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The Business
of Risk

After successful stints at the criminal Bar, the SFO, and as GC of Kroll, Bill Waite co-founded The Risk Advisory Group. Now CEO, he chats to GC’s Catherine McGregor and Catherine Rodgers about his journey into business leadership, and how lateral-thinking in-housers can use their skillsets to go off the beaten career track.


T H E   R I S K  A D V I S O R Y  G R O U P  C E O

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BILL WAITE

CO-FOUNDER AND GROUP CEO, THE RISK ADVISORY GROUP

CATHERINE McGREGOR

EDITOR-IN-CHIEF

CATHERINE RODGERS

EDITOR AND FEATURES WRITER

GC: It’s quite an unusual route for a criminal barrister to go in-house and become general counsel. Why did you decide to take that route and what was it that appealed to you about the GC role?

Bill Waite (BW): Whilst criminal work is exciting and interesting, it tends to be fairly constrained. The defences tend to be the same, the law tends to be the same - the environment gets smaller. The other point about the Bar is you tend to become a very sharp foil: your skills are more and more refined, which is great if you want to stay a barrister, but it doesn’t actually train you to do anything else.

I started looking at what other options there might be for me, and at that point I met Barbara Mills who was the head of the UK’s Serious Fraud Office. It sounded very interesting. The issues were a lot wider and a lot more complex. I arrived there on secondment at a time when the SFO was prosecuting corporates quite a lot, and I became engaged in some fantastic work that was coming through the door. We were working in big teams of lawyers, forensic accountants and computer forensics people, we worked a lot with the FBI and the Department of Justice, so it was very, very interesting, large-scale, complicated work. I was either part of a team that was doing those investigations or I was actually controlling those investigations.

I spent nearly four years at the SFO and it was one of the best professional experiences of my life. But then the question was: what next? I had entered on the basis that there might be opportunities either to go back to the Bar or to go to a City firm, but the SFO stopped prosecuting corporate, and therefore the appetite among the City firms to form white-collar law departments diminished.

I was made a couple of offers to go back to some very prestigious sets of chambers, and at the same time a company called Kroll Associates came along. I was faced with a choice: do I go back and do pure law and pure advocacy, or do I take an opportunity which is a bit wider, which involves a continuation of international travel, business and building time? I took a chance and decided to go to Kroll Associates.

An industry in its infancy

GC: Did it feel like you were taking a big gamble? Was Kroll still quite new?

BW: Kroll was about 20 years old then but I was entering a consultancy sector which had a very mixed reputation, so it was a significant career risk. But Kroll was the leading brand and it had some excellent clients. The whole risk management consultancy business was in its infancy at that particular point, so there was the thought process that you could be part of something that was new and fresh - and therefore you could influence it - rather than going into a law firm or going “traditionally in-house”. We’re talking about the mid-nineties and there weren’t the kinds of roles that I would be capable of doing in-house at that particular point in time. It was really the Bar, a regulator or something else. And I opted for something else.

GC: When you founded The Risk Advisory Group, you went from being general counsel to moving totally into the business side. How did that come about?

BW: When I joined Kroll it didn’t matter what your actual skillsets were; if you were generally competent you would do the case. What we did at Kroll in London was restructure the business so that we had a corporate investigations practice, a business intelligence practice and a security business. We recruited people with the appropriate skills into those various new parts, so I had lawyers, forensic accountants and computer forensics people because they know what evidence is: they know what a fact is and they know how to treat evidence.

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Shifting the model

That had a very strong result for Kroll’s London business, but it didn’t really fit with the company’s business model. I discussed that with a number of colleagues at the time and we decided that we would go off and try and do it ourselves, but try and do it in a different way. So we went out and raised venture capital and started The Risk Advisory Group.

When we started, we were very much focused on two things: investigations and business intelligence. By “business intelligence”, really what we were talking about was looking at people with whom our clients were contracting, whether it be entering a joint venture, appointing a third party in a remote jurisdiction, or employing a senior executive. In “investigations”, we were doing litigation support, so we were looking at witnesses, looking at backgrounds, and looking at issues, to try and help clients find out facts which would help them resolve their problems. We were very much focused on internal skills, on language capability, and on trying to shift the model from an extensive use of sub-contractors to a professional service business where you’re deploying your own internal skills to solve client problems. So that’s why I did it.

GC: Often the trajectory for people moving into business is from the finance side. Do you think there are advantages to having a legal background in terms of doing what you’re doing now?

BW: The business has moved on quite a lot in the last 18 years and a lot of what we do is about protecting our clients, their reputations, their people and their assets. Now there is a lot of intersection with legal regulation around that - whether it be Bribery Act legislation, Foreign Corrupt Practice Act [FCPA] legislation, export of technology issues or terrorist funding issues. You really need to understand those issues, because if you’re producing reports for clients about who they are going to do business with and you don’t understand what the driver for that product is, then that will create a problem for the client. Because if you don’t understand what they’re dealing with, how can you possibly support their decision-making process?

Opportunity, not risk

A lot of the work that we do is about making proper, informed business decisions. Nobody wants to do business with a corrupt individual because that might create a regulatory risk. But above that, from a commercial perspective, it’s much better to do business with someone who’s honest, who’s got ethics, who’s got integrity and who can deliver on the contract. I think part of the problem in this space more generally is that people are overly focused on the risk and not focused sufficiently on the opportunity. A lot of the due diligence processes people put in place now are very protective, but they really should be thinking: what’s the commercial opportunity, and who do I really want to be doing business with? If, by doing various checks and understanding their business, I get to the right conclusion, that will also give me the benefit that I know they’re not corrupt. But putting it the wrong way round is the wrong driver, and I think that’s a mistake that a number of corporates are making.

“people are overly focused on the risk and not focused sufficiently on the opportunity.”

GC: Do you think that’s also a classic mistake that a lot of lawyers have made while in their role in corporates – being too focused on the stereotype of the lawyer saying “no”, rather than the lawyers being the ones who can actually help to make, if not every deal, then the right deal?

BW: The law is a risk mitigation tool. And I think that transactions are about opportunity. Every opportunity carries with it a risk. The worst kind of in-house lawyers don’t understand the business, they don’t understand why transactions are happening and they see themselves as giving pure black letter legal advice. I think the best kind of in-house lawyers are people who understand the business, understand the business objectives and understand that the law is a tool for mitigating the risk around transactions – it shouldn’t really be seen as a barrier to transactions.

Clearly there are absolutes. For example, you wouldn’t want to buy an asset that was acquired through corrupt means. Your job as an in-house lawyer is to try and understand what the business is and what it’s trying to achieve, to focus the business people and assist them in their decision-making processes, and then, through appropriate legal devices, mitigate any downside risk that there is. I think that fundamentally if you’re seen as somebody who purely gives legal advice, your career options within any business are fairly limited.

Rigour, ethics and discipline

GC: Have there been any drawbacks – any lawyerly habits or modes of thought that you’ve had to shake off in order to move into the CEO role?

BW: At its heart, being a good lawyer is about logical analysis of fact-sets. That’s a useful device for any CEO to have because you’re gathering information; you need to understand the weight of that information, where it’s come from, and what the objectives are, in order to make informed business decisions. The legal thought process is disciplined, it’s rigorous, and I think that that’s pretty healthy. I also think it helps in the context of understanding business risk - and some of that might be reputational, some of that might be regulatory, some of that might be commercial.

Clearly lawyers by tradition aren’t fantastic at numbers. Some are, some aren’t, but generally-speaking that’s a weaker part of their skillset. But I think there’s no inhibition; in fact I think there are distinct advantages for people from legal departments migrating into the business environment. If you’re a lawyer, you carry with you professional ethics, you understand that your primary duty is to justice, and I think that helps in the sense of duty to shareholders, self-interest - all of those issues are embedded in lawyers in a way that they are perhaps not embedded in some other professions.

GC: In this increased regulatory landscape, where everyone is now talking about risk management and risk arbitration, do you think that in some ways the corporate environment is becoming more fertile for lawyers to move into business leadership roles? Whereas perhaps a few years ago people were thinking, “oh, you’ve got to be an accountant, it’s all about the numbers and making as much money as possible”?

BW: In America there’s always been a tradition for GCs to be on the board and that isn’t true in Europe; it certainly hasn’t historically been true in the UK. I think that that is changing, but risk is fundamental to every business, and regulatory risk is clearly more pressing at the moment because there are very big headlines about very significant fines in the financial services sector, defence and aerospace, and other sectors. But I don’t think that you should be dominated by the regulatory risk. If you work in a regulated environment – if you’re a bank or a financial services business, clearly there is a matrix in which you’ve got to operate. But I think if you’re a manufacturing business or an oil and gas business and you have been subject to risk for a long period of time, you shouldn’t let the fact that the Bribery Act has come on stream or that there are big fines from the FCPA dominate your strategy. They’re a factor, but they’re not the factor.

“The legal thought process is disciplined, it’s rigorous, and I think that that’s pretty healthy.”

But to your underlying point, I think that those business environments are becoming more and more complicated. Not just because of the regulation, but because businesses, in order to grow, have got to get outside traditional markets because traditional markets are pretty stagnant. There’s not very much going on in Europe; you’ve got to go to Africa, you’ve got to go to Indonesia where the population is 250 million and there’s going to be a middle class of 60 million within the next 10 years. You’ve got to go there. That carries a different degree of risk. You’ve got to understand those risks and that will inform business decisions. The thought process around that - thinking beyond the financial risk to the regulatory, reputational and commercial risk - is quite important. That kind of discipline, I think, can come from a legal background.

No straight trajectory

GC: Do you have any advice for anybody currently in a pure legal role that might want to broaden their skillset and move into a business role?

BW: I think you’ve got to take risks. You’ve got to look for opportunities. And sometimes that might mean taking a step backwards, or a step to one side. When I went to the SFO I took a pretty significant pay-cut because I could see an opportunity to do something that was different. I think that if you constrain yourself to a silo, particularly a legal silo, it can be like being sucked towards a final conclusion and if you don’t actually want to end up at place X, you might have to take some risks around your career.

The legal market has changed a lot. If you look at the criminal Bar, that’s changed hugely in the last 20 years. If you look at local authorities, they’re beginning to join together and sell their legal services externally. If you look at some companies, and BT is a good example, the general counsel is looking at selling legal competencies and capabilities externally. It’s a very fluid market. That is also true of external legal firms, which are being challenged by corporates to offer more commercial advice in different ways. So I don’t think anybody could think now that the legal profession as it stands in 2015 will be the same as in 2030. Don’t think that you’re in a safe environment, or that there’s a straight trajectory, because outside events are going to impact on that fairly dramatically.

But if you really do want to move out of pure law, trying to get engaged in the commercial aspects of your business, trying to think outside the pure legal risk is one way of doing that.

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Don’t forget your skillset

Clearly you’ve got to analyse your own core strengths and if you are the very finest IP lawyer or the very finest swaps lawyer and you enjoy doing that, then there’s nothing at all wrong in staying in that sector of the profession for as long as you want. But the market is changing, it’s pretty dynamic, and if that doesn’t appeal or if you’re concerned about where the market is going to go then you’ve got to broaden your skillset. But broaden it knowing that you’ve got a very, very strong capability through your legal training.

GC: So sometimes you need to think more laterally about the transferable skills that legal training brings you, that can be applied to other areas of business?

BW: Yes. We’ve got quite a big security business here, and we employ a lot of former military people, but they’re not all there doing military things. The initial objective in a military environment might have been to secure a town, defend an airport, build X. But they’ve got very good communication skills, management skills, they have managed big budgets, they are very focused on achieving objectives.

A lot of that you could say of a lawyer. The underlying thought processes, discipline and the ethical position of lawyers tends to be pretty strong. Communication skills, the ability to think logically, to express views clearly, to articulate and to persuade – they’re all things you might look for in a CEO. So I think that the days of lawyers locking themselves - or being locked - into little boxes are changing. But people have got to push for that as well as waiting for it to happen.

A facilitator, not a barrier

GC: It’s a common theme among people we talk to that are going in-house for the first time: they’ve made that decision because they’re looking for more than just the black letter law, they’re looking for new opportunities, to be more involved with the business. Sometimes it’s just making sure they don’t get siloed once again by going into a business which thinks of them as “just the legal department”.

BW: It’s something I’d also say about compliance, which has both accountants and lawyers as compliance professionals. The second you’re seen as a barrier to a transaction, your value in an organisation is diminished. If you’re seen as a facilitator, as somebody who can help the business make proper informed decisions, then people will engage with you. I think that that is an optic that some people get wrong. Because, yes, the law might say this, but you really need to think about it in a wider context. And if the law says this here, then are there any other ways of looking at it, what are the actual facts, do you have sufficient certainty around the position to give that legal advice, what if you did this in this way, and how can you adjust whilst still taking a risk to mitigate the downside? Essentially it’s being commercial. So I think people need to be reflective. You often get in-house counsel complaining about the 20 page memorandum that tells them what the law is but doesn’t help them in any way, shape or form – it might be excellent legal advice, but what does it actually mean for the business? It means the fee note for quite a lot of money, but for what?

“I don’t think anybody could think now that the legal profession as it stands in 2015 will be the same as in 2030. ”

GC: And sometimes it’s about explaining to the business (if you have to say no to an aspect), exactly why that is?

BW: That’s entirely accurate. It goes back to my ethical point, really. There are times when you’re going to have to say no, but when you do, people have got to believe that you’re giving good advice and that you’re not just being 200% risk averse around the situation. If you’re perennially saying no, then that isn’t going to be valued in the same way as when you say no on deal 15, and they know that you’re going to give them very good reasons for it. And again, that goes back to understanding the business, understanding the business objectives, engaging with the business leadership and understanding the thought process behind what they’re trying to achieve. Rather than just drafting a contract.

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