(Author) Legal Counsel

Lately, there has been a lot of “shopping around” by business units for the legal advice they want to hear. One has now gone over my head twice to the GC to get a legal “okay” that I advised against. “Tattling” on me first saying “no.” These power plays are really frustrating. We have a culture of “getting the client to YES,” but it’s hard for me to do that when I know the “yes” will bring certain liability to us. Is there an effective strategy to succeeding in this type of atmosphere?

Some background information about me: I am a specialist and the only one of “me.” Two different units recently have gone above my head and my boss — and then when the advice changes I am left explaining to my boss why the GC had questions about xyz advice I gave so and so. It’s really straining my relationship with the business unit leadership — and I also have no idea how they are spinning the facts when they go up the ladder.

I know this is typical for in-house affairs, but there has been an uptick lately after some shifting of leadership.

For clarity; I have not just been been giving out “no” answers. My advice is being interpreted by certain divisions as a “no,” when I advise of the potential legal consequences/risks. Then, they try to get a different opinion. I have realized I need to reframe how I approach my non-legal colleagues. Most of my career has been advising in-house counsel as an outside counsel and now I am directly advising the decision makers, so it’s a learning curve.

It’s been a struggle lately because of some retirements - and dealing with new personalities… who take my advice personally like Im hyper critical. I’ve never had this issue before and generally get along well with everyone.

We do not have an escalation process — these are corporate long-timers in new roles who will just pick up the phone/Teams/email when they don’t like what they hear from me and shop for an answer they like above my head. It is general employment law — and exec compensation, contracts, and outside lit management. They all make their own decisions — but vet those decisions through me. Sometimes the actions some of the newer leadership want to take are so out-of-bounds it’s hard for me to find a solution, so I advise of the consequences if they make a certain decision.

I haven’t been in my position that long. For the first time ever I was recently told we have a “very high risk tolerance.” And there have been some senior leadership changes who perceive advice differently — management who don’t seem to have much exposure to the legal side of things. GC is not happy being bothered — but it’s a couple of repeat players.

Coming from a litigation background I put too much focus on the outcome.

General Counsel Responses:

• I find it surprising how many of these types of posts I see. I get that it is annoying to have people do this, but can you imagine a firm attorney telling a client that they just could not do something? That's just not how this whole game works. I often have to correct my business folks when they come to me to "approve" contracts that it is not my job to say yes or no, and that I'm there to help them analyze what risks exist and how we can try to negotiate to meet their goals. I still don’t see it as a lawyer making a go/no go decision, as that’s being left to the appropriate business manager, but I completely agree that an important part of the role of corporate counsel is to ensure that leaders throughout the organization are being kept apprised of potential risks and decision-making is happening at the correct levels.

• Lawyers should hold the gate to ensure the right level of management is making the decision. A lawyer for a sub should stop the sub’s GM from agreeing to bind the group company in a deal, even though that’s a “business/financial risk/liability”. The same goes for high dollar value liability.

• It’s important to develop a reputation as someone who doesn’t just say “no” all the time. I would advise thinking of some creative solutions to get around the perceived roadblocks and always lay out the risk exposure to management. Sometimes it takes a while to get a feel for where their comfort level is regarding risk. When you say “no,” it needs to be for something important and that means we can’t overuse it.

• It’s not our job to drive the business. It’s our job to advise the business of legal risks.

• This is where your legal leadership team needs to be firm with the business about the shopping around practice being unacceptable and processes needing to be followed. Does your team have processes, including escalations to the business unit leadership, executive team, and legal leadership team, in place? What kinds of things are you saying “no” to? Honestly, you shouldn’t normally be flat out saying “no”. If you are negotiating a contract, for example, and the other side refuses to limit liability, so you’re at a standstill, it’s not our job to tell the Business they have to back away from the deal. You advise the Business of the situation and risks, and you escalate it to the decision-maker because it’s a business decision. Unfortunately, if you are constantly telling the Business they can’t do something and kill deals, then you won’t be able to build a rapport with the Business Units, which could cause confidence to be lost. Without more information, I would caution you on this.

• This is where your legal leadership team needs to be firm with the business about the shopping around practice being unacceptable and processes needing to be followed. Does your team have processes, including escalations to the business unit leadership, exec team, and legal leadership team, in place? What kinds of things are you saying “no” to? Honestly, you shouldn’t normally be flat out saying “no”. If you are negotiating a contract, for example, and the other side refuses to limit liability, so you’re at a standstill, it’s not our job to tell the Business they have to back away from the deal. You advise the Business of the situation and risks, and you escalate it to the decision maker because it’s a business decision. Unfortunately, if you are constantly telling the Business they can’t do something and kill deals, then you won’t be able to build a rapport with the Business Units, which could cause confidence to be lost. Without more information, I would caution you on this.

• Just because it’s a risk you wouldn’t personally take does not mean the business team shouldn’t take it. There are very few 'hard no' scenarios in corporate practice.

• The “O” in CLO makes your role hybrid and able to make risk decisions.

• I have worked in the regulatory environment and in a high turnover environment and often found myself in this position. It took some time and training of myself, but when I get like - what the heck are y’all thinking- I now manifest that as - what is your goal/objective here? I understand you are asking about y, but it seems like your ultimate goal/driver/need could be achieved in a different manner. Let’s talk through the issue/risk/you’re really addressing to see how we can best mitigate them while achieving your ultimate goal/result. Once I get them talking - we can almost always come up with a better solution.

• Weave some examples in, e.g., with a previous client, we took a similar risk and the result was abc or I’ve experienced x cases where this approach was used and y times the result was adverse to the employer. Is that result within your risk tolerance? If not, let’s figure out a different way to achieve the same result..,,

• Instead of saying no, I find it helpful to lead the business/commercial folks to the right conclusion. “We could agree to that, but if [this instance] happens, then (describe the bad scenario), which I know you don’t want.”.

• First of all, your GC should back you up and show a united front. However, your job is to provide counsel, especially as junior counsel. Even as GC/secretary, I try to avoid making the decision. I can tell the business whether or not a course of action is advisable but it’s ultimately up to them. In your situation, I would couch any advice as just that — advice. And make sure that they know that if they don’t like the advice you’re open to discussion with GC and senior management about possible alternatives. If they elect to proceed despite your advice you can appeal it as well. But ultimately it’s not your call and you have to live with that. And so long as you and your GC are aligned, you should be fine doing just that (even if your company suffers).

Counsel Responses:

• There is no easy solution. I deal with this a lot. I am a subject matter expert and they go above me to a corporate generalist for a better answer. Luckily my boss knows that I know far more about my area of practice and will either just defer or call me. You pretty much need to get that level of confidence with the people higher up. If you’re not a specialist that becomes a lot more difficult. I’d say contact the people they’re going to and discuss the situation to ask them to call you first if they question your advice.

• At the end of the day, our job is to advise on legal liability. Except for like Fraud, bribery, OFAC, etc., it’s not our job to flat out say 'no'. If the deal is so good from a business perspective that legal risk is okay, that’s for the business to decide.

• A CEO/GC once told me, “you can only advise the business of the risks, and give the business the freedom to make smart risks based on your advice.” Once you’ve provided crisp advice that they can use as a basis for their judgment, let it go. Have mitigation strategies in place, and if you have to use them in the future, then use them.

• Certainly true, however, in this case it sounded like they were going to other lawyers for legal advice. I tell our managers here’s what the situation is and whether it’s market and then the risks and tell them they can agree to it if they want. I don’t, however, let them go to someone else to okay purely legal issues.

• We advise, they decide. Always better to start with getting to their true intent. They ask, “can I do x?” and even though x is a horrible thing to do, you haven’t really answered their question, which is “how do we accomplish y?” By simply saying no to x, their question is unanswered. Sometimes it’s criminal, which is a hard stop, but I guarantee you that the average level of acceptable risk is a lot higher for your average business person than it is for your average attorney. Beyond that, you need to make sure that you give a heads up to coworkers and supervisors. Some people just like to forum shop. That needs to be shut down, but not by you.

• It sounds like you aren’t aligned with your GC/company risk tolerance if the GC is accepting risk that you advise against. I can’t imagine the GC is happy about having gotten caught in the middle of these decisions. I’d try to quickly understand the company risk tolerance (maybe meet with GC/business leadership) and modify how you assess risk . As many have said, the business should have the decision right after receiving your risk analysis.

• I wish I had the luxury of just saying things are “business decisions.” I’m a CLO with a small legal department. Everything I consider is a business decision but my colleagues (usually the CEO and CFO) still want advice and a recommendation. I wouldn’t last very long just laying out the risk and saying, in effect, “not my problem, you decide.” OP, my suggestion is to stop viewing risk just like a lawyer and understand how the business views it (what drives it, what is material, what do they care about, etc).

• If it’s not criminal, or very damaging to the company reputation wise, or potentially deadly, then it’s just a risk to be weighed. I have multiple conversations every day that end with “I recommend you do” x, y, z. That’s rarely a true legal decision but instead is a business path forward that accomplishes what the business wants while mitigating that risk. I’ve only said no once in my time at the company and that was after spending lots of time trying to find a work around without success.

• There are only a few things I say outright “no” to. And those are the sort of things that you could say “no, wtf, are you stupid????” Most items are: “I think this is a bit risky and would prefer (abc), but this is ultimately a business decision.”

• I call it the “anti-testimony rule.” Instead of answering “is this legal?” I ask what they’re trying to do. You need to get the business partners trained to come to you to craft the legal solution, not to try to make their own for you to rubber stamp.

• An important point for everyone in-house to try to remember is not to stress about the outcome. Make the best decision you can based on the info you have in the time available. If you’ve done your job as well as you can and the business shops for another answer, it's not your concern. If they make a “bad” decision, it’s not something you can control. Even where I’ve been the one making (or involved in making) the decision, I make the best decision I can but I don’t stress about what comes next.

• If you’re saying "no" and they can go above you to get a “yes” in most cases you shouldn’t have ever said no.

Attorney and Associate Responses:

• Honestly, this is typical for in-house things.

• You say it’s an issue of bringing liability on the company. That’s solely a business decision. In my opinion, there should never be a “no” in these situations unless it’s asking for fraud or violation of some law. If it’s high enough liability risk, then it’s a matter for the GC to weigh in on. What’s high enough tolerance depends on the company. I’m a SME and I often tell my business people what the liability exposure is and they often veto it and move ahead. No skin off my back, it’s their call. Only a few I’ve had to raise to GC and in those cases it’s beneficial because I’ve gotten to lay my case to higher ups. For what it's worth, I’m at an extremely risk adverse org. But there’s a general acceptance of monetary liability in most business decisions.

In-house? Be a part of the conversation on Fishbowl (anonymous).