Robert Weber had been in private practice for just under 30 years when chairman and chief executive officer Sam Palmisano approached him to lead the legal function at technology giant IBM. He had tried a number of cases for the company in his previous role at law firm Jones Day, but he says he hadn’t even considered leaving his partnership at the firm until Palmisano came knocking. ‘I knew that a job like this came up only once in a lifetime,’ he explains. ‘I would have been a fool not to jump at the opportunity.’
However, Weber admits to ‘a bit of a culture shock’ when he took up the role in January 2006. ‘Anyone who moves in-house from private practice experiences that,’ he says, adding that he has since counselled a number of legal professionals through the transition. ‘The position is just so fundamentally different,’ he explains. ‘As an external counsel, particularly a trial counsel, you are brought in to work on high-profile cases that command the attention of the board. When you move in-house, you become a member of a larger team. It’s no longer just about legal; instead, it’s about how the board and management work together, and how the legal department can provide support on a much broader spectrum of issues.’
Similarly, Weber says that working in-house requires attorneys to be able to understand the bigger corporate picture. ‘As in-house counsel, you’re in it for the long haul,’ he explains, contrasting the more transaction-based approach on which external counsel operate. ‘External law firms come in to manage a deal or argue a case in litigation. When it’s over, they move on to the next thing. However, when you work in-house, each case or legal task is just a small part of a bigger picture – a piece of glass in a broader mosaic.
‘That sense of working towards a unified goal delivers a greater sense of accomplishment,’ Weber adds.
In constant demand
Another key difference that Weber identifies between in-house and private practice is the constant flow of work. ‘When you work in a law firm, your workload fluctuates greatly,’ he says. ‘You get your head down on a major case, but once that’s over, you have time to step back and relax. But there are no peaks and valleys when it comes to in-house work. All we have here is peaks – and we need to be able to deliver the goods 24 hours a day, seven days a week.’
Weber adds that, as with any successful multinational, the profile of IBM’s brand heightens the pressure and scrutiny on the work of the in-house legal department. ‘Everything that happens at IBM is subject to greater media and shareholder scrutiny, simply because of who we are,’ he explains. ‘That means that issues that perhaps in other companies would not get much attention are in the spotlight straight away.
‘But we accept that challenge,’ stresses Weber. ‘We feel an added sense of responsibility in everything that we do because of IBM’s history and its role in the community. This is something I talk to my lawyers about all the time. We joined this company because of what IBM represents, and we recognise that the brand and its reputation are gifts to us from the people who came before us. Ours is not a fly-by-night operation; we have a responsibility to maintain and enhance the work of our predecessors.’
Being ‘fly-by-night’ is certainly not a term that can be applied to IBM. The company generated $95.8bn in 2009, operates in 170 countries, has nearly 400,000 employees (of which 500 work in its legal department), and will be celebrating ı00 years of business in 2011. Business processes and procedures are well established in this company, and the legal function is no exception. ‘I had the good fortune of joining one of corporate America’s most efficient law departments,’ agrees Weber. ‘We have a very strong talent pool with very knowledgeable lawyers. I certainly wasn’t brought in here to fix any flaws in the way the department works.’
But there is still plenty for Weber to get his teeth into. ‘The business is constantly evolving, so the legal department needs to evolve, too,’ he says. ‘For example, we have invested considerable effort in realigning the legal department to reflect IBM’s future business strategy. It’s about shaping the legal department and the way that we work in order to support where the company is headed, as opposed to where it has been.’
A new legal model
Weber explains that IBM’s legal department was organised historically (and regionally located) to reflect the way that the business operations were divided; for example, by brand or geography. ‘Originally, IBM’s core business was split between its hardware and software divisions,’ he says, ‘and so we managed the service functions to reflect this. Generally this meant providing on-the-ground support in each territory that was tailored to each brand and market.
‘However, IBM as a business has since moved in a completely different direction. Now it works to provide its customers with a more complete service, which means that its business units are becoming more focused on providing integrated solutions, rather than simply selling hardware or software.’
In addition, Weber stresses that geographical location has become less important as the business – and the market – has become more global. ‘That requires us to approach corporate support functions such as the legal department in new ways,’ he explains. ‘It’s not just that our business units need access to our services 24/7; we also need to be able to put the right talent on the right problem at the right time.’
Weber believes that the best way to fulfil this requirement is by moving towards a more global pooling of resources. ‘It used to be that companies such as IBM would expand by setting up mini versions of their headquarters in each new market with all the infrastructure, resources and expense that necessitates,’ he says. ‘For example, that “mini IBM” would need to have its own legal function, even if that meant just putting one lawyer in place. As that approach is no longer realistic, we’ve moved to globally integrate our support functions via a series of global legal delivery centres that can serve all our business units.’ The company has opened two such centres: its operation in Michigan, US, which was established over a year ago, and a new centre in Dublin, Republic of Ireland, which assists the company’s operations in Europe. Each has several dozen attorneys in place at present, with plans for growth over time.
‘We do still have lawyers on the ground in key business jurisdictions,’ he explains, ‘but we don’t rely on them solely; instead, we are concentrating on developing our two global delivery centres by bringing in new law school graduates and newly qualified lawyers, uniting them in a centralised location and training them in IBM legal issues, so that they can support the company at a global level.’
Weber emphasises that this ‘is not a play for cookie-cutter [low level] work’, explaining: ‘Our global delivery centres will be providing the full spectrum of services that our legal department currently delivers, from due diligence work to mergers and acquisitions (M&A) and divestiture. If we’re going to achieve global integration, if we are going to be one legal department, we need to build better tools to get there.’
Keeping on top of the issues
Technology and the rise of the internet assists in the delivery of those services, of course, but how does the company overcome the fact that law, by nature, is jurisdictional? Surely you need a lawyer on the ground in each place you work? Weber doesn’t think so. ‘We have developed a legal matrix to monitor and provide for the regional nature of law and to ensure that we have the skills we need to work in each jurisdiction,’ he explains. ‘That includes establishing “subject-matter experts” who are detailed in areas of law that are of key concern for us; for example, in European privacy laws. Similarly, we have built a series of “global centres of excellence” that operate as a resource for the entire company. In these virtual hubs, our lawyers and business units can obtain key legal information, discuss issues and instant message their peers for assistance if needed.’
Weber adds that this approach is also enabling the legal department to move to a more flexible way of working. ‘It used to be, for example, that the regional legal team would negotiate and monitor contracts in their local area,’ he says. ‘But you don’t need a local presence to manage tasks like these. In fact, by diverting contract management to our global delivery centres, we have the flexibility to put the right talent on contract work at the right time, and that pays considerable dividends when it comes to standardisation and uniformity of process.
‘Similarly, if one particular jurisdiction suddenly experiences a peak in activity, there is a danger that you will find yourself held up if you’ve only one lawyer on the ground there,’ Weber adds. ‘The ability to be nimble in response to the company’s legal requirements or sudden peaks in workload is an issue that we work on day and night.’
Of course, overhauling a company’s legal department isn’t something that happens overnight; particularly if it is one the size of IBM’s. But Weber states that the evolution has been seamless so far. ‘Part of that comes as a result of ensuring that the entire legal function understood why the company needed a fundamental transformation of its legal services in the first place,’ he says. But from a logistical point of view, Weber comments that it also meant driving the change by approaching it ‘in the same way that we would any other complex legal issue’; in other words, by pulling together a team to assess the issues and identify the possibilities.
‘There is a danger in any corporate hierarchy that only senior people sit in on these sorts of discussions,’ suggests Weber, ‘as if senior people should just listen to the senior team. But companies have to reach down and call on their more junior members of staff for ideas, too. For example, when it came to realigning the legal function, we asked the entire legal department for its recommendations: what could we do to make them better enabled, and what did they want from their managers? Their input was vital and had some very gratifying results, particularly in regards to staff motivation.
‘Any legal department’s biggest challenge comes in the way that it deploys and enables its talent,’ he stresses, ‘and IBM has hundreds of lawyers around the world and hundreds of contract negotiators and support staff. It’s my job to deploy and motivate them effectively.’
Here, Weber believes that the global delivery centres will also play an important role, not only in retaining, but also in finding, talent. ‘Under the old model, all our legal work was managed in the New York area or in London, for example,’ he says. ‘However, that limits your talent pool as not everyone wants to live in those locations. Legal is nothing if not a talent business. I can have the best systems in the world, but if I don’t have the right staff, then those systems will never be as effective as they should be.’
Weber adds that IBM has a strong track record of retaining talent because it understands the need to develop and reward its teams. ‘It’s not just about providing career paths,’ he says, ‘we also want to give them as diverse an experience as possible.’ Here, again, listening to the views of the department’s more junior team pays considerable dividends. ‘I suppose it’s counter-culture in a sense,’ Weber remarks. ‘But you need to give your team a responsibility for their own development.’
Weber adds that the enthusiasm of the legal team has played a key role in the success of IBM’s pro bono programme. The company’s legal department recently received a National Public Service Award from the American Bar Association for its work in this area, becoming only the second company to do so in an award category that is generally dominated by law firms. ‘It’s an extraordinary recognition,’ he says. ‘It fits with IBM’s commitment to public service, but while we encourage our lawyers to do this, it’s entirely voluntary – it’s certainly not a regime.’
Doing more with less
The centralisation of IBM’s legal work into its two global delivery centres in Dublin and Michigan is still in its early phases, but Weber is confident and excited about the future capabilities of the two centres. ‘Our lawyers are not carrying out all elements of our legal work yet, but within a year, they will be,’ he says. ‘We have a very intensive training programme at IBM, which means that we are implementing practice area by practice area.
‘Moving forward, we’re going to see greater use and more competent deployment of initiatives such as this,’ he adds. ‘We are also utilising resources in low-cost jurisdictions to carry out routinised work [for example, via legal services outsourcing], and we think we’ll get to a point soon that, for much of what we do, the business unit won’t be concerned with who or where that work is being carried out.’
The legal department has also driven similar efficiencies through its ‘doing law with less’ websites, a series of portals that provide legal updates to internal clients. ‘It means that, rather than having to call on the legal department for advice immediately, the business unit can access an overview of the issue,’ describes Weber. ‘It helps to inform their behaviour, while allowing us to reduce our workloads.’
But Weber says that these cost-cutting measures are not solely attributable to the economic downturn. ‘Yes, the recession has meant that companies are having to develop new models for the delivery of legal services,’ he accepts. ‘Companies can’t go back to the old ways of doing things. But, at IBM, we were on that path before the downturn; in fact, we have been discussing how to become more nimble without compromising our level of service since I first joined the organisation, and we started to roll out our plans for change as far back as January 2007.’
Weber explains that, when it comes to divvying out work, the legal department’s default approach is to evaluate whether or not the resources and expertise needed to handle that matter exist in-house. For example, he says that the legal department does not itself conduct litigation, dispute resolution or substantial M&A activity on its own. Instead, that work is handled in conjunction with outside firms, under the supervision of the legal department.
After that, he says it depends considerably on the situation. ‘We don’t have the mindset here that everything should be done in-house,’ he comments. ‘Instead, it’s about finding the most efficient way to fulfil each specific task.’
Weber adds that he feels ‘very fortunate to work with a fine collection of external law firms’, but he says that he is troubled by what he sees as a focus on who can make and report the most revenue – the race to bill the most by the hour. ‘This seems to me to be reflective of a flawed business model,’ he says, adding that he doesn’t think that any firm has found a solution yet. ‘Large firms have a global reach, but they are expensive to run and can suffer from uneven quality. Smaller firms, in contrast, can become too insular and need to rely more on lateral affiliations in order to refresh their knowledge banks. None really have the right model, as far as I can see.
‘Law firms talk about innovation a lot,’ Weber affirms, ‘but it seems to me that much more is said than done. Despite the need for innovation, they still see their primary function as profit per partner, as opposed to institutional value. Yes, law firms need to be able to keep hold of the talent, but the emphasis has to be on maintaining quality. At the moment, it’s a bit like Goldilocks: the offering is too hot or too cold, and no one has got it quite right.’
Weber argues that law firms have much to learn from in-house approaches to legal management, arguing: ‘In-house legal departments concentrate on delivering value for their internal clients at the best price and in the most efficient way. It’s something that we are obsessive about at IBM,’ he adds. ‘We want to do more with less, and to do that we need to find new ways to deliver our services.’ Here, Weber believes that the two global delivery centres play a key role. ‘We are saving substantial amounts of money by operating in this way,’ he stresses, ‘but we are also creating a new way of working that will shape our practice and profession in the coming years.
‘IBM’s legal function has developed over nearly a century of hard work and investment; it’s my job to make sure it’s fit for the next 100 years, too,’ Weber concludes.
This article was first published in Legal Strategy Review, issue 6