Weighing legal counsel against other issues2008-06-13
A significant portion of my family is made up of lawyers. My brother, an uncle, several cousins all practice law of one type or another. I’ve also worked closely with corporate attorneys over the course of my career, and I can’t think of one who wasn’t a good, decent person. So I don’t view lawyers through the stereotypical filter that has produced volumes of lawyer jokes. They’re real people and most of them work hard to do a good job for their clients.
That doesn’t always mean their advice is always best. In the business world, a lawyer’s job is, in large part, the mitigation of risk. That’s why so many communicators seeking to implement social media in their organizations run into legal roadblocks. It’s not that launching a blog or participating in social networks is illegal per se, but rather that the lawyers—who are only doing their jobs—are obliged to report the potentially negative consequences that could result from such activities.
Some would have us believe that companies must—are required to—comply with every recommendation from the legal team. The fact that every corporation came into being as a legally-based form of organization does not mean that its purpose is legal in nature. As Encyclopaedia Britannica puts it, a corporation is a “specific legal form of organization of persons and material resources, chartered by the state, for the purpose of conducting business.”
So a corporation is born of legal standing but its reason for existence is the conduct of business.
That’s why the general counsel reports to the CEO, not the other way around. It is the job of the CEO to weigh legal counsel against other counsel and make a decision about what is best for the business. Of course, no CEO in his right mind (and there evidently are plenty who are not) would embark on any venture that is illegal. Conversely, a CEO can decide that the benefits of an activity outweigh the risk that a law might, maybe, be violated, particularly if safeguards are put in place to minimize that risk.
Such is the case with organizational engagement in social media. There are some leaders who simply bow to the legal department and reject blogging or other online social engagement. Then there are legal teams—like the one at Dell—that wholeheartedly support company blogging, even by the top investor relations official. In between, there are organizations whose leaders make judgments based on the company’s best interests.
Michael Hyatt, president and CEO of Thomas Nelson (one of the largest trade publishers in the U.S.), is one of these. Interviewed for the new book I have co-written with John C. Havens, “Tactical Transparency.” Hyatt’s outside counsel advised against his plan to encourage employees to blog, citing several risks. Hyatt thanked them for their input and went ahead with his plan which, he says, has produced none of the risks but has returned huge dividends to the company. When asked how he could reject the lawyers’ counsel, Hyatt said:
Leadership, whatever else it takes, it takes courage. You???ve got to be willing, as a leader, to set the pace, to be the example, to model what you???re asking others to do and to be courageous in the face of people who might be fearful or are only looking at the downside. You have to focus also on what???s the upside, and with very, very modest investments, the returns are huge.
(You can listen to the entire interview here.)
History validates Hyatt’s view. The let’s-mitigate-risk approach led legal teams to advise companies against adopting fax machines and email and instant messaging for many of the same reasons they are advising against social media today. Imagine business today if CEOs had listened to their lawyers and rejected email and fax machines! Besides, the lawyers are looking only at what could happen, not necessarily what is inevitable. The development and communication of policies has been incredibly effective at keeping company representatives from stepping on legal landmines. Besides, as Lynn Tyson—Dell’s vice president of investor relations—put it:
The ability for an investor relations department to execute this and do it well quite frankly is predicated on how well they do their jobs every day. And if there???s confidence in their ability to exercise sound situational judgment over the phone or over e-mails or in one-on-one meetings with investors or group meetings with investors or drafting press releases, then there should be that same level of confidence by the company in their ability to have a dialogue over the Internet.
The same goes for an engineer, a human resources manager, or a front-line employee.
As a senior communicator in two Fortune 500 companies, I worked hand-in-hand with the companies’ general counsels. Given their druthers, these top lawyers would have preferred the company didn’t communicate at all. The absence of communication means the absence of legal risk associated with communication. But, of course, these same lawyers recognized that the non-legal risks of not communicating were far greater. That’s why we worked together: to ensure solid communication while also minimizing the potential legal consequences of a misstatement.
I even worked with one associate general counsel who was very clear in a meeting where we were each making our case to management: “My advice is just the legal perspective. There are always other considerations.”
Every now and then, though, a leader had to intervene. In my first job, as an internal communications representative at ARCO in the mid-1970s, I wrote an article based on an interview with the president of the company’s minerals division. At that time, the threat of Congressionally-mandated vertical divestiture was looming, which caused the lawyers to excise a quote in which the president insisted that, should divestiture occur, the minerals division would be able to survive as an independent company.
In a meeting, the president listened respectfully to the lawyers’ arguments. When they were finished, he asked, “But is it true?” The lawyers agreed it was true. The president turned to me and said, “So print it.”
That’s courage. The lawyers did their job and the president made a decision based on all the factors. And wouldn’t you know, none of the lawyers’ concerns ever materialized.
There’s a reason, after all, that lawyers are called “counselors.” I have no issue with lawyers invoking legal risks when advising on social media. I just have problems with leaders who fail to weigh those risks against all other factors to make a decision based on the best interests of the business.