“In the twenty-first century, change is discontinuous, abrupt, seditious. In a single generation, the cost of decoding a human gene has dropped from millions of dollars to around a hundred bucks. The cost of storing a megabyte of data has dropped from hundreds of dollars to essentially nothing. Global capital flows have become a raging torrent, eroding national economic sovereignty. The ubiquity of the Internet has rendered geography meaningless. Bare-knuckled capitalism has vanquished all competing ideologies and a tsunami of deregulation and privatization has swept the globe.”
With these words Gary Hamel opens Leading the Revolution, generally regarded as one of the most insightful leadership and change management texts available. There is no question. We live in tumultuous times. Entire corporate and financial sectors, and the companies within them, continue to converge, restructure, merge and morph at an almost unbelievable speed and scale. Yet, it is not change in and of itself that is important. We all know we live in a time of massive change. The expression “paradigm shift” has rapidly attained the status of a cliché. What is important is how we respond to change.
This article looks at an evolving and accelerating adaptation to change that is taking place within the legal profession: lawyers as corporate executives. Lawyers have historically been trained to protect clients from risk. Accomplished corporate executives, on the other hand, shrewdly assess risk, take measured risks, and even take significant risks where circumstances warrant. But boundaries are blurring. More lawyers are crossing over from law to the corporate world of their clients. Not as in-house counsel, but as senior executives. In a related development, more young women and men are enrolling in joint LLB/MBA programs. Whether you are a law student pondering how best to prepare for your future career, or a successful practitioner seriously considering “crossing over,” we believe you will derive considerable benefit from the experiences of the remarkable group of lawyers interviewed for this article.
Perhaps no one appreciates change more than Calin Rovinescu. After 22 years of corporate practice with Stikeman Elliott in Montreal, a professed “deal junkie,” head of the firm’s corporate and commercial practice, managing partner of the firm’s London, England office, and a career as one of Canada’s top M&A counsel, addicted (in his own words) to “MDS” (multi-dimensional stimulation), Rovinescu has, since April 2000, held the number-two slot at Air Canada as the Executive Vice-President, Corporate Development and Strategy. “At a time of tremendous turmoil and change,” says Rovinescu, “we are re-engineering the culture of Air Canada. Just one of our challenges, for example, is figuring out how to get management to re-shape what was once a crown corporation, which then acquired a bitter competitor, and turn it into a more entrepreneurial entity that is better and stronger. This business is about so much more than bums in seats. Technology and the Internet have had a massive impact on things like the whole reservation system, the frequent flyer program, etc. Add to that such issues as changing labour relations, divestitures, regulation, cross-border competition, and a host of other things, and we’re talking major transformation.” Rovinescu has “crossed over,” from the role of an accomplished lawyer to that of a senior corporate executive. And he relishes the opportunity.
Rovinescu is part of a trend: the blurring of the boundary between law and business. The number of lawyers crossing over is increasing. Names that immediately come to mind are John Tory, Q.C., President and Chief Executive Officer of Rogers Cable Inc. (formerly practising with Torys), David Drinkwater, Executive Vice-President, Law and Corporate Development, Ontario Power Generation (OPG) (formerly Osler, Hoskin & Harcourt LLP), and Geoffrey Belsher, Executive Managing Director, Co-Head Mergers & Acquisitions, BMO Nesbitt Burns (formerly Blake, Cassels & Graydon LLP). There are many others such as Henry Sykes (formerly Bennett Jones LLP), President and CEO, Conoco Canada Limited, and Messrs. Beattie and Binet (both formerly Torys) who are the President and Vice-President, respectively, of The Woodbridge Company Limited. More recently, some lawyers who left practice to become executives have returned to the profession, i.e. “switchbacks.” Names that again immediately come to mind are Purdy Crawford, Q.C., (formerly Chairman of Canada Trust Financial Services and non-executive Chairman of Imasco Limited), Peter Dey (formerly Chairman of Morgan Stanley Canada Ltd.), and Brian Levitt (formerly President and Chief Executive Officer of Imasco Limited), all of whom returned to Oslers, and Garfield Emerson, Q.C. (formerly President and Chief Executive Officer of NM Rothschild & Sons Canada Limited), who recently joined Fasken Martineau DuMoulin LLP.
The trend is not huge, but it appears to be accelerating. It has happened before, but it seems more so now. In order to find out why, we interviewed 14 lawyers who are either now in senior executive positions in major Canadian corporations or have recently returned to practice from such corporations. We asked them if there were macroeconomic forces at work creating the conditions for people like them to cross over. We asked, who was being recruited to cross over, and why were they interested? How did the law, and their particular practices, prepare them to take on senior executive roles in business? And what were they not prepared for? What did they see as the big cultural differences in the roles? Finally, what advice would they offer to young lawyers who might want to follow them 15 years hence?
Crossing over in Canada is not new. There have been a few notable examples of successful crossovers to business—for example, John A. Tory, Q.C., from Torys, now President of Thomson Investments Limited, and Fraser Fell, Q.C., from Fasken & Calvin (now Fasken Martineau DuMoulin) who became Chairman of Placer Dome Inc. But it is unusual. “The number of business lawyers who actually cross over to business are still but a small fraction of the legal profession,” says Brian Levitt, who, along with Norman Loveland, now heads up Oslers’ new Montreal office. And Levitt is right. Historically, such career transitions have been seen as interesting exceptions to the rule of a life-long career in law. When Purdy Crawford made the successful transition from Oslers to Imasco in 1984, he was, and is still regarded by many today, as the prototype for the successful lawyer turned corporate executive. But why is there a clear sense that this trend is accelerating?
Why Now? Convergence
The corporate landscape is changing rapidly. Gary Hamel’s glimpse into the 21st century is unnerving. How it is actually played out in Canada and the impact it is now having on the legal and business landscape provides useful insight as to how this new lawyer turned corporate executive career model may take shape.
The convergence of industries is occurring globally and continues to be a primary driver of M&A activity. Prime examples in Canada are the media, cable, and telecommunications sectors. Convergence requires a sophisticated understanding of not just content, technology, transmission, marketing, etc., but an equally firm grip on such areas of law as securities, competition, regulatory structures, and others. Corporations that are active players in convergence need highly skilled professionals who can understand and navigate the business, legal, financing, regulatory, political, policy, etc. issues all at once. In short, perfect territory for a lawyer who knows the business of his client.
“In 1995, Ted Rogers called me,” recalls John H. Tory, CEO of Rogers Cable (formerly of Torys). “He had just finished acquiring Maclean Hunter and was going to create a new media company which was a combination of Rogers broadcasting assets, the Maclean Hunter broadcasting assets, the Maclean Hunter publishing assets and The Shopping Channel on TV. Rogers also owned a controlling interest in the Toronto Sun. Ted Rogers asked me to become the President and CEO of this new Rogers Media company. If you had all of the jobs that might get me interested in leaving a law firm, this would be the one.” Why him? Because Tory had an intimate knowledge of his client’s business, the legal management skills, the connections, and the trust of his clients.
John Tory had only been a lawyer for two years when he became the Principal Secretary to then Ontario Premier William Davis. Four years in that job opened up the whole world of public policy, regulation and how government works. It also gave him a great teacher on how to lead people. “My key mentor was Davis. I watched him forge a consensus among 30 people around the cabinet table on difficult issues every week.”
Returning to practise at Torys in 1986, Tory specialized in government affairs, legislation, regulatory and administrative law. This deepened his knowledge of how to get things done in regulated environments. At the same time, he began building his ties with Rogers. His father was an advisor to Ted Rogers and Tory was asked to be on the board, to advise the family companies, trusts, etc. Over time, he became a “trusted advisor” to the Rogers companies.
“Torys was great that way,” he says. “They encouraged their lawyers to become valued business advisors and cross over. Essentially the firm said, ‘If you are thinking about this kind of move at any stage in your career, we want you to know we think it’s great.’ When you think about it, how better can you forge a relationship with a client than by having one of your former partners sitting in a senior role in their executive offices? At Torys, those who ended up with the most fulfilling careers, and who produced the best economics for the firm, were those lawyers who became valued business advisors, relationship managers and assemblers of talent within the firm.”
In 1990, John Tory was elected one of two managing partners of Torys, with a focus on the financial and business aspects of the firm. As he recalls: “Leadership roles in law firms are invaluable in helping you to cross over. The managing partner role is a position of responsibility but not authority. You learn how to persuade and gain consensus, and when to use authority in a limited way when you have to. You learn to invest in leadership, giving good direction, treating people well, developing them, and how to structure and resource work to get the right results. You learn the p&l and the big picture. And you learn how to administer, how to bill and collect. Even in big companies, success is in the basics.” Why was he asked to cross over? “I was a long-standing trusted business advisor. Ted had seen me in action. I knew many of the issues they were facing. And I had managerial experience.”
Deregulation
As Hamel observed, a tsunami of deregulation and privatization is sweeping the globe, producing a host of new challenges. There is no better example in Canada than the utilities sector. The monolithic Ontario Hydro Energy Inc. has been broken up and the various successor entities are preparing themselves for competition. In this mix of chaos and opportunity we find two lawyers turned senior executives, David Drinkwater and Eleanor Clitheroe.
Drinkwater is Executive Vice-President, Law and Corporate Development for Ontario Power Generation (OPG). One of six EVPs, he oversees all non-nuclear regulatory affairs (i.e., relationships with the Ontario Energy Board, the National Energy Board, US energy boards, etc.), manages corporate development and strategic planning (including all mergers and acquisitions), supervises the general counsel, and sits on various committees (executive, risk oversight, etc.). How did he get here?
Drinkwater started by getting an MBA at the Richard Ivey School of Business at the University of Western Ontario. He then went to law school. “Ivey taught you to prioritize issues, which made law school easy,” he says. Early in his legal career at Oslers, Drinkwater went on secondment as the executive assistant to James C. Baillie, Q.C., then chair at the Ontario Securities Commission (OSC) when the Securities Act was undergoing a massive revision. Returning to Oslers, he built on this specialization, working in and then managing the firm’s securities group, and then heading up the firm’s corporate department. Subsequently, he became the managing partner of Osler Renault, a London, England joint venture between Toronto-based Oslers and Montreal-based Ogilvy Renault.
In 1996, after over twenty years at Oslers, Drinkwater became general counsel at Bell Canada, working directly with Ron Osborne, Bell’s President and CEO. In 1998, he followed Osborne to OPG “to get in on the ground floor of deregulation.” “I was lucky in three ways,” Drinkwater notes. “One, Oslers has the most lawyers who have crossed over successfully into executive management. It is part of the culture, taught by Purdy Crawford. Two, I specialized early. The experience at the OSC had me making public presentations and developing a profile long before I became a partner. Three, being a managing partner taught me good interpersonal skills, good persuasion skills, and good organizing and delegating skills. All three things have helped me in my business roles.”
Eleanor Clitheroe is the President and Chief Executive Officer of Hydro One Inc. She is responsible for the high and low voltage transmission lines, the retail side of the business, and the forthcoming entry into telecom. Clitheroe crossed over early in her career. After studying law at McGill and Western, she completed an MBA, then articled at Torys in capital markets and securities law. Soon after she moved to CIBC as Assistant Manager Capital Funding, helping the bank respond to the new rules on capital adequacy. From there she moved to Treasury, on the money market side, to stints in retail in product development and marketing, and then back as VP, Global Treasury. From 1989-1993, she went into government, ending up as Deputy Minister of Finance for the Province of Ontario. In 1993, her finance background took her to Ontario Hydro as CFO, where she became accountable for getting the restructuring underway. In 1997, she became responsible for transmission, distribution and retail, which formally became Hydro One in 1999.
“Law really permeates everything we do here,” she says. “Law gives you a good understanding of how regulatory structures operate, how contracts function, how negotiations work, etc.” According to Clitheroe, it also teaches you how to think. “Law teaches you the Socratic method. You are presented with a set of facts and some problems. You have to follow a set of principles. You have to search for evidence. You have to present your thoughts, see alternate viewpoints, anticipate and counter objections, argue and make recommendations. You have to use abstract and lateral thinking to reason out what is the next step in the evolution of this body of common law. I found the MBA to be less rigorous, more functionally-based than problem-based.” For Clitheroe, the law was and is a supremely important skill set enabling her to function as CEO.
David Feldberg makes the same point. Feldberg, President and CEO of Teknion Corporation, crossed over early, from law at Minden Gross Grafstein & Greenstein LLP into the family business. “Did I want to be a partner or a principal?” he says. “When I was exposed to the corporate commercial deals at the law firm, I realized I would rather be the one doing the deals.” Feldberg thinks there is no substitute for how the law teaches you to think. Law teaches you how to analyze situations, how to get to the heart of the matter quickly, frame alternatives, think on your feet and act confidently (even when you are not), and present your case in a cogent manner. There is no better training.”
Consolidating Markets, New Competitive Models
On an increasingly continental and global scale, corporations are consolidating, technology is changing how organizations compete, alliances are being formed and reformed at an ever faster rate, and businesses are developing “clusters” of related ventures in order to increase their “share of wallet” and capture the higher multiples the stock market attributes to some business models versus others. Air Canada provides a valuable illustration.
Privatized in 1986, Air Canada went through an aborted merger with Canadian in 1992, fought off the threatened Onex takeover in 1999, and merged with Canadian Airlines in 2000. Meanwhile, new low-cost competitors like WestJet have emerged, the airline alliances have become increasingly important, government and regulatory issues have moved centre-stage, and Aeroplan is regarded by some analysts as more valuable than the airline itself. In all, it is a perfect place for a self-professed MDS addict like Calin Rovinescu.
Not only is Rovinescu in charge of strategy and corporate development, mergers and acquisitions, alliances and international affairs, and “structural solutions to shareholder value,” he also oversees the Chief Information Officer, the Vice-President of People, the Senior Vice-President and General Counsel, the Vice-President of Aeroplan, and the Senior Vice-President of Government and Public Affairs.
Rovinescu started out working with entrepreneurs doing financings in the film industry, moved into securities law, and by the early 1990s was specializing in M&A work. He honed his skills in deals such as CN’s first cross-border financing in the early 1980s and acted as lead counsel (when he was 29) for Mercantile Bank when it was acquired by National Bank of Canada in 1989. “I participated heavily in the strategies of these businesses, not just providing legal advice.”
Rovinescu was lead counsel to Air Canada in its 1986 privatization. At that time he deepened his relationships with the top 10 to 15 officers and came to know much about the company: the regulatory context, the marketing of the IPO, the terms of the employee share purchase plan, how the frequent flyer program worked, etc. Along the way, he entered management roles within Stikeman Elliott. He ran recruiting. He became the head of the firm’s corporate commercial practice. In 1993, he moved to London to head Stikemans’ European practice, focusing on Eastern Europe and the flood of privatizations following the end of the Cold War.
Subsequent to his return to Canada, Onex’s threatened takeover of Air Canada brought him and Air Canada CEO Robert Milton in close contact. By April 2000, when he crossed over to Air Canada, Rovinescu already had a unique blend of legal acumen, business skills and relationships combined with an in-depth understanding of Air Canada’s strategic opportunities and threats. “That was when I could start using real bullets,” he says. “But first I had to really think about the value I could bring in changing Air Canada.”
Talent Is Increasingly Scarce
By now, anyone who can breathe, read the financial press or listen to the TV or radio knows that attracting and retaining top talent is still the number-one issue that keeps CEOs awake at night. The recent economic downturn provides, at best, a respite. Demographic realities are such that we will soon be facing an unrelenting shortage of talent, particularly top leadership and management talent. Corporations are looking outside their normal talent pools, and law firms are one unconventional arena in which top performers are now seen by some executives as essentially low-hanging fruit.
At the senior level, talent is in high demand and knowledge-reliant firms are searching for the people who can do the job. That is how Lawrence Haber came to National Bank Financial from Toronto-based Fogler, Rubinoff LLP. Haber is an Executive Vice-President, responsible for corporate development (strategic planning, acquisitions and new ventures) and supervising non-financial risk management, legal, compliance and the corporate secretary. “I started as a securities and corporate lawyer and was lucky enough to be mentored by Lloyd Fogler, who drummed into me that you first had to know the client’s business, then the law. I specialized early in the financial services business, structuring business transactions and dealing with regulatory and compliance issues. When First Marathon Inc. merged with Levesque Beaubien Geoffrion Inc. under the National Bank of Canada umbrella, it created a larger, more complex operation. The CEO, Kym Anthony, saw a need for a role that didn’t exist before, someone who could provide oversight, checks and balances but who didn’t have an operations role. I think they valued my judgment, my knowledge of the industry, and my ability to deal with all manners of stakeholders.”
To attract the talent, business can frequently offer better compensation and more challenging work. Law firm compensation is still largely driven by the billable hour which, with lockstep remuneration structures, is a disincentive to many ambitious people. “There can be a huge compensation upside attached to business,” says David Allan (formerly at Blakes), Managing Director and Head of Securitization at CIBC World Markets. “Wall Street has strong allure,” says Geoffrey Belsher (formerly at Blakes), Executive Managing Director, Co-Head of Mergers and Acquisitions, BMO Nesbitt Burns, “and we are still losing valuable human capital to New York.”
Business can also offer more challenge. “Lawyers find it attractive to go into a company, work in the legal department, and then have the opportunity to transition into a business unit job,” says David Drinkwater. “I believe there will be lots of movement from Ontario Power’s law group to the business units.”
At the other end of the demographics, Canada’s future talent pool will be comprised of a new generation, coined the Nexus Generation, who already clearly march to the beat of a different drummer. More independent, self-confident and educated than any of the previous generations, they are more likely to have three to five distinct careers during their professional lives and are much less likely to pledge a lifelong allegiance to any one firm. Their values too are different: they want challenging, new and different learning/career experiences and life-work balance among other things.
While these emerging professionals will have more choice and are likely to be in higher demand, they will also face more pressure and stress. In short, they are likely to redefine the model for whatever careers they pursue. “This trend is going to continue to grow,” says John Tory. “Young people today will have blocks of four to five years in different roles. They simply plan to have more than one career.” And this is where the other shoe drops for practically every major business law firm across Canada. As David Drinkwater observes, presciently in our view: “Law firms should market themselves as places to learn and stay for a while.”
Changing Law Firm Cultures
Changes occurring within the legal profession itself, including the organizational structure of firms, provide yet further explanation as to why lawyers are crossing over. At the top end of the market, law firms across Canada have embarked on a massive consolidation. Firms aggressively seek to expand their client reach both within and outside Canada. As we found in last year’s article (“Lawyers and Leadership,” Lexpert, July/August 2000), as their size grows, top-end law firms are beginning to resemble their corporate clients more closely. As such, they are faced with similar business issues including strategic planning, financial management, marketing, human resources and leadership.
Business acumen is increasingly a competency of value not only to one’s clients, but to the firm itself. “Law firms have traditionally been partnership-driven,” says Geoffrey Belsher, “but increasingly the cultures of firms and business are merging. For example, law firms are becoming more focused on value and the bottom line. Increasingly, there are more similarities than differences.” One significant implication of this trend is the potential that can be realized by firms that are able to attract legal business leaders back into their fold. Examples include Purdy Crawford, Peter Dey and Brian Levitt, who have returned to Oslers. While the value that these “switchbacks” can provide law firms in terms of competitive advantage is significant, Belsher and others are quick to point out that issues of compensation and reward will have to be addressed. “However, to go back would be hugely additive,” Belsher observes.
Who Is Asked?
Over and over again, we heard that the lawyers who were asked to cross over were those who had become “trusted business advisors.” “When you have graduated to the ultimate role of the highest value with the most and deepest relationship with a client where they will not abandon you,” says John Tory, “it is to the role of the trusted advisor. They no longer think of you simply as a lawyer. They are calling on you as a trusted advisor and you have bonded that relationship to the point where almost nothing will tear it apart. You are crazy not to do that whether or not you cross over.” (Editor’s Note: The expression ‘The Trusted Advisor’ is the title of David H. Master’s new book on professional service firms, co-authored with Charles H. Green and Robert M. Galford.)
Jeffrey Blidner is a case in point. Blidner is Vice-Chairman of Trilon Financial Corporation, responsible for expanding Trilon’s asset management activities (bridge financings, restructurings, and third-party capital). He also remains a part-time partner with Toronto-based Goodman and Carr, and spends one day a week as an advisor to the Global Group of Companies. Blidner and Trilon originally came together through a mutual client. He was outside counsel to Trilon for three years before they began discussing his crossing over. Blidner brought huge depth in financial structuring. “I have seen hundreds of term sheets,” he says. “I can look at the workability of all kinds of structures and avoid false starts.” According to Blidner, “lawyers bring a different perspective and discipline that organizations value. They are trained to go from concept to detail very quickly.”
Trilon represented a broad cross-section of the economy and lots of opportunity. Still, Blidner and Trilon spent more than a year talking. “Trilon tells me ours were the longest negotiations they ever had with anybody.” Both sides knew the skill fit was there. They wanted to be sure that the advisor role that worked so well “on the outside” would in fact “work on the inside.”
Trusted business advisor is a multi-faceted term. It implies relevant, focused legal skills. The number of lawyers we interviewed who specialized in either securities and/or regulatory law is noteworthy. “Generally,” says Eleanor Clitheroe, “the expectation in the mindset of an organization, if it is bringing a lawyer in, is often for legal advice. They just don’t naturally think of recruiting executive positions from the law firms. With securities deals, the similarities become apparent early to both sides.”
It requires an interest in and aptitude for business. “I was very business-oriented,” says Purdy Crawford. “I was already preferring the Harvard Business Review to legal publications. As I became involved with M&As, they of course involved strategic and tactical advice. I started to bring a bright young lawyer along to give the legal advice and I would be thinking, ‘Boy, wouldn’t it be tempting to be a CEO?’ I was already starting to cross over.”
It assumes knowing the industry and the company exceptionally well. All would agree with Lawrence Haber, who says “Get as much exposure to the business world as possible. Always be focused on your client, their objectives, how they make money, how they are performing, what their strategic issues are.” It requires that you become a close member of the management team. “Go to their industry conferences and ask to attend their management meetings. Let them know you aren’t charging for this, that it’s part of your education, development, whatever. It’s the best investment of time you will make and it will come back to you ten times over,” says John Tory. It also entails working with and coming to know the senior management very well. “Lawyers get more face time with senior management on critical issues,” says Jeffrey Blidner. “It makes them a natural to become a trusted advisor and then to cross over.”
The Role of Mentors
The importance of mentors in the early training of almost all of our lawyers-turned-executives is quite striking. It is so important that we are tempted to call the presence of a strong business-oriented mentor a critical success factor. “Stanley Hartt [then a senior partner at Stikeman Elliott in Montreal] threw me in the deep end early,” says Calin Rovinescu. “He taught me to think quickly on my feet. ‘You know that client I told you about,’ he would say. ‘They are expecting an answer from you next week. I can’t be there.’ He taught me how to have confidence and shoot from the hip. He mentored me about the big picture. No matter what the transaction was, he would look at things from the standpoint of numerous stakeholders: securities regulators, the Ministry of Finance, etc.” Later, David Angus, Q.C., also a senior partner at Stikemans in Montreal, would take him to dinner and explain everything that was happening in the firm. Harold (Sunny) Gordon, Q.C., a former major rainmaker at Stikemans (now Vice-Chairman of Hasbro Corporation in Rhode Island), taught him how to bring new clients on board.
John Tory learned a lot about the importance of and necessary skills in building consensus among stakeholders from then Premier William Davis. Important mentors for Geoffrey Belsher were David Jackson at Blakes, a former Chairman of the firm, and David G. Ward, then Head of Mergers and Acquisitions at Nesbitt Burns and now with TD Securities. Geoffrey Blidner’s first mentor was Herbert Abramson at Goodman and Carr, who now runs a stock brokering operation. “He taught me that you must understand the business or you cannot be a good counsel.”
These examples of mentors, some of whom have become close friends for 20 or more years, indicate that those who wish to move into this hybrid world of law and business will do so more easily if they begin to cultivate such relationships early on. In more than one instance, we saw mentors becoming employers.
Why Cross Over
All of our crossovers had successful careers at their law firms. All had been approached before and said no. What drew them across the line this time? For many, it was the new challenge.
Lorie Waisberg is Executive Vice-President, Finance and Administration of Co-Steel, Inc. Waisberg left Goodmans LLP in Toronto (then Goodman Phillips & Vineberg LLP) where he was a top corporate/M&A lawyer. “The fact that it was a change turned me on,” says Waisberg. “It was an interesting and challenging project with a limited life. I thought it would open some clogged cells. It was very refreshing.” A fresh challenge with an interesting project was the most important aspect for Waisberg, but he goes on to identify other considerations. “You do think about economic issues, naturally,” he says. “I was making a lot of money at Goodmans but not really dealing with retirement issues. Lawyers often make a lot of money, live well, and don’t think about tomorrow. Today, I make a lot less in salary, but the pension benefits over-compensate for the difference. There are other upsides such as bonuses. If we get this thing turned around there could be some very serious money. Some of that is within my control and some at the whim of global markets for steel.”
Waisberg, and most others we spoke to, talked about the consideration they gave to lifestyle. Some, like Waisberg, thought they might be able to work fewer hours. Most found that they are working as many hours but that the stress is different. This is an important point. Geoffrey Belsher describes the stress in legal practice as more a grind with the constant need for absolute attention to detail. In contrast, according to Belsher, the stress in business comes from rapid and overlapping transactions.
Dollars and lifestyle go somewhat together. Law firm compensation is based on time and the better one is perceived to be, the higher the rate for the time spent. Organizations pay more for value of deals and end value. Their compensation typically includes such performance incentives as stock options and bonuses. The return can be higher but so too the risk. As Blidner notes, “I docketed 2,400 hours per year as a lawyer, year in and year out. Now, the money works for you even if you are not working. That makes the dollars better and the lifestyle much improved.”
What Waisberg, Belsher and others describe in the trade-offs on types of stress typifies the invigorating impact that change can have on some individuals. All the lawyers we interviewed also talked about how much they enjoyed this change, which points to a key principle about stress that Dr. Hans Selye reported on more than 50 years ago. It is not the hours or volume of effort we expend that causes burnout, but rather minimal satisfaction received. It is work that has become tedious that wears us down. Highly satisfied people often work longer and harder but feel less stress than others.
It thus comes as no surprise that intellectual stimulation was a key consideration identified by many of the lawyers. “At Trilon,” says Blidner, “I get to deal with a broad cross-section of the Canadian economy. I knew I would learn a lot and be part of something much bigger.”
“I was interested in getting in on the ground floor of deregulation,” says David Drinkwater.
These were the reasons for crossing over that were given to us. What we didn’t hear was that they were fed up with law or burned out. What this indicates is that the kind of individuals who migrate towards roles that combine business and law tend to be operating at or near the top of what is called Maslow’s hierarchy of needs. They are more willing to take risks because they are more financially and emotionally secure. They are worried less about esteem because they have confidence and are competent at what they do. And so they tend to be looking for new opportunities to learn, stretch themselves, interact with other bright people and generally get the most out of what they do. This is called self-actualization.
Two Plus Two = Five
One of the most valuable skill sets characteristic of the combined legal-business role that we heard about over and over is the way it fuses together some of the best skills of legal and business thinking. For example, when one combines what Geoffrey Belsher, Jeffrey Blidner and Eleanor Clitheroe and others describe as the unique legal thinking that “teaches you to go from concept to detail very quickly” with the business basic of bias for action you arrive at a very different approach and perspective on risk. Jack Welch, the famous CEO of GE, recently described the bias for action: “where you find 50 reasons to do something and 50 to not, always go with the 50 reasons that say ‘do it.’” This kind of two plus two equaling five skill set leads to what change management guru Noel Tichy calls a “transformational skill.”
Transformational skills allow those who possess them to look at and change things differently, i.e. to think outside the box. They also enable those who possess them to move faster and with greater flexibility, as their roles are no longer restricted by preconceived boundaries. Lawyers’ roles, for example, are clearly defined as advisors while business people are deciders. These lawyer/business leaders will tend to transcend these career boundaries and act more freely as advisor-decider according to the dictates of a given situation.
The one set of skills that every individual interviewed felt to be of immense value was legal reasoning itself. “Law teaches you to think rationally, write and present ideas clearly and convincingly,” says Geoffrey Belsher. “You learn to separate what is most important from a vast sea of information,” says John Tory. “I use my legal thinking skills virtually every day,” says Eleanor Clitheroe. “The law teaches you a method of thinking that never leaves you.”
And there is no question that good lawyers fuse their legal thinking skill set with business thinking capabilities. As Calin Rovinescu explained, “70 per cent of what I now use I learned from clients and practising law. I have worked on a huge variety of transactions: ‘A deal is a deal is a deal.’ The other 30 per cent of what I now use comes from management experience within Stikeman Elliott. I learned politics. Corporations could learn a lot from partnerships in how to do a better job creating consensus and how to impose a solution if you have to.” With respect to this latter point, John Tory is in complete agreement. “Leadership roles in law firms are invaluable in helping you to cross over.”
What You Don’t Learn At Law School
We also asked the lawyers interviewed what their legal background did not prepare them for. Some points were obvious. Almost all wished they had more financial training. “I had to improve my skills in financial analysis and discounted cash flows,” says John Tory. David Drinkwater thinks lawyers have to improve their presentation skills. “They need to learn how to synthesize and simplify faster than they do, especially for board presentations.”
Other differences are less obvious. For one, you move from agent to principal, from advisor to decision-maker. “I feel it in my stomach,” says Lawrence Haber. “I used to know where I started and where I stopped and I slept well knowing I had done my best. Now [as a decision maker] it is more all-encompassing.” Further, the cultures are often quite different. “The corporate world is more vertical and siloed,” observes David Drinkwater. “The legal firm is more horizontal. You have to realize that people in corporations think more vertically. If you want to get help from other functions, you have to spend more time than you realize building relationships with your other peer heads.” Drinkwater also thinks that the lawyer is more dependent on his/her relationship with the CEO. “The chemistry between you and the CEO is the beginning and the end,” he says. “In a law firm you can move around more.”
The final difference is quite subtle. You move from a solo role to being more of a team player. Many lawyers come, by nature and by training, to rely principally on themselves. Even when they are part of a team on a file, they know that they can fall back on their own knowledge and skills if they have to. They work and act independently.
This is not possible in a senior role in business. The knowledge is more varied; you have to rely on a team. For David Drinkwater, this is a central point. “As a lawyer, you realize you can always fall back on your personal knowledge. In a corporation, you have to rely on your team and be comfortable with that dependence.”
Profiles
The operative word around career planning today is role. Jobs are passé, as are fixed career labels. Roles are portfolios of diversified skills that are more flexible. They can and do evolve to match changes inside and outside one’s working environment. A distinguishing feature of this business/legal role, for example, is that it is uniquely customized for each individual we spoke to. That being said, here are some of the most striking characteristics of the group:
1. They represent all age groups and stages in their careers, but they are seen as leaders, some at the pinnacle of their career, others as up-and-comers. As David Allan at CIBC World Markets advises, “If your ultimate objective is to cross over, stay long enough in the law to establish and distinguish yourself as a leader in your practice area.”
2. At this point, we were hard-pressed to find many women in this role. Regrettably this accords with a recent study of the American Bar Association which found that only about 10 per cent of in-house counsel at Fortune 500 companies were women. It is noteworthy that exclusion from informal social activities and mentoring networks were cited as major barriers.
3. The recruitment, selection process and gateway is often characterized by established, long-term relationships with clients. Corporate clients feel they know and understand trust-based relationships. The lawyers who cross over know their client’s organization, business, and strategic objectives and challenges intimately.
4. As mentioned previously, this group demonstrates early on a natural interest in business and aptitude for it. Many had family, friends, and mentors in both business and political circles. About half have MBAs. Those who don’t wish they did. The legal and business mentors play a very important, often determinative, role.
5. Perhaps one of the most distinguishing characteristics that set these professionals apart from either their legal or business colleagues are their consensus-building skills and the way they approach risk. Generally speaking, these individuals have reached a sufficient level of accomplishment and self-confidence within their legal careers that they begin to think more in business terms; again to quote Jack Welch, “where you find 50 reasons to do something and 50 to not, always go with the 50 reasons that say ‘do it.’”
Conclusion
Thinking through a problem is something that people with legal training do better than most. The evolving role of the legal/business professional is ideally suited to the speed and complexity of today’s changing business and legal environment. Jack Welch at GE is well known for coining the term “boundaryless.” Almost twenty years ago, he forewarned that sector specific business and financial services boundaries were starting to come down and that we would all have to move faster. It should come as no surprise that boundaries between law and business are dissolving as well and so too the traditional role differentiation between lawyer, investment/corporate finance executive and CEO. In this respect, discussing whether the number of people crossing over from law to business is creating a trend misses the point entirely. The fact is that these new professionals are combining two very complex sets of skills into a role that gives them speed and agility in the kind of environment in which they do what they do best—and this can be either in a law firm or in business. To use Calin Rovinescu’s words, it also enables them to “start using real bullets.”
Irene Taylor is a senior leadership consultant with Johnson Smith International, a Toronto-based management consultancy specializing in strategic change. Mark Smith is the firm’s Managing Partner.
With these words Gary Hamel opens Leading the Revolution, generally regarded as one of the most insightful leadership and change management texts available. There is no question. We live in tumultuous times. Entire corporate and financial sectors, and the companies within them, continue to converge, restructure, merge and morph at an almost unbelievable speed and scale. Yet, it is not change in and of itself that is important. We all know we live in a time of massive change. The expression “paradigm shift” has rapidly attained the status of a cliché. What is important is how we respond to change.
This article looks at an evolving and accelerating adaptation to change that is taking place within the legal profession: lawyers as corporate executives. Lawyers have historically been trained to protect clients from risk. Accomplished corporate executives, on the other hand, shrewdly assess risk, take measured risks, and even take significant risks where circumstances warrant. But boundaries are blurring. More lawyers are crossing over from law to the corporate world of their clients. Not as in-house counsel, but as senior executives. In a related development, more young women and men are enrolling in joint LLB/MBA programs. Whether you are a law student pondering how best to prepare for your future career, or a successful practitioner seriously considering “crossing over,” we believe you will derive considerable benefit from the experiences of the remarkable group of lawyers interviewed for this article.
Perhaps no one appreciates change more than Calin Rovinescu. After 22 years of corporate practice with Stikeman Elliott in Montreal, a professed “deal junkie,” head of the firm’s corporate and commercial practice, managing partner of the firm’s London, England office, and a career as one of Canada’s top M&A counsel, addicted (in his own words) to “MDS” (multi-dimensional stimulation), Rovinescu has, since April 2000, held the number-two slot at Air Canada as the Executive Vice-President, Corporate Development and Strategy. “At a time of tremendous turmoil and change,” says Rovinescu, “we are re-engineering the culture of Air Canada. Just one of our challenges, for example, is figuring out how to get management to re-shape what was once a crown corporation, which then acquired a bitter competitor, and turn it into a more entrepreneurial entity that is better and stronger. This business is about so much more than bums in seats. Technology and the Internet have had a massive impact on things like the whole reservation system, the frequent flyer program, etc. Add to that such issues as changing labour relations, divestitures, regulation, cross-border competition, and a host of other things, and we’re talking major transformation.” Rovinescu has “crossed over,” from the role of an accomplished lawyer to that of a senior corporate executive. And he relishes the opportunity.
Rovinescu is part of a trend: the blurring of the boundary between law and business. The number of lawyers crossing over is increasing. Names that immediately come to mind are John Tory, Q.C., President and Chief Executive Officer of Rogers Cable Inc. (formerly practising with Torys), David Drinkwater, Executive Vice-President, Law and Corporate Development, Ontario Power Generation (OPG) (formerly Osler, Hoskin & Harcourt LLP), and Geoffrey Belsher, Executive Managing Director, Co-Head Mergers & Acquisitions, BMO Nesbitt Burns (formerly Blake, Cassels & Graydon LLP). There are many others such as Henry Sykes (formerly Bennett Jones LLP), President and CEO, Conoco Canada Limited, and Messrs. Beattie and Binet (both formerly Torys) who are the President and Vice-President, respectively, of The Woodbridge Company Limited. More recently, some lawyers who left practice to become executives have returned to the profession, i.e. “switchbacks.” Names that again immediately come to mind are Purdy Crawford, Q.C., (formerly Chairman of Canada Trust Financial Services and non-executive Chairman of Imasco Limited), Peter Dey (formerly Chairman of Morgan Stanley Canada Ltd.), and Brian Levitt (formerly President and Chief Executive Officer of Imasco Limited), all of whom returned to Oslers, and Garfield Emerson, Q.C. (formerly President and Chief Executive Officer of NM Rothschild & Sons Canada Limited), who recently joined Fasken Martineau DuMoulin LLP.
The trend is not huge, but it appears to be accelerating. It has happened before, but it seems more so now. In order to find out why, we interviewed 14 lawyers who are either now in senior executive positions in major Canadian corporations or have recently returned to practice from such corporations. We asked them if there were macroeconomic forces at work creating the conditions for people like them to cross over. We asked, who was being recruited to cross over, and why were they interested? How did the law, and their particular practices, prepare them to take on senior executive roles in business? And what were they not prepared for? What did they see as the big cultural differences in the roles? Finally, what advice would they offer to young lawyers who might want to follow them 15 years hence?
Crossing over in Canada is not new. There have been a few notable examples of successful crossovers to business—for example, John A. Tory, Q.C., from Torys, now President of Thomson Investments Limited, and Fraser Fell, Q.C., from Fasken & Calvin (now Fasken Martineau DuMoulin) who became Chairman of Placer Dome Inc. But it is unusual. “The number of business lawyers who actually cross over to business are still but a small fraction of the legal profession,” says Brian Levitt, who, along with Norman Loveland, now heads up Oslers’ new Montreal office. And Levitt is right. Historically, such career transitions have been seen as interesting exceptions to the rule of a life-long career in law. When Purdy Crawford made the successful transition from Oslers to Imasco in 1984, he was, and is still regarded by many today, as the prototype for the successful lawyer turned corporate executive. But why is there a clear sense that this trend is accelerating?
Why Now? Convergence
The corporate landscape is changing rapidly. Gary Hamel’s glimpse into the 21st century is unnerving. How it is actually played out in Canada and the impact it is now having on the legal and business landscape provides useful insight as to how this new lawyer turned corporate executive career model may take shape.
The convergence of industries is occurring globally and continues to be a primary driver of M&A activity. Prime examples in Canada are the media, cable, and telecommunications sectors. Convergence requires a sophisticated understanding of not just content, technology, transmission, marketing, etc., but an equally firm grip on such areas of law as securities, competition, regulatory structures, and others. Corporations that are active players in convergence need highly skilled professionals who can understand and navigate the business, legal, financing, regulatory, political, policy, etc. issues all at once. In short, perfect territory for a lawyer who knows the business of his client.
“In 1995, Ted Rogers called me,” recalls John H. Tory, CEO of Rogers Cable (formerly of Torys). “He had just finished acquiring Maclean Hunter and was going to create a new media company which was a combination of Rogers broadcasting assets, the Maclean Hunter broadcasting assets, the Maclean Hunter publishing assets and The Shopping Channel on TV. Rogers also owned a controlling interest in the Toronto Sun. Ted Rogers asked me to become the President and CEO of this new Rogers Media company. If you had all of the jobs that might get me interested in leaving a law firm, this would be the one.” Why him? Because Tory had an intimate knowledge of his client’s business, the legal management skills, the connections, and the trust of his clients.
John Tory had only been a lawyer for two years when he became the Principal Secretary to then Ontario Premier William Davis. Four years in that job opened up the whole world of public policy, regulation and how government works. It also gave him a great teacher on how to lead people. “My key mentor was Davis. I watched him forge a consensus among 30 people around the cabinet table on difficult issues every week.”
Returning to practise at Torys in 1986, Tory specialized in government affairs, legislation, regulatory and administrative law. This deepened his knowledge of how to get things done in regulated environments. At the same time, he began building his ties with Rogers. His father was an advisor to Ted Rogers and Tory was asked to be on the board, to advise the family companies, trusts, etc. Over time, he became a “trusted advisor” to the Rogers companies.
“Torys was great that way,” he says. “They encouraged their lawyers to become valued business advisors and cross over. Essentially the firm said, ‘If you are thinking about this kind of move at any stage in your career, we want you to know we think it’s great.’ When you think about it, how better can you forge a relationship with a client than by having one of your former partners sitting in a senior role in their executive offices? At Torys, those who ended up with the most fulfilling careers, and who produced the best economics for the firm, were those lawyers who became valued business advisors, relationship managers and assemblers of talent within the firm.”
In 1990, John Tory was elected one of two managing partners of Torys, with a focus on the financial and business aspects of the firm. As he recalls: “Leadership roles in law firms are invaluable in helping you to cross over. The managing partner role is a position of responsibility but not authority. You learn how to persuade and gain consensus, and when to use authority in a limited way when you have to. You learn to invest in leadership, giving good direction, treating people well, developing them, and how to structure and resource work to get the right results. You learn the p&l and the big picture. And you learn how to administer, how to bill and collect. Even in big companies, success is in the basics.” Why was he asked to cross over? “I was a long-standing trusted business advisor. Ted had seen me in action. I knew many of the issues they were facing. And I had managerial experience.”
Deregulation
As Hamel observed, a tsunami of deregulation and privatization is sweeping the globe, producing a host of new challenges. There is no better example in Canada than the utilities sector. The monolithic Ontario Hydro Energy Inc. has been broken up and the various successor entities are preparing themselves for competition. In this mix of chaos and opportunity we find two lawyers turned senior executives, David Drinkwater and Eleanor Clitheroe.
Drinkwater is Executive Vice-President, Law and Corporate Development for Ontario Power Generation (OPG). One of six EVPs, he oversees all non-nuclear regulatory affairs (i.e., relationships with the Ontario Energy Board, the National Energy Board, US energy boards, etc.), manages corporate development and strategic planning (including all mergers and acquisitions), supervises the general counsel, and sits on various committees (executive, risk oversight, etc.). How did he get here?
Drinkwater started by getting an MBA at the Richard Ivey School of Business at the University of Western Ontario. He then went to law school. “Ivey taught you to prioritize issues, which made law school easy,” he says. Early in his legal career at Oslers, Drinkwater went on secondment as the executive assistant to James C. Baillie, Q.C., then chair at the Ontario Securities Commission (OSC) when the Securities Act was undergoing a massive revision. Returning to Oslers, he built on this specialization, working in and then managing the firm’s securities group, and then heading up the firm’s corporate department. Subsequently, he became the managing partner of Osler Renault, a London, England joint venture between Toronto-based Oslers and Montreal-based Ogilvy Renault.
In 1996, after over twenty years at Oslers, Drinkwater became general counsel at Bell Canada, working directly with Ron Osborne, Bell’s President and CEO. In 1998, he followed Osborne to OPG “to get in on the ground floor of deregulation.” “I was lucky in three ways,” Drinkwater notes. “One, Oslers has the most lawyers who have crossed over successfully into executive management. It is part of the culture, taught by Purdy Crawford. Two, I specialized early. The experience at the OSC had me making public presentations and developing a profile long before I became a partner. Three, being a managing partner taught me good interpersonal skills, good persuasion skills, and good organizing and delegating skills. All three things have helped me in my business roles.”
Eleanor Clitheroe is the President and Chief Executive Officer of Hydro One Inc. She is responsible for the high and low voltage transmission lines, the retail side of the business, and the forthcoming entry into telecom. Clitheroe crossed over early in her career. After studying law at McGill and Western, she completed an MBA, then articled at Torys in capital markets and securities law. Soon after she moved to CIBC as Assistant Manager Capital Funding, helping the bank respond to the new rules on capital adequacy. From there she moved to Treasury, on the money market side, to stints in retail in product development and marketing, and then back as VP, Global Treasury. From 1989-1993, she went into government, ending up as Deputy Minister of Finance for the Province of Ontario. In 1993, her finance background took her to Ontario Hydro as CFO, where she became accountable for getting the restructuring underway. In 1997, she became responsible for transmission, distribution and retail, which formally became Hydro One in 1999.
“Law really permeates everything we do here,” she says. “Law gives you a good understanding of how regulatory structures operate, how contracts function, how negotiations work, etc.” According to Clitheroe, it also teaches you how to think. “Law teaches you the Socratic method. You are presented with a set of facts and some problems. You have to follow a set of principles. You have to search for evidence. You have to present your thoughts, see alternate viewpoints, anticipate and counter objections, argue and make recommendations. You have to use abstract and lateral thinking to reason out what is the next step in the evolution of this body of common law. I found the MBA to be less rigorous, more functionally-based than problem-based.” For Clitheroe, the law was and is a supremely important skill set enabling her to function as CEO.
David Feldberg makes the same point. Feldberg, President and CEO of Teknion Corporation, crossed over early, from law at Minden Gross Grafstein & Greenstein LLP into the family business. “Did I want to be a partner or a principal?” he says. “When I was exposed to the corporate commercial deals at the law firm, I realized I would rather be the one doing the deals.” Feldberg thinks there is no substitute for how the law teaches you to think. Law teaches you how to analyze situations, how to get to the heart of the matter quickly, frame alternatives, think on your feet and act confidently (even when you are not), and present your case in a cogent manner. There is no better training.”
Consolidating Markets, New Competitive Models
On an increasingly continental and global scale, corporations are consolidating, technology is changing how organizations compete, alliances are being formed and reformed at an ever faster rate, and businesses are developing “clusters” of related ventures in order to increase their “share of wallet” and capture the higher multiples the stock market attributes to some business models versus others. Air Canada provides a valuable illustration.
Privatized in 1986, Air Canada went through an aborted merger with Canadian in 1992, fought off the threatened Onex takeover in 1999, and merged with Canadian Airlines in 2000. Meanwhile, new low-cost competitors like WestJet have emerged, the airline alliances have become increasingly important, government and regulatory issues have moved centre-stage, and Aeroplan is regarded by some analysts as more valuable than the airline itself. In all, it is a perfect place for a self-professed MDS addict like Calin Rovinescu.
Not only is Rovinescu in charge of strategy and corporate development, mergers and acquisitions, alliances and international affairs, and “structural solutions to shareholder value,” he also oversees the Chief Information Officer, the Vice-President of People, the Senior Vice-President and General Counsel, the Vice-President of Aeroplan, and the Senior Vice-President of Government and Public Affairs.
Rovinescu started out working with entrepreneurs doing financings in the film industry, moved into securities law, and by the early 1990s was specializing in M&A work. He honed his skills in deals such as CN’s first cross-border financing in the early 1980s and acted as lead counsel (when he was 29) for Mercantile Bank when it was acquired by National Bank of Canada in 1989. “I participated heavily in the strategies of these businesses, not just providing legal advice.”
Rovinescu was lead counsel to Air Canada in its 1986 privatization. At that time he deepened his relationships with the top 10 to 15 officers and came to know much about the company: the regulatory context, the marketing of the IPO, the terms of the employee share purchase plan, how the frequent flyer program worked, etc. Along the way, he entered management roles within Stikeman Elliott. He ran recruiting. He became the head of the firm’s corporate commercial practice. In 1993, he moved to London to head Stikemans’ European practice, focusing on Eastern Europe and the flood of privatizations following the end of the Cold War.
Subsequent to his return to Canada, Onex’s threatened takeover of Air Canada brought him and Air Canada CEO Robert Milton in close contact. By April 2000, when he crossed over to Air Canada, Rovinescu already had a unique blend of legal acumen, business skills and relationships combined with an in-depth understanding of Air Canada’s strategic opportunities and threats. “That was when I could start using real bullets,” he says. “But first I had to really think about the value I could bring in changing Air Canada.”
Talent Is Increasingly Scarce
By now, anyone who can breathe, read the financial press or listen to the TV or radio knows that attracting and retaining top talent is still the number-one issue that keeps CEOs awake at night. The recent economic downturn provides, at best, a respite. Demographic realities are such that we will soon be facing an unrelenting shortage of talent, particularly top leadership and management talent. Corporations are looking outside their normal talent pools, and law firms are one unconventional arena in which top performers are now seen by some executives as essentially low-hanging fruit.
At the senior level, talent is in high demand and knowledge-reliant firms are searching for the people who can do the job. That is how Lawrence Haber came to National Bank Financial from Toronto-based Fogler, Rubinoff LLP. Haber is an Executive Vice-President, responsible for corporate development (strategic planning, acquisitions and new ventures) and supervising non-financial risk management, legal, compliance and the corporate secretary. “I started as a securities and corporate lawyer and was lucky enough to be mentored by Lloyd Fogler, who drummed into me that you first had to know the client’s business, then the law. I specialized early in the financial services business, structuring business transactions and dealing with regulatory and compliance issues. When First Marathon Inc. merged with Levesque Beaubien Geoffrion Inc. under the National Bank of Canada umbrella, it created a larger, more complex operation. The CEO, Kym Anthony, saw a need for a role that didn’t exist before, someone who could provide oversight, checks and balances but who didn’t have an operations role. I think they valued my judgment, my knowledge of the industry, and my ability to deal with all manners of stakeholders.”
To attract the talent, business can frequently offer better compensation and more challenging work. Law firm compensation is still largely driven by the billable hour which, with lockstep remuneration structures, is a disincentive to many ambitious people. “There can be a huge compensation upside attached to business,” says David Allan (formerly at Blakes), Managing Director and Head of Securitization at CIBC World Markets. “Wall Street has strong allure,” says Geoffrey Belsher (formerly at Blakes), Executive Managing Director, Co-Head of Mergers and Acquisitions, BMO Nesbitt Burns, “and we are still losing valuable human capital to New York.”
Business can also offer more challenge. “Lawyers find it attractive to go into a company, work in the legal department, and then have the opportunity to transition into a business unit job,” says David Drinkwater. “I believe there will be lots of movement from Ontario Power’s law group to the business units.”
At the other end of the demographics, Canada’s future talent pool will be comprised of a new generation, coined the Nexus Generation, who already clearly march to the beat of a different drummer. More independent, self-confident and educated than any of the previous generations, they are more likely to have three to five distinct careers during their professional lives and are much less likely to pledge a lifelong allegiance to any one firm. Their values too are different: they want challenging, new and different learning/career experiences and life-work balance among other things.
While these emerging professionals will have more choice and are likely to be in higher demand, they will also face more pressure and stress. In short, they are likely to redefine the model for whatever careers they pursue. “This trend is going to continue to grow,” says John Tory. “Young people today will have blocks of four to five years in different roles. They simply plan to have more than one career.” And this is where the other shoe drops for practically every major business law firm across Canada. As David Drinkwater observes, presciently in our view: “Law firms should market themselves as places to learn and stay for a while.”
Changing Law Firm Cultures
Changes occurring within the legal profession itself, including the organizational structure of firms, provide yet further explanation as to why lawyers are crossing over. At the top end of the market, law firms across Canada have embarked on a massive consolidation. Firms aggressively seek to expand their client reach both within and outside Canada. As we found in last year’s article (“Lawyers and Leadership,” Lexpert, July/August 2000), as their size grows, top-end law firms are beginning to resemble their corporate clients more closely. As such, they are faced with similar business issues including strategic planning, financial management, marketing, human resources and leadership.
Business acumen is increasingly a competency of value not only to one’s clients, but to the firm itself. “Law firms have traditionally been partnership-driven,” says Geoffrey Belsher, “but increasingly the cultures of firms and business are merging. For example, law firms are becoming more focused on value and the bottom line. Increasingly, there are more similarities than differences.” One significant implication of this trend is the potential that can be realized by firms that are able to attract legal business leaders back into their fold. Examples include Purdy Crawford, Peter Dey and Brian Levitt, who have returned to Oslers. While the value that these “switchbacks” can provide law firms in terms of competitive advantage is significant, Belsher and others are quick to point out that issues of compensation and reward will have to be addressed. “However, to go back would be hugely additive,” Belsher observes.
Who Is Asked?
Over and over again, we heard that the lawyers who were asked to cross over were those who had become “trusted business advisors.” “When you have graduated to the ultimate role of the highest value with the most and deepest relationship with a client where they will not abandon you,” says John Tory, “it is to the role of the trusted advisor. They no longer think of you simply as a lawyer. They are calling on you as a trusted advisor and you have bonded that relationship to the point where almost nothing will tear it apart. You are crazy not to do that whether or not you cross over.” (Editor’s Note: The expression ‘The Trusted Advisor’ is the title of David H. Master’s new book on professional service firms, co-authored with Charles H. Green and Robert M. Galford.)
Jeffrey Blidner is a case in point. Blidner is Vice-Chairman of Trilon Financial Corporation, responsible for expanding Trilon’s asset management activities (bridge financings, restructurings, and third-party capital). He also remains a part-time partner with Toronto-based Goodman and Carr, and spends one day a week as an advisor to the Global Group of Companies. Blidner and Trilon originally came together through a mutual client. He was outside counsel to Trilon for three years before they began discussing his crossing over. Blidner brought huge depth in financial structuring. “I have seen hundreds of term sheets,” he says. “I can look at the workability of all kinds of structures and avoid false starts.” According to Blidner, “lawyers bring a different perspective and discipline that organizations value. They are trained to go from concept to detail very quickly.”
Trilon represented a broad cross-section of the economy and lots of opportunity. Still, Blidner and Trilon spent more than a year talking. “Trilon tells me ours were the longest negotiations they ever had with anybody.” Both sides knew the skill fit was there. They wanted to be sure that the advisor role that worked so well “on the outside” would in fact “work on the inside.”
Trusted business advisor is a multi-faceted term. It implies relevant, focused legal skills. The number of lawyers we interviewed who specialized in either securities and/or regulatory law is noteworthy. “Generally,” says Eleanor Clitheroe, “the expectation in the mindset of an organization, if it is bringing a lawyer in, is often for legal advice. They just don’t naturally think of recruiting executive positions from the law firms. With securities deals, the similarities become apparent early to both sides.”
It requires an interest in and aptitude for business. “I was very business-oriented,” says Purdy Crawford. “I was already preferring the Harvard Business Review to legal publications. As I became involved with M&As, they of course involved strategic and tactical advice. I started to bring a bright young lawyer along to give the legal advice and I would be thinking, ‘Boy, wouldn’t it be tempting to be a CEO?’ I was already starting to cross over.”
It assumes knowing the industry and the company exceptionally well. All would agree with Lawrence Haber, who says “Get as much exposure to the business world as possible. Always be focused on your client, their objectives, how they make money, how they are performing, what their strategic issues are.” It requires that you become a close member of the management team. “Go to their industry conferences and ask to attend their management meetings. Let them know you aren’t charging for this, that it’s part of your education, development, whatever. It’s the best investment of time you will make and it will come back to you ten times over,” says John Tory. It also entails working with and coming to know the senior management very well. “Lawyers get more face time with senior management on critical issues,” says Jeffrey Blidner. “It makes them a natural to become a trusted advisor and then to cross over.”
The Role of Mentors
The importance of mentors in the early training of almost all of our lawyers-turned-executives is quite striking. It is so important that we are tempted to call the presence of a strong business-oriented mentor a critical success factor. “Stanley Hartt [then a senior partner at Stikeman Elliott in Montreal] threw me in the deep end early,” says Calin Rovinescu. “He taught me to think quickly on my feet. ‘You know that client I told you about,’ he would say. ‘They are expecting an answer from you next week. I can’t be there.’ He taught me how to have confidence and shoot from the hip. He mentored me about the big picture. No matter what the transaction was, he would look at things from the standpoint of numerous stakeholders: securities regulators, the Ministry of Finance, etc.” Later, David Angus, Q.C., also a senior partner at Stikemans in Montreal, would take him to dinner and explain everything that was happening in the firm. Harold (Sunny) Gordon, Q.C., a former major rainmaker at Stikemans (now Vice-Chairman of Hasbro Corporation in Rhode Island), taught him how to bring new clients on board.
John Tory learned a lot about the importance of and necessary skills in building consensus among stakeholders from then Premier William Davis. Important mentors for Geoffrey Belsher were David Jackson at Blakes, a former Chairman of the firm, and David G. Ward, then Head of Mergers and Acquisitions at Nesbitt Burns and now with TD Securities. Geoffrey Blidner’s first mentor was Herbert Abramson at Goodman and Carr, who now runs a stock brokering operation. “He taught me that you must understand the business or you cannot be a good counsel.”
These examples of mentors, some of whom have become close friends for 20 or more years, indicate that those who wish to move into this hybrid world of law and business will do so more easily if they begin to cultivate such relationships early on. In more than one instance, we saw mentors becoming employers.
Why Cross Over
All of our crossovers had successful careers at their law firms. All had been approached before and said no. What drew them across the line this time? For many, it was the new challenge.
Lorie Waisberg is Executive Vice-President, Finance and Administration of Co-Steel, Inc. Waisberg left Goodmans LLP in Toronto (then Goodman Phillips & Vineberg LLP) where he was a top corporate/M&A lawyer. “The fact that it was a change turned me on,” says Waisberg. “It was an interesting and challenging project with a limited life. I thought it would open some clogged cells. It was very refreshing.” A fresh challenge with an interesting project was the most important aspect for Waisberg, but he goes on to identify other considerations. “You do think about economic issues, naturally,” he says. “I was making a lot of money at Goodmans but not really dealing with retirement issues. Lawyers often make a lot of money, live well, and don’t think about tomorrow. Today, I make a lot less in salary, but the pension benefits over-compensate for the difference. There are other upsides such as bonuses. If we get this thing turned around there could be some very serious money. Some of that is within my control and some at the whim of global markets for steel.”
Waisberg, and most others we spoke to, talked about the consideration they gave to lifestyle. Some, like Waisberg, thought they might be able to work fewer hours. Most found that they are working as many hours but that the stress is different. This is an important point. Geoffrey Belsher describes the stress in legal practice as more a grind with the constant need for absolute attention to detail. In contrast, according to Belsher, the stress in business comes from rapid and overlapping transactions.
Dollars and lifestyle go somewhat together. Law firm compensation is based on time and the better one is perceived to be, the higher the rate for the time spent. Organizations pay more for value of deals and end value. Their compensation typically includes such performance incentives as stock options and bonuses. The return can be higher but so too the risk. As Blidner notes, “I docketed 2,400 hours per year as a lawyer, year in and year out. Now, the money works for you even if you are not working. That makes the dollars better and the lifestyle much improved.”
What Waisberg, Belsher and others describe in the trade-offs on types of stress typifies the invigorating impact that change can have on some individuals. All the lawyers we interviewed also talked about how much they enjoyed this change, which points to a key principle about stress that Dr. Hans Selye reported on more than 50 years ago. It is not the hours or volume of effort we expend that causes burnout, but rather minimal satisfaction received. It is work that has become tedious that wears us down. Highly satisfied people often work longer and harder but feel less stress than others.
It thus comes as no surprise that intellectual stimulation was a key consideration identified by many of the lawyers. “At Trilon,” says Blidner, “I get to deal with a broad cross-section of the Canadian economy. I knew I would learn a lot and be part of something much bigger.”
“I was interested in getting in on the ground floor of deregulation,” says David Drinkwater.
These were the reasons for crossing over that were given to us. What we didn’t hear was that they were fed up with law or burned out. What this indicates is that the kind of individuals who migrate towards roles that combine business and law tend to be operating at or near the top of what is called Maslow’s hierarchy of needs. They are more willing to take risks because they are more financially and emotionally secure. They are worried less about esteem because they have confidence and are competent at what they do. And so they tend to be looking for new opportunities to learn, stretch themselves, interact with other bright people and generally get the most out of what they do. This is called self-actualization.
Two Plus Two = Five
One of the most valuable skill sets characteristic of the combined legal-business role that we heard about over and over is the way it fuses together some of the best skills of legal and business thinking. For example, when one combines what Geoffrey Belsher, Jeffrey Blidner and Eleanor Clitheroe and others describe as the unique legal thinking that “teaches you to go from concept to detail very quickly” with the business basic of bias for action you arrive at a very different approach and perspective on risk. Jack Welch, the famous CEO of GE, recently described the bias for action: “where you find 50 reasons to do something and 50 to not, always go with the 50 reasons that say ‘do it.’” This kind of two plus two equaling five skill set leads to what change management guru Noel Tichy calls a “transformational skill.”
Transformational skills allow those who possess them to look at and change things differently, i.e. to think outside the box. They also enable those who possess them to move faster and with greater flexibility, as their roles are no longer restricted by preconceived boundaries. Lawyers’ roles, for example, are clearly defined as advisors while business people are deciders. These lawyer/business leaders will tend to transcend these career boundaries and act more freely as advisor-decider according to the dictates of a given situation.
The one set of skills that every individual interviewed felt to be of immense value was legal reasoning itself. “Law teaches you to think rationally, write and present ideas clearly and convincingly,” says Geoffrey Belsher. “You learn to separate what is most important from a vast sea of information,” says John Tory. “I use my legal thinking skills virtually every day,” says Eleanor Clitheroe. “The law teaches you a method of thinking that never leaves you.”
And there is no question that good lawyers fuse their legal thinking skill set with business thinking capabilities. As Calin Rovinescu explained, “70 per cent of what I now use I learned from clients and practising law. I have worked on a huge variety of transactions: ‘A deal is a deal is a deal.’ The other 30 per cent of what I now use comes from management experience within Stikeman Elliott. I learned politics. Corporations could learn a lot from partnerships in how to do a better job creating consensus and how to impose a solution if you have to.” With respect to this latter point, John Tory is in complete agreement. “Leadership roles in law firms are invaluable in helping you to cross over.”
What You Don’t Learn At Law School
We also asked the lawyers interviewed what their legal background did not prepare them for. Some points were obvious. Almost all wished they had more financial training. “I had to improve my skills in financial analysis and discounted cash flows,” says John Tory. David Drinkwater thinks lawyers have to improve their presentation skills. “They need to learn how to synthesize and simplify faster than they do, especially for board presentations.”
Other differences are less obvious. For one, you move from agent to principal, from advisor to decision-maker. “I feel it in my stomach,” says Lawrence Haber. “I used to know where I started and where I stopped and I slept well knowing I had done my best. Now [as a decision maker] it is more all-encompassing.” Further, the cultures are often quite different. “The corporate world is more vertical and siloed,” observes David Drinkwater. “The legal firm is more horizontal. You have to realize that people in corporations think more vertically. If you want to get help from other functions, you have to spend more time than you realize building relationships with your other peer heads.” Drinkwater also thinks that the lawyer is more dependent on his/her relationship with the CEO. “The chemistry between you and the CEO is the beginning and the end,” he says. “In a law firm you can move around more.”
The final difference is quite subtle. You move from a solo role to being more of a team player. Many lawyers come, by nature and by training, to rely principally on themselves. Even when they are part of a team on a file, they know that they can fall back on their own knowledge and skills if they have to. They work and act independently.
This is not possible in a senior role in business. The knowledge is more varied; you have to rely on a team. For David Drinkwater, this is a central point. “As a lawyer, you realize you can always fall back on your personal knowledge. In a corporation, you have to rely on your team and be comfortable with that dependence.”
Profiles
The operative word around career planning today is role. Jobs are passé, as are fixed career labels. Roles are portfolios of diversified skills that are more flexible. They can and do evolve to match changes inside and outside one’s working environment. A distinguishing feature of this business/legal role, for example, is that it is uniquely customized for each individual we spoke to. That being said, here are some of the most striking characteristics of the group:
1. They represent all age groups and stages in their careers, but they are seen as leaders, some at the pinnacle of their career, others as up-and-comers. As David Allan at CIBC World Markets advises, “If your ultimate objective is to cross over, stay long enough in the law to establish and distinguish yourself as a leader in your practice area.”
2. At this point, we were hard-pressed to find many women in this role. Regrettably this accords with a recent study of the American Bar Association which found that only about 10 per cent of in-house counsel at Fortune 500 companies were women. It is noteworthy that exclusion from informal social activities and mentoring networks were cited as major barriers.
3. The recruitment, selection process and gateway is often characterized by established, long-term relationships with clients. Corporate clients feel they know and understand trust-based relationships. The lawyers who cross over know their client’s organization, business, and strategic objectives and challenges intimately.
4. As mentioned previously, this group demonstrates early on a natural interest in business and aptitude for it. Many had family, friends, and mentors in both business and political circles. About half have MBAs. Those who don’t wish they did. The legal and business mentors play a very important, often determinative, role.
5. Perhaps one of the most distinguishing characteristics that set these professionals apart from either their legal or business colleagues are their consensus-building skills and the way they approach risk. Generally speaking, these individuals have reached a sufficient level of accomplishment and self-confidence within their legal careers that they begin to think more in business terms; again to quote Jack Welch, “where you find 50 reasons to do something and 50 to not, always go with the 50 reasons that say ‘do it.’”
Conclusion
Thinking through a problem is something that people with legal training do better than most. The evolving role of the legal/business professional is ideally suited to the speed and complexity of today’s changing business and legal environment. Jack Welch at GE is well known for coining the term “boundaryless.” Almost twenty years ago, he forewarned that sector specific business and financial services boundaries were starting to come down and that we would all have to move faster. It should come as no surprise that boundaries between law and business are dissolving as well and so too the traditional role differentiation between lawyer, investment/corporate finance executive and CEO. In this respect, discussing whether the number of people crossing over from law to business is creating a trend misses the point entirely. The fact is that these new professionals are combining two very complex sets of skills into a role that gives them speed and agility in the kind of environment in which they do what they do best—and this can be either in a law firm or in business. To use Calin Rovinescu’s words, it also enables them to “start using real bullets.”
Irene Taylor is a senior leadership consultant with Johnson Smith International, a Toronto-based management consultancy specializing in strategic change. Mark Smith is the firm’s Managing Partner.
Lawyer(s)
Calin Rovinescu
John Tory
Henry W. Sykes
David Binet
Purdy Crawford
Peter Dey
Brian M. Levitt
H. Garfield Emerson
Fraser M. Fell
Ted Rogers
William G. Davis
Lawrence P. Haber
Lloyd S. D. Fogler
David C. Allan
Harold (Sunny) Gordon
David G. Ward
Herbert Abramson
Jack Welsh
Firm(s)
Stikeman Elliott LLP
Torys LLP
Ontario Power Generation Inc.
Osler, Hoskin & Harcourt LLP
BMO Nesbitt Burns Inc. - Lgl. Dept.
Blake, Cassels & Graydon LLP
Bennett Jones LLP
ConocoPhillips Canada Resources Corp.
Woodbridge Company Ltd. (The)
Morgan Stanley Canada Ltd.
N M Rothschild & Sons LLC
Fasken Martineau DuMoulin LLP
Toronto Sun
Hydro One Networks Inc.
Richard Ivey School of Business
Ontario Securities Commission
Bell Canada / BCE Inc.
McGill University - Faculty of Law
University of Western Ontario - Law Building
CIBC
Teknion Corporation
WestJet Airlines
Canadian National Railway Company
National Bank of Canada
Onex Corporation
National Bank Financial Inc.
Fogler, Rubinoff LLP
First Marathon Securities Ltd.
Levesque, Beaubien, Geoffrion Inc.
CIBC World Markets Inc.
Carswell Media, a Thomson Reuters business
Trilon Financial Corporation
Global Group (The)
Hasbro
TD Securities Inc.
Gerdau Ameristeel
Goodmans LLP
American Bar Association
General Electric Company