“If your only job was reporting to me what outside counsel thinks, I can replace you with a phone,” Schumacher said. “I expect all of my lawyers to be so actively engaged that not only are they partnering with a firm, they have their own points of view and, hopefully, they’re aligned with the outside law firm.”
Bloomberg Law is conducting a Q&A series highlighting some of the legal industry’s most important relationships: the often fruitful but sometimes complicated connections between general counsel and their outside law firms. We’re talking with general counsel across industries about how they select outside lawyers and handle issues like billing, fees, and tracking performance.
Schumacher was appointed general counsel of Abbott Laboratories in 2005. She joined Chicago-based AbbVie following its spinoff from Abbott in 2013 and is now the company’s vice chairman of external affairs and chief legal officer.
She spoke with Bloomberg Law about her expectations for outside counsel management and AbbVie’s program that mandates diversity at the partnership level of the company’s core outside firms.
This conversation has been edited for clarity and length.
Bloomberg Law: Abbvie handles a wide range of global regulatory issues. Do you typically hire outside firms for those matters?
Laura Schumacher: It really depends on the magnitude of the issue and the complexity of the issue. We as an organization are very hands-on. Our lawyers are very hands-on, and we try to do a fair amount of the legal work inside the company. We do employ outside counsel where the matters are large and complex, and we don’t have the depth or the ability to staff up a big antitrust action or a big intellectual property case.
But even in those instances where we do use outside counsel, we try to partner very directly with the team and consider ourselves to be a part of the team. We’re actively integrated with the lawyers. We don’t just get reports back from the outside firms about what’s happening in the case. We feel that we are the architects of the strategy, we’re the drivers of the result, and together with our outside firms I think we achieve the best result because we bring a slightly different perspective by virtue of having a deep knowledge, not just of the law, but of the issue and the business ramifications of the of the issue.
BL: About 20 law firms make up around 75% of your billing. How do your in-house lawyers manage these firms?
LS: I expect all of my lawyers to be so actively engaged that not only are they partnering with a firm, they have their own points of view and, hopefully, they’re aligned with the outside law firm. But I never would view one of my members of my legal team as a conduit to pass information along. If your only job was reporting to me what outside counsel thinks, I can replace you with a phone. At the end of the day, I can pick up a phone and call outside lawyers and find out what they think all the time, but what I really want to know is what you think.
BL: Has the pandemic changed these relationships between your team and your outside firms?
LS: Unequivocally no. The pandemic may make things a little bit more difficult with everything being remote and so on. But I would give our firms a lot of credit, and I would give the team a lot of credit for working through challenging circumstances. We closed the Allergan acquisition, which is the largest acquisition in our history—and probably the largest acquisition of 2020—in the middle of the pandemic, fully remote, and I think that is an enormous tribute to the law firms and to the people working on the case and to our team.
Kirkland & Ellis was the primary M&A partner, McCann Fitzgerald was our Irish counsel, and Allergan was represented by Wachtell Lipton and Arthur Cox. To be able to manage a cross-border, $63 billion acquisition remotely and deal with the regulators and all the rest of it is pretty incredible.
BL: AbbVie also has a Diversity in Law program for your outside firms. How did that initiative begin?
LS: We started designing our current program in 2017, and we put that program in place in 2018. So far, we’ve had great success. The partners, the law firms, have been very receptive. I believe, in general, the law firms do want to try to drive the change, but they need to be motivated. Because it takes work.
BL: How do you measure your firms’ success?
LS: We wanted very specific, concrete, and measurable goals. We sat down with these law firms, and we said, “Okay, look, at the end of the day, we don’t want you to staff our cases with a bunch of first year associates that make up your numbers, and then they never advance.” That’s because we know that this problem—or this challenge, or this opportunity—is to provide a chance to advance people, not just bring them in and then have them not succeed. So we said we want 50% representation at the partnership level with gender based diversity, and we want 25% with ethnic diversity.
We also said we’re going to look at it over a five-year time horizon, and we’re going to stage-gate it over that time so we can look at whether you’re achieving the goal. The ultimate understanding is that if you do not hit these goals if we get to year four, and you’re nowhere, and all of a sudden you think you’re going to hit this goal in the next year, we know that that’s not really a commitment to diversity.
BL: Have you seen outside firms make real progress?
LS: Within this group of top law firms, some of them have just hit it out of the park, and you can see their commitment in every matter where they bring to the table a diverse team. I think it’s important to underscore that this is at the partnership level because in order to really attain lasting diversity, we’ve got to give opportunities and people have to advance. Saying, “I want this 50% at the partnership level,” means you have to do something within the firm to actually get there to have a pool of talent, because there’s no sacrifice in the demand for results. I would say we get better results with these teams, than we otherwise would.
And there are a few firms that have been disappointing. Three to four years into it, we haven’t really made a lot of progress. Those are firms where we do value the relationships, we sit down with them every year and say, “If you don’t make meaningful change here, we’re going to have to part ways down the road.”
It’s not something that we like, because we do invest in our firms, and if they understand the company and the business, then they’re valuable to us too. But if they’re not committed to bringing the kind of diversity that we want to see it, then it’s not a firm that we necessarily want to have a long-term investment in. I think they understand that.