{"id":3210,"date":"2024-11-05T22:36:11","date_gmt":"2024-11-05T22:36:11","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/the-reason-a-gc-abruptly-departs-may-not-be-what-you-think\/"},"modified":"2024-11-05T22:36:11","modified_gmt":"2024-11-05T22:36:11","slug":"the-reason-a-gc-abruptly-departs-may-not-be-what-you-think","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/the-reason-a-gc-abruptly-departs-may-not-be-what-you-think\/","title":{"rendered":"The Reason a GC Abruptly Departs May Not Be What You Think"},"content":{"rendered":"\n
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The sudden departure of a company’s general counsel often sparks suspicion and triggers concern. This perception is amplified when a recently hired GC abruptly leaves.<\/p>\n<\/div>\n

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Last month, Purchase, New York-based Mastercard named its fourth legal chief since 2021, following\u00a0the departure of Rob Beard<\/a>, who stepped down from his role after just 14 months. Neither the company nor Beard, who left to become the legal chief of a laser manufacturer, responded to Law.com’s inquiries about his early exit.<\/p>\n<\/div>\n

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From the outside, nothing seemed amiss. The company’s stock price rose 30% during his tenure, though the company did suffer the disappointment of having a court in June shoot down a $30 billion settlement <\/a>it and Visa struck aimed at resolving merchant litigation that has been running for decades alleging the card giants charges excessive swipe fees.<\/p>\n<\/div>\n

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Still, nothing can be assumed.<\/p>\n<\/div>\n

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Veteran in-house observers say reasons for unexpected GC exits are varied and wide-ranging, from ethical concerns\u00a0and differences in management styles to personal issues, such as aging parents who need more support or the loss of a child.<\/p>\n<\/div>\n

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Susan Hackett, CEO of the consultancy Legal Executive Leadership, said sometimes GCs do leave quickly because they believe the company is\u00a0operating in an unethical manner.<\/p>\n<\/div>\n

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“If the new general counsel faces an issue that they have an ethical and professional responsibility to address, and they bring it to the top of the ladder, but senior leadership neglects to address it, that GC must leave,” Hackett said.\u00a0 “They might place themselves in professional jeopardy, if they remain and are part of it.”<\/p>\n<\/div>\n

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In such instances, sometimes the GC makes a so-called “noisy exit,” going straight to regulators to rep[ort something is amiss.<\/p>\n<\/div>\n

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The blood testing company Theranos provides a classic example of a noisy departure.<\/p>\n<\/div>\n

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After resigning as general counsel, David Taylor cooperated with investigators in a probe that ultimately led to the conviction of founder Elizabeth\u00a0Holmes on fraud charges and her sentencing to more than 11 years in prison,.<\/p>\n<\/div>\n

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While sudden GC departures often raise eyebrows,\u00a0 the vast majority of them are\u00a0 what Hackett terms professional departures and have nothing to do with issues of illegaility.<\/p>\n<\/div>\n

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“A company can’t be pilloried for wrongdoing just because a GC suddenly departs,” Hackett said.<\/p>\n<\/div>\n

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Instead, professional departures often indicate other issues at play, such as a company reducing its compliance budget, making it more susceptible to regulatory violations, or the GC disapproving of the way senior management treats other employees.<\/p>\n<\/div>\n

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“A\u00a0pro departure could result from anything,” says Hackett, who for more than two decades was general counsel of the\u00a0Association of Corporate Counsel. “For the most part, you can’t infer the company is corrupt in these instances.”<\/p>\n<\/div>\n

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Often, a departure looks odd because a GC\u00a0has landed an attractive new job, but the former employer and new employer aren’t in sync on when the new position will be publicly disclosed.<\/p>\n<\/div>\n

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Two days later, New York City-based Estee Lauder announced it had hired La Lande a<\/a>s general counsel.<\/p>\n<\/div>\n

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While Mastercard has had four legal chiefs since 2021, the first, Tim Murphy, shifted to the newly created role <\/a>of chief administrative officer. The company then promoted\u00a0 Rick Verma, its head of public policy, to legal chief. He left after 2-1\/2 years to become deputy secretaruy for management and resources for the U.S. State Department.<\/p>\n<\/div>\n

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John Gilmore,\u00a0co-founder and manager of the recruiter and consultancy BarkerGilmore in Rochester, New York, said abrupt GC exits often result from differing management philosophies between the new legal chief and a company’s C-suite.<\/p>\n<\/div>\n

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“One of the biggest issues is when the new general counsel and the executive leadership team are not aligned in their approach and decision-making,” Gilmore said. “This could be a misalignment of risk tolerance, strategy to deal with a litigation, a regulatory matter, a major transaction, an internal investigation, or expectations being set one way during the interview and finding out another after joining the company\u2014this causes immediate distrust.”<\/p>\n<\/div>\n

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To help avoid this, Gilmore advises firms to disclose as much as they can about their companies so that\u00a0 new legal chief understands the challenges they will face when they begin their role.<\/p>\n<\/div>\n

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“We try to get the company to be above board as possible so the new GC will know what to expect is going on,” Gilmore said.\u00a0 “Companies can’t always share specific issues, but they can give another example that is similar to provide potential hires an idea of what they will be facing if they step into the role, so there will no surprises.”<\/p>\n<\/div>\n

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He said most GCs will spend their first six months or assessing how they are settling into the legal departments and developing relationships with members of the executive team, a period Gilmore calls\u00a0“a bit of dating game.”<\/p>\n<\/div>\n

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However, this relationship can be strained if a newly arrived legal chief is too eager to launch his ideas.<\/p>\n<\/div>\n

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“A new GC may want to come in and shake things up, make new policies before understanding how the company has been operating,” Gilmore said.\u00a0 “Sometimes, it’s too much change, too quickly.”<\/p>\n<\/div>\n

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Abrupt departures often remain riddles unsolved because companies and GCs tend to gloss over any differences following a separation, and the departing legal chief often reaches a financial\u00a0settlement that includes a\u00a0nondisparagement provision.<\/p>\n<\/div>\n

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And even in the most contentious cases when criticism may be warranted, speaking ill of a former employer is widely considered poor form, trespassing unspoken professional guidelines.<\/p>\n<\/div>\n

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Gilmore said his firm provides a one-year guarantee for the candidates it places\u2014meaning that if the attorney leaves voluntarily or is released for performance-related reasons his company will conduct a new search at no cost, beyond reimbursement of\u00a0expenses incurred. The guarantee does not cover attorneys who left because of a corporate restructuring or for health reasons.<\/p>\n<\/div>\n

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Meanwhile, anecdotal evidence suggests the sudden departures of legal chiefs are less frequent today due to the expanding influence of the GC role in companies.<\/p>\n<\/div>\n

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“The GC has to earn entry into those additional footholds of responsibility or influence in the company,” Hackett said.\u00a0 “This requires that trust be in place before the role is expanded.”<\/p>\n<\/div>\n

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Despite all of the possible explanations, sometimes the reasons for a GC unexpectedly exiting their post is simple and relatable.<\/p>\n<\/div>\n

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In the throes of competitive business culture, it’s easy to\u00a0 forget that corporate attorneys have personal lives that may at times takes precedence over their careers.<\/p>\n<\/div>\n

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“Someone may have just suffered a heart attack, or they need to tend to an ailing parent,: Hackett said\u00a0 “Someone may have suffered a death in their family\u2014they might have just lost their spouse, or a child.”<\/p>\n<\/p><\/div>\n

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