Analysis

GCs Forced To Juggle As Legal Teams Face COVID-19 Cuts

By Michele Gorman
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Law360 (June 4, 2020, 4:22 PM EDT) -- As general counsel lay off lawyers and other staff to help companies shoulder the economic fallout of the COVID-19 crisis and adjust to operating with leaner departments, they're being forced to reprioritize and find ways to make up for lost knowledge, experts say.

Uber confirmed that in May it had reduced its global workforce by 25%, and its legal department was not spared. Hilton Worldwide Incalso had to scale down its legal unit, and some staff from the law entity at Marriott International had to move to shortened workweeks.

Experts say that any time an in-house department reduces its ranks, it loses critical institutional and legal knowledge. And the typical challenges that come with layoffs have been compounded by changing rules and regulations amid the pandemic, as well as remote work environments that for some involve home-schooling children.

Additionally, teams are juggling with how to handle different topics such as health and safety, privacy, employment and bankruptcy that have jumped to the fore of high-risk issues and priorities.

To move forward during difficult times, general counsel who have previously dealt with staff cuts or are accustomed to working alone or with just a few lawyers say it's crucial to understand the risk appetite for the business and where legal advice will have the biggest impact.

"You cannot cover everything. You should cover most things and understand what kind of risk the company is willing to take," said Flavia Naves, who as general counsel and chief compliance officer at automated global payments and liquidity startup Qwil operates as a legal entity of one. "If you're going to try to cover everything at 100%, you're not going to be able to do it."

Top corporate lawyers, along with their direct reports and entire teams, if possible, should try to figure out how to reduce workloads in lower-priority areas by taking "smart risks," said Michelle Banks, a senior adviser at BarkerGilmore LLC who coaches and mentors general counsel.

Previously, during her 10-year tenure as general counsel at Gap Inc., Banks experienced two significant companywide layoffs that affected her legal department.

She stressed that, given their training, it can be challenging for lawyers to actively look for opportunities to take risks. But it's critical nevertheless, especially given the staff reductions happening across the board.

With just three other full-time lawyers on her team, car-sharing company Turo's chief legal officer Michelle Fang understands her staff cannot participate in every meeting they might want to attend, especially during the pandemic.

"We ruthlessly prioritize in terms of what we take on and the level of service that we give to particular things," she said.

This approach helps free up time for lawyers to focus on more pressing matters. As an example, Fang said she recently spent a total of about 100 hours with a colleague analyzing the changing guidance on the recent federal stimulus package — working through questions including whether to apply, and involving the board for approval to do so.

That was work, Fang said, "that was not on the agenda. But it was super-important and worth doing, and [a] very high-value add for our business because of the impact that COVID has had on my industry and my business."

Another lawyer who has had to refocus her department's priorities recently is Susanna McDonald, vice president and chief legal officer of the Association of Corporate Counsel. She says she has been adjusting to a reduced legal staff since earlier this year, when two attorneys from her six-person department left the organization for other opportunities.

McDonald noted that the most senior lawyer within an affected legal department will "really have to make some hard decisions as to what [they're] going to be working on first."

One area where McDonald's team has pivoted was with its plans to upgrade its privacy program related to the General Data Protection Regulation, the European Union's sweeping data protections that took effect two years ago.

Given the size of the department now, they have decided instead to continue with the existing program and focus more on crafting policies that will help ensure the health and safety of employees when they return to the office, and to maintain their confidentiality.

​Experts say general counsel and mid-level managers with smaller teams ​should consider the reality there could be less delegating and a greater need for them to roll up their sleeves to help fill the gaps.

Since some on her team might not be able to be proactive on as many projects as before, Fang said it helps to train colleagues in other business units to know when to include the legal department and educate them on topics that are especially risky and sensitive.

And collaboration among her team is key.

"Any single lawyer on my team, including myself, will jump in on anything that needs to be done," Fang said. "That doesn't mean that's always going to be efficient — you have to figure out ways that people know who to go to for the right things — but [there should be] just sort of an expectation that we're all willing to help on anything."

And with turnover, companies have likely lost experts on certain issues who had fingerprints on multiple projects. General counsel might bridge the gap by leveraging outside counsel for high-risk matters and seeking alternative, lower-cost options such as freelance attorneys and boutique firms that specialize in specific practices, Banks said.

Another way to scale the legal team is to consider secondments or summer associates. In addition to Fang's four-lawyer team, an attorney from Cooley LLP has been temporarily seconded full time to Turo. Fang has also hired a former summer associate as a part-time fellow to help with legal research projects.

Amid layoffs, Banks said it's important for general counsel to act quickly to bring the team together — even if it's through a video meeting — to transparently discuss what's happening and why; share plans and expectations; and allow staff to ask questions and voice concerns.

And she urged managers to empathize not only with the staff leaving the company, but also with those remaining in the legal department.

"I think if you don't treat the people who are leaving really well, the people who are staying are going to be impacted, and they're going to be less motivated, less positive from a morale perspective," Banks said, adding that managers should try to give as much notice as possible, show compassion and offer support, and even try to connect their former colleagues with new job opportunities.

The silver lining in some layoffs, Banks said, is the opportunity for legal departments to emerge as more efficient, productive and prioritized entities, and for corporate counsel to learn new skills.

"Many of the existing employees who don't get laid off will have the potential for career growth to learn new areas, to expand their role or expand their responsibilities," she said. "I think it's difficult, but it's not all bad. Some change will be positive."

--Editing by Philip Shea and Orlando Lorenzo.

For a reprint of this article, please contact reprints@law360.com.

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