(Author) Assistant General Counsel
I wanted to get some advice on communicating legal comments. I’m at a S&P 500 company in a relatively senior role where I interact with the C suite and the Board frequently. Just came out of a meeting with the CEO, CFO, and divisional CEOs discussing an important investor presentation. Everyone seemed to be resistant to legal comments, including low hanging fruit/easy fixes that are clearly required by law.
I ended up getting 60% of my legal comments incorporated, but with great difficulties, and people seemed frustrated by them. I get that legal comments are annoying in nature, and “less important” from a business standpoint, but that’s what I’m getting paid to do. How do you typically communicate legal comments to business colleagues effectively?
For more context: a 60-page deck was sent to me for the first time Saturday and it needed to be finalized Monday. I provided legal comments on Saturday. I offered to discuss on Sunday, but no one took me up on it. The second version was sent out on Monday with many of my comments ignored, and it was the version discussed live on Monday with the C suite, where I pushed and people were saying that there was no time to implement legal comments. I cannot go into specifics, but some of the comments are SEC required and there’s simply no flexibility. They don’t add value other than complying with SEC rules. My GC does have my back, but he is not in the weeds/does not get into this level of details.
General Counsel Responses:
- Maybe ask the business unit how they want comments. I’ve had teams tell me redline, redline with a comment as to the reason, just comment with the reason, and comment with redline in comment and reason. I try to accommodate their preference where I can.
- I've been here. It's very frustrating. I totally feel you. Consider asking the responsible team for a “hot wash” or review of the process this time to help improve the process and timing going forward. Then, use that time to reinforce how you want to best support them and the company and put the best product forward while avoiding unnecessary risk as well as to educate them on the requirements and why legal review is important. Be flexible and try to figure out where and when they can best plug that review time into the overall process. No one wants to see regulatory changes like these at C suite review. It makes everyone look not collaborative/team-oriented and then folks get defensive. It’s super irritating to boot. Try to leverage process improvement to build your review in before it gets here. - If they refuse, then, there’s nothing more you can do but continue to call the issues out in the moment.
- I’ve learned that it's hard to call out SEC rules out loud in a process review and it’s even harder for them to affirmatively state in a process meeting or document that they are committed to that type of an approach and action going forward. So, trying to thread the needle and calling them out while also trying to get to a consensus process that avoids this type of chicanery in the future. I’ve used this approach several times and only once have I had the business unit just flat refuse to be cooperative in any way. That said, I had it on record with the leadership. So, the next time there was a dumpster fire at the C suite - they had to answer as to why they had refused to work collaboratively. It did not go well for them.
Counsel Responses:
- This is hard - if your GC hasn’t trained these people to take SEC rules seriously then it’s hard for you to do it. Does GC have your back on this stuff? I’d ask mine to talk to CFO and then have GC/CFO double team the CEO.
- Add commentary like, not updating this sentence will result in up to $X in fines.
- Shouldn’t Investor Relations own the deck and shouldn’t they know better than to try to sandbag you?
Attorney and Associate Responses:
- You should be making these comments before this goes to the C Suite.
- What? C suite should never get a non-compliant investor presentation. Literally 90% of these are the same. The only issue that likely ever comes up is non-GAAP. And this is probably not the first time they’ve done a presentation. So either y’all’s company is malpractice city for the last x amount of years they’ve been doing presentations or more likely you’re just adding things to add things and they weren’t necessary anyway.
In-house? Be a part of the conversation on Fishbowl (anonymous).
