Ten Things: Essential Issues for In-House Counsel (2019 Edition)

Hello everyone!  Best wishes for the New Year to all of you.  I am excited about 2019, especially when it comes to this blog – and I’ll have some news to share about me next month.  I have a lot of (hopefully) interesting topics on my list for the coming 12 months.  And I am working on volume two of “Ten Things You Need to Know as In-House Counsel – Practical Advice and Successful Strategies” for the ABA.  Look for it to come out later this year.  As I have for the past several years, I like to begin the year thinking about what issues will be most important for in-house lawyers over the upcoming 12 months.  As you can imagine, there is plenty out there that we all need to be concerned about.  Still, I read a lot over the holidays and jotted down plenty of notes about the most interesting developments.  Obviously, I have no monopoly on setting out what’s important.  As my wife often tells our daughters, “Pay no attention to the man behind the curtain.”  Still, I think the below is a helpful list of topics, some of which everyone will find applicable to their legal department.  This edition of “Ten Things” sets out my 2019 list of essential issues for in-house counsel:

1.   President Trump vs. Everyone.  I know this one has been on my list before, but it’s clear to me that I need to add it again.  And make it number one.  Whether you love him or hate him, there is no question that President Trump and his administration (and their unorthodox manner of governing) will keep making things challenging for businesses and in-house lawyers in 2019.  From battles with Congress, the now five-week-old government shut-down, the Mueller investigation, immigration, environmental policy, new interpretations of law and regulations, military matters, trade wars (and exceptions for some companies but not others), and so on and so on.  It’s difficult to think of any business – and therefore any legal department – that does not need to pay close attention to what’s going on with this administration.  If you haven’t already, and there are government-related issues that could have a substantial negative or positive impact on your company, it’s probably time to also think about what types of government affairs programs or services your company will need.  Here is a post I wrote on running an effective government affairs campaign.  If I had to pick one Trump-related issue to focus on in 2019, I’d pick trade because the ability of companies to import and export globally with or without tariffs or limits is such a key component of profitability (e.g., automobiles, farm products, smartphones, etc.).  Moreover, if the trade uncertainty continues to negatively impact the economy and the markets, in-house lawyers will see the results immediately in terms of – among other things – more litigation, bankruptcies, law firm rates, and cost-pressure on the department (including pressure on staff).  Note that for those of you outside the U.S. you can pretty much substitute in your own political leader(s), e.g., Putin, Macron, May, Erdoğan, Trudeau, and so on, and have something to monitor in 2019.

2.  HR policy review.  Every in-house lawyer and every legal department should have a yearly set of basic “maintenance” tasks set out in a group calendar, i.e., a scheduled set of tasks the department/lawyer needs to do each year to protect the company.  For example, every January you can review your privacy notice and every June your website terms and conditions.  One task that should be on everyone’s list for 2019 is a review of your HR policies.  Typically, this is done in conjunction with the HR team.  The idea here is to make sure your company’s HR policies are up-to-date and comply with the law – including any changes that may have arisen over the past year.  Some policies to focus on include:

  • Employee vs. Contractor policy
  • Exempt vs. Non-Exempt policy and classifications
  • EEO statement
  • Sexual harassment policy, procedures, and training
  • Pay equity
  • Parental leave
  • Drug testing
  • Marijuana in the workplace (a fast-growing issue – no pun intended)
  • Biometric data privacy policy

3.  Essential documents.  I have been on the receiving end of this call recently, “We are going to create a data room for the deal.  The first thing we need is all of your company’s – and subsidiaries’ – organizing documents.”  Crap! Or something like that.  Where are all those documents?  Especially for that subsidiary we organized in Ukraine back in 1998.  If you’re not sure where your “essential” documents are, 2019 is the year to get your house in order.  Here’s what I would make sure I have located and stored away (for the parent and any subsidiaries):

  • Articles of Incorporation/Charter
  • By-Laws
  • Board of Directors agreements/equity
  • Board book, i.e., minutes, resolutions, etc.
  • Founders Subscription agreements
  • Shareholders agreements
  • Partnership agreement (if applicable)
  • Loan/Refinancing agreements
  • Operating agreement (if an LLC)
  • Current capitalization table
  • Employment agreements for company officers (and key employees)
  • Equity incentive plan documents
  • Current website terms of use and privacy notice
  • Business licenses

There may be other documents of importance specific to your business.  The key is to think through what you might need in the event of a sale, IPO, refinancing, or whatever and make sure you have it stored away (and updated every year) or know how to quickly access it. It will save you a lot of pain.

4.  Brexit.  When I first heard that the people of the UK had voted to leave the European Union, I was stunned.  That we are almost to February 2019 and there is no plan for how the UK will exit the EU is beyond stunning.  It’s astoundingly astonishingly staggering!  Last year this time I was telling my team that there was no way this would not get resolved with plenty of time to analyze the changes.  Sadly, I was wrong.  Very wrong.  All in-house lawyers need to pay attention to what’s coming down the pike with Brexit, especially the “no deal” scenario.  Some of the big issues that jump top of mind are data privacy/data transfer, trade/tariffs, employee issues, air travel, and banking and other regulated services.  Alex Morall wrote a really good article last year entitled “Brexit: Contingency Planning for In-House Counsel” that every in-house lawyer should read now.  It’s full of great links and resources along with a basic primer for what’s coming.

5.  Succession Planning.  This is probably one of the issues that rarely rises to the top of mind within in-house legal departments but ask yourself this: if the General Counsel left today, who would succeed her?  If a key member of the legal department left today, would succeed them?  If you don’t know the answer (or even the process to decide) then you’re behind the curve.  And the legal department being behind the curve means risk to the company.  Moreover, succession planning is not a one-day exercise.  It’s a series of steps from an analysis of the legal department’s role in the business, the company’s legal needs (now and five years from now), employee reviews and development plans, to an actual written succession plan document.  If you are not sure where to start, read my blog post on how to get started with succession planning and things you need to do.

6.  Social Media.  I know this one seems pretty dated, but I am still surprised by how often companies, executives, and even in-house lawyers find themselves in trouble because of a regrettable social media post.  And the waters are only going to get deeper and more dangerous as social media is now an indispensable part of marketing and communicating.  Thus, it’s time to make sure that the legal department is driving the company’s social media policy, either as the leader or the driving force behind the marketing department efforts.  There are three things you need to focus on here: a) Have a social media policy and update it yearly, b) train employees, management, and the board of directors on the policy and the potential pitfalls of social media, and c) send regular reminders out to everyone a couple of times per year so the policy stays top of mind.  And, of course, be sure that you and everyone in the legal department is trained as well and understand the risks social media presents to the company and to your careers.  Everyone in the department should be a watchdog, monitoring their social media channels for any company employee posted something silly or worse to Facebook, LinkedIn, Instagram, and so forth.  For more, check out this well-done webinar on social media risks prepared by the Foley Hoag law firm.

7.  GDPR/CCPA.   Sure, you busted your ass to get the company into GDPR compliance before the May 25, 2018 deadline.  But guess what?  You’re not done!  Not by a longshot.  First, GDPR contains a long list of obligations that continue on, such as internal policies, sub-processor agreements, customer requests, privacy-by-design, etc.  Complying requires lawyers, guns and money.  Well, lawyers and money for sure.  And a lot of time.  Make sure the executive team knows and understands that GDPR is an ongoing issue, one that requires their support and company resources.  It may help to inform that that fines – including a $57M fine against Google – are starting to occur.  And don’t forget that the EU’s updated e-privacy directive is on the horizon as well and should be something you are watching closely.  Even though it’s unlikely to become effective in 2019, now is the time to start thinking about compliance.  Finally, California has gotten into the act with the California Consumer Privacy Act of 2018 (CCPA), which – while similar in some respects to GDPR – will impose a new set of obligations on companies falling under its jurisdiction (though which companies it applies to is still unclear).  The CCPA goes in effect in January 2020 with enforcement delayed six-months after that date.  This means it’s time to get focused on the CCPA and what things your company needs to do to be able to comply.

8.  Focus.  One thing that becomes clearer every year is that our all-encompassing digital world is making it increasingly harder to concentrate at the level needed to get work done – especially legal work.  There are just so many distractions.  While I am a huge fan of technology, I understand that every piece of technology can detract from getting things done.  I have written about ways to tame the email monster, but that is only scratching the surface.  The key is learning how to truly focus.  Over the holidays I came across a book written by Carl Newton called “Deep Work: Rules for Focused Success in a Distracted World.”  Mr. Newton sets out four rules for focusing without distraction on a mentally demanding task.  In sum:

  • Work deeply – integrate time into your calendar for deep work and protect those blocks like you would for a meeting or other appointment.
  • Embrace boredom – train yourself to be bored, to ignore your phone and other distractions.
  • Quit social media – probably the most controversial of the rules, though not a 100% cold-turkey plan.  Rather, it’s about limiting your social media apps and services.
  • Drain the shallows – meaning if you allow your day to become dominated by “shallow work” you’ll never get any things done.

While some of Newton’s ideas around minimizing distractions may be too extreme for some, most make tons of sense.  The challenge of finding ways to work deeply is something that impacts all in-house lawyers and solving it is something to work on in 2019.

9.  Climate Change.  I grant you that people can have widely differing opinions on the cause, but no one can seriously disagree that the earth’s climate is changing.  Simply put, it’s getting warmer.  And while at first glance you might not think that impacts the work of in-house lawyers, you need to look again.  Climate change has and will continue to have a big impact on companies and in-house counsel. For starters, the US government released a report last November discussing how a warmer planet can have a substantial negative impact in GDP over the next several decades.  This potential decline can be tied to a number of issues businesses/in-house counsel are dealing with arising from climate change, such as:

  • Wildfires and resulting devastation (and impact on utility companies and insurers and premiums)
  • Rising utility costs (raising the cost of doing business)
  • Lack of snow/warm weather in towns/resorts relying on winter sports
  • Flooding (impacting mortgages, insurance rates)
  • Danger of melting ice caps/ice to shipping (owners, consumers, insurance)
  • Infrastructure stress/failures (roads, bridges, power grid)
  • Impact of rising sea level on shore-front property (it’s “sinking”)
  • Lawsuits over failure to properly disclose climate change impact in public filings (Exxon Mobil)
  • Water shortages (everywhere)
  • Impact of heat on theme park attendance (Disney, airlines, hotels)
  • Increase in pandemics (sick people don’t come to work/drive up health care costs)

For a more fulsome list of the climate change concerns (and – interestingly – opportunities) of a myriad of large companies, check out Bloomberg’s “Climate Changed: Corporate America Is Getting Ready to Monetize Climate Change.”   But, bottom-line, if you haven’t been thinking about climate change and how it may impact your company, now is the time to start.

10.  State Attorney Generals.  It’s easy sometimes for in-house lawyers to focus on Federal regulators like the DOJ or the FTC.  But, there is another group of regulators out there that in-house lawyers need to be aware of – State Attorney Generals.  These regulators have wide-reaching investigative and enforcement powers – antitrust, unfair competition, environment, privacy –  and they are getting more and more aggressive with using them, usually as a multi-state group (which just multiplies the fun for their target).  Moreover, Democrats picked up four AG seats in last November’s election, now holding a 27-24 advantage.  And while I don’t like to over-generalize, Democratic AG’s are probably more likely to launch an investigation on the margins than Republican AG’s.  Also, as the federal government backs away from enforcement, e.g., Consumer Protection Bureau, FDA, EPA, etc., state AG’s are more than willing to pick up the slack.  And it should be no surprise that California, New York, Hawaii, and Massachusetts have laws that give great powers to their AG’s.  I have been on both sides of an AG investigation – in terms of my company being a target (thanks trial lawyers) and my company seeking to get AG’s to take action.   I have a very healthy respect for State AG’s.  You should too.  More than ever, every legal department needs to be thinking about issues that could bring an AG investigation of their company and remedy that behavior or where they can lobby AG’s to take action in the interests of the company.  For more on State AG’s, check out the National Association of Attorneys General web site.

 *****

I know there is a lot here – and sorry it’s so U.S.-centric.  But, it’s only a starting point for things that could use your attention in 2019 (or any year for that matter).  To keep things manageable, pick an issue or two that you think may be the most problematic for your company or the department and focus on those (from this list or your own – and it’s important that you do some thinking about this relative to you and your company’s specific circumstances and location).  Use Google alerts to get information about your topics sent to you automatically.  Subscribe to blogs that deal with the topics that interest you.  The Wall Street Journal has a “Risk/Compliance” section that is very helpful (and you can subscribe to daily alerts). If the department is big enough, you can divide issues up between different attorneys with each responsible for monitoring different issues in depth.  Calendar a regular meeting (quarterly or monthly) to discuss what is going on with the different issues you are tracking.  If your company has a risk manager (or similar role), invite her to attend as well.  While it’s not something you are trained for in law school, in-house lawyers are expected to spot and manage risk.  Making sure you are doing so should be a regular part of your workday during 2019.

Sterling Miller

January 24, 2019

My third book was recently released.  It’s called The Slow-Cooker Savant.  Yep, it’s a cookbook.  Just one of my hobbies.  You can buy it here on Amazon.com or at SterlingMillerBooks.com.  The perfect gift anytime!

book_two

Follow me on Twitter @10ThingsLegal and LinkedIn where I post articles and stories of interest to in-house counsel frequently.  I also do consulting, free-lance drafting, and coaching for individuals and legal departments.

“Ten Things” is not legal advice nor legal opinion and represents my views only.  It is intended to provide practical tips and references to the busy in-house practitioner and other readers.  If you have questions or comments, please contact me at sterling.miller@sbcglobal.net.

 

 

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