Resiliency in Legal Departments

“Necessity is the mother of invention,” says Bill Solomon when asked about the impact of the Great Recession on Ally Financial and his legal department. Solomon—who has acted as General Counsel for Ally since 1999 and was practice area manager and an attorney for General Motors for eleven years before that—made tough decisions, pushed through challenges, and ended up with a strong and flexible team.  In this profile, he shares how he got there as well as his thoughts on law firm consolidations, cybersecurity and work/life balance.

Collaboration and giving opportunities

Under pressure to reduce headcount and fees after the Recession hit, he and his department “made do.” Changes that he made included “triag[ing] the work, lower[ing] expectations of the client, and lean[ing] on folks to find a better or smarter way of doing work.” They also got “more aggressive in dealing with outside counsel in terms of alternative fee arrangements” and began to delegate work to nonlegal staff, a strategy that he says “helped people who got the work feel empowered.” Coming through on the other side was no question: “Once you get past the shock, you figure out there’s another life.”

Ally Financial went from 120 to 34 lawyers following the sale of the Company’s international operation and bankruptcy of the mortgage subsidiaries four years ago, and Solomon says that the key to shifting gears then was “sharing information and being transparent, letting people know they’re valued and asking them to collaborate and treat everyone decently and with respect.” The largest challenge in introducing that culture was convincing the leadership group “not to favor their own people when it comes to pay and performance. You have to think of it as a collegial team, so the leaders have to work well together.” That spirit of collaboration has led to a congenial atmosphere, where there’s “very little acrimony.”

What the numbers say

Analytics has long played a large role in his strategy. Though Solomon doesn’t self-identify as a “techie geek,” he was an early adopter. It all started with a need to get a handle on the department’s budget when Ally Financial spun out of GM. “My Director of Operations and I sat down and scoured the literature,” he says. “Whether it’s inside costs or outside legal costs, data is king. You have zero credibility with management if you don’t have data to back up what you’re saying—likewise with outside counsel.”

The department uses data as a way to measure and connect with everyone on the legal staff. “We try not to overdo it,” he says, “but you can’t manage what you don’t know.” Additionally, Solomon relies on data to “cut win-win deals” and to work with firms on alternative fees.

Many of their relationships with outside counsel are based on alternative fee arrangements: “Time plus material doesn’t incentivize people to work quickly, but fixed fees can encourage people to start cutting corners when they shouldn’t.” Data helps them prevent either of those situations. “We’ve saved literally millions of dollars bidding out work where we can define success and define what needs to get done,” Solomon says.

Part of that has to do with volume. He recalls a conversation he had with Fred Bartlit 25 years ago. He remembers Bartlit saying, “We can handle product litigations better and more cheaply, but you have to trust me, and you have to give me enough volume where I can make up for losses.” Solomon says, “For us, it’s the same thing. Some years you win, and some you lose. We need law firms with the courage and confidence to buy in, and in-house needs the confidence to say, ‘If a law firm makes more on a matter, good for them.’ It doesn’t have to be adversarial.”

Consolidations, expertise, and cybersecurity

“The firms are hungrier.” Solomon says that is a side effect of the record number of law firm mergers last year. “There continues to be too much focus on ‘bet the company’ firms, but we have not suffered as a result of consolidations. If anything, firms are more receptive to being smart about bidding for work and being reasonable with fees.” He says that “some really big firms—even those who had layoffs during the downturn and are now back to where they were before—still think they’re the only game in town.” The consolidations might well change that.

Solomon has been frustrated because few law firms are able to provide the expertise Ally Financial needs in regulatory areas. “There are a couple of boutique firms in D.C. that are specialized in the area of consumer credit,” he says, but when they were looking to find talent a couple of months ago, they found themselves in “a bit of a pinch.” Although they have this expertise on the inside, “it would be nice to go outside and get some help every once in a while.”

One thing Solomon doesn’t worry too much about is cybersecurity. “We just had a leading firm review our data security procedures,” and the feedback was very good. He attributes this to a “first class cybersecurity group at Ally.” He knows “it’s not a matter of ‘if,’ but ‘when,’” when it comes to data breaches, but he has confidence in his team: “These guys are terrific.”

Future changes and strategy

Ally is “engaged on a number of new initiatives,” because it views itself as “a digital disruptor of financial practices.” To assist the company in this cutting edge arena, he says that the legal department will be looking to “facilitate the business model.” Because many of the regulations on the books “were put in place for a different era” and don’t consider digital banking methodology, they have to “find a way to make it work that is legally efficacious.”

Despite professing himself to be an “old-fashioned guy,” Solomon has recently undergone a “major transformation in [his] thinking”: He now sees that increased work/life balance for lawyers is “the wave of the future.” Millennials are driving this change, he believes. “The best and the brightest now want a fuller life outside of the profession. You can’t be the world’s greatest lawyer, spouse, skier, and parent all at once, but you can be excellent at many things.” Two of “[his] best” lawyers work part-time, and they “could not afford to lose them.” He says if lawyers have the “right attitude, aptitude, and work ethic,” there’s no reason why part-time or contract work shouldn’t be a regular part of staffing strategy.

Through collaboration, transparency, and data, Solomon has steered his legal department to continue growing in strength, regardless of what unexpected obstacles might arise. “Our lawyers work well together. We’ve created a sense of collaboration and camaraderie.”

 

INTERESTED IN READING MORE LEGAL VISIONARY PROFILES?

2015 and 2016 interviews included:

  • Cameron Findlay, SVP, GC and Secretary at the Archer Daniels Midland Company
  • Matt Fawcett, Senior Vice President, General Counsel and Secretary of NetApp
  • Lisa Hart Shepherd, CEO of Acritas
  • Peter Kellett, CEO of Dykema
  • Veta T. Richardson, President & CEO of the Association of Corporate Counsel (ACC)
  • Firoz Dattu, Founder & CEO of AdvanceLaw
  • Andrew Sherman, Senior Partner at Jones Day
  • Bill Henderson, Professor of Law at Indiana University
  • Ralph Palumbo, Founding Member of the Summit Law Group
  • Laura Stein, Executive Vice President & GC for the Clorox Company
  • Patrick J. Lamb, Founding Partner of the Valorem Law Group
  • Elisa D. Garcia, C., EVP and CLO of Office Depot
  • Fred H. Bartlit, Jr., Founding Partner of Bartlit Beck Herman Palenchar & Scott LLP

Click here to read their profiles.