In this episode of Ropes & Gray’s podcast series, Culture & Compliance Chronicles, litigation & enforcement attorney Tina Yu talks with Julian Danobeitia, an executive coach and director at DownTheCorridor. The first of a two-part discussion, this episode focuses on how the legal and compliance functions are often perceived within organizations, and why that impacts their ability to perform. Drawing on professional experiences, movies and psychology, the two also drill down on what kind of relationships among co-workers tend to foster a more healthy compliance culture.
Tina Yu: I'm sure you'll have a lot of very interesting insights for us. So today, the topic is: How do we communicate with each other in a way that's open and conducive to getting our messages and concerns across? Julian, you and I have had conversations about this and I think what ultimately it boiled down to was respect. On the topic of respect, we wanted to delve further into how legal and compliance functions are often perceived in an organization because we just think that perception really heavily impacts, first, respect towards the messages that these functions are trying to propose and trying to put forward, but on the other hand, that perception will also impact generally how employees are communicating with them on compliance and risk management issues.
Julian Danobeitia: Have you ever watched this magnificent film called Inside Out? That film is probably the best exposition of, I guess, pretty much everything that we're going to talk about in this session because what that film really eloquently puts, I think, is something that in psychology and neuroscience is a pretty reasonable proposition to make, which is that emotion drives all behavior, and of course, emotion absolutely helps to create perceptions. I can remember from my own career, walking into many rooms with many clients and many people on the other side over the years, and watching people’s eyes hit the ceiling as soon as I walk through the door because low and behold, "The lawyers are here," or "The regulatory people are here," or "The Ministry of No are here," or "The Business Prevention Unit is here." I guess one of the things that I learned as a result of the coaching process that I went through myself after leaving the practice as a lawyer, was that that response to me was driven in large part by my own behavior, but I was never really, until I got into coaching myself, able to see that. And it's only because I've been extraordinarily lucky in my career and have been given the opportunity to work with some incredible people and work inside the auspices of a very large law firm that finally created the first big coaching school for lawyers. It was there that I first got to see that what it seems we're trying to do is to get people to do the right thing, but we're trying to get them to do it by telling them off, and we're trying to get them to do it by telling them what's wrong, and we're trying to get them to do it by creating legislative frameworks. Sometimes, not every time, of course, but that's certainly the perception that I come across most often in business, that, "The regulatory people are out to get us. They don't understand us. They don't see our view." And that's a shame, of course, because I know that that's not what regulatory people intend to create for the rest of the people in their businesses and experience, and yet, that's what happens. But, much more fundamentally, it’s the absence of any focus on the relationship itself between the regulatory part of the business and the rest of the business, which I've had the privilege of being able to support professionals in building those relationships over the course of my career. And things change when that happens, I think. Things change when that happens – when that focus shifts, things seem to change.
Tina Yu: I completely agree with that. And actually, I'd be really interested in exploring this, from your perspective as a coach, in how to help people come out of that shell, if you will, a little bit later in this podcast. But I do want to go back to your point about how there being this disconnect between the legal and regulatory functions, when ultimately, the end goal is really the same, regardless of which function you're in – you just want this organization to be better, but you're coming about it from a very different perspective. I mean, in my own experience, like you mention, there is this general distrust of lawyers. There's this general distrust of compliance because they view them as cost centers, and a lot of the times they view them as obstacles or sometimes even a check-the-box exercise that creates more administrative hassle for them when they want something done. A lot of the times, like you mention, it is like the movie Inside Out. You have all these different emotions, opportunities or goals you're trying to achieve at the same time and that creates oftentimes a very disjointed result that isn't beneficial, ultimately, for the organization. There needs to be some kind of bridge between these different perspectives, and I just find that unfortunately lacking because of this mutual distrust almost. Like I said, I think oftentimes the business side, the sales teams, the marketing teams – they just view the procedures and processes that the lawyers and the compliance professionals are putting in ultimately as a protection, a safety net, as an administrative burden and as an obstacle that they need to overcome ultimately. And then that feeds back into this vicious circle where the legal and the compliance functions look at the reaction of the business side and say, "Well, they're just not being cooperative. They don't get what we're trying to do here. They're making our lives difficult as well." That resentment just grows within an organization, so it just seems important to me that there needs to be these open lines of communication on what each department or each function is trying to do and how the others are actually supporting that instead of hindering it, and I just don't think that that is happening often enough.
Julian Danobeitia: I couldn't agree with you more. I don't know if the training is vastly different in the U.S. from the training here in the UK, but I am absolutely sure that what I got told about was rule one, which is that, "You've got a duty to your client and you've got a duty to the court." I know that in my own case, my response was to learn as much of the law as I could and be absolutely right in my assertions about everything, and never take the foot off the gas and make absolutely sure that everybody knew that I was being a lawyer, so to speak. So my own paradigm was, or my own sense of myself was, as a lawyer, that I deliver value by knowing lots of law and doing loads of hard work. And that's what I did – in fact, I got really good at doing that. At one stage, I had so many files in my room that I was able to block the door of my office so nobody would come in and disturb me while I was doing all this important work, and that was a huge mistake on my part. But again, my emotions, if you like, created my perceptions of what I was supposed to be, my paradigm of what I was supposed to be, and I was committed to being it. The one thing that I never focused on was the relationship – the relationship with anybody really, or to put it more bluntly or more clearly, the experience that I was creating for other people around me because I wasn't aware of the experience that my own emotions were creating for myself. As a result of that, of course, I got the results that I got. I can distinctly remember when I went from private practice to in-house – that was really the start of my inquiry about how this can be done differently, and how particularly in-house lawyers and people who are in a regulatory function inside commercial organizations or large organizations of any type, can get a different result. The irony is that, I've worked with a lot of in-house teams, and the in-house legal function almost invariably is the only function that joins up all of the other functions in any organization. So they already have this incredible network because they get access to those parts of the business that maybe some others don't get to the same extent. So therefore, for an in-house legal team, I think the key is maybe, and this is a huge generalization because each team is different, each business is different, but it may be around shifting the focus towards the relationship and away from the file that's on the desk. If you're able to build a relationship with another part of the business in a way that you haven't previously, what you may then get is a very different result. If I tell myself that they're wrong and they're bad, and I tell myself that my job is to get them while they're doing the bad thing that they're doing, they probably will be – that's probably what I'll discover. I'm thinking about the Stanford Prison Experiment where we experienced a situation where you got two very nice decent groups of students who were asked to play different roles (prison guard, prisoner) and who, within a matter of hours, were turning up the dials on the electric shock machine so high that everybody thought that they were going to kill each other, and it only took a few hours. So what I'm saying is that I think that the role of the in-house legal function or the in-house regulatory function is one factor, but I think that that function sits within a wider culture inside any organization. I think that regulatory people can be an enormous driver of change inside those organizations, as can lawyers.
Tina Yu: I really like the perspective that the legal compliance function, they actually do see a very big slice of what's going on within the company, and if there's a way to bridge that communication channel, then they could actually play a very, very important role. That's not just limited to the very dry legal issues – they could really become a core, if you will, of maintaining the companies' cultures and maintaining the companies' values because they have such a broad insight into the on-goings. And I do think, like you mentioned, it is a shame when these roles become pigeon-holed into what many perceive as a traditional legal compliance regulatory role. I really like that visual where you said you were in your office and you had this pile stacked high that was blocking your way out the door. That image portrays, I think very accurately, how some of the more traditional legal roles have been viewed. And I think we do need to physically take that first step and physically remove those files and binders, and open that door and start talking to people when you're within an organization. I have spoken to various in-house counsel and it's interesting when they tell me the biggest difference between their roles within a law firm and within the organization is they have been forced to become people-people. It's translating, "Why is this a big issue? Why does this have potential repercussions on the company and what should you do?" And taking that very foreign and cold legalese and making it into something that's acceptable, that's understandable, and something that can be easily embraced by the rest of the organization. And I think that really is one of the key roles about being a lawyer that, like you said, isn't always communicated in law school.
Julian Danobeitia: I know that it wasn't – I mean, I just don't think it was a conversation that at an audible level was taking place inside the law. I was having a coaching session this morning with a general counsel of a big organization. What she as general counsel inside a commercial organization, and many of her peers want a lot, is for private practice lawyers to take this relationship-based focus on, too, because they have the same issues as well. It's very, very hard for a GC to go and instruct a law firm and say, "We need to be in Italy next Tuesday, and please get me something that is appropriate or fits the purpose that I can present to my board around the regulatory issues. So it needs to be succinct and clear. And then receive 50 pages of War & Peace with an invoice attached to it.” That's not really focusing on the relationship. That private practice lawyer at that point is not focusing on the experience that he is creating for that general counsel who's tried to be clear about what she needs in order to help her business move more forward from a regulatory perspective. My sense is, maybe there's a role for private practice lawyers, and in-house lawyers and regulatory people to play in concert by all helping each other to shift this focus. For shareholders, this is probably quite relevant – I don't think that there are many shareholders who are thrilled at the idea of risking their return on capital employed by putting their cash into an organization that's out of the regulatory requirements that they're subject to. So I think maybe shareholders as well have some part to play when they are faced with the choice to do the right thing rather than not do the right thing. What's your sense, Tina? I can remember being in practice and being faced with questions about whether I should or shouldn't do a thing. I think that that's the crucial moment – that's maybe the moment that from a regulatory perspective, we should be focusing on in how to build the capacity of that person faced in that moment with that challenge, to do the right thing rather than not.
Tina Yu: Julian, I completely agree with what you've said, and honestly, I'm a firm believer that most people want to do the right thing, but ultimately, what they believe to be the right thing when that moment comes? It's going to be influenced by many, many different factors. I think one of the most important things that the legal role, the compliance role, the other regulatory roles, that the most important thing that they can do is to arm that individual with the right tools to make what, in hindsight, is ultimately going to be the right decision. And we've discussed this in other podcasts, where it's so easy for somebody who's in an isolated environment to go down the slippery slope of non-compliance. It's really because they just didn't have the tools, they didn't have the outreach, they didn't have the resources to support them in making what we now would see as the right decision versus the wrong decision, so I completely agree with you that it does ultimately boil down to that point. When we're looking at whether you do have a good compliance program or not, the ultimate question is, "Are you doing enough? Are you providing these resources? Are you creating the environment that is going to foster these decision-making processes and decision-making capabilities in the members of your organization when they're at this point?"
Julian Danobeitia: What's working? What are the actions that you see making a difference inside organizations from a regulatory perspective?
Tina Yu: Ultimately, what I've found to be most useful is having that open environment and having those open lines of communication. What's really struck me, just talking to different people and hearing from their experiences, is people don’t really think about bad stuff happening to them, until they're faced with it. And most people that I've spoken to like to think of themselves as good people, and that in itself is kind of a bias because it makes it easier for you to justify or find a legitimate, or so-called "legitimate reason," for doing something that you otherwise might not have done. So, what I find most difficult for people is, when they don't have somebody to talk to because a lot of the times when you're stuck in your little hole and you're in the silo and you're doing your own thing, you don't have somebody to bounce ideas off of. I think sometimes you will make a very different decision if you could only hear yourself speak to another person about it because what is in your head and once it is communicated, that will give you a different perspective. If you're alone and you don't have anybody to talk to about it, then I think that is a very big contributing factor to making the so-called "wrong decisions."
Julian Danobeitia: You just reminded me why we called our company DownTheCorridor, because, of course, there was somebody down the corridor from me when I was a trainee who I could bounce ideas off of and not make the silly mistakes. That's really interesting.
Tina Yu: I just find it fascinating because I have been in training sessions – the most effective training sessions that I've had are when people are talking about the issues they encountered. And you can tell people have been thinking about it, people have been mulling over it, but there never was really a platform for them to discuss it. People enjoy these discussions because when they hear about examples, when they really think about these examples, and when they're trying to apply themselves to the examples, you could see the wheels going off in their heads. It's a training process in decision-making as well because that's when they really apply themselves and they are trying to apply what we're telling them to do or not to do. And that's when, I think, it really begins to make a difference because you could write things in black and white and all caps and huge fonts, and people are still not going to think about applying them. So, I do find it has to be an organic process for it to be the most effective, and having those conversations is really the beginning.
Julian Danobeitia: That's so interesting because it takes me right back to Richard Bowlby's secure attachment theory of what our outcomes look like. Those with a secure attachment relationship are likely to have a better outcome than those that are not. And, of course, Mary Ainsworth in her later research on the whole concept of the secure attachment relationship and what it does and how it changes us, how it changes the way we think and behave, was able to demonstrate very clearly that actually, that can happen anytime – it can happen early in life, it can happen at any other time. It's so interesting to hear you articulate your experience of it, your day-to-day experience of it, as fundamentally being around having somebody to talk to about it and just bounce ideas off, as you say.
Tina Yu: Thank you very much, Julian. And thanks to our listeners for tuning in to our Culture & Compliance Chronicles podcast series. Please stay tuned for part two, where Julian and I will talk about techniques on approaching and establishing relationships. In the meantime, for more information, please visit our website at www.ropesgray.com. And of course, if we can help you navigate any of the topics we discussed, please don't hesitate to get in touch with us. You can also subscribe to this series wherever you regularly listen to podcasts, including on Apple, Google and Spotify. Thanks again for listening.
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