Going places: Michelin’s
The legal department of iconic tyre-manufacturer Michelin has a strategy for success. Group general counsel Benoit Balmary talks GC through its eight-point legal manifesto.
Legal Department strategy
The driving seat of a global legal organisation is a complex place to be – and many GCs could be forgiven for spending all their energy just to stay in the same place. Not so at Michelin. Despite overseeing a legal team of 200 lawyers and patent engineers, spread across 20 countries, group general counsel Benoit Balmary was keen to serve not only the business strategy of Michelin, but to develop his own.
‘We have a team called the global management team, which is the management team of the legal function worldwide, which I chair. This is composed of all of the general counsel of the regional teams, and the heads of the biggest domain teams (IP and corporate) and the head of ethics – because ethics concerns everybody. This team meets every semester and together we set the strategy of the legal departmentt for the coming years,’ explains Balmary.
Under the leadership of Jean-Dominique Senard, president of the Michelin group, the team developed an eight-point strategy, addressing all components of a successful legal team in a holistic way – and have ownership of the department’s direction of travel. Balmary talks GC through each point in Michelin’s journey – and how far the team has still to go.
ONE: Leverage technology
One of the levers in order to achieve the first point was to create an information system.
Historically the Michelin legal team had deployed heterogenic information systems, and it was difficult to interact between teams because they could not see what the others were doing. This led, at times, to redundant effort between teams.
A few months ago, thanks to a partnership with our colleagues in the IS department, we launched a global portal for the entire legal community. People can ask questions to another team, and anyone around the world can give an answer. A resource centre sits behind this portal, where people can upload any new tool, template or process they come up with, to be accessible to the entire community.
It allows us to reuse, as much as possible, the work product of a given team and then we only have to localise for the appropriate jurisdiction – 80% of the work is done. That started to work pretty well. We are also rationalising all of our communications, which are now channelled through this portal. So, with one post, you can reach the entire legal team. It is very promising and has been widely adopted, especially by the new generation of lawyers.
TWO: Improve career development
We needed to understand what the various stages of development of a lawyer or a patent engineer were. We also needed to work on career management, to make sure that people understand what kind of path they can look at.
In order to create more defined career paths for team-members that were transparent for both management and employees.
In partnership with our personnel department, we created a matrix, which we matched with our HR matrix. This allowed people to understand a technical translation of where they stood and how the company would look at them from an HR standpoint.
We applied that to our lawyers, patent engineers, paralegals and administrative staff. Each person can see where they are on the scale of development. We are in the process of trying to show people examples of what expertise can lead to what other expertise.
Even outside of legal, we are starting to engage with other departments within the group to see whether they are interested in legal, and whether we can deal with them to show people where they can go. In accordance to individuals’ choices, we are designing training paths for them. We are finishing the design phase for this now.
THREE: Rationalise our recourse to external legal services
We needed to adopt a global portfolio and some portfolio management rules to significantly reduce the number of law firms for the group, to achieve economies of scale and add value.
The surveys we sent out before putting this strategy together contained an extensive section on law firms. From the responses, I realised that we had completely decentralised use of Michelin’s law firms. In fact, each team had their own firms – and sometimes certain teams didn’t know that other teams used the same ones. I thought the number was too big and we diagnosed that we were losing a lot of value. You cannot usefully manage a relationship this way.
We began categorising law firms into what we call ‘premium’ and ‘standard’ partner law firms. Depending on the category, our expectation is different. For instance, we have what we call ‘value added services’ – or to what extent firms invest in knowledge management. We asked those firms with which we have the most important business to provide us access to their own knowledge management system, which was a great way for our lawyers to get very interesting data.
We created a global database, where we log references to law firms. This has been integrated into our new portal so that everyone in the world knows whom we are working with on a given topic, and our team members can post their opinions on each.
We have open discussions about our issues with our law firms, giving the client perspective and enriching their vision. In turn, we ask them to evaluate us – are we a good client, are we easy to do business with and provide services to? For instance, sometimes our teams were frustrated with the quality of the responses from a given law firm, and so we started to engage with them, acknowledging that perhaps there is an issue from our side. They told us that our questions are too open-ended and it was difficult to give precise advice. So we fixed it.
FOUR: Revisit our relationship with the business
This was one of the most important ones: we undertook profound reflection on our internal client partners and our partner support models.
We wanted to conceptualise and modulate the way we provide legal support to our business partners internally, to rationalise the way we were providing our legal service, and make it more visible and more understandable to the partner.
We just created a sort-of architecture of all the items that our legal teams are supposed to check, in order to provide fully-fledged legal support to the partner. This led us to realise that some teams were not providing the entire list, and some were doing more than the list requires – going beyond providing legal services.
It’s like a menu: our internal partners understand what they are going to get and what they are not going to get, making it clear what our lines are and what our strategy is going forward. It has been a very good way for us to interact with our partners, and now they understand where we are coming from – our processes, what networks we leverage internally to support our process, and what is our strategy to train them up on what topic going forward. Of course they have a word to say about all this and, as a result, we have become far closer to the business than we could have ever dreamed of.
FIVE: Create collective intelligence
Our strategic horizon was to become a fully integrated community. This was important because most of our issues now are cross-border. The idea was to share more than we ever had, to look at the biggest common denominator as much as we could and then cross-fertilise each team’s work and become more synergetic than we have ever been.
When I joined four years ago, we sent surveys out to all of our legal teams asking what their pains and gains were, what their tools were, and so on. We tried to obtain a sort of X-ray of the legal team, and our common finding was that we were, in fact, a bit siloed. We were operating along the traditional law firm model with very independent and separate offices working together on an ad-hoc basis, rather than as a connected community.
The image that I gave the team was that the legal department was a fantastic alignment of brain cells, but with insufficient connections between them. We needed to create a collective intelligence body with the proper connections so that everything would light up after a while – and we are seeing this happening now. For the last four years now we’ve been quite intensely creating a global governance for the department, with global rules and guidelines, global objectives for our functions, KPIs, and a global communication system. It’s starting to really pay off.
We want to focus on enhancing the knowledge within the group and promote compliance – not simply to do punctual training in order to put out a fire, but to have a strategy that asks: how do we infiltrate the global corporate culture? What should everyone within the group know? It’s about trying to see how to best transfer our knowledge to our partners.
Very often, legal departments, including ourselves, tell people ‘don’t do that, don’t do this’ rather than tell them why the law is, how it is, or what it is aimed at.
We are working on the foundations of a global training strategy throughout the group. We are trying to provide practical examples of the rationale behind each law so that people understand why they need to comply with it and really make good decisions, because you can’t have a lawyer behind every person. The idea is to give individuals the basic legal cultural package, to enable them to make the right decision by themselves – to create territories of compliance within which they know they can safely do their business and, if they feel they are approaching the boundary, they know how to get in touch so that we can help them come back within a safer place.
In future, we would like to create some white papers to explain to people our position on certain topics. Hopefully we’ll get to that in a few years, but the first priority is to revisit the way we train our partners. We’ve also been looking at using cartoons, videos, and more modern formats such as e-learning modules, to help propagate legal knowledge throughout the group. It’s a very big task.
SEVEN: Ethics as a business feature
We are working to consistently improve our management of ethics by making ethics a business feature.
Ethics is not a message that is sent out by Legal from its ivory tower to the business. It has to become a feature of business, like discounts and profits. Just like any other element of the business transaction, ethics is a fundamental feature.
We are trying to create conditions for ethics to become a complete element of the business culture. The company has a strong corporate culture with very strong values, and we are trying to complete that to make it such that all the regions of the world, and our people operating in each region, can use ethics as a means to do business.
One of the challenges is that there are a lot of new regulations that are coming out around the world on ethics. For instance, one just came out in France called Sapin II, which is very similar to the UK Anti-Bribery Act on corruption. We are making sure that the group is fully compliant with every applicable new ethical standard and regulation around the world, and I think compliance is really the first part.
EIGHT: Quality advice
We want to try to entirely revisit the corpus of prescriptions and recommendations coming from legal.
We need to ensure that each legal team doesn’t send out a new prescription without having consulted with all the other legal teams, and to make sure we aren’t overwhelming the business with legal prescriptions.
We have just started work on the corpus of our prescriptions in an attempt to simplify them, and make them more accessible to the business and help them become business tools. That’s really fundamental.