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The CEO View of Legal – #1

2005 July 20
by John Wallbillich

I hope to offer the occasional insight into the CEO’s view of the corporate legal function. Today, two different voices:

Innovating rather than litigating.

Good Technology CEO Danny Shader was recently interviewed on CNET’s news.com. Mr. Shader was asked about licensing patents from NTP, who is waged in pitched litigation with BlackBerry maker Research In Motion:

(Interviewer): Patent-holding company NTP says you license their technology. I’m curious if you had any thoughts on how the patent dispute and contract negotiation between RIM and NTP is going to shake out.
Shader: I can’t speculate. We took a license because we think it’s better to spend our time and energy innovating on behalf of our customers rather than litigating at the end.

Based upon that comment, Mr. Shader appears to be a CEO focused on the best way to achieve business objectives and not one to litigate because you may have a case. The cost, distraction and uncertainty of litigation is easy for some CEOs to underestimate, and it is up to the GC to educate on these points as well as advocate a potential position. Companies sometimes move into litigation like a tropical storm builds into a hurricane. A bit of cold water helps both situations.

I can’t believe how much of your day can be taken up by legal.

While not a CEO (yet), Limited Brands COO Len Schlesinger gave a first person account to Fast Company in their clever “What I Know Now” feature:

I can’t believe how much of your day can be taken up by legal. Everything has legal implications. The governance issues all have legal implications. When you have 4,000 outlets, something happens in the stores every day that has legal implications. We’re in almost every state, so there are those regulatory authorities. Something’s always happening. And of course, I waste the most time on paperwork.

While this remark seems to describe a GC’s dream environment, it reveals a real challenge: if much of what we do appears to “take up” the day of the CEO/COO, we must do only what is required in the most effective way possible. Anything more–and there is always something else to do, or some other angle to address–is too much. Such a GC risks making the corporate legal department a boat anchor in the aforementioned hurricane.

So Lesson #1 of the CEO View of Legal:

Drive innovation and not just litigation.

And a bonus corollary:

Take the time needed–not a second more.

P.S. I found it interesting that Mr. Schlesinger is a former professor at Harvard Business School. I don’t know why he would want to leave the cutting edge academy that is HBS and join a stodgy company like Limited Brands.

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