What I want from my general counsel – a CEO’s perspective

GC speaks to Luis Alvarez, CEO of BT Global Services, about his thoughts on the legal department, his own role and how lawyers can get inside his head.

Luis Alvarez is CEO of BT Global Services, one of the global market leaders in managed network IT services for businesses. Luis joined BT in April 1999 as multimedia and internet director, then as country manager for BT’s Spanish, Portuguese and Latin American operations. He became head of BT’s operations in Europe, the Middle East and Africa, and Latin America, and was in charge of BT’s Global Telecom Markets (GTM) unit, managing business with carriers and operators outside the UK. He was made CEO of BT Global Services in 2012.

GC: First of all, as background for our readers, can you briefly describe BT Global Services, its remit and how it fits into the wider BT Group?

Luis Alvarez (LA): BT Global Services is the largest division so far in BT in terms of the size of the business – we do close to £7bn-worth of business. We provide services on a global basis to governments and our corporate customers, who demand complex solutions in the environment of networked IT services. We have 18,000 people around the globe and we are able to supply services in 170 countries. We ensure they use the technology in the best way for their businesses and operations globally. Around 40% of Global Services people are based in the UK and the rest are around the globe.

GC: There is a lot of talk about the potential for lawyers to move into business or leadership, and we have examples of people doing that. You’re a telecoms engineer by training and are now in the CEO role. Can you tell me a bit about the transition, how it came about and how you navigated it?

LA: I think an important element of a successful transition is to try to be multidisciplinary and have an overview of everything – to bring a legal, financial and customer perspective.

To get to the CEO role, you need to create a personal profile that is suited to the company; in terms of my background, I had extensive expertise on the technical side.

I complemented my personal experience with a more thorough understanding of the financials of the company, of legal compliance, the regulatory framework and environment. I think to really succeed at understanding the customer perspective is critical, because everything we do is paid for by our customers. It’s that combination of understanding the market, the customers, the portfolio you have, the technology platforms and how you take those technology solutions into the market; that all works towards complementing your personal background.

In terms of understanding how you manage that in the proper way, I used to say the financials are the walls, and the legal and compliance have to do with the house. Some CEOs might have more weight in one direction because of their experience or their sales profile, some might have more of a financial profile, or more of a marketing approach, so it is varied, but I think you need to have a little bit of everything.

GC: So, thinking about yourself as multi-disciplinary is the key? One of our earlier articles discussed the fact that some lawyers don’t do themselves any favours by being too ‘protective’ of their status as lawyers.

LA: One critical thing that you learn in any job is how to deal with people and with teams; how you inspire them and whether you are able to share a vision. From that, it becomes about how you communicate and execute those things – that could be done in any area of the company. Then you need to understand what the implications are of all that, and in terms of your numbers and results, what are the commitments you take to the market, to your board? There are a number of things like that that you learn. You keep learning throughout your career. No one can say, ‘oh, I have the knowledge now, I’m a CEO and I don’t need to learn anything more’. It’s actually the opposite. You very quickly realise the large number of things you need to learn about.

GC: What are the qualities that you might expect from an ideal GC?

LA: I think the word ‘counsel’ says everything. The advisory role is critical. In an advisory role, I expect someone who has a good general global view, someone with a vision of the impact of the different frameworks in which we operate.

It has to be someone who is honest and vocal, not someone who says, ‘if my boss doesn’t want to hear it, then I won’t say it’. I keep telling my legal team that they should be as vocal as they need to be, because they are the guardians of many of the things we do.

Also, there is a degree of being an observer; being an adviser in other topics that aren’t exactly legal things. It is a privileged position because what they touch has to do with almost everything else we do in the company. It has to do with commercial relationships with customers, to relationships with employees and suppliers, the way you comply with the market, with regulation. So being aware of all of those things, they can assess the business extremely well. There is so much more to the job than saying ‘we are not legally compliant with this or that’.

The GC needs to create an environment of trust; it’s absolutely critical to have this. The CEO has to trust counsel and the other way around. It doesn’t mean that you are always going to do exactly what the GC envisions, or that the vision of the CEO is always followed, but they have to be extremely complementary.

GC: Do you think there are any approaches that GCs or in-house lawyers should avoid when dealing with the business?

LA: I think one mistake could be that they don’t feel part of the business, and this is a risk in the sense that counsel can feel that they are external players. Actually, they are an integral part of the business in the world in which we operate and, as I said before, how you do things within the GC role is as critical as what you deliver.

The other one is being too quiet. My expectation is that you are a member of the management team first, and then secondarily you have your role as your sales function or your GC function. It means that I expect a strong contribution, and maybe sometimes they step back and don’t give an opinion, or they don’t think they have valuable opinions. That’s a mistake.

Thirdly, rather than explaining why things shouldn’t be done, I would like lawyers to try to find out how to do them – to have a ‘can-do’ attitude. I think they very quickly go into ‘no, you shouldn’t do this’. Instead, they should say, ‘in order to do this, this is what we need to do’. It could be about our limited liabilities, it could be about a contract with a supplier that is operating in a region or it could be about some kind of commercial relationship that you would like to build with a customer. What counsel may say is, ‘well, you know what? We are not going to have this, full-stop’. They could say to me, ‘in order to create this relationship, this is the way to protect the company.’ Moving more into a can-do attitude would be very valuable.

GC: Do you think it is helpful, if a lawyer has to say no, that they explain fully why they are saying no, and the context of where the no comes from?

LA: I think that in our team we try to create an environment in which everybody is there. The sales people are there, maybe asking, ‘why do we need to do this?’, the technical guys are there, saying ‘why do we need to build this expensive or cheap solution?’, and our commercial and legal teams are there to explain why something should happen. You have to create that environment, absolutely.

But the role of the CEO is to facilitate that, and the role of the GC is to step in and say, ‘yes, I can explain why’. People are more sensible when you have the right conversations in an open environment, like the one we foster at BT.

GC: It sounds like your team environment encourages lawyers to make sure they take opportunities and don’t just sit on the sidelines.

LA: The way I see it is they have to be part of the team. When you have complex conversations with the team and one of the members of that team is a legal person, when you create this environment, they can get involved and have an opinion on the way these conversations are going. They can also help people during these conversations – ‘don’t go doing this, I think we have reached the limit, or in this area, or this other one.’ They have to be very demanding in these conversations, because they have to protect their company as well as enable the business, and so there has to be positive creative tension. That is a good way of driving the business – balancing those two things.

GC: Do you think there are benefits to GCs being on boards? Obviously, different regions of the world have different views on it, and it has been more common in the US than Europe, but do you think it is a positive for businesses to have the lawyer on the board? Or it is better for the lawyer to have more of an objective role?

LA: I think both models can work. There are advantages in having the general counsel as a member of the board, in terms of understanding the implications of decisions. Acting as a GC of the board, but not being a member as such, has the advantage of being an independent voice. The role of the board in many cases is to make sure they protect the company and protect the rights of the stakeholders, and actually I don’t think the role of the GC is very different. It’s the balance of enabling the business and supporting it, as well as being the gatekeeper of the company and compliance whenever it is needed, and managing those things in sometimes challenging situations.

GC: With a global increase in regulation, is the role of the general counsel and the legal team more pivotal than ever before?

LA: It’s not only regulation, but regulation and compliance in general, and in any industry this role has become more business-related. If we look to history, the role was more separated, there was more paperwork, and it was less business-related. I think more and more that you can’t separate the implications of regulation from the business, both in the short term and the long term. For example, being able to understand the influence you need in the way that European Union regulations will evolve over the next few years. You need a forward-looking, even a strategic perspective of the implications of regulations and your interpretations of how regulatory issues have been written, or how you take something to court against the competition authorities. That strategic component is new, especially in key industries where this is a major thing. But when you look to data protection, for example, that affects every single industry, and it’s about having that clear understanding of the challenges and risks that the company could face. Whether it is a US company with safe harbour provisions or a European one with extended data protection, you need to understand the implications of that now under the European Union. Regulation is the more strategic component in the role of the GC, and it has a huge impact on the business. There are opportunities, because in most of the telecoms industry, regulators have open, intense conversations with players in the industry, and it necessitates understanding very clearly what those implications could be. It is absolutely critical; it has to do with tariffs, competition rights, it has to do with every single thing.

GC: With the advent of the European Commission’s Digital Single Market and increased consolidation, what do you think are the compelling issues going forward?

LA: In digital services, we see things from a positive perspective and we have been talking about the European Single Market for quite a long time. My personal view is that it’s an opportunity for Europe as a whole. I don’t think we have been focused on supporting businesses as such, instead being more focused on consumer markets. One of the messages we are giving across the EU is to make sure that the business perspective is also being taken into account. We can facilitate and make the business more competitive if it has access to similar kinds of infrastructure and platforms across several countries without the need to individually buy complex and different technical and commercial propositions, and deal with different regulatory frameworks. So, for us, that is an opportunity.

There are still a number of question marks – the data protection one is critical, and IP rights and content rights are still being discussed, and even the new IP solutions coming to the table in our sector are not 100% sorted. There are also issues such as roaming and how that is going to evolve. New players that are coming from different perspectives within the industry but who are also still significant players, like Google and others, are also making things interesting.

GC: Do you have any thoughts on how your GC and legal team can help you navigate these challenges?

LA: The first thing is bringing a detailed understanding of business and how things impact the business, customers and suppliers in both the short and long term.

When you are a GC, there is an interesting role to play in terms of the multicultural environment of a global company. When you are in a multicountry environment you need to deal with multiple legal frameworks, multiple regulations. In the UK, the legal and tax environments are very different from the US, and even in Europe you have different legal and tax environments which you need to understand very well. I think the legal team can really help to make it easier for us to deal with the complexity of that global environment.

To me, managing complexity is one of the requests we have of them, to make sure they understand what the implications are – we might have a contract that affects 15 out of 20 countries. Therefore, you need to make sure you can provide the services needed, the licences to provide those services, you have to make sure you can bill in the proper way, you need to understand which countries are under sanctions and which are not, you need to understand how, if certain regulations were to change, it would impact that country, so there are a number of implications on a global basis. It is a base to help drive our internal agenda and the way we set up our businesses.There are countries in which it is impossible to provide services directly and to bill for them, and so you have to find a way, rather than say ‘oh, I can’t provide you with services in China’. We need them to say ‘this is how we provide services, this is the legal framework we use and we need to apply for a new licence if that will be available’. Managing that complexity in a multicultural, multicountry environment is as fascinating for them as it is for us when we’re dealing with customers like Nestlé or Pepsi or Rolls-Royce, which are operating all over the globe.
It is very exciting to support the business and help navigate through technology and solutions. We used to say that when we combine the skills and the knowledge of our people with the platform and technology, it becomes the art of connecting.

GC: A common theme with a lot of GCs we interview is that many leave private practice law firms because they want more challenges, and to be more involved in the business – not just looking up what the law says.

LA: The main difference between being part of a law firm and part of a company is the pride you can have in the business you run. You are not just in and out, like when you are a consultant. In reality, the ones who are going to leave a heritage of what is being built are the actual employees of the company. That pride in what you have been able to create, and what you have been a part of, is the key difference between externally playing a role on a specific contract or project, and being part of a team.

GC: Finally, in this issue of GC, we are looking at talent management, including questions of diversity and creating a diverse legal team. I know that as a company, BT has been very proactive in terms of diversity, and has made it central to the culture. Can you speak a little about how that has had an effect on the business?

LA: I am a strong believer in diversity in all senses, and this enriches the way you operate and the way you deal with issues. It gives you different perspectives and, therefore, the final decisions you take are better. That is one reason why diversity is so critical.

Sometimes companies trade diversity for having a more homogenous team because they think it might be easier to manage, and in certain respects that is true. It is more challenging when you have a more diverse team, but it’s also richer and more powerful, and that is a real benefit. We have diversity in terms of nationality, gender, ethnicity and sexuality. We have a good combination of people from different cultures and nationalities. It is very rich.

GC: The diversity of the people you are working with seems to match the diversity of your customer base.

LA: Yes, it does. I am proud of how my team works, it is balanced pretty well. We have a programme in the UK where we are encouraging people to study engineering, and we have a special programme for girls to go into engineering, too. I am proud to say my wife is an engineer and my daughter is going to study biomedical engineering. We should be open to challenging people like that. I am a firm believer that you need to understand personal circumstances and experiences to facilitate these career paths. You have to be proactive in every single area. I’m proud that in Global Services we do this on a global basis, we have country managers who are women and our diversity within BT gives us a great range of capabilities.