Corporate Boards Dislike Lawyers, Starbucks General Counsel Says

The chief legal officer at Starbucks Corp. has candid advice for outside counsel to consider when advising a company’s board: “Boards of directors don’t like lawyers.”

“I have never seen a room become as depressed and deflated as when the general counsel says, ‘I’ve invited my outside counsel to talk to you,’” said Brad Lerman, Starbucks’ general counsel, during a legal conference Thursday.

“The message to the board is, ‘Houston, we have a problem,’” added Lerman, who arrived at Starbucks last year, but was relating his experience as a board member at McKesson Corp. The board receives it as, “‘There’s something going on here that my general counsel, that my legal team that we work with as a board feels like they can’t handle without bringing in additional firepower.’”

Lerman was directing his message to a crowd of primarily law firm white-collar defense attorneys, a community he knows well from prior stints as a partner with Kirkland & Ellis and Winston & Strawn.

The comments, delivered on a panel at an American Bar Association event in San Francisco, provided guidance on how outside defense lawyers should tailor their messages, such as when presenting to a board about the company’s exposure to government investigations.

“What they want to hear from counsel, even under the worst of circumstances, is not sort of an insight into the nuances of the law or procedural strategies that may be available to the company,” he said. “They want to know how is this going to end.”

“Outside counsel need to keep in mind that the board is immediately wondering, ‘did we miss something?’” Lerman said. “‘Did we have the right oversight? Were we asleep at the switch?’”

He spoke during a general counsel forum at the ABA’s annual white collar crime conference in which he was joined by chief legal officers and other senior personnel from corporate giants such as Uber Technologies Inc., Walmart Inc., and General Dynamics.

The attorneys took turns offering their perspective on how and whether to push back on a government investigation or to cooperate.

William Hochul, a Davis Polk attorney and former general counsel of Delaware North Companies, kicked off the topic by sharing what he called a slightly contrarian view.

“I think it’s a mistake when you don’t telegraph you’re willing to fight,” Hochul said.

“I hesitate to say this as a former DOJ person for many decades, and of course this place is populated with former DOJ people,” but going in to cooperate may be “the start of a very unpleasant journey,” he added.

Joe Beemsterboer, a former acting DOJ criminal fraud section chief who is now Walmart’s vice president of government enforcement and legal investigations, disagreed.

“I think generally the worst mistake out of the gate can be to immediately go to that fighting context because at some point you may have to pivot away from that with the department,” Beemsterboer said.

Tony West, who is the chief attorney and executive vice president at Uber, replied, “plus one” to Beemsterboer.

But West, a former US associate attorney general, spoke to the importance of finding ways to engage with government outside of the investigation context, such as when Uber assisted law enforcement by providing carjacking data.

That way, “when we do have to fight,” West said, “you’re leveraging yourself in the best way possible.”

Laura Schumacher, who sits on General Dynamic’s board of directors and is past chief legal officer of Abbott Laboratories and AbbVie, said she’s learned from making numerous presentations to DOJ prosecutors that when a company does want to combat the government’s view, it’s best to winnow down the list of issues under dispute.

“I have found that that gives a lot more credibility to your position than if you come in, ‘we’re going to fight and you’re wrong on every single thing,’” Schumacher said.