Behavioral science is not often invoked in the halls of law departments, but maybe it should be. Two recent articles highlight the importance to a GC’s success of understanding why people think and act as they do.
General counsel are in the position of having to reconcile two jobs: being both a business partner in the management of the company’s business and the guardian of the company’s integrity. One aspect of their work requires creativity, risk-taking and far-sightedness. The other requires careful scrutiny of every corporate action in the short and long term for potential regulatory, liability and just plain reputation pitfalls. Achieving high productivity with high integrity might strain even Superman’s talents.
An article in Corporate Counsel by Ben W. Heineman Jr, former GE senior vice president-general counsel, entitled "How GCs Can Avoid Being Caught in the Middle" recites some of the recent scandals that attest to how difficult that balancing act can be: the fraudulent financial practices at Enron, the pretexting at Hewlett-Packard Corp, and the wave of options backdating.
Perhaps what chilled GCs to the bone most recently were the guilty pleas by Purdue Pharma L.P., its president, GC and former chief medical officer to misleading the public about the drug OxyContin’s risk of addiction. They have agreed to pay a total of $634.5 million in fines. Rather than relaying focus group concern about potential for abuse, Purdue Pharma gave false information to its sales representatives that the drug was less addictive than other painkillers.
Heineman mentions a number of attributes that can help GCs successfully straddle their two roles. Vis-a-vis the other corporate managers, the GC must have the ability to stand his/her ground on clear illegalities and to make sure he/she has enough time to assess those situations that are not clear cut. And GCs must be able to take those stands in the pressure-filled environment of a board meeting where the CEO is likely to be a ferocious skeptic and many board members will side with the CEO. See our July 18, 2007 entry on Promoting an Effective Board about the importance of personal attributes in good decision-making.
The Texas Lawyer article "It’s All in Your Head: Cognitive Theory Can Help GCs Lead Organizations to Better Decisions" by Michael Maslanka, a managing partner at Ford & Harrison in Dallas, contends that a GC’s real power–the ability to influence decisions– comes from understanding the way people think, which requires tapping into cognitive science.
Maslanka lists a number of biases that people in general and managers specifically can suffer from if they aren’t on the alert:
- The bias that there is only one cause when something bad happens
- The tendency to focus on conclusions and generalities instead of specifics
- Hardwiring that makes it easy to believe accusations and hard to disbelieve them
- A confirmation bias, which only admits facts that support our beliefs (and further reinforces our belief bias)
- Overreliance on what is first heard
- Resistance to change that can only be overcome with practice, practice, practice
Maslanka encourages GCs to be open to all possibilities and to question rather than dictate. Heineman also points out the importance of maintaining within the law department a culture that welcomes, even requires, lawyers to raise concerns about financial, legal, ethical or reputational issues. We refer to this as a "culture of dissent"– one that invites concerns, follows up on them and does not punish anyone for raising them, but rather praises them. See our March 16, 2007 entry on the article Handling Conflict and Dissent in Law Practice (and Life).
While it may not be mind reading, being cognitively aware of your own personal attributes and biases, as well as others’, can help steer you toward that Superman performance to which all GCs aspire.