here’s the lowdown on crypto’s recent downward spiral, how it played out, and what it could mean for legal.
Terra terror: how it all started
The price of a single Terra token is supposed to be $1. All the time. That consistency is one of the major selling points of so-called stablecoins, a class of cryptocurrencies that are pegged to a fiat currency or commodity. On May 7, however, Terra, which is controlled by an algorithm — mysteriously became untethered from the dollar. On May 9, it fell to 35 cents. Its sister currency, LUNA, soon crashed from $80 to a few cents. The two currencies went kaput just weeks after they were valued together at almost $60B.
- No one knows who caused the algorithm to glitch but theories online include collusion on the part of hedge funds Blackrock and Citadel Securities (both have denied the claims) and a plot by an unknown “evil genius”. Fingers are of course also pointing at the currency’s creators — Terraform Labs. South Korean authorities have launched an investigation into the organization for violating financial regulations, Terraform’s entire in-house legal team has abandoned ship and, in case that wasn’t enough drama, an employee is being investigated for personally embezzling Bitcoin from the company. The company attempted a resurrection at the end of May with LUNA 2.0 but it didn’t take long for that currency to plummet too. It looks like they’ve come to the end of the road.
- The collapse of Terra and Luna had tragic real-world consequences. Some 280kpeople were impacted in South Korea alone. People lost their life savings. Some feared they would become homeless. Moderators of the r/TerraLuna sub-Reddit shared suicide prevention helpline numbers as members shared their losses. The misery didn’t stop with Terra-Luna. Panic sent the whole market tumbling. Bitcoin’s price dropped from $38k on May 4 to 28k on May 11 — its lowest price since 2020. Across the crypto industry, $1.5 trillion has essentially vanished.
SEC Chair Gary Gensler previously described cryptocurrency markets as the Wild West. The jaw-dropping losses of the Terra-Luna crash might make stricter regulation seem like a no-brainer but, if we stick with Gensler’s metaphor, this ain’t crypto’s first rodeo. The price of bitcoin plummeted by 80% in 2018 and yet the space is still more or less overrun by bandits. Maybe this time around, the sheriff will fire some shots.
Wicked ways in the Wild West
A group of concerned techies has penned a letter to Congress warning them against the narrative that crypto is a “positive financial innovation”. They urge lawmakers “to resist pressure [to] create a regulatory safe haven for these risky, flawed and unproven digital financial instruments.” Here are just a few reasons why crypto-skeptics are appealing for more oversight.
- The bad guys: The untraceable(ish), decentralized nature of crypto makes it a useful tool for money laundering, ransomware attacks, bribery, terrorist fundraising, and dark web criminality. But then again, fiat currency doesn’t exactly have a clean record.
- Consumer protections: If you put your money in the bank, it’s (usually) covered by insurance. Banks will help you reclaim misdirected payments and there are authorities that work to prevent fraud. There are also rules about how financial institutions advertise, what products they offer and what info they provide. Very little of that applies to crypto.
- Dodgy advertising: In a recent newsletter, we wrote about celebrities like Larry David and LeBron James pushing crypto on Super Bowl ads, despite possible conflicts of interest. This is possible because promoting crypto and NFTs occupies a legal gray zone. Kim Kardashian is among celebs being sued in a class-action suit for allegedly using misleading marketing to inflate the price of EthereumMax. Cryptocurrency exchange Binance also found itself in hot water after it was revealed they marketed Terra to users as a “safe” investment (yikes!).
- Reserve-ations: Stablecoins attempt to maintain price stability through one of two methods: a) algorithms that manage the supply of tokens and b) asset reserves. The implosion of Terra casts serious doubt on the reliability of algorithms but asset reserves don’t seem fully trustworthy either. Stablecoin Tether is supposed to have $1 in the bank for every token but in 2019, New York state found that for periods it had no reserves at all. A price slip from $1 to 95 cents in May led to fresh fearsabout their reserves.
All these shenanigans were one thing when crypto was seen as a super high-risk, fringe investment but now it’s mainstream. More than 10% of American adults own at least one cryptocurrency. That figure will climb to 19% by the end of the year. And among millennial parents, crypto ownership is already at 29%. Those who choose to ignore the trend are not necessarily safe either. There’s a looming danger that crashes in cryptoland could spill over into the rest of the financial system and cause things to really hit the fan.
Not so fast
The absence of regulation in this space is not simply for lack of will. There are several factors that make it really challenging for authorities to bring crypto in line with other financial products:
- Geography: You can walk into the physical building where the Bank of America is headquartered. There’s no doubt about what jurisdiction its activities fall under. The location of Binance’s headquarters, on the other hand, is a mystery — making it a bit tricky to keep them in line. Crypto issuers are also able to take advantage of regulatory arbitrage which is when jurisdictions compete to offer the laxest regulatory environment to attract businesses.
- Anonymity: Satoshi Nakamoto is the pseudonym used by the creator/s of Bitcoin but their real identity has never been verified. BuzzFeed recently sparked uproarwhen they ‘outed’ the formerly anonymous creators of Bored Ape Yacht Club, a collection of ape cartoons that sell for hundreds of thousands as NFTs. Slapping legal consequences on crypto masterminds is a bit like trying to give a speeding ticket to Santa Claus.
- Scope and the rate of change: There are over 18k cryptocurrencies in circulation. That doesn’t even cover the array of digital assets (EFTs and NFTs) available to investors. Things change fast, with new trends emerging on platforms like Reddit rather than traditional financial media. Regulators have a lot of unfamiliar ground to cover and they’re playing catchup.
- The danger of killing the industry: Bitcoin emerged after the 2007/8 financial crisis as a reaction to the perceived untrustworthiness of the established financial industry. Part of crypto’s appeal is that it is ‘liberated’ from traditional financial systems. Heavy regulation could kill crypto’s spirit and stymie innovation, making it less fun and perhaps less lucrative. On the other hand, regulation could build trust and legitimacy, spurring investment from more conservative investors.
- Privacy: Given the number of bad guys doing bad things, making crypto more transparent seems like a great idea. But greater transparency could wipe out another major draw of crypto. There are some good non-criminal reasons for wanting a payment to be difficult to trace. In countries with oppressive governments, crypto can offer freedom from repressive monitoring.
- Regulators won’t play nice: SEC Commissioner Hester Peirce said of crypto that regulators all want to “plant their flag and get a little piece of that regulatory pie.” The Commodities Futures Trading Commissions (CTFC) treats bitcoin as a commodity but the IRS says it is property.
- The mystery of regulation: Blockchain attorney Marco Santori has describedcrypto as a “regulatory platypus” since it doesn’t fit into any one category. Charles Hoskinson, founder of cryptocurrency Cardano, says that authorities are used to dealing with financial assets as either securities, commodities, or currencies … but crypto can be all three.
The rules so far
One of the major decisions facing regulators is whether to apply existing rules to crypto or to design new bespoke rules. Most countries deal with crypto using a patchwork of authorities who offer broad guidelines using existing laws. Crypto is typically recognized as property but not as legal tender and is taxed accordingly. Crypto exchanges are required to register with authorities and meet some basic anti-crime requirements.
In the United States:
- The SEC is the authority that throws its weight around most in the crypto space. Anything classified as a security is within the SEC’s remit. There’s been a lot of confusion around what is and isn’t a security but the SEC says the Howey Test can be used to determine whether a crypto asset falls into that category. It has successfully charged crypto creators for not registering tokens. The cases to watch are the SEC’s lawsuit against Ripple, and their investigation into Binance — both of which could set precedent.
- The CTFC has said that some tokens like Bitcoin and Ether are commodities and not securities and should therefore be under their jurisdiction. The agency has been described as having a “do no harm” approach to crypto regulation.
- Crypto exchanges must register with the Financial Crimes Enforcement Network (FinCEN) and meet anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations including the Travel Rule.
- The IRS considers cryptocurrency to be property, so income and capital gains tax rules apply. Biden also introduced new rules in November’s bipartisan infrastructure bill which means that exchanges must notify the IRS directly of crypto transactions.
- Individual states have even passed their own laws and regulations which Bloomberg has collated into a handy list.
- There’s a lot more nitty-gritty you can get into. For example, ICOs (a form of cryptocurrency used to raise capital) are only subject to regulation if they are issued as security tokens rather than utility tokens. You can read the details here.
Some countries have taken more unusual action. China has banned crypto exchanges and bitcoin miners from operating in the country. Egypt has banned all crypto trading for religious reasons and El Salvador has gone in the other direction and adopted Bitcoin as legal tender (a move viewed by most as a terrible idea).
What’s on the horizon
Tighter regulations are already having an impact. Crypto exchange Binance recently announced that they are changing their ways in order to get licenses from regulators. Crypto libertarians will be disappointed to hear that Binance now has a “traditional corporate structure” and will soon be going public with its location. Crypto firms have also started hiring normal, boring compliance people … just like other less sexy companies. More change is coming.
The European Union has laid out the first multinational regulatory framework for crypto with its Markets in Crypto Assets regulation (MiCA). Once MiCA goes live (which will be soon):
- Non-EU crypto service providers will need to apply for a “passport” that will allow them to operate in the bloc and will come with a host of compliance requirements.
- Crypto issuers will have to be licensed and meet certain requirements, such as “fair, clear, and not misleading” marketing.
- Stablecoin issuers will have to demonstrate a minimum level of reserves.
Legal experts anticipate that the new framework will keep lawyers very busy.
In the United States:
- The Fed may issue its own digital currency.
- The SEC is expanding its Cyber Unit, so a crackdown on securities-related misbehavior can be expected.
- The Justice Department has launched a task force to tackle crypto crime.
- There could be more action around private or unhosted crypto wallets. FinCEN wants crypto exchanges to collect the names and addresses of anyone transferring crypto to a private wallet in order to prevent money laundering but the proposed regulation is controversial.
- The White House has initiated a government-wide effort to solve problems in the crypto industry.
- This week, senators introduced a bill that proposes light regulation that would encourage growth in the crypto industry. It’s one to watch.
- Lawmakers are not the only ones with ideas. Crypto companies have put forward over 150 new laws in 40 states this year.
What GCs can do
Louis Legot, a partner at Foley & Lardner says that “Businesses that fail to evolve will cease to be competitive.” Legal teams can help businesses to navigate the risky business of crypto without missing out on the opportunity to be a part of this exciting new field. Here are 3 ways to get involved.
- Compliance: Make sure your business is ticking all the boxes with regard to money laundering regulations and tax reporting requirements. When in doubt, approach regulators for clarity.
- Regulation monitoring: Keep up to date with constantly changing state, federal, and international laws.
- Sharpen up your technical knowledge: You don’t need to understand all the ins and outs of every crypto asset but a base level of technical knowledge will help legal teams understand, weigh up, and communicate the level of risk involved with different activities.
The r/TerraLuna sub-Reddit is no longer full of doom and gloom. Investors have nursed their wounds and are ready to put their money on the next big thing. The broader crypto industry, however, is a bit more reticent than it was 6 months ago. It remains to be seen whether it will regain its momentum. If it does, GCs should be prepared to engage in more activities that set their risk-radar flashing.
🚀 An Expert's Take: How Contracts are Launching Space Markets
The body of space law is built up around international agreements but, as space is increasingly commercialized, contracts are becoming an important part of the legal framework that supports private activities beyond our world.
Meet the expert: This piece comes from superstar human spaceflight attorney and friend of Lawtrades, Megan Sieffert. Alyssa is Spaceflight Counsel, Associate GC, at Axiom Space, a new space start-up that’s become a major player in commercial space activity. Her accomplishments include negotiating the first agreement with NASA for the right to fly a fully commercial crew to the International Space Station. Here she shares her wisdom on the past, present, and future of legal agreements for lower earth orbit.
1969-2022: From space race to space economy
Fast facts:
Our relationship with space has changed dramatically since we watched Neil Armstrong step onto the moon on our square, antennaed televisions back in 1969.
- Axiom is planning a private space station.
- Civilian crews are piloting space missions.
- American Apparel is making astronaut flight suits.
- Satellite images are so affordable they can be used for firefighting and lawn care.
- And school children are designing and building satellites of their own.
Megan’s take:
To accommodate the rapid development that has taken place, the framework for conducting commercial activities while in orbit has been allowed to evolve. Space transportation is regulated by the Federal Aviation Administration while regulation of commercial activities depends on the location where such activities occur. Companies like Axiom Space are exploring what rules and laws evolve around marketing, research, and development activities conducted in orbit for profit. The answer now largely points to written and social contracts.
1998: No profits on the ISS
Fast facts:
- The International Space Station may be the most expensive structure ever built.
- The first section of the ISS was launched in 1988.
- In January that year, 15 governments signed the Intergovernmental Agreement.
Megan’s take:
The Intergovernmental Agreement stated the intention that the ISS enhance not only scientific and technological endeavors but also commercial ventures in space. And yet, the ISS could not be used to turn a profit.
The reason for this lies in the ISS Crew Code of Conduct. The Code applies to all individuals approved for flight to the ISS (Not you, Mark Watney. Space pirates are exempt.) and acts as an ethical framework for living and working on the station. It states that:
“ISS crewmembers shall refrain from any use of the position of ISS crewmember that is motivated, or has the appearance of being motivated, by private gain, including financial gain, for himself or herself or other persons or entities.”
That left governments and space agencies scratching their heads. How do you develop the space industry and regulate it when commerce is specifically forbidden?
2017: Commerce in low Earth orbit
Fast facts:
- Low Earth orbit (LEO) is the area in which the ISS and most satellites are located.
- It is roughly 200-1600 km above the surface of Earth.
- LEO satellites circle the planet 12-16 times a day.
Megan’s take:
In 2017, NASA ditched the not for individual profit approach and made a plan to increase its commercial presence in (LEO). The plan allowed ISS crewmembers to do approved commercial activities which NASA designated as “duties”. It opened the doors for private astronauts to participate in missions to the ISS.
Companies were then able to compete for flight opportunities to take crews to the ISS. A unique contractual arrangement called a FAR contract under U.S. procurement law was used to enable private companies to barter with the U.S government and coordinate the activities of private astronauts.
The “duties” loophole and the use of FAR contracts were game-changers because they:
- Allowed other entities besides the government to access the ISS.
- Allowed the government to work with private astronauts aboard the Station to conduct commercial activities on their behalf.
- Allowed entities on the ground to sign agreements to send science and payloads to the Station.
And so the commercialization of LEO took flight.
2022 and beyond: Harmony and extraterrestrial paella
Fast facts:
Companies keep finding innovative ways to monetize space.
- There’s a special espresso machine for the ISS.
- You can buy beer that has been to space.
- 700 people have purchased tickets on Virgin Galactic commercial space flights.
Megan’s take:
Fascinating relationships form around the common goals of the ISS, namely harmony and cohesion. One of the most interesting elements of being an attorney involved in the commercialization of LEO is engaging with the legal framework used to support partnerships in this area. The Axiom mission connected lots of people including:
- Think Food Group who offered shared paella to crewmembers onboard the station while enabling new in-flight fine dining experiences.
- Children from around the world who collaborated to form a piece of artwork incorporated into an NFT minted from space.
- Friends and families from Canada, Israel, Spain, and the United States who joined at the Kennedy Space Center to cheer on the crew for launch.
All of this is to say that as the world starts building new markets in space, contract attorneys will pave the way for the rules, guidelines, and conduct for any participants who seek to participate in commerce beyond our world.
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⭐️ 5 Key Takeaways: How Non-JDs Can Save You Time & Money
Last Thursday, we discussed all there is to know about non-attorney roles in legal with Trina Pacheco Walker, Kelsey Copeland, and Eric Lentell. They touched on their first non-JD hires, how they convey the value of these roles, what they envision for the future of legal departments, and even more. Here’s what we learned.
1. Stand aside, attorneys. There are some things we can do without you.
There are tons of tasks that fall to the legal department but don’t require an attorney. Many can be handled by a seasoned non-JD pro, such as a paralegal or contract coordinator. TriNet is all over this approach — less than a third of their 90-person in-house legal team are attorneys.
Sometimes an attorney is not only unnecessary but ill-equipped. For example, a non-JD with an understanding of business development, analytics, and project management makes for a great legal ops manager. Plus, they’re a whole lot cheaper.
If you’re a solo GC or a small team at a scrappy startup and can only make one non-JD hire, go for a dynamic all-rounder. If they can kick ass at everything from legal ops to managing contracts and supporting litigation efforts, that could be a game-changer.
2. To JD or not to JD? That is the question.
Have a good, hard look at all the functions and processes in your department and identify the biggest time-vacuums and headache-inducers. Once you have an understanding of your needs and inefficiencies, you can make hiring decisions that boost productivity.
Start with your highest volume tasks because that’s where you can have the biggest impact. For example, if you have heaps of contracts coming through the business and every single one is landing on an attorney’s desk, you might be able to use software and non-JDs to improve the intake system and ensure that contracts only surface for attorneys when there is a legal decision to be made.
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3. Get the dinosaurs on board.
Some senior management teams ride e-scooters to work while TikToking dank memes and sipping on breakfast kombucha but others are a little more old school. If your C-suite is resistant to hiring non-JDs, you can convert them by demonstrating how non-JD hires will save time, save money and boost productivity.
Try to link non-JDs to a strategic advantage. For example, the right legal ops talent could cut the time it takes to close on sales deals, giving the business a competitive edge.
When you make your case to the higher-ups, think tactically. Prep some data. Build out the use case. Present it in a way that they are used to when making decisions about resource requests from any other department.
It’ll make hiring requests much easier if you nurture good relationships with the C-suite over time, toot your department’s horn on the regular and keep management up to date on any major pain points.
⚙️ We’ve been building something new!
We want to talk to legal folks working in new industries and see how they deal with legal and innovation. First off, crypto!
Join us for a fireside chat with Drew Morris (Senior Legal Counsel, TRM Labs) as we explore the legal highs and lows of working in this fascinating industry.
4. Get everyone on board.
It’s not just the C-suite that needs to get with the program when it comes to your non-JD hiring strategy. If attorneys aren’t engaged with your new legal ops approach, the whole thing could be a dud.
Legal ops should also collaborate and communicate with other departments, especially people in ops roles. It’s a great way for non-JDs to learn and develop their personal brand. It ensures that other systems (e.g IT and HR systems) integrate seamlessly into legal ops processes. Plus, if legal ops are involved early on in things like product development, that can help to nip issues in the bud.
5. Get tech’d up.
It’s official. AI is stealing our jobs. Well, kinda. We’re seeing the largest inflow of cash ever to legal tech from private equity and venture capital. For example, Archer Aviation recently adopted open-source NDAs that allow parties to simply click to choose from a selection of terms.
Tech tools will probably allow legal departments to operate with fewer humans overall but they’ll need non-JDs to manage those tools. Non-JDs are also often the people who are able to highlight when and where tech tools can add value and create efficiency.
Our panel’s favorite software tools include:
Enjoy these recaps? Share them with your network!
See ya at the next one,
⭐️ The Lawtrades Team
🤿 Sunday Deep Dive: Startup Culture - The Good, The Bad, & The Legal
‘Start-up insanity’ is becoming its own television genre. Apple TV+ served up Jared Leto as WeWork founder Adam Neumann, a serial entrepreneur with a God complex whose empire turned out to be as substantial as the emperor’s new clothes. There’s both an HBO documentary and a Hulu series about Elizabeth Holmes, another real-life, cult-leader-esque founder, who offered employees the chance to be part of something special in exchange for 120-hour workweeks. And Showtime’s Super Pumped: The Battle for Uber highlights the greed, misogyny, and toxicity of Silicon Valley through the rise and fall story of CEO Travis Kalanick.
These shows make for juicy watching. After all, who doesn’t enjoy seeing arrogant twenty-something billionaires get their comeupance? For many in the tech start-up world, however, they’re a little too close to home. Being a part of a fast-growing company with a bold vision and a heap of incoming VCs can be thrilling and rewarding. But the reality can be long hours, limited resources, disorganized leadership, or even insolvency.
Legal workers are definitely no stranger to harmful work environments. According to research, half of legal workers say their productivity has been impacted by ‘toxic workplace culture’ and the legal sector came first by 10 percentage points in a study of employees who had previously left a job due to bad workplace culture. We’ve put together a list of red flags to help legal talent steer clear of toxic start-ups as well as a few tips for detoxing your company culture.
The Perfect Work-Work Balance
The job description: Flexible hours, unlimited leave, free meals, nap pods.
What it really means: Cancel your lease. You’re never leaving the office.
Source: Instagram
When businesses are just starting out, they don’t have the money to fund a big team. Even if they do have the money, there’s a trend for start-ups to follow a ‘lean’ strategy, meaning that growth is prioritized and hiring is kept to a minimum. That might mean that GCs find themselves flying solo with a limited budget for outside counsel. Tech companies also tend to grow faster than they can hire, leaving the existing team with an ever-expanding workload.
As the company grows, start-up employees often find themselves involved in recruiting and training new staff members, which takes up even more time. There’s a sentiment that anyone who feels overworked is not really overburdened, they’re just not ‘working smart’. As if that’s not enough, many start-ups have a ‘work hard, play hard’ attitude which involves an expectation that, after a long workday, staff stay on and socialize with the team.
Of course, not all start-ups are the same and many do offer great work-life balance. There’s a major shortage of tech workers and companies are working hard to create an environment that attracts and retains talent. But it’s worth investigating this aspect of company culture before you take a job.
Don’t be charmed by perks like unlimited leave which mean nothing if paired with a culture of workaholism. In fact, critics argue that unlimited leave policies can lead to staff taking fewer vacations. In job interviews, ask employers what kind of hours their staff actually work. Follow that up by reaching out to current employees to ask about their work-life balance. Finally, check out Glassdoor to get an honest review of your potential employer.
Assembling A Plane When You’re In Mid-Air
The job description: Exciting, fast-paced, varied.
What it really means: We have no idea what we’re doing and neither will you.
Source: Medium
Reid Hoffman, the co-founder of LinkedIn, once said that “An entrepreneur is someone who will jump off a cliff and assemble an airplane on the way down.” Founders know that most startups fail. They’ve only got so much time to become profitable before their own money or the investment they’ve raised runs out and they crash into the jagged rocks at the bottom of the cliff. And then they’ve got to keep making that profit, grow the company and keep the investors happy, all within a fast-changing market and with competitors breathing down their necks. It should come as no surprise that startup founders are twice as likely as other people to suffer from depression.
Some founders are often one of the cons of working for a start-up. Visionaries are not always good at managing people. In fact, as the aforementioned television shows indicate, they’re often downright odd (which is probably why they’re able to reimagine the world). Being under enormous pressure doesn’t help. And a 100% commitment to achieving the company’s mission doesn’t always line up with giving employees the things they need to thrive.
When you join a tech startup, you’re stepping onto that still-to-be-assembled plane. Some people will thrive under that kind of pressure and it can forge bonds. Early-stage start-up employees talk about an ‘all-in-it-together’ sentiment and a feeling that they’re building something great. For others, the instability and pressure of the start-up environment can be too much. It’s no secret that Silicon Valley has an Adderall habit, sustained by a constant need to build better, stronger, faster, and change the world. Pressure can also lead to mistrust and tension among the staff.
The ‘unassembled’ nature of start-ups can also mean that there is no clear chain of command, limited delineation of responsibility, and a whole lot of winging it. Employees may find themselves roped into all sorts of things that aren’t technically part of their job role — which could be fun or frustrating.
If you’re thinking about working for a tech start-up, take some time to do some soul searching and figure out if you’re a good fit for that kind of environment. Consider taking on a freelance role to gain some experience in start-up culture before making a career leap.
Inclusion And Diversity “Initiatives”
The rejection email: Unfortunately, we feel that you aren’t the right culture fit for the role.
What it really means: We’re looking for clones.
Source: The Startup (Medium)
Journalist Emily Chang writes in her book Brotopia: Breaking Up the Boys’ Club of Silicon Valley, “By lionizing the idea of meritocracy, Silicon Valley can deny that the lack of diversity is a problem.” Meritocracy was one of the principles hailed in a controversial 10-page memo written by former Google employee James Damore. In the memo, he argued that women are biologically less well-suited to work as software engineers and that it was, therefore, reasonable that (at the time) 82% of Google’s tech workers were male. The ensuing debacle is too complicated to explain here but it illustrates Chang’s point: tech has a diversity problem and an attitude problem to go with it.
Men in tech earn more than women in the same job 59% of the time and as many as 88% of women in tech say they have experienced clients directing questions to male peers when they should have been addressed to them. Silicon Valley also saw its own #MeToo movement with two dozen women speaking out about sexual harassment.
The lack of diversity in tech is not just about women. Only 2.8% of Google’s technical roles and 4.8% of their whole workforce is made up of Black employees. Facebook and Twitter have similar demographics. For the minority of Black workers in tech companies, the workplace can be a lonely minefield of microaggressions and blatant disrespect.
This one is difficult to weed out as a prospective employee, but if you’re getting ‘bro-vibes’ upfront, that could be a red flag.
Detox 101
Maintaining a happy, healthy workplace is a worthy goal in and of itself, but it’s also smart from a legal standpoint. Unhappy employees can lead to bad press, leaked IP, and even lawsuits — none of which are good for your bottom line. Here are a few things that start-ups (and in-house legal specifically) can do to flush out toxic vibes.
Source: Instagram
Fair and transparent hiring processes
- Make sure that new hires know what they’re getting into. If you expect them to work long hours and be a jack-of-all-trades, then be honest. If they still take the job, then you’ve established trust. If they don’t, you’ve saved yourself having to hire someone new when they quit in 6 months.
- In-house legal can facilitate this process by preparing employment contracts that provide clarity about what’s expected of employees. They can also help to design a recruitment process that takes into account anti-discrimination hiring regulations and act as adjudicators on whether prejudice is creeping into the hiring process.
Ask your employees what benefits they actually want
- We’re not here to cast shade on anyone who chooses a job because of free ice cream, a ping pong table, or daily rooftop yoga. But if you’re paying your employees 30% below market rate, crushing their spirits, and skimping on medical insurance, it shouldn’t come as a surprise that they’re stress bingeing the Ben and Jerry’s and weeping through downward dog.
- The benefits you offer can also have an impact on the diversity of your workforce. If you want to attract software engineer soccer moms and boomers with thirty years of legal experience, a ping pong table might not have as much impact as good parental leave and a strong pension plan.
- Legal can help with this too. Young start-ups will need guidance on statutory requirements around things like employee insurance and companies with workers outside the US will need to take into account regulations around parental and sick leave.
- Also, if you’re thinking of making the jump from a law firm to a tech start-up, you’ll be pleased to hear that in-house legal teams enjoy the best benefits packages in the legal sector.
Implement some structure
- As engineers and the parents of toddlers will tell you, the structure is what keeps things from going sidewards. Horizontal workplace hierarchies and rebelling against old-school notions like HR departments may be trendy but it can be important for staff to know who is in charge of what and where to go with certain issues. The fact that traditional work structures have been around forever doesn’t necessarily mean they’re good but it doesn’t necessarily mean they’re bad either.
- If you’re at a start-up that has no HR department, you can play a role in ensuring the company doesn’t wind up in court. Hiring, firing, maternity, harassment claims, and privacy are all matters that are usually in HR’s wheelhouse and are fraught with potential legal landmines. Legal can also help to minimize structural ambiguity by weighing in on the details in job descriptions and employment contracts.
Care about longevity
- Many start-ups want to grow as fast as possible and achieve their unicorn horn. If you focus on the short-term, don’t expect your team to be there in the long run. Building relationships and investing in people is key to a healthy workplace. Legal teams stand at a small distance from the primary mission of the company which means they can offer perspective when founders make decisions that send the wrong message to their staff.
Build work-life balance into your processes
- If you don’t want staff to get burnout and complain of long hours, don’t just say it. Rules like ‘no emails after 6 pm’ and buddy systems that mean employees are covered when they go on vacation are practical things you can do that allow staff to step back when they need to.
- Law has long been known as a burnout career but soaring demand for legal services during the pandemic has led to a shortage of legal talent and increased pressure on both law firms and in-house teams. In this challenging hiring climate, start-ups would be wise to position themselves as an alternative to the burnout culture of law firms by offering more flexibility and better work-life balance.
If you can afford to pay fair wages, do it!
- Not every start-up can afford good wages but if your attitude is that your staff should be willing to earn less because it’s a great privilege to work for your company, that’s toxic. Fair wages can also boost workplace diversity because they attract people with different financial backgrounds and family obligations.
Most Start-Ups are likely just overwhelmed by the many challenges involved in starting a new company. With a little more focus on the human aspect of business, and perhaps a nudge in the right direction from legal, there is hope that even the most toxic of start-ups can turn things around.
Want to work for a cool startup without all the stress? Test the waters by going freelance with companies like Airbnb, Coinbase, DoorDash, and more on Lawtrades.
🤿 Sunday Deep Dive: Unions...What's Been Going on & Why Legal Should Care
Trade unions are having a moment. 2021 saw a wave of worker activism that led NBC News to dub it the ‘year of the worker’. 2022 has brought a flurry of headline-worthy trade union victories that seem to herald a new era for US workers. Labor shortages, a pro-union administration, and a stronger focus on workplace equality and mental health are driving the shift. And yet, it’s not completely certain that what we’re witnessing is the start of a comeback narrative. In this deep dive, we take a closer look at what has been going on, why it’s happening, and what’s next for American trade unions.
What’s all the fuss about?
On April 1st, workers at an Amazon warehouse in Staten Island, New York, voted in favor of unionizing, making them the first-ever Amazon workers to do so in the US. Corporate America wishes it was all an April Fool’s Day joke. There are a few good reasons why.
First, Amazon spent $4.3M on anti-union consultants in 2021 and still couldn’t keep the unions at bay. That doesn’t give much hope to less powerful companies trying to avoid the same fate. Second, unionization is contagious. Organizers for the union movement at the Amazon warehouse in Staten Island say that workers from 50+Amazon buildings have reached out to them following their victory. A similar pattern is playing out a Starbucks. Since August, when one of their cafes voted to form the company’s first union, 200 outlets have indicated that they want to have a union election and 24 have voted in favor of unions.
Meanwhile, at least 2 Apple stores have filed requests to take a vote on unionization. And union elections have been successful at the New York Times (where tech workers formed one of the biggest tech unions in the US), MIT (where grad students unionized), and the SoHo branch of outdoor store REI.
One of the reasons these elections have captured the imagination of organizers across the country is that they were such outright victories. Pro-unions votes were:
- 88 to 14 at REI in Manhattan
- 25 to 3 at Starbucks in Mesa, Arizona
- 404 to 88 at NYT (tech workers)
- 1914 to 986 at MIT (grad students)
- 2564 to 2131 at Amazon in Staten Island
These numbers are inspiring to workers but it’s no surprise that they give companies the cold sweats. Employers pay union workers one-third more than non-union workers and research shows that public companies lose 10%+ of their market value in the months after employees vote to unionize. Amazon’s operating expenses increased by ~$150M for every 1% of their workforce that unionized.
In the case of Starbucks, shares slid 12% in April as Wall Street forecast that the company will keep pouring cash into anti-union efforts. At the same time, by holding off the unions, the cafe chain is damaging its employee-friendly brand. A survey found that 4% of consumers plan to stop visiting Starbucks if they fail to reach an agreement with workers.
Are we in the middle of a unionization wave?
It sure sounds like it! Interest in organizing is booming. Petitions to form a labor union have gone up 57% in the last 6 months. The broader population is feeling more positive about unions too. According to a poll, 68% of Americans approve of unions — the highest percentage since 1965. Gen Zers and young millennials show the highest approval at 77%, which suggests the pro-union workforce is only going to grow.
But it’s difficult to tell if the latest wave of union action is a blip or a revolution. Union membership has been in a steady decline for the last 40 years, including during the pandemic. In 2021, 10.3% of U.S. employees were union members. That’s compared to 10.8% in 2020 and 20% in the early ‘80s. And although young people approve of unions, only 4.3% of 16 to 24-year-olds actually belong to one.
Plus, for every high-profile union win, there are losses. About a month after the success of the April 1st vote at Amazon, workers at a second warehouse in Staten Island soundly rejected unionization in a clear-cut vote. Workers at a Hershey candy factory in Virginia also voted against unionizing in March, despite complaints that it was difficult to get time off. The same happened at HelloFresh food-packing warehouses in California, where workers were earning less than the living wage. And organizers at an Amazon warehouse in Alabama have twice failed to gain enough votes to unionize. Even the unionization of 200 Starbucks cafes sounds far less dramatic when you consider that there are ~9k Starbucks outlets.
As optimistic as workers may feel after the Staten Island vote, Amazon is yet to sign a contract. Experts say that less than 50% of union certifications lead to a contract. The company could drag out negotiations until workers no longer have the will to continue.
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What’s behind all this union action?
Labor shortage
- There is an array of factors that could be contributing to the current mood around unions. The most obvious is the current labor shortage. At the end of February, there were 11M job openings in the US. This shift in power from employers to employees is reflected in pay. Wages have increased almost 6% in the last year. Amazon increased its minimum wage in September and even offered signing bonuses of $3k to attract new staff. When jobs are plenty and labor is short, workers are more comfortable confronting their employers and making demands.
New attitudes to work
- The labor market has also been upended by the so-called Great Reconsideration. It’s not clear whether it was the anxiety of a fast-spreading, killer disease, the boredom of lockdown, or the convenience of working from home, but the pandemic has changed the way that people think about work. Employees are demanding better work-life balance, more flexibility, the option to work remotely, more fulfilling work, more money, more mental health support — the list goes on.
Pandemic isolation
- Furlough policies, lockdowns, and an increase in working from home cut many people off from watercooler banter, after-work drinks, and the camaraderie of the factory floor. Unions can offer a sense of belonging, identity, and community that many of us missed in the last couple of years. Furlough and working from home also disrupted the usual channels of communications through which employees could air grievances, leaving concerns unaddressed.
Politics
- Unions are benefitting from a pro-labor political environment. President Joe Biden says he wants to be the “most pro-union president … in American history.” Last April, for example, he created a task force specifically to tackle the decline of the unions. And this March, as the Biden Administration prepares to spend billions on infrastructure, it was announced that it plans to give preference to projects that encourage workers to unionize.
Social media
- Social distancing during the pandemic pushed workers to move conversations about working conditions online. Platforms like Instagram and Facebook make it easier to organize and attract a younger set of workers. In some cases, online union meetings drew as many as 10x more attendees than in-person gatherings. Social media also offers new ways of communicating, such as running polls and sharing videos and allows workers to tap into a broader pro-labor audience.
- Gen Z for Change is a coalition of progressive digital activists with 500M+collective followers that have been described as a TikTok Army. They tackle issues like climate change and workers’ rights. When Starbucks fired 7 employees who were trying to unionize a store (it’s unclear if that was the reason for their dismissal), Gen Z for Change set up a system that allowed people to spam the company with fake job applications for the 7 open positions using disposable email addresses. They claim that 140k people made bogus applications.
Do unions make things better for workers?
From a pay point of view, the answer is almost certainly yes. In 2019, union members earned average weekly wages of $1095 whereas non-members earned $892. Unions can negotiate for benefits like improved medical coverage and increased parental leave or for conditions such as changes to the way sexual harassment complaints are addressed. They can lobby for favorable government policies and donate to political candidates that will support their members.
However, there is a case to be made that unions harm workers more in the long term. Conservatives argue that unions make companies less competitive and are therefore bad for job growth — but that’s not of huge concern at the moment with so many unfilled positions. Target claims that unions would create conflict in the workplace and reduce flexibility. And Amazon CEO Andy Jassy has said that unions are slow and bureaucratic which makes it harder for employees to push for change.
It’s also worth considering that the current labor market puts employees in a strong position to make demands without going through the conflict involved in forming a union or paying union membership fees. In the 6 months to Feb 2022, 13% of employers improved dental coverage and health and wellness stipends. Another 12% offered improved or new mental health coverage. And 8% introduced unlimited paid time off. Target and Walmart announced last summer that they would offer employees free college tuition. Neither is unionized. And Amazon will now cover travel costs for employees for abortions and other medical procedures. Other companies are getting creative with more frivolous perks, like an office beekeeper.
But the free market hasn’t addressed all workers’ concerns. Amazon is a case in point. One warehouse worker claimed that she was afraid to take toilet breaks in case she missed her targets. Drivers say that they are forced to drive dangerously for the same reason. Amazon workers are seriously injured at an 80% higher rate than workers at other warehouses. And a New York Times investigation found that the company had been underpaying staff at ~180 warehouses for at least 18 months because of problems with their payroll software, leading to staff having cars repossessed or having to sell wedding rings. Cost-cutting work conditions are a tough pill for employees to swallow when their employer boasts a net income of $33B in 2021, up from $21B in the previous year.
What the unionization trend means for legal
The current wave of union activity highlights the fact that a lot of companies are doing a bad job of addressing their employees’ concerns. It might sound like it’s beyond their remit, but the legal department can play a positive, constructive role in improving the employee-employer relationship and avoiding the disharmony that leads to unionization in the first place.
Anjeli Narine, Associate GC at the Massy Group of Companies, put together a list of ways that legal teams can help to improve employee relations. These include:
- Preparing employee contracts that avoid ambiguity and pre-empt future disputes
- Assisting with doing due diligence on potential recruits to ensure they are a good fit
- Insisting that all communications are documented so that all parties have clarity on what has been agreed
- Asking ‘How was this dealt with in other cases?’ to ensure equity of treatment
- Keeping up to date on regulations that protect employees' safety and wellbeing
Strong dispute resolution and complaints processes are essential to ensure that employees feel safe and respected.
It’s also worth noting that regulators are paying close attention to anti-union behavior at the moment. The National Labor Relations Board has issued a memo saying that it is illegal under federal law to force workers to attend anti-union meetings, although the regulator has tolerated such meetings in the past. Companies need to be cautious that activities like group meetings or necessary communication monitoring (such as recording calls for training purposes) cannot be construed as union-busting. Legal teams can guide them through those risks.
Both workers and corporate employees will be watching Starbucks and Amazon closely in the coming months. If more locations vote to unionize and succeed in signing a contract, it will certainly turn heads. The threat of unionization alone may change the relationship between workers and higher-ups. In the meanwhile, the economic factors that are pushing union activity could shift. Data from economic research firm Capital Economics suggest that the labor shortage has already peaked and is now easing. Other experts argue that the shortage is here to stay. Either way, the corporate-worker battle is a David and Goliath story, which is just the kind of story that keeps an audience gripped.
⚔️ 5 Key Takeaways: What A First-Time GC Needs To Know About Privacy
Last Thursday, we hosted an intriguing and informative discussion with Peter Day (Global Chief Privacy Officer, DGC, SHEIN), and Jordan Mazur (GC, Lively, INC.) moderated by fellow Lawtrader and Fractional Privacy Officer, Ben Isaacson. They dove into the basic legal concepts and touched on the nitty-gritty practices surrounding privacy. Here’s what we learned.
1. Know Your Stuff
As a GC, you have to establish yourself as someone people can come to about privacy questions. To do that, you need to have some baseline knowledge. If you don’t, you’ll find yourself saying, “No, we can’t do that” to everything, without good reason or alternative suggestions and no one will want to approach you. Pick up a few books or jump on some webinars to get up to speed. You’ll never know everything there is to know but if you have a working framework of the understanding you can reach out to an expert for the specifics.
Some questions to ask your business include:
- What do we want to do with data?
- How do we monetize data?
- How do we collect data?
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2. Acquaint Yourself
If your business is trading in multiple countries, it can be tricky to design a privacy strategy that works in every jurisdiction. European Laws have been a headache for US legal teams in recent years, from the ePrivacy Directive to GDPR, the Digital Markets Act, and the Digital Services Act. In the past, you could design your privacy strategy around European law and pretty much be safe in any jurisdiction but it’s getting more complicated. Every jurisdiction has slightly different laws that can trip you up.
- There are loads of new state-level laws coming out all the time in the US like the new Utah privacy law. You should keep very open tabs on them. Hot tip: read the whitepapers that Law firms send out to summarize new regulations. It’s smart to grant the most generous protections to everyone, regardless of state, rather than applying different things in different states.
- If you have operations in Europe, you’ll likely need a data protection officer.There’s a huge debate as to whether DPOS can be sufficiently independent of the operational side of a business to help individuals vindicate their data rights. If you are a small team, it’s easiest to hire an outside, part-time DPO to ensure they are independent. If you’re likely to interact with local data protection authorities or if you have a team in Europe and there are likely to be time zone issues, it is probably best to hire someone in Europe. But if your headquarters and operations are in the US and you just have a lot of European data, you can stick nationally.
🗓 It’s Gonna Be May
Well, we’re just a bit late. Keep up-to-date with our next events:
How to Build a High-Performing Legal Team: Thu, May 12th, 3 pm ET
- Join our own Matt Margolis as he moderates a discussion with Nili T. Moghaddam (GC, Bungalow) and Shaun Sethna (DGC, Altisource) for a deep dive into their experiences developing successful teams.
👉 RSVP here.
How Non-JDs Can Save You Time & Money: Thu, May 26th, 3 PM ET
- Join our own Lauren O’Neill as she moderates this discussion with Trina Walker (Director, Legal Change, TriNet), Kelsey Copeland (Sr Corporate Counsel, NASCAR), and Eric Lentell (DGC, Archer) as they discuss the importance of non-JD roles as well as how much time and money they can save.
👉 RSVP here.
3. Map Your Data
Regulators are demanding more and more transparency and it’s difficult to keep tabs on how data is used internally. Many companies are not equipped to answer the tough questions. There are huge benefits to doing manual data mapping. That means speaking to an engineer on every team in your business and asking them 3 questions:
- Where are we getting the data?
- Where are we sending the data?
- What are we doing with the data in between?
The major challenge is that the information is obsolete the moment you gather it since things are constantly changing. You might also get pushback. Use those conversations to build a network of people in the company that you can use for data mapping, spread the word that privacy is important, and show that you can be a useful resource.
🔄 If We Could Turn Back Time
While we can’t turn back time, we can bring you back to our past events you may not have been able to attend. Check out the How to Market Your Legal Team as a Team of YES. Our panelists shared why it's important to brand your legal team, and their best tips on how to do it successfully.
If you’d like to see more full-length replays, snippets, and more — subscribe to our YouTube channel.
4. Reach Out For Help
If you find yourself constantly explaining your business to outside counsel, it might be time to hire. An in-house privacy lawyer can signal to a counterparty that you take privacy seriously. But it won’t come cheap — privacy lawyers are in demand. If you’re spending 2.5x a regional privacy lawyer’s salary on outside counsel, that could also signify that it’s time to bring someone on board. On the other hand, if you’re dealing with international jurisdictions, you’ll need to hire outside counsel to inform you of specific regional laws.
There’s also software out there that can help you with your privacy program, such as One Trust. The cost of that kind of software varies from free trials right the way up to 6-figure contracts. They’re often either handy or disappointing. It’s important to realize they won’t replace the on-the-ground work of building a strategy and understanding the data process in your businesses, and they’ll never be as valuable as a good outside lawyer or privacy program manager.
🏘 We’ve Expanded
Did you notice? Our full replays just got a bit fuller. The full-length podcast and video replay now come attached. Oh, and we’ll be highlighting key snippets later this week. Check out our LinkedIn for a first glance.
5. Keep Your Tabs Open
To IAPP, or not to IAPP? Let’s face it, IAPP conferences are not the end-all, be-all of privacy … but their website is full of useful information and their books can be a godsend. Another great resource to find cutting-edge news? LinkedIn. There are many privacy influencers that give access to the latest news and provide helpful (not to mention free) resources. Don’t be afraid to reach out to your network with questions, you’d be surprised at who is willing to lend a helping hand.
Helpful Resources:
Who to follow:
- Brian Levine (Managing Director, Cybersecurity & Data Privacy, EY-Parthenon)
- Omar Tene (Partner, Goodwin)
- Law firms’ privacy teams put out useful content. Field Fisher, for example, does lots of Adtech content.
Enjoy these recaps? Share them with your network!
Until next time,
🤝 The Lawtrades Team
🤿 Sunday Deep Dive: The Supply Chain Crisis & Legal
The global supply chain is like a Rube Goldberg machine. A ball slides down a chute and hits a lever which throws a hammer that switches on a fan that blows a million bits of paper into the air—kinda like this awesome Ok Go music video. In other words, it’s a carefully balanced system that relies on just enough arriving just in time. There isn’t much room for error and disruption can cause an almost endless string of knock-on effects.
There was a time when ‘supply chain’ wasn’t a phrase people brought up in casual conversation like the football score. That time is long gone. The fragility of it all has been thrown into stark focus in the last couple of years. National lockdowns around the world shuttered factories, held up transport systems, and lead to a ton of shortages. Some of those shortages were exacerbated by demand surges resulting from pent-up lockdown savings (e.g. couches, building materials, and cars) and social isolation (hello, sex toys). They even threatened to cancel Christmas.
Source: Twitter
But the pandemic is just one of many threats the global supply chain has faced in recent years. The U.S.-China trade war caused imports from China to fall by $87Bdollars in 2019. When the container ship Ever Given got wedged in the Suez Canal last March, it held up 12% of global trade. Last year in the UK, a shortage of truck drivers caused petrol stations to run dry and Brexit has left trucks stuck at the border for days while logistics teams hack through red tape. As if things weren’t bad enough, Putin’s invasion of Ukraine is serving up a fresh helping of chaos which, aside from its horrifying direct impact, brings with it a heap of new supply chain challenges.
What do petrol, wheat, and electric scooters have in common?
There are supply chain challenges in almost every industry. Here are just 3 commodities causing major havoc:
- Gas: You don’t need us to tell you that the price of gasoline hit record highs last month. One reason for this is that the crude oil price has rocketed as the global economy bounces back faster and better from COVID-19 than expected, creating some serious demand for oil. Another is that Russia, which accounts for about 10%of global oil production, is facing heavy sanctions. And since getting anything anywhere requires gas, pretty much everything is getting more expensive.
Source: Twitter
- Fertilizer: The price of natural gas in Europe has been soaring for the past year but the Ukraine crisis has pushed it to a record-high. Natural gas is used in the production of nitrogen-based plant food which means that high prices threaten agriculture. On top of that, Russia and Ukraine account for 29% of global nitrogen-based plant food and Russia is a major exporter of other soil nutrients like potash and ammonia. Farmers on every continent are changing crops, cultivating less, and using less fertilizer which will impact the price of food. For consumers, it’s bye-bye, smashed avocado, hello, beans on toast.
- Semiconductor chips: These electronic devices are inside everything from electric scooters to smartphones, cars, washing machines, and pacemakers. There’s a major shortage of these little guys caused by a bunch of factors including a boom in demand for laptops and webcams, lockdown factory closures, a rise in the cost of shipping, and the conflict between the U.S. and Huawei. Chipmakers are increasing capacity and new suppliers will emerge but things are likely to get worse before they get better. Before the invasion, Ukraine supplied half the world’s neon gas which is essential for the production of semiconductor chips. If you’re hoping for a new car or phone for Christmas, you might want to let Santa know now.
General Counsel to the rescue
Supply chains are front and center on many businesses’ agendas these days. In October, a survey of CEOs revealed that supply chain disruption is seen as the number one threat to growth. In Q3 earnings calls by Fortune 500 companies, mentions of ‘supply chain’ increased by 412%. Businesses that aren’t already experiencing delays, high production costs, quality management, and delivery shortfall are evaluating their risk exposure and trying to mitigate it.
Cue the in-house legal team! Executives are turning to legal to answer their questions and help them cope with messy breaches of contract.
Questions businesses are asking include:
- What are our rights and obligations if our supplier fails us?
- What exactly are the commitments in the contract in terms of quantity, quality, and delivery time?
- Does the contract allow the supplier to adjust the price and if so under what conditions?
- Are the commitments in the contract backed up by warranties?
- Will our insurance provide coverage if we breach a contract, get sued, or face unprecedented costs?
- Is there a business continuity clause?
- Does the contract allow us to withhold payment or use different suppliers if necessary?
- Should we litigate if suppliers fail us?
- If our supplier is forced to reduce output, what allocation are we entitled to?
Here are 5 things legal teams can do to help businesses weather the storm:
1. Prepare a situation report.
Other teams in your business are likely taking time to predict potential problems and set up plans B and C. You can assist them and get ahead of some of the questions above by checking your business's contracts with key suppliers and/or customers. Identify pressure points and vulnerabilities and consider what actions the business could take in different scenarios.
2. Explain the pros and cons of litigation.
Enforcing contracts through litigation is not always the best solution. It’s expensive and it can be complicated, especially when dealing with partners in different jurisdictions. And although it may result in compensation, it often doesn’t solve the immediate problem—whether that’s a container of cat food stuck in the Suez or a 30%rise in the cost of wigs. In fact, litigating or refusing/delaying payment could create long-term beef with a supplier or even force them to go under, which is not ideal for anyone involved.
Alternatives to litigation include formal complaints, open discussions around risk and responsibility, and reworking contracts to allow for backup supply arrangements. Businesses can request service credits or liquidated damages as a gesture of goodwill.
3. Competition issues
In times of crisis, governments occasionally relax competition laws to allow companies to collaborate and ensure that consumers get the products they need. Last year, the UK government allowed some cooperation in the grocery sector to ensure that shops stayed supplied and also relaxed competition law for companies responding to COVID-19. French and European competition authorities made similar rulings.
If authorities in your businesses’ jurisdictions do relax competition laws for your sector, take the time to read the small print and make sure your business is compliant. Such rulings will usually be for a limited period and apply to very specific things. The goal is to help consumers and the economy get through an emergency, not to enrich your shareholders. When in doubt, reach out to the regulator for clarity and, if you can’t get an answer, err on the side of caution. It’s wise to keep a trail of all exceptional activities in case you do come under scrutiny.
4. Build back safer
Many businesses are looking for new suppliers. Some lost suppliers in the pandemic. Some want a backup option. Others are trying to diversify and onshore their supply chain (more on that later). Given the fragility of things right now, they’ll be wanting to do some serious vetting before they commit. They’ll also want to set up watertight contracts that treat major disruptions as the norm, rather than an afterthought.
Legal teams can help by drafting contracts that take into account the lessons we’ve learned from the last few years. Force majeure clauses should be specific and provide cover for things that seemed bananas as recently as 2019 but sound pretty normal in 2022 e.g. pandemics, global shortages, and nuclear war. Contracts can require suppliers to do a risk analysis of their own suppliers and to provide regular risk reports on supply chain disruptions. Contracts should also stipulate what happens if delivery time, volume, and quality don’t meet original commitments.
5. Build back better
Now is also a good time for businesses to examine the environmental, social, and government (ESG) status of their supply chain. In other words, as businesses establish new contracts and re-examine old ones, they should consider how the products or materials they buy impact people and the planet.
There are several reasons why that’s a good idea: a) it allows for a proactive (instead of reactive) approach to expected ESG regulations; b) It’s the right thing to do, and c) it provides support to your business’s consumer base and community. 88% of U.S. and UK consumers want brands to help them be more eco-friendly and ethical in daily life. For example, Biden is pushing to mandate that retirement funds incorporate ESG analysis, New York requires food businesses to recycle or donate scraps and the UK requires large employers to report wages by gender.
The Chancery Lane Project has set up a toolkit that gives legal professionals access to ‘net zero aligned clauses’ that you can use in contracts. So far they’ve had 63k downloads. Clauses cover reducing food waste, incentivizing fuel efficiency, sourcing greener energy, and auditing water usage.
The future of supply chains
The war in Ukraine and the latest lockdowns in China have cemented the general sense that supply chain disruptions are the ‘new normal’. For the past 2 years, we’ve been putting band-aids on every leak in the dinghy but now it’s time to build a better boat.
According to a survey by McKinsey, 93% of senior supply chain executives say they intend to make their supply chains more ‘flexible, agile, and resilient’. In the past year:
- 61% have increased inventory of critical products
- 55% are sourcing raw materials from more than one source
- 23% are expanding backup production sites
- 15% are nearshoring and increasing supplier base
- 11% are nearshoring production
And 90% say they planned to do some degree of regionalization in the coming 3 years. General Motors, Toyota, and Schneider Electric have all announced plans to boost production in North America. Governments are getting in on the onshoring action too. France is building nuclear plants to reduce its reliance on foreign energy sources while the UK is preparing an ‘energy independence plan’. Innovations in technology make it possible to hyperlocalize productions. Electric vehicle start-up Arrival is pioneering highly automated microfactories, small enough to fit into an urban warehouse, and vertical farming techniques mean plants can even be grown inside grocery stores.
New disruptions are certain to come. As the globalization pendulum swings back and supply chains are reset, in-house teams will be presented with a host of new challenges. But challenges can be opportunities. Now is the time to build resilient, agile contractual relationships that foster ethical and sustainable business practices and protect your business from whatever storm is next on the horizon.
If you’d like to learn more about how you can implement more sustainable practices within your supply chain, check out the replay from our panel, Why Legal Should Lead on Sustainability. Christine Uri, Chief Legal & Sustainability Officer at ENGIE Impact, takes us step-by-step into how legal can get involved.
🪄 5 Key Takeaways: How to Market Your Legal Team
Yesterday, we hosted yet another panel surrounding a topic our community has been eager to learn more about. Moderated by the amazing Lydia Cheuk (GC, Away Travel) we were joined by Arianna Marks (AGC, Beanstalk), Sarah Ouis (Founder, Law But How?), and Ramya Ravishankar (AGC, Bowery Farming) as they shared why it's important to brand your legal team, and their best tips on how to do it successfully.
1. Open The Dialogue
If you don’t display your value-add, no one else is going to do it for you. Be upfront early on and flag yourself as not only a thought partner but also a business partner. Let’s be real, no one is going to understand the work that legal does. But, they will understand and appreciate any metrics you can provide. Prepare tangible data to showcase your work, so other teams know what you’re working on, and what you have accomplished. It’ll do wonders for promoting your team’s value, and open up an opportunity to collaborate cross-functionally with other teams.
📣 Let’s Continue The Discussion
It was wonderful to see so many questions come in from our audience and have a steady flow of dialogue in the chat. We’d love for you to join our own private community of in-house leaders! It’s a place to network, share ideas, meet other like-minded professionals, and continue discussions like these.
2. Leverage The Little Things
We all know legal is perceived in a certain way (ahem, cost center), but it doesn’t have to be. Many of the people you interface with may not have had previous exposure to legal, or any idea how and when to interact with your team. Don’t underestimate the little resources you can use to build touchpoints with other departments. Incorporate interactive elements within intro presentations or training sessions so they’re fun and engaging. The more you humanize your team, the more others will feel comfortable keeping a regular cadence of communication.
👂 We’d Like To Hear From You
At Lawtrades, we’re working hard to build the number one legal community for in-house peeps, and we’d love to have your input. So we’ve created an open line of dialogue to hear what you need. Have a content idea, want to drive a networking session, participate in one of our panels, podcasts, or even provide feedback? Leave it in our community suggestions tab!
3. Learn Your Audience
You are only going to be better at mitigating risk if you’re involved in the crucial business conversations at the outset. It seems obvious, but it may not be to everybody. Learn how to communicate with those at the executive level, understand what makes them tick, and adapt your language to match theirs. While words are important to legal, the C-suite speaks better in numbers and hard data. Come at it with a positive intent, and show you’re willing to be involved. It’ll further the trust of the legal team, and work to build a positive, long-lasting relationship.
📆 Coming Up
If you loved this panel and can’t wait to see more…
Join us next Thursday, April 28th, for What a First-Time GC Needs to Know About Privacy. Moderated by Ben Isaacson (Fractional Privacy Officer and Lawtrader), come and listen to Peter Day (Global Chief Privacy Officer and DGC at SHEIN) and Jordan Mazur (GC at Lively, INC.) as they share what a first-time GC should know about privacy, from key law concepts to trends and implementation strategies.
4. Know Your Business
You have to learn the entire lifecycle of your business…it’s how you can communicate in a meaningful way that resonates with the non-lawyers you work with. Understand where the crucial business decisions are coming from, and mirror them in your negotiation strategies. If the business team sees that you are willing to think creatively to craft solutions when reviewing a contract rather than jumping into a redline and saying no to everything, they’ll view you more as a partner instead of a stopgap.
5. Establish Your Presence
Get to know your colleagues! Schedule time to have those casual ‘water-cooler conversations’ with your team. As time goes on, those relationships can reap dividends for you. Don’t miss the value of personal branding. When you’re publically visible, people get to know you from a different angle. Encourage your legal team to network and participate in community discussions (like this one!) so they can establish their presence outside of the workplace. Word will spread and trickle back to the value-add of your team.
Would you like to learn more about building your personal brand? We dove deep into the what, why, and how of cultivating a personal brand. Check it out here.
☎️ Let’s Get In Touch
Want to learn more about Lawtrades? Sign up for a 15-minute call with a member of our team and you’ll get 10 free hours of legal service, on us.