In-house legal team takes new direction at Spotify

In 2016, Horacio Gutierrez left his position as general counsel of Microsoft to help take Spotify, the music streaming company, public. For two years, he played a leading role in the negotiations that allowed Spotify to complete the first direct listing on the New York Stock Exchange, rather than a conventional initial public offering. This meant offering shares to the public without an investment bank underwriting the offering and setting the share price, and required the exchange to change its rules. Direct listings on the NYSE are now available for other companies.

The IPO was just one of many areas where the legal team helped make a difference to Spotify.

“The legal department is at the centre of the company’s ability to differentiate and innovate,” says Mr Gutierrez.

Intellectual property is at the heart of Spotify’s business model. The licensing and publishing operations teams sit within the legal and business affairs team, but instead of lawyers it comprises operational experts, project managers and data scientists.

People, process and technology are the so-called “golden triangle” of organisational change. Management theory posits that all three factors are essential for success. The legal leaders and in-house legal teams ranked in this year’s report are making changes in each of these three crucial areas.

The greatest evolution over the past few years has been a growing appreciation within legal departments of technology’s ability to improve and scale human expertise. Says Mr Gutierrez: “I want to de-lawyer as much of our high-volume legal services as I can by investing in people who build processes and tools.”

One of his first actions at Spotify was create a legal operations team with people from product and software development backgrounds. The team is headed by Caraline Pellatt, head of business operations, who says their focus is to build process, tools and service models “like a high functioning business rather than a legal department traditionally seen as a cost centre.”

The legal team at Honeywell, this year’s top ranked in-house legal team, work closely with the IT department to develop and test new technologies in its legal practice. Honeywell has implemented a host of artificial intelligence applications to standardise and speed up aspects of legal work. New ediscovery tools have helped the team cut spending on law firms.

“We are a technology company,” explains Honeywell’s general counsel, Anne Madden, adding: “We are a great appreciator of the value of technology in our own practice of law”.

Across industries, new approaches to process drawn from manufacturing, engineering, design and software development are being adapted for use by legal teams. Terms such as “agile sprint cycle” and “development lifecycle”, which describe the process followed by coders to create new software, have moved from Silicon Valley into the vernacular of in-house legal operations. While approaches to process and technology have advanced in the past two years, the new types of talent being brought into in-house legal teams are having the greatest impact. Growing involvement from operations, cyber security, technology and data privacy experts is changing the face of the corporate legal department.

The General Motors legal team features in this year’s report for its role in the carmaker’s development of new businesses and business models like self-driving cars and Maven, a car-sharing service.

When general counsel Craig Glidden joined General Motors in 2015, it was initially to help the company through a crisis resulting from faulty ignition switches. He oversaw a $900m settlement with the US Department of Justice and the resolution of multiple lawsuits.

Mr Glidden then set his sights on rebuilding the legal team, which suffered from staff departures and low morale.

New hires since 2015 now make up more than half of the 350-person team. Only 220 are lawyers, and many of the new roles are filled by professionals with diverse skills and experience in areas ranging from cyber security to alternative business models.

A priority for many of this year’s top legal teams is promoting diversity and inclusion. Discover Financial Services’ diverse legal team now acts as a model for the rest of the business to follow.

One of the characteristics that general counsel Kelly McNamara Corley says she looks for in new hires is past experience leading diversity and inclusion initiatives. Many of the featured legal teams also exercise buying power to compel law firms to improve diversity statistics.

Drawing on diverse educational and professional backgrounds has become essential to help businesses succeed in new, increasingly technology-led industries.

For General Motors, which last month announced big job cuts in North America and an end to production at seven plants, the need is particularly acute. “The industry is going through a once in a lifetime event,” Mr Glidden says. “We have had to change our structure and get people dedicated to new practice areas.” 

Winner: Horacio Gutierrez

General counsel and vice-president, business and legal affairs
Spotify

After 17 years at Microsoft, Horacio Gutierrez joined Spotify as general counsel in 2016. Mr Gutierrez also heads the music-streaming service’s global licensing function, critical for negotiating and establishing commercial licensing arrangements with artists, labels and publishers. He played a leading role in preparing the company for its initial public offering on the NYSE, paving the way for the unusual direct listing in April 2018.

Craig Glidden

Executive vice-president and general counsel
General Motors

When Craig Glidden joined GM in 2015 the legal department was in crisis. Following the recall of nearly 30m cars due to defective ignition switches, he oversaw a deferred prosecution agreement and settlements of numerous lawsuits. In the past three years, Mr Glidden has rebuilt the legal team to serve the transforming business. Its 350 lawyers and professionals support new business models, such as autonomous cars and car-sharing services.

Anne Madden

Senior vice-president and general counsel
Honeywell

Anne Madden has played an instrumental role in the company’s growth as global head of mergers and acquisitions since 2002. She oversaw close to 100 acquisitions and 70 divestments during that time. In 2017, Ms Madden took over as general counsel, heading health and safety, product stewardship and government relations. She has introduced a range of tools in compliance and contracting as well as AI instruments to improve the efficiency of the legal team.

Kelly McNamara Corley

Executive vice-president and general counsel
Discover Financial Services

Kelly McNamara Corley has been with Discover for more than 30 years and general counsel since 1999. Her team is instrumental in guiding the business through complex payment regulation in over 160 countries, enabling its growth. By adopting new litigation and contracting technology, she has reduced costs by 32 per cent since 2016. Her team is diverse by design, and active in promoting the benefits of diversity across the company.

Innovative Lawyers North America Ranking 2018

View the full rankings here

• Top Innovative Law Firms: Six of the best overall
• Most Innovative Law Firms: Business of Law
• Most Innovative Law Firms: Legal Expertise
• In-house
• Rule of Law | • In-house
• Collaboration 
• Data, Knowledge and Intelligence | • In-house
• Managing and Developing Talent | • In-house  
• New Business and Service Delivery Models | • In-house

• New Products and Services | • In-house
• Strategy and Changing Behaviours | • In-house
• Technology | • In-house
• Accessing New Markets and Capital | • In-house
• Enabling Business Growth and Transformation | • In-house
• Managing Complexity and Scale | • In-house
• Litigation & Disputes | • In-house
• Creating a New Standard | • In-house
• Canada: Legal Expertise
• Canada: Business of Law