EILEEN LYNCH: I am senior vice president, Global Brand Marketing at Thomson Reuters, Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals. I joined Thomson Reuters in 2009 following an extensive career at Merrill Lynch where, as Managing Director of Corporate Marketing, I held broad responsibilities for driving the firm’s global brand, digital presence and sponsorships.

Thomson Reuters has been an extraordinary opportunity to extend these strengths in strategic, visionary and measurable ways. We work to convey our leadership in global financial information, while engaging deeply with our clients and our own experts in a broad array of professions.

Thomson Reuters is the largest and most valuable news organizations in the world with 3,000 expert journalists covering the globe and feeding vital information to our clients on a real time basis. News is an essential ingredient in everything we do, as are the expert professionals—lawyers, traders, accountants, doctors, clinicians – who can channel it to our clients in timely and meaningful ways.

Our experts are impressive—given the number of lawyers we have on staff we would rank #22 in the AMLAW 250—and their professionalism is key to placing the data and information within a nuanced context of geography, demographics, industry and trend. This allows us to create more valuable product offerings.

Taken all together, this knowledge and these products enable our clients to make smarter decisions in the mission critical industries that they serve. We like to say that Thomson Reuters delivers knowledge that transforms our professional clients’ worlds and enables them to accomplish amazing things.

Having begun my career in advertising, I find it particularly exciting to participate in the broader marketing communications world today as it adapts to the needs of our customers—where, when and how they choose to engage with us.

This changing environment challenges us to be swift, relevant and interactive—both in the way that we do business around the world, and also how we convey our brand through our businesses. These include Legal and Financial and Risk, Tax and Accounting, Intellectual Property and Science.

We partner directly with our businesses and, in concert with their teams, design marketing architecture, distinctive messaging and go-to-market strategies that are targeted to their industries and their clients.

At the same time, my role is to ensure that all these elements reflect the Thomson Reuters brands with clarity and integrity.

As far as the marketing setup goes, how are you guys organized within Thomson Reuters?

We have a centralize brand and marketing communication function that serves the needs of all the businesses ensuring consistency across multiple industries and vertical lines of business.

As part of the senior leadership team, I work hand in glove with the businesses to ensure that our marketing communications strategies are targeted to the needs of the business lines, aligned to the overarching corporate strategy, and supportive of our Thomson Reuters brand. This starts at the very beginning of the conversation and I am proud to say that we all work very well in driving and sustaining these marketing streams.

In terms of my role in this structure, I manage brand marketing, encompassing these initiatives across the organizations. My team works in partnership with my colleagues and partners who manage internal and online communications, and corporate affairs.

You mentioned the four-year lifespan of the company. Do you find that your role has become more strategic even during that time?

The nature of our business is continually changing. Being strategic is key to staying competitive. Thomson Reuters has always been a highly strategic environment and is becoming even more so.

But I have observed a growing appreciation at Thomson Reuters of the role we play in developing and nurturing customer relationships. As our business reaches into more markets, and grows in more countries around the world, it is important to have a brand that values these deeper conversations and the vital information flows among ourselves, our clients and our prospects.

Do you do any benchmarking against similar organizations that you respect for the way their marketing engine runs? Is there anyone in particular that stands out as being at the top of the league?

We do benchmark—but with an eye first and foremost on how to best serve our customers. As an intelligent information company we need to measure ourselves against the highest standards of trust, relevance, excellence and speed.

To do that we throw the doors open and look to traditional competitors as well as other world class brands. We look at the behaviors of these brands—the expected and the unexpected—that matter to our customers. We take into account many data points that inform us about our markets and the economics, industries, and demographics that drive them. It’s especially important to understand how companies are engaging with customers in social media in developing relationships.

At the end of the day we look at best in class behavior and deliverables that matter to our customers—and we challenge ourselves to continually measure up to them and beyond them.

The overwhelming consensus seems to be that social media, both as a concept and as a strategy, needs to be used, but a lot of times people aren’t sure how to really make use of what they’re getting out of it to leverage it. How has the experience of getting into and using social media been for your team? Has it been straightforward?

It is straightforward and I will tell you why. News and journalistic context is at the heart of our business—and today blogs and social media are vital channels for our customers to access these offerings.

What’s so exciting about social media is that it is a place where we as a company—and separately our journalists who cover the financial markets and various industries—can gain a better understanding of what’s on the minds of our customers.

Journalists can get real time feedback from their readers. Our customers have their own blogs and use Twitter to get and convey information. And, key to our business, our customers use social media to access the news and journalistic insights to inform their decisions.

That’s the practical application of social media. But understanding and engaging our customers when and where they want, are also key to the value of our brand. Social media is a big part of our customers’ personal and professional currency. It allows us to be a part of their lives in ways that matter to them.

It sounds like you guys have, through your journalists, company advocates as an inherent part of the company. Do you work with any of them on what they’re saying or how they present themselves? Or do you allow it to more organically develop?

Credible objectivity is the bedrock of journalism. The value of our 3,000 journalists and the news they produce is rooted in this integrity and the clear separation of the news business and the rest of the company. They cannot and will not be influenced.

I do work with our journalists to understand who they are and what they stand for, because their value and their work are intrinsic to our brand within and beyond our organization. They are important to our marketing initiatives because they are so good at what they do, and because our customers gain invaluable perspectives from them.

Our journalists are a fantastic asset to our organization and we are proud of their work and its impact on the marketplace.

Does Thomson Reuters have a CIO? Do you work very closely with them and collaborate often?

Yes, we have a CTO and a CIO—and they and their teams are close partners to us in delivering the Thomson Reuters brand. As an intelligent information company that uses state of the art technology to deliver our news, products and services, we rely on the leading expertise of our CTO and CIO and their teams.

From the platforms they build, we are able to constantly and consistently deliver quality products and content to the clients—again, targeted to who wants them and when and how they choose to participate with us. This helps us to deepen our relationships with our customers, which as I have mentioned, is our most important goal. Towards this, we take full advantage of our entire platform of communications technologies, including social media and mobile options, in structuring our advertising, sponsorship, and product introductions.

I would imagine that mobile is a big area for your organization, both from the IT and marketing standpoints. Do you have a separate mobile app team? If so, is that located within marketing or IT?

Yes, we have a separate mobile team located within IT. We work with our mobile and social media teams develop ideas for bring our programs to life for our customers. So it’s a very interactive relationship. For example, we work with the mobile team to develop apps that will support our sponsorships. We’ll bring in our social media teams during the early part of a sponsorship conversation to help us think about how to use social media in structuring, marketing and executing a sponsorship.

From a marketing standpoint, are there any challenges to mobile apps that you guys are looking into?

We need to create platforms to deliver these apps and other products to our customers and do it better than anybody else. While it’s a challenge to make sure that we are continually evolving and upgrading that access, it’s also very rewarding to be able to take our promises and messaging straight to the customer that way. It’s an extension of our relationship.

Are there any big trends from a macro marketing standpoint that you anticipate taking off, becoming more refined or generally being a big focus over the next couple of years?

The biggest challenge is to continue to break through the noise created by the proliferation of information. We constantly have to think of new and relevant ways to be part of the conversation that our customers are having.

That’s why our imperative is taking the message to where our customer is. This requires us to think, create, buy and measure our outreach differently. We need to be on the platform and place of our customers’ choice to stay connected to them.

What do you think is going to be the differentiating factor for Thomson Reuters?

Our differentiating factor is we understand the professional worlds of our customers better than any other company.

This is due to our best-in-class expertise in three key areas:

• First, in our global news organization that gives us a wide and intelligently contextualized view of the world;
• Secondly, in our professionally staffed knowledge centers that inform and shape our products and services; and
• Thirdly on the flexible communications platforms that connect us with our customers where they work and make decisions.

This depth and breadth gives our customers meaningful and actionable information that changes the way that they operate and succeed.

Is there anything else you want to touch on that we haven’t discussed?

I would say in summary, customer expectations today are originated in the consumer marketplace. We lead intelligent information for the professional marketplace—but the same rules apply in providing a quality experience that drives loyalty. Mac products—the iPhone, iPad, iTouch, etc.—have defined and reset consumer expectations about how they receive information and engage with content.

Customers across the board expect the same kind of valuable, engaging experience in their workplaces. They want in the professional world what they have in the consumer world. That has forced a complete redefinition of the way we do business in order to meet those expectations. And that is amazing.

BIOS:

Eileen Lynch
Eileen Lynch is senior vice president and head of global brand marketing at Thomson Reuters. In this role, she oversees all aspects of brand strategy and marketing for this leading provider of intelligent information to the professional marketplace. Thomson Reuters was recently recognized by Interbrand as the 37th Best Global Brand.

Prior to joining Thomson Reuters, Eileen was managing director of corporate marketing at Merrill Lynch, responsible for brand strategy, advertising, global sponsorships and online marketing. While at Merrill Lynch, she was selected as one of the first group of high-potential women leaders in the firm. Eileen started her career in advertising, having worked at several leading agencies, including Foote, Cone and Belding, Scali McCabe Sloves and Bozell Worldwide.

Eileen is on the board of trustees of the Thomson Reuters Foundation and the board of directors of the Bob Woodruff Foundation, a national nonprofit that helps ensure our nation’s injured service members, veterans and their families return to a home front ready to support them. She is a member of the Marketing 50 (M50) and the International Women’s Forum (IWF). She has also served on the board of trustees of the King Low Heywood Thomas School and the Ad Council and was a police commissioner in Stamford, CT.

Eileen graduated from St. Michael’s College. She lives in Stamford, CT.

Lily Robertson
Lily Robertson is a senior content associate at Argyle Executive Forum, overseeing content development and speaker recruitment for various cross-industry events. She is also the editor of Argyle Journal, the newly launched content and news platform for Argyle Executive Forum.

Lily has a B.A. in English and anthropology from the University of Virginia.

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ROBERT TURNER: Mercer is a global leader in human resource consulting, outsourcing, and investment services with more than 25,000 clients worldwide. Our consultants help clients design and manage health, retirement and other benefits and optimize human capital. We also provide customized administration and outsourcing solutions as well as investment consulting and multimanager investment management services.

Mercer’s 20,000 employees are based in more than 40 countries, including 1,700 people in 12 cities across Canada. Mercer is wholly-owned subsidiary of Marsh & McLennan Companies, a global team of professional services companies that offer clients advice and solutions in a number of areas, including risk, strategy and human capital. There are 52,000 employees worldwide with an annual revenue exceeding $10 billion.

My work with clients includes a range of human capital issues, from total compensation through to employee engagement (both hot topics in nearly every HR VP’s strategic plan these days). Every organization has a talent management strategy that’s aligned with its business strategy, and every HR VP uses that strategy to create the right organizational structure with the right people and processes to drive that business strategy.

Talent management involves many processes. It all begins with workforce planning and talent acquisition strategies and progresses through to career management which includes succession planning, leadership development and performance management. A good talent management strategy usually enables solid employee engagement with Mercer designing various programs to assist with the resultant action plans such as addressing total rewards that include compensation, health and retirement and benefits programs.

What would you say is on the minds of your clients in the human capital arena?

The effective management of human capital continues to be a top priority for organizations in all sectors because of the impact of a focused and committed workforce on an organization’s competitive advantage.

Each organization’s approach must be unique to their needs, but ultimately it’s about creating effective programs and processes that support the attraction and retention of the best talent, focusing that talent on the achievement of the organization’s strategies and objectives and creating a work environment that can sustain and enable that success.

Mercer consultants work with clients in all areas of human capital from the development of strategies that are aligned with each client’s needs to the design and development of specific programs to support that strategy such as succession planning, performance management, and total rewards programs.

Compensation continues to be a priority in the media these days. What advice do you give your clients in this area?

Mercer has deep expertise in this area. Our clients come from all industries and sectors so there isn’t one solution that fits all needs. For example, the compensation issues for executives in large publicly-traded private sector companies may be quite different from the challenges associated with a public sector organization that is seeking to enhance the performance focus of its workforce. What is true of all organizations is that compensation is an important part of an effective human capital strategy. Because organizations always value what they pay for, we see organizations continuing to fine tune their pay-for-performance systems to ensure they are aligned with their current business needs.

What do you need to create a pay-for-performance environment?

There are a couple of things. First, you have to have the right processes in place to enable pay-for-performance incentives. It all starts with proper goal setting, typically based on the organization’s three- to five-year strategic plan. The first year of that plan involves establishing good stretch goals and the milestones that keep the rest of that strategic plan in motion.

Secondly, you have to have good monitoring and reporting systems to track the results. Part and parcel of that is having good performance management processes, including tracking both the “what” and the “how” of the results obtained—especially at the CEO and senior leadership team levels.

The “what” is comprised of the desired results of your plan. Effective pay-for-performance systems ensure that the key priorities and objectives for the organization are aligned with each employee’s ability to impact the achievement of those results. This means that each employee’s performance objectives should consider the achievement of the broader organizational priorities when individual performance objectives are set. Because different roles can impact different outcomes, each employee’s objectives will be unique to their role. The key is to limit the selection of objectives to the most important priorities…it’s all about focus and clarity and at the end of the day, employees need to see the objectives as fair and achievable. If you don’t meet that test, your pay-for-performance system won’t achieve the desired impact because of negative motivation.

The “means to the ends” is the other side of the equation which we call the “how.” Employees have to achieve the results through the demonstration of the right behaviours that reinforce the organization’s culture (most often measured though the organization’s values). This is particularly important for the CEO and senior leadership team because their attitudes and behaviours have an impact on the entire organization—and everyone in that organization is watching them.

It’s incredibly important to have that top-down effect where the culture is demonstrated at the C-level. If a CEO is really putting in the time and energy to understand the culture and put the people in the organization first, it has an incredible effect on the organization as a whole.

You’re absolutely right. 360-degree feedback is an important part of that toolkit because it shows the CEO’s behaviours from many perspectives—from direct reports through to the Board Chair. The Board Chair might also ask for feedback from other committee chairs and or other members of the board—as well as external stakeholders such as customers and service related partners. That 360-degree view allows one to obtain a comprehensive perspective of the CEO’s performance as well as identify any hidden strengths or blind spots in the person being assessed.

What do you mean by “blind spots”?

A blind spot is when the individual being rated (in this case the CEO) gives his/her behaviour a higher rating in a self-assessment than others give him or her in their reported feedback. Essentially this is the identification of a difference in the CEO’s perception of performance relative to others.

What do you do about blind spots?

Performance assessment processes support both the evaluation of past performance as well as the creation of development plans to improve future performance. The identification of blind spots enables a focus to the development plan by providing clarity about opportunities for improvement. After all, understanding expectations and acknowledging any gaps in performance are necessary requirements to enable change.

We touched a little bit on stretch goals. In the human capital world, we hear more about SMART goals. What differences do you see between the two?

They are really the same thing. SMART is an acronym, and the “A” stands for “achievable.” Our view is that performance goals need to be reasonable and challenging, which means that they are seen to be achievable but have some risk therefore some stretch.

How do you ensure that goals are reasonable and challenging?

This is the art of performance management. Goal setting is challenging because there are many factors which might impact the achievability of a goal and its objectives. Organizations should look to past practice as a guide. All organizations set annual budgets and some set long-term plans. A first step would be to review the past patterns of goal setting and the results obtained, to understand what the track record has been and what factors impact performance. As a general rule, we believe that a stretch goal should be generally achievable in most years, say six or seven times out of ten. That also means that significant over under achievement should only occur two or three times out of ten. In fact, we see this outcome reflected in the average incentive awards in the market which for CEO’s tend to average around 97 percent of target, suggesting that goals are generally met.

Is there anything else you’d like to explain about goal setting that our readers should know?

Goals need to be seen as fair by both the employees who are being held accountable and by the organization that is establishing these goals. This means that there must be an expectation of performance stretch, that goals must recognize market conditions and that goals must also recognize shareholder expectations. So goal setting cannot be static. The appropriateness of goals must be continuously assessed and targets adjusted as circumstances warrant. This is particularly important for organizations that are new to these processes—it takes a few cycles to get it right.

The other challenge is setting the boundaries of performance. We believe that effective performance measurement systems must also establish the threshold and outstanding boundaries of performance, in addition to the target goal. Being clear about the boundaries of under or over achievement allows the organization to be clear about the pay-for-performance implications of performance.

Finally, the biggest mistake we see is organizations setting too many objectives. Organizations need to make real choices when using performance measurement as part of a pay-for-performance system. Too many measures results in reduced focus because the priorities of the organization are not clear. In addition, the more measures you use, the less differentiation we might expect when overall performance is assessed because over or under performance on any one objective has a small impact on the final assessment. We would generally recommend no more than five or six measures and ideally fewer.

Have you seen any great examples of unique, creative ways that people have utilized their pay-for-performance structures in their goals on either the private or public side?

While pay-for-performance is a common place in the private sector, it is still an emerging practice in the public sector. Public sector organizations have had a long history of service-based compensation design but recently, there has been significant pressure from regulators to set performance goals for public sector organizations to ensure that results are aligned with the regulator’s priorities and expectations.

The healthcare sector is one public example. Hospital CEO compensation has become a hot topic of interest here in Ontario. It’s clear that taxpayers are looking to understand the goals that have been set by the hospital Boards for their CEOs and their senior leadership teams as well as whether or not those goals are being met. It all comes down to whether or not taxpayers feel good about the use of their hard earned money.

An expert panel report was recently assembled by the Honorable John Manley, who reviewed executive pay practices in the Ontario hospital sector. The expert panel advised that there should be a shift away from fixed pay to more re-earnable pay based on performance, which is what we’ve been talking about today. The expert panel provided eight recommendations on executive compensation in the hospital sector and Mercer consulted with the Ontario Hospital Association on the implementation of those recommendations.

What would you say is driving employee engagement right now?

We define engagement as the result of how employees feel about the overall work experience – whether they are prepared to put discretional effort into what they do because of their perception of the organization, its leaders, the work assigned, the work environment and the recognition and rewards they receive for their efforts. Although drivers of engagement are specific to each organization and will reflect unique business environments and histories, Mercer has done extensive research on global differences in levels and drivers of employee engagement. Mercer’s recent What’s WorkingTM survey identified that the level of employee engagement in Canada has decreased significantly in the last few years. In fact, Canadians have one of the lowest levels of engagement among the 17 countries Mercer surveyed, with one third saying they are looking to leave their organization in the next 12 months and another one-fifth ambivalent about whether to stay or go.

Among those employees who are more fully engaged, the ability to do a good job at a successful, respectable organization and having the flexibility to provide high-quality products and services is key to their commitment. In addition, and for the first time, we are also seeing drivers related to rewards, as “being paid fairly for my contributions” has surfaced as a key driver of engagement in Canada. This is contrary to what we have seen in previous studies where career development, training opportunities, or the desire for recognition have often been identified with engagement. Pay and specifically pay-for-performance is top of mind for employees these days. So Canadian employers need to be aware that their rewards practices are having a significant impact on employee engagement.

For the first time, we have multiple generations in the workplace with different expectations from the employer-employee relationship. What should employers be considering?

A very interesting finding from our What’s Working™ survey is that younger workers are showing greater interest and confidence in being financially prepared for retirement. The reality is that young workers may need to be more self-sufficient than previous generations, as corporate or even government—sponsored retirement benefits are being reduced. It’s likely that the safety net won’t be as strong for them. And they will need to rely more heavily on defined contribution plans to accumulate retirement savings. So it’s important that they understand their options and take full advantage of what’s provided for them by employers. That can be a challenge as retirement often seems so remote to young workers that they dismiss its relevance. Plus, they have many other competing priorities for their ‘spend’ in the short term. While older workers generally feel more prepared financially for retirement compared to younger colleagues, many of them still can’t afford to retire. This presents workforce-management challenges for employers, who must determine how to exit older employees from the workforce and maintain an active talent pipeline that gives younger workers motivation to advance in their careers.

Is there anything else you want to point out?

I learned very early in my career that the needs of employees and the needs of the organization that employs them are inseparable, and that’s certainly been validated by Mercer’s findings on all of the factors that engage the workforce—including pay-for-performance.

BIOS:

Robert Turner
Robert Turner is a partner with Mercer in Toronto.

Robert has been a human resources executive for over 20 years and a consultant for more than four years. As a human resources executive, Robert has worked in consumer packaged goods, food services, retail, high tech, financial services and healthcare. During his time as a consultant, he has worked with both Ontario- and Alberta-based health organizations on initiatives to align organizational strategy to organizational structure by focusing on accountability frameworks. As senior vice president of human resources for Alberta Health Services, Robert helped develop and execute their human resources strategy, organizational design and HR processes.

Since joining Mercer in May 2011, Robert has worked with several public sector employers on CEO performance management processes and executive and non-management compensation plans. In addition, Robert collaborated on Mercer’s contribution to the Honourable John Manley’s expert panel on executive compensation, and is currently working with the Ontario Hospital Association on a variety of human resources projects, including the implementation of the recommendations made by the expert panel.

Robert holds a Bachelor of Science degree from the University of Toronto and an MBA from the Ivey Business School at the University of Western Ontario.

Scott Robbin
Scott Robbin is a senior content associate at Argyle Executive Forum. In this role, Mr. Robbin manages content development, editorial speaker recruitment and execution for more than 20 annual business events. He has over five years of experience working on the production and implementation of senior-level events. He holds a Bachelor of Arts degree from Columbia University, where he was the captain of the varsity tennis team.

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AudienceScience is one of the early technology innovators in digital marketing, having been in this space for a little over 10 years. Our initial focus was on the management and utilization of data for efficient audience targeting by publishers. We’ve worked with the top publishers in the world to help them capture data about visitors to their website and then use that data to create anonymous profiles of those users. By using those profiles they can target audiences to better match the needs of the advertiser. Today we also work directly with advertisers and their agency partners to drive efficiency and performance through audience-targeting, campaign execution and consumer insight and analysis.

My original career was in public accounting and consulting; I was a CPA by training and at one time was a partner in one of the largest public accounting firms.  But I jumped off that rollercoaster and have been in the Internet space for about 14 years as CFO, COO or CEO in a number of different public and private companies.

One of the big things CMOs are focusing on is leveraging this wealth of information out there. What sort of approach and strategy do you take when partnering with a CMO to help utilize this data?

We utilize a very solutions-oriented approach. Clearly our business is very technical and our capabilities are technology-oriented, but we believe that success is the result of a combination of technology and service. We sit down with each client to get a good sense of where they are in their understanding of digital marketing, audience targeting and data management. Some CMOs are much more technical and clearly understand their capabilities and needs, while others are much less knowledgeable. So we start by gaining an understanding of where they are in their own strategic development in order to effectively coach them along. We always do our best to match our support and resources to the needs of the client.

In your work with CMOs have you found that their understanding of technology from a marketing standpoint has expanded?

Absolutely. While some clients are more savvy than others, the trend is certainly toward more effective utilization of technology. Many of the larger brands are becoming convinced of the potential for improved efficiency in digital marketing. Consequently, they are shifting some of the money that has historically been directed toward TV, or print, to online. Technology plays a big role, so more emphasis has been placed on building up that expertise and large advertisers are trying to get up to speed as quickly as they can. That’s a trend that I think will continue.

How big a factor is money when it comes to how effectively a brand can manage and utilize data in audience targeting?

The utilization of data to efficiently target your specific audience at the right time can be applied by anyone, but obviously the more money you’re spending the bigger impact you can make. However, we work with smaller clients as well and how much consultative effort that we put in place is a function of how much we can save that client. That dictates the worth of our technology and services.

What are some of the common misconceptions that people have about display advertising that you find yourselves having to correct?

One is somewhat a function of our own doing over the years as digital marketers, and it deals with return on investment and quantifying the results of your display advertising in terms of metrics like click-through rate, conversion rate and cost-per-conversion. The misconception is the idea that you can measure all campaigns the same way, which is just not true. For many campaigns it’s a function of your strategy and where you are focused as a marketer in terms of the traditional marketing funnel. For instance, if you are an online retailer and you’re looking to drive specific traffic to a website that is going to sell a product, you can measure the effectiveness of your campaign and the ROI in terms of the amount of traffic you acquire or the sales volume.

The other end of the spectrum would be if your digital market strategy is much more top-of-the-funnel oriented. You may be a manufacturer trying to build interest in a new product line, and you’re looking for people to just read articles and information. That is a very different digital marketing strategy, and I think there is a tendency by a lot of marketers to not always recognize that you have to measure these campaigns differently. Brand awareness or purchase intent is much different than conversion rate.

The second misconception is that all data is created equal. There are massive amounts of data that might be available to help you target your specific audience, but some data is more valuable than others. Some will be more valuable at a higher-funnel-brand-oriented campaign than others which might be more valuable at the bottom of the funnel. Having a partner with experience, a history of success and proven technology allows you to really understand the different strategies for different kinds of objectives. We’ve been in the business a long time and feel very comfortable knowing that when we sit down and work with clients we’re able to help them cut through some of that.

Is it a challenge getting CMOs to implement the sort of changes that will help them be clearer about their advertising and the data they’re gathering?

It can be hard, but sometimes it happens quicker than expected. It helps to present a compelling case with the examples we’ve gleaned from other campaigns to show how we can meet their expectations. It’s not always an easy case to make, and it really depends on the audience, but the proof points speak volumes.

Are there particular industries that are more responsive than others, or that you tend to work with more?

I would say that the concepts of data and audience targeting are relevant to most industries, although some have hit on it sooner. The automobile and travel industries in particular are looking for information about people who are interested in cars or in taking vacations. What articles do they read, what sites do they go to? The ability to develop anonymous profiles of potential customers is something they’ve become pretty effective at. The CPG area is also becoming more focused on audience targeting, and there are plenty of other industries that are moving in this direction.

Since as you mentioned earlier that not all data is created equal, what are the top two or three ways that you think marketers should approach data and metrics in their own way?

They need to recognize the difference in value between first-party data and third-party data and then develop their own strategy to combine these effectively. Many large advertisers have a fair amount of data that they capture through traffic to their own websites, and that first-party data and partner data – where you work closely with others who provide data to you – are important. At the other end of spectrum, data purchased from providers can have value, but that often depends on the source.

I think the message here is that as an advertiser you should have a data strategy, as well as the capabilities, the technology and partner relationships to develop and effectively utilize that strategy. Issues like ensuring that the data brought to you has been gathered in a privacy-compliant way may be new concepts that an advertiser hasn’t previously considered. The key is having a partner that will help you through that process, understand your objectives and build a data asset that could be most effective for your own marketing strategies.

Are there any other key trends you expect that we’ll increasingly see over the next year or two?

I think we’ll see acceleration on the part of advertisers and larger brands to take control of their data. From an industry perspective we’ll see more recognition that there are some players who are not as effective at helping clients as others. Working on a large scale with big data is something we’ve been doing for 10 years now, and that experience is not easily replicated. New players are showing up in this space every day, and just because they have a good marketing brochure doesn’t necessarily mean they have the scale and the experience to be effective. So as the demand by big brands for the right partners increases over the next year or two, you’ll see some technology or service providers who aren’t up to that challenge, get weeded out.

Before we conclude is there anything else you want to cover or expand on a little bit more?

The challenges that many advertisers will face as they go down this path may not come from a lack of data, but from too much data. I think the measurement of the data quality and campaign results as well as attribution techniques will evolve over time. We will get better and better at this. Even though we’ve been at it for over 10 years it’s still in some ways the early days. If we continue to make the kind of progress that we’ve made over the last 10 years and maintain our growth trajectory, I think this will be a very exciting time and an interesting place for everyone in the marketing world to be.

BIOS:

Jeff Pullen

Jeff leads the entire organization in setting AudienceScience’s overall direction and executing key strategies for growth. Jeff utilizes his extensive experience in mergers & acquisitions, strategy innovation and operational excellence to ensure the continued success and further development of AudienceScience as a premier digital-marketing technology solution for our clients and partners.

Jeff has held executive-leadership positions for several respected public and private companies, and also served as a partner in a global consulting firm where he specialized in troubled company restructuring, M&A and litigation services.

A graduate of the University of Nebraska, Jeff received his B.S. with Distinction in Business Administration/Accounting. He serves as a member of the IAB Board of Directors, and currently holds an inactive Certified Public Accountant’s license in California.

Lily Robertson

Lily Robertson is a senior content associate at Argyle Executive Forum overseeing content development and speaker recruitment for various cross-industry events. She is also the editor of Argyle Journal, the newly launched content and news platform for Argyle Executive Forum.

Lily has a B.A. in English and Anthropology from the University of Virginia.

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Robert C. Johnson: I joined SNR Denton, formerly known as Sonnenschein Nath & Rosenthal, in 1973 after graduating from NYU School of Law. I started in litigation and immediately enjoyed diving into business disputes, discovering the facts and researching the applicable law, and fashioning a hopefully compelling story on behalf of our clients to present at trial. I have had the privilege of heading the Litigation and Arbitration practice in the Chicago office for the past 17 years. For 10 of those years, I was also the Chair of the national Litigation and Arbitration practice group. Additionally, I served for a number of years on our firm’s Finance Committee, which is involved in constructing alternative fee arrangements with our clients.

I am one of a seemingly vanishing breed of lawyers who have spent their entire career at one firm. When I joined the firm, there were about 60 lawyers and we had one office in Chicago. Today, our firm is one of the 25 largest law firms in the world, with about 1,500 lawyers and professionals serving clients in key business and financial centers in more than 60 locations around the globe.

Over the years, I’ve handled all types of civil cases, including securities fraud, antitrust, bankruptcy, patent infringement, construction disputes, shareholder disputes, fair housing claims, and unlawful discrimination claims. I started representing insurance companies in the late 1980s in environmental coverage cases and that has grown into a rather large insurance litigation practice. The environmental coverage cases that I’ve been involved in were some of the major litigations of the last three decades, spurred by the adoption of federal and state laws requiring environmental cleanup.

My work on environmental coverage cases led to other types of coverage litigation for insurance companies involving such things as asbestos, mold, and other toxins as well as cases involving coverage claims for defective products and construction defects, and bad faith claims handling. I’ve also handled a number of consumer class actions. Class actions is a litigation area in which our firm has had a great deal of success and has developed a strong national reputation.

What are some of the major changes that you’ve seen from a general counsel’s point of view about the way cases are handled? What best practices have you learned over the years?

When I started, clients were not as centrally involved in litigation as they are today. A successful litigation practice involves partnering with the client and formulating the best strategy for the prosecution or defense of the case and, most importantly, working with the client to develop a winning theme for the case. That general counsels and their litigation staffs are much more involved in working with outside litigation counsel is a welcome development. It has the benefit of involving the client early on in the case not only in strategy decisions but also settlement prospects. The most enjoyable part of my job is trying cases, but litigation can obviously be expensive. As a result, most commercial cases headed for trial are settled, often after the issues in the case have been narrowed through successful motion practice. Partnering with our clients helps them better understand a case’s strengths and weaknesses and permits them to be proactive in the settlement process.

Another trend that we’ve seen is the increased use of budgeting. In-house counsel are much more proactive in requiring and analyzing budgets and determining whether the budget needs to be revised as the case is developed. Each case has a life of its own and it’s difficult to predict exactly how a case is going to unfold and what it is going to cost to prepare. Much of it depends on what the opponent does and the decisions the court renders as the case is proceeding. Nevertheless, the budgeting process requires the litigators to focus on efficiencies and controlling expenses and helps in-house counsel forecast and manage their costs.

Do you have any lessons learned regarding the budgeting process or creative ways to ensure that clients stay within their budgets?

We try to develop as detailed a budget as possible for those clients that require one. We closely monitor our monthly billing against the budget and modify the budget as the case requires. In the past, a budget was more of an estimation at the beginning of a case as to what it might cost to prosecute or defend the case. But over the years, the budgeting process has become sophisticated and the budget is more closely monitored during the life of the case by both outside and inside counsel. The budgeting process can also lead to discussions with the client regarding alternative fee arrangements that will provide the client with predictable costs while also compensating us for efficiency and successful litigation results.

What issues are important in litigation to really get ahead of a case?

Once the lawyer has a full understanding of the facts and applicable law, it’s crucial to formulate a strategy for developing the case and to start fashioning a winning theme. A complex case involves many issues, but it is imperative to separate the wheat from the chaff, simplifying the case that’s going to be presented. In essence, a trial is about presenting your client’s story in a compelling way. You can’t win a trial unless you present a cogent, persuasive story that will resonate with the judge or jury.

Can you describe some specific cases and the lessons learned from these larger litigated cases?

I’ve been involved in hundreds of interesting cases over my years of practice, but two in particular stick out in my mind.

One was a case that we tried not once but twice in federal court in Montana. It involved an insurance coverage claim by a company that owned a chemical distribution plant in Montana that had caused extensive environmental damage through the release of perchloroethylene, also known as perc, that had migrated into the groundwater and poisoned wells that surrounded the plant. The fundamental coverage issue was whether the release of perc was the result of routine periodic discharges in the regular course of the company’s business, in which case there would be no coverage under the policies, or whether the release of perc was a result of a sudden and accidental spill, in which case there might be coverage. The company claimed that a sudden and accidental spill had occurred in the 1970s, but there were no witnesses who had seen the alleged spill. Instead, the company tried to prove through circumstantial evidence and expert testimony that it had occurred.

We represented one of the two insurance company defendants in the case. The first time we tried the case, the judge ruled at the close of the trial that there was insufficient evidence to submit the case to the jury, granting judgment in favor of the defendants. Unfortunately, the Ninth Circuit Court of Appeals reversed, finding that there was enough evidence to submit the case to the jury. So we had to go back and try it a second time.

Even though we had tried the case once (and won), we continued to work on shaping our presentation of the evidence in preparation for the second trial. Among other things, we developed more evidence of historical aerial photography of the plant, which demonstrated that the vegetation at and surrounding the plant had died gradually over the years due to routine spillage of chemicals. We also retained three new experts to supplement the one expert we had at the first trial. Those new experts were able to more definitively prove that the alleged spill could not have occurred as the company claimed. Happily, the jury came back in the second trial with a verdict in favor of the defendants. The lesson from this case is that a trial lawyer needs to be open to new approaches as to how to present the most persuasive case possible at trial.

The second case is memorable because it involved the most complex forum fight in which I’ve been involved. It was also a coverage dispute. The policyholder had manufactured a plastic (polybutylene) piping system for installation in new homes, primarily in Southern states. These systems had a relatively high rate of failure, and the insured sought coverage for the millions of dollars in claims paid to repair water damage from the leaking systems and to replace the systems. The fundamental coverage issue was whether property damage occurred at the time the systems were installed, but before they leaked, triggering coverage under the policies in force at the time of the installations, or whether property damage did not happen until individual plumbing systems failed, resulting in water damage to the homes, which triggered coverage in those policies in force at that time. The insurers wanted to have that coverage issue decided in Illinois state court, where the law was favorable to them. But the policyholder sought to have the issue decided in the bankruptcy court in its home state of Texas.

We litigated the forum issue for a number of years in bankruptcy and federal district courts in both Illinois and Texas, and in appeals to both the Seventh and Fifth Circuit Courts of Appeal. The carriers prevailed, and the coverage issue was ultimately resolved in their favor by the Illinois Supreme Court, which rejected a decision of the Seventh Circuit Court of Appeals on the trigger of coverage issue involving the same plumbing systems. The resolution on that crucial coverage issue ultimately led to a settlement that dealt with all the claims on a global basis.

My involvement in this case and related litigation lasted about 14 years. It was, in every sense of the word, truly complex litigation. The lesson, of course, is that the choice of forum can be crucial to the outcome of a case and needs to be a fundamental focus of a successful litigation strategy.

SNR Denton is a combination of SonnenscheinNath& Rosenthal and Denton Wild & Sapte. Can you explain that combination and how it helps your firm’s ability to better service your clients?

In 2010, the two legacy firms combined, giving the new firm the ability to service our clients’ needs seamlessly around the world. Denton had offices in the United Kingdom as well as in Continental Europe, the Middle East, Russia and the CIS, and Africa. In 2011, the combined firm opened additional offices in Singapore, Hong Kong, and Beijing. The growth has been exciting. One of the reasons that the combination has worked so well is that the two firms had amazingly similar collegial cultures. It has been a pleasure getting to know and work with our new partners around the world.

The 2010 combination followed by a year approximately 100 lawyers joining our firm from the New York firm of Thacher Proffitt & Wood, doubling the size of our New York office and infusing tremendous capabilities in the capital markets and corporate law areas.

The combined firm has organized its practice into eight key industry sectors to focus on the comprehensive legal and business needs of our clients. These sectors are Energy, Transport and Infrastructure; Financial Institutions and Funds; Government; Health and Life Sciences; Insurance; Manufacturing; Real Estate, Retail and Hotels; and Technology, Media and Telecommunications. Within these sectors, we offer virtually every service a client could need. One of our strengths as a firm is the deep bench of talent that we now have, not only in Chicago but throughout the U.S., Europe, Asia, and Africa. We pride ourselves on bringing to bear the most experienced and talented lawyers within our firm on any particular issue a client brings to us. In Chicago, our lawyers have done work for approximately two-thirds of our 20 largest clients in the U.S., and we are increasingly serving our clients abroad. As a trial lawyer, I am particularly proud of our strong group of 65 talented Chicago litigators.

What is the firm’s long-term strategy for growth?

We are devoted to understanding and serving our clients’ needs. We believe that to excel at that, we will need to continue to grow both here in the U.S. and around the globe, including into new geographies. We will continue to position ourselves as one of the largest law firms in the world, capable of delivering quality and value to our clients on a global basis. When I joined the firm in the 1970s, I didn’t dream that we would have offices around the world in dozens of countries. But it has become a reality and it is all quite invigorating.

I have enjoyed my almost 40 years as a lawyer tremendously. I’m surrounded by incredibly intelligent and interesting people at this firm. Each day brings a new challenge and a new opportunity, which makes my job both exciting and rewarding.

BIOS:

Robert C. Johnson:
Robert Johnson heads SNR Denton’s Litigation and Arbitration practice in Chicago and is the former Chair of its firm wide Litigation and Arbitration practice group.

He specializes in complex litigation with an emphasis on insurance and reinsurance litigation, including class actions, representing such companies as Travelers, Chartis, Hartford, Swiss Reinsurance, Allstate, ACE Bermuda, Stonewall, MMIC Group, Country Mutual, and Great American.

Robert has represented insurance clients in scores of environmental and asbestos coverage cases in state and federal courts in Illinois, Iowa, Indiana, Wisconsin, Michigan, Missouri, Montana, Ohio, Delaware, Pennsylvania, Connecticut, New York, Massachusetts, and California. He litigates other types of coverage claims as well, including product liability, construction defect, mold, bad faith, personal injury (including advertising injury), group health and disability, and reinsurance claims.

Robert also has extensive litigation experience involving such diverse subject matters as securities fraud, antitrust, bankruptcy, patent infringement, construction disputes, shareholder disputes, fair housing, and unlawful discrimination claims.

In addition to his trial work, Robert has an active appellate practice, having handled appeals in the U.S. Courts of Appeal for the Second, Third, Fourth, Fifth, Seventh, Eighth, Ninth, and Eleventh Circuits, the Supreme Courts of Illinois and Delaware, and in each of the five districts of the Illinois Appellate Court.

Scott Robbin:
Scott Robbin is a senior content associate at Argyle Executive Forum. In this role, Mr. Robbin manages content development, editorial speaker recruitment, and execution for 20+ annual business events. He has over five years experience working on the production and implementation of senior-level events. He holds a Bachelor of Arts from Columbia University where he was the captain of the varsity tennis team.

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On May 18 Facebook Inc. will be launching their initial public offering, predicted to be one of the largest in history according to MarketWatch. Facebook’s 27-year-old CEO, Mark Zuckerberg, is scheduled to sell 30.2 million shares, worth $951million. Zuckerberg will retain voting control of 58.8 percent of the company after the I.P.O. and plans to put the proceeds towards tax obligations.

Despite generating $3 billion-a-year in advertising revenue bankers and prospective investors are are struggling to value the brand. Facebook’s revenue up to this point has centered on assuring marketers that buying advertising with them will earn an invaluable brand buzz but some larger companies are not so convinced according to The Wall Street Journal.

Facebook, like Google Inc. or Yahoo Inc., sell traditional display and search ads on their sites, but Facebook also offers image and text-based ads as well as additional methods that have yet to be thoroughly tested.

Last year, the company began partnering with comScore Inc. and Nielsen Co. to create tools that would allow brands to track their campaigns on the site but because Facebook doesn’t allow third-party surveys or “cookies” on its site, it’s difficult for advertisers to track the return their companies are getting from ads purchased.

Facebook has set the estimated price for their upcoming IPO at $28 to $35 a share, according to a revised prospectus. A conservative average of these prices would put the company in a position to raise $10.6B, valuing the company at $86B.

President-elect Francois Hollande looks forward to pioneering a fresh start within the French government, ending an era of economic darkness. Socialist party leader Hollande gained office with just under 52% of the votes during Sunday’s election. Nicolas Sarkozy, the first French president since 1981 to not win a second term, will relinquish power to Mr. Hollande during a meeting between the camps on May 15.

Mr. Hollande’s win marks the first for the Socialist party since Francois Mitterrand in the 1980s. The majority attributes Hollande’s success to France’s economic turmoil in conjunction with President Sarkozy’s unpopularity.

For many, particularly the younger demographic, the election of Mr. Hollande brings hope for change. Many are looking forward to seeing major changes within the job market despite the current state of the French debt.

President-elect Hollande has many promises to fulfill coming into his term. The Socialist candidate has committed to raising taxes for the wealthy, including large corporations and individuals earning more than 1M euros a year. He has made a vow to increase the minimum wage, hire 60,000 additional teachers, and lower the retirement age from 62 to 60 for workers who qualify.

Jean-Marc Ayrault, mayor of Nantes and a veteran socialist parliamentarian, is the top pick for prime minister. Ayrault is a German speaker who could be instrumental in bolstering relations with Chancellor Angela Merkel in Berlin, according to The Telegraph.

Elsewhere in Europe, political changes were also in motion. Greece made their voice heard, initiating a rebellion against the two main parties of the traditional establishment. All eyes are now awaiting the outcome of the elections and the formation of a government as the political scene shifts before Europe’s very eyes.

The change comes as no surprise as early market responses to the weekend votes translated to a drop within the Greek stock market almost 8% and the French CAC 40 index down by 1.7% according to The Guardian. Despite the controversy it’s hard to ignore the excitement of history being made within the Eurozone as his relationship with Merkel is expected to determine the future of the political climate.

One of the things that we did about six years ago was really recommit to making sure we understood what the industry was telling us, what our customers were telling us, where we had strengths and opportunities, and where we actually still had a lot of work to do.  We are in certainly no means out of the woods on this, but if you think about the transformation that we’ve been in as a company, brand, and marketing organization, this idea of the heritage of customer-centricity in our brand is something that we’ve really re-embraced over the last four years.  Social is core to how we think about that.

One of my favorite quotes ever is “If you talk to people the way advertising talks to people, they’d punch you in the face.”  One of the things that we’ve really tried to do in our social outreach is be much more specific about listening to what our customers are telling us.  We have a very significant investment in our listening command center and we have 26,000 conversations a day about Dell, which can be extraordinarily overwhelming.  What we’ve invested in, from an infrastructure perspective, are the tools and technology to really help us break those down.  We have a very significant social outreach service team who goes out and engages with customers to address their questions, comments and concerns.  We also get a lot of people who say nice things about us on social.

One of the reasons we made that decision was because if you go back six years ago when the business was not doing as well as we wanted and our products were not where we wanted them to be, we were basically just getting clobbered in the blogosphere.  One of the decisions that we made was we could do one of two things.  We could either wade into that discussion and listen to what people were saying about us and respond or we could hide.  The natural human inclination is well, hide sounds good, but you just can’t do that.

If you think about our journey with social over the last number of six years, we really started in 2006 thinking about why don’t we reach out and engage with our customers?  We’ve done a number of things across the past six years, some of which have been tremendously successful, some of which have been less successful.  As you think about places where we had some really great early innovation, around February 2007, we launched a platform called IdeaStorm.  It was then a very robust platform that allowed users to come and talk to us about their specific ideas for Dell.  We had a lot.  We actually took a lot of those suggestions.  For example, Linux operating system on a Dell PC is one of the ideas that we got from IdeaStorm.  We had lots of other smaller ideas that we saw.  We were really passionate and excited about this.  We’ve actually recently completely redone it and reinvested in IdeaStorm for the next number of years.

We had some very early success around Dell outlet and the way we used Twitter for sales.  To Jonathan’s question, “How do you think about the value of social and the ROI of social?”, the way we try to break down the discussion is it’s not about any one of these things; it’s almost like saying, “What’s the value of marketing?”  You cannot look at it in aggregate.  We look at something like the return on investment of our Dell Twitter outlets and the ability to really accelerate the sales cycle in a very specific part of our business.  We had some early success there.

We also launched our listening and command center about a year-and-a-half ago.  This, I mentioned earlier, is the way we bring structure within the company to how we listen and respond to conversations on behalf of Dell.  The tools are not where the industry needs them to be.  You look at all of the social data – we use Radian6, and it’s a great platform – but think about the way we categorize posts and the way we understand what customers are saying.  It’s a great first step, but there’s still a lot of technology and infrastructure that needs to evolve to make that as fine a point as marketers and company executives need to understand what’s happening in their business.

The other thing that we’re really proud about – and I think we’ll talk about it a little bit in the breakout Q&A section – is we invested very heavily in our social media and community university.  We call it SMaC U.  We’ve trained thousands and thousands of our own employees.  One of the reasons we think this is so important is because it gives us the opportunity to give a safe environment for our employees to go out and engage in social.  It also creates a fantastic community.

We did a program recently with our XPS 13, which is our recently launched Ultrabook.  We’re very proud of this product.  We think it’s fantastic.  It’s gotten great reviews.  Please go buy one immediately.  What we did when we seated the product with a lot of influencers and bloggers and people that we knew had an impact in the social sphere, we were able to go to the SMaC certified community and pair each one of those influential’s up with someone who was SMaC certified and who was certified on behalf of the company to go out and engage in social.

One of the reasons why we think that that level of training and that level of known boundaries are so important is because it’s really easy to make dumb mistakes in social. Now you can make a mistake and everybody could know in five minutes.  Really educating your employees about what’s the brand voice we want to have, what do we think is okay to say in social, what is our social policy, how do you get clarity on your disclosure and how do you make sure that you are not inadvertently creating a false impression?  All of those things are really important.  For example, the hash tag of #workfordell when you’re doing a Tweet on behalf of the company is really important.  Our social media and community policies actually post it on our Website, so having that level of transparency.

The other one that I’ve actually personally found to be sort of fascinating is how we then train senior executives behind the scenes.  We’ve used SMaC U as a way to train our core employee population.  They’re very interested in this curriculum.  Then what we do behind the scenes is consolidated, smaller training classes for our executives.  It is fascinating because I can’t tell you how many conversations I’ve had that went something like, “Well, you know those little URLs you use for Twitter, those short ones?  How do you get those?”  This level of making a safe environment for your executives to learn because they’re very used to being sure about something before they open their mouth and before they publicly say something.  That training behind the scenes, both on the tools and technology that they may not want to admit that they don’t understand and also, here’s what it means to engage with your customers in social, has been really fascinating.

What we sometimes do with them is say, “Okay, just do one Tweet a day.  That’s your first step.”  We’re going to do one Tweet a day and then we’re going to figure out what you’re hearing from your customers; a really important cultural journey there.

If I break it down, there are six lessons that we’ve been really focused on over the last six years.  Listen, engage and act.  I talk a lot about our listening infrastructure.  This is where I feel really good about where we are in terms of understanding the pace of the industry.  Integrate social media across functions to achieve customer and business value.  That’s sort of a mouthful, but what I mean by that is it’s not about marketing, it’s not about customer care, it’s not about any one of these individual functions; it’s about everything across your business.

If I’m being really honest, there’s places where I feel really good about this and there are places where I think that we have a lot of work to do still.  Ironically, given that we’re marketing-led in our push to social, we’re not doing as well in some of the basic marketing things that I think we should do in social.  For example, our approach to paid media strategy on a lot of our social sites is still pretty fragmented, and that’s a little bit of a function of the way we organize our media budgets.  There are still lots and lots of work for us to do there.

Best practices and coherence across social sites.  As we think about being really explicit about what we’re using a platform to achieve.  I have a lot of conversations with people who say things like, “Well, social media can’t be very good for the B2B part of your business.  You must just focus on it for your consumer business.”  In fact, for us, the opposite is true.  We’re much further along in our journey with IT decision makers and technical business decision makers because we use the platform around community and the ability to go out and engage with IT decision makers who are in the decision making path around how they make purchase decisions.

To Jonathan’s question about ROI, one of the things that we have actually measured is the relationship between customers searching for storage, for example, on a number of our platforms or other places where we can get the data to the degree to which that accelerates the storage sales cycle.  That’s a much more valuable investment for us than when we did a pop-up ad on a Facebook site and got somebody to buy a $500 PC on sale.  Really thinking behind the scenes about what we need to do to engage with our technical decision maker community.  That’s really core to our platform.

I talked a lot about our SMaC U and our empowering employees and then the business value across the lifecycle.  I make this joke a lot, I think it’s really funny, but if the answer were 12, my life and the life of my marketing sciences team would be so much easier.  I get these questions still, “What’s the value of social media?”  I really think it’s so important to break that down and talk about the input, the expected outcome, and the value of any individual piece and how those things really add up.  We see through things like our back end analytics that we’re accelerating the sales cycle, as I mentioned.  We see that customers who engage with us on Facebook or core technical decision maker properties are much more likely to buy with us.  We do try to be really honest about cause and effect and not just relationship, so we have to have all of these things together.

My joke is always around marketing sciences – if you added up all of the things we say are driving ROI from a marketing perspective, marketing would have a 2,000% return on investment, which patently is not true.  Being really honest about how you measure the pieces is important to gaining credibility.

Finally, how you rethink customer connectivity through the culture, the process and the tools that enable you to engage with your customers in a way that’s helpful and on their terms.  Those are the core principles we think about.  We’re very transparent about where we are in our journey.  We’re very transparent about our policies.  We do really try to enable our employees to be really active in social.  There’s a ton of work to do there still, but we’re excited about the business possibilities and the way we think about that customer connection is core to our brand.

With that I’m going to move to Jonathan.  We’re going to do the Q&A.

[Jonathan Trichel]: This is our fireside chat.  Let’s pretend that there’s a fire and it’s a lot colder.

Allison, I think it’d be interesting to hear just a little bit more about how you came to this role at Dell, your history with Dell and your passion around this topic.  Maybe you could give us a few minutes of background to give folks a sense for your role.

[Allison Dew]: Sure.  I’ve been at Dell almost exactly four years.  I moved in May 2008 from Seattle.  Do not move from Seattle to Austin in May if you’ve gone almost a decade without seeing the sun and then suddenly it’s 103 degrees.  You think, ‘what the hell have I done?’

I came to Dell as part of the marketing transformation efforts.  I spent eight years at Microsoft, where I’d been since business school, doing a number of jobs across Microsoft.com; I ran brand and advertising for Windows.  My joke is always, “I was in charge of the brand for launching the world’s most hated technology product.”  I was the brand director for Vista.  Now, I just say Windows on my resume.  Then I ran marketing for MSN at the end.

As part of the Dell marketing transformation, I mentioned a little bit about how we’d seen hyper growth through a number of our early years, and then had this moment in time where we thought, ‘wow, we actually have to invest in things like marketing as a profession.’  You actually have to have specific skills to do marketing.  It felt very similar to where Microsoft was, honestly, in the late ‘90s, early 2000s.

Then over the past number of years, I’ve built a number of functions within Dell – our customer research function and our planning function.  I took on a role within the social media and community team about a year ago.  Now, I’m running a pretty large team around corporate and consumer marketing.

One of the areas where I have a lot of personal passion is around marketing sciences, data and analytics, and how you really get to that next level of understanding what your customers are telling you.  One of the things I care a lot about is how you take social data and primary research data and look at them, not in competition with each other, but as complements to each other.  There’s this really interesting forefront across all of the tools.  It’s very easy to get overwhelmed.

How you build these functions and bring them together is one of my great personal passions.

[Jonathan Trichel]: What do you think you miss most about Seattle?  You can’t say fresh wild salmon because we have Whole Foods here.

[Allison Dew]: What I miss about Seattle – and I love Austin, I love the sun – is that it’s very easy to get in the car and go to Vancouver, Portland and  Cannon Beach, which is on the Oregon shore.

[Jonathan Trichel]: Here, we drive three hours and you’re in Texas.

[Austin Dew]: Right.  Where should I go? Of course, I miss my friends and community.

[Jonathan Trichel]: I think in speaking with a lot of participants, half the companies in this room are Deloitte clients, so I know this first hand.  We’ve also sort of interviewed and polled throughout the participant cohort.  As I mentioned earlier, a lot of question around social media – where’s it applicable and not applicable?  It’s such a broad topic you mentioned.  I’m going to play advocate a little bit for the cynic in the room and ask a couple questions around that.  I think a lot of people have publicly and visibly seen Dell’s investment in this area at both Dell World and other environments.  You certainly have, to your point, a lot of customers who come through and see a lot of your technology.  Let me start with this.  You mentioned B2C and B2B.  In broad terms, what is the split from an investment and activity standpoint on your side?  Are you spending 50% of your time on business and 50% on consumer or is it much more weighted toward consumer?  Can you talk a little bit about the mix?

[Allison Dew]: Yes.  It’s actually much more weighted towards our B2B investments.  The way we think about our community investments, the way we think about user data from our primary data sources plus social data sources, and understanding the buying behavior and the buying patterns of companies at aggregate and how you think about what an IT decision maker is looking for from a content perspective as they’re making a decision about a storage purchase, we actually spend much more of our investment on the B2B side of social.

The great irony now is in February, I took over the global consumer marketing organization and I kept saying, “Dammit, I wish I’d spent the last year building up more of the consumer component,” because now, selfishly, I’m thinking ‘wow, we are actually coming from behind on one of the places that, from an external perspective, is much more highly visible even though it’s not actually as lucrative for us.’

There’s still a lot of work to do, but I feel really good  about our IT decision maker communities.  We launched a program called Dell Rockstars late last year, which is a shameless copy of the Microsoft MVP program, which is all about how you empower technical advocates who are part of the community to answer questions on your behalf.  Those things are fantastic.

Ironically, our Facebook strategy is kind of a mess.  It was more of a mess before.  We had 250 different Facebook sites, so going from 250 competing sites to 40, that’s progress, but still not where we need to be from a consumer perspective.

[Jonathan Trichel]: I think a lot of people can get their head around what this looks like in the consumer environment.  Can you talk a little bit more about your social media investments and activities on the business side?  We have a lot of representatives here today that are a bit more in the B2B environment.  Tangibly, what does that look like?

[Allison Dew]: A lot of it is about content, community and the right platforms.  It’s real easy to say and it’s actually really hard to do, but understanding where your decision makers are and providing them with the right content on the communities in which they engage.  With technical decision makers, it’s actually a little bit easier than some of the other community decision makers you might have because they already have this long-standing tradition of engaging in technical communities on the Web.  That’s one, getting them the right content.

The other is that kind of back end infrastructure piece around how do you think about your sales force data, which is the aggregate data at the company level, individual data that helps you understand who are decision makers, and then really taking that data with a pretty significant behind-the-scenes investment in data mining to understand that path analysis and where you see people actually breaking down in the decision making cycle.  None of the tools allow you to do that now.  You get companies that talk a lot about “I can build your social CRM” and I always think right, sure.  I’ve looked at all the pieces and they don’t work together.  How we build that ourselves and how we look at taking best of breed tools and integrating them, that’s a multiyear investment for us.  It’s part of our larger marketing automation program.

That’s one of those places, where in order to get over the skeptics, we built some of these systems manually, so in a complete privacy compliant way; I‘m not kidding.  We actually looked at how you take some of these profiles and this type of information.  We built that sales cycle in Excel.  We handed it off to the sales teams.  Then we saw this acceleration of the deal cycle, increased margin on the deals we were handing over, and larger revenue numbers per deal.  Being able to say we think social is a way to accelerate the sales cycle in the B2B space helps unlock that natural skepticism to allow us to get that kind of investment.

[Jonathan Trichel]: For some of the participants that may be with organizations on the front end of this, can you talk a little bit about whether it was when you came from Seattle at the door with the bags or earlier, what was the business case or the outcome promised to Dell shareholders as a result of all this investment?  If there’s someone in the audience saying, “Look, we’re on the very front end of this and we’re trying to make the case for investment in listening tool technology, the proactive monitoring and intervention, using social media as a marketing tool,” talk a little bit about was it, “Folks are going to buy more Dell gear, they’re going to retain longer as customers and we’re going to drop the cost to serve them?”  Can you talk a little bit about the business case around investment for someone that might be more on the front end of making that argument?

[Allison Dew]: Eventually, we got to all of those things.  We had what we call our SOS, or social outreach services.  If you look at how the average MPS score for customers who have been through our SOS outreach programs compared to some of our other support channels, it’s much higher.  It’s actually also cheaper.  We were able to get to all of those pieces and again, I think it’s about those specific programs you’re running.  Instead of talking about social and aggregate, it’s about breaking down here’s the business problem we’re trying to solve.  It sounds hokey, but it’s the way we got some of this funded.  Here’s the business problem we’re trying to solve.  Therefore, here’s how we think social is a tool to do that.

Where I see people roll their eyes is in this vague discussion about it’s a new world and blah, blah, blah.  I mean, I roll my eyes at that because it sounds a little bit like the way we were talking about the Internet in 1997. Of course the world has changed.

The other thing I would say is early on when you go back to 2006 and when we started to engage in this social sphere, it was because we were basically being clobbered in the blogosphere.  There was this honest discussion that we had to have with ourselves.  A lot of this predates me personally around ‘look, this is killing our brand.’  What you’re getting is this pile-on effect from people who were having negative experiences.  To my earlier point, we could do one of two things.  We could hide, which sounded like a good idea from a personal perspective, or we could go out there and engage with our customers.  It was really scary.

I have a couple of guys on my team who were early on in that movement and they’ll talk a lot about sitting there manually refreshing a browser – this is before any of the tools existed – searching for where we had customers who were having problems.  You go back to 2006.  There was a big battery blowup, which was not actually a Dell-specific problem, but it doesn’t matter in the eyes of your customers.  They were really angry at us and we were taking the heat for that.  Being able to go out and manually enter in “No, no, no,  call this number and we will get you a new battery” was one of the ways we started to get into that fray, and it was a fray at that moment, get the courage to keep going, and then be really specific about each type of investment.

[Jonathan Trichel]: Actually, I was just going to follow up on a couple points you made.  You mentioned NPS.  I know a lot of our marketing clients have a fairly straightforward time walking this to NPS.  They don’t have a straightforward time walking NPS to financial results.  In your case, this notion of net promoter score or a loyalty score, for Dell, is that the end all, be all, or have you been able to connect that to actual financial decisions and results?

[Allison Dew]: Both.  We do know that customers who have a higher NPS have a higher lifetime value.  We can see that in the data.  The other thing, though, when you think of NPS as the end all, be all, there is a place where marketing sciences can kind of get ahead of itself and become overly complicated.  At the end of the day, you have to believe that doing it in a responsible way from a margin and investment perspective goes without saying, but if you service your customers well and if they’re happy with you and believe in your products, services, and all of the things that you offer, they will over time buy more from you.

That’s the place where sometimes, even as a person who’s spent a lot of her career on the quantitative side of marketing, starts to get a little personally frustrated around all the data dissection.  At the end of the day, you can almost say from a human emotion, if you’re engaged and you believe in a brand, you will usually buy more from them.  Let’s accept that as common sense and let’s also do the work on the back end to make sure that you get that right sweet spot of investment to return on investment.

[Jonathan Trichel]: Have you guys ever piloted that?  Have you ever taken a control sample by either geography or product segment or some segmentation and said “Okay, for this group we’re going to do nothing from a social media standpoint and for this other group we’re going to give it everything we’ve got and see how buying patterns, retention patterns or cost of service is different?”  Have you ever sort of used some controlled experiment like that to prove it out or do you think that’s a good idea for companies to consider?

[Allison Dew]: I don’t think you can actually do it in a controlled way because you can’t segment the audience enough to do that on social because it is too much of an interrelated Web.  What I can tell you, though, is we have a natural control group phenomenon going on where we know through all the MPS data that there’s a double digit point difference, which kind of makes a big deal of customers who’ve engaged with us on social support versus those who haven’t.  We actually start to see that even when the customers have a problem, starts off potentially angry, that the immediate ability to respond to them and solve their problem not only addresses their immediate question, but changes their perception of the company.

We have that.  Without having tried to do it from a controlled experiment perspective, we do have that data set.

[Jonathan Trichel]: What would you do different?  You guys have been on this journey for a few years.  You’re widely recognized as sort of leading the pack in this space.  I’m sure you’ve learned some things along the way that if you could have done it all over you might have done it a little different.  If that’s true, I’d love for you to share it with the audience; the pitfalls, things to keep in mind as they go along their journey in this regard.

[Allison Dew]: The one thing we are actually pretty good at is calibrating as we go.  That’s actually not true in a lot of business functions because you get so invested in whatever you’re doing.  I actually think we’ve done a pretty good job of that. I said this jokingly, selfishly, because I’m now in charge of global consumer, but I also genuinely believe it to be true.  I wish we hadn’t let our consumer social engagement get quite as stuck in the organizational quagmire.  That’s actually where we get who’s in charge, who does this, etc, where we manage to get over ourselves a little bit more on the B2B side of the business where we could see really clearly how you invest in community and content for IT decision makers.  That’s a really important gateway to the brand.  It’s not where I would like it to be.

[Jonathan Trichel]: Balancing out on both sides.

[Question]: Do you have it all centralized now so you’re running it for the globe?

[Allison Dew]: We have it hub-and-spoke.  One of the things that my team has is the core training, the core infrastructure with the listening tools, and then we have also within regions.  For example, the thing I will always say to my counterpart in Asia is there’s absolutely no way I should tell you what to do with Renren, which is a social media site in China, as you likely know, but what I will tell you, what I expect you to adhere to is here’s the overall Dell policies for engaging in social and by the way, here are our overall brand policies and here’s what we want to stand for as a company.  You can engage in Renren the way that you want and the way that’s right for your geography as long as you stay within these boundaries.

It does feel like a Wild West at times, where sometimes we’re like, what are they doing over there?  What’s happening?

[Jonathan Trichel]: Allison, thank you so much.  I appreciate you taking the time with us.  Thank you.

The contents of this session transcript remain the sole property of Argyle Executive Forum, and may not be rented, sold, reproduced or distributed to any outside party.  Any unauthorized use represents theft of property for which Argyle Executive Forum will pursue any and all appropriate legal remedies.

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PAOLO GRASSI:  I grew up in a small town of 7,000 people in the Italian part of Switzerland, where I received all my education until I left the area to attend law school. Since we had no universities close to home, I moved north to the German part of Switzerland and studied in Berne. While there, I earned my law degree and returned to the Italian section of the country, where I practiced law for two years before landing an opportunity to move to New York. I worked at White & Case for about a year, in 1990, and later took a position at AIG. At the time in New York, there wasn’t a big demand for Swiss lawyers without a U.S. bar qualification, so I started at AIG as an entry-level staff attorney in the International Legal Department. I went to school at night, earned a Masters degree (LL.M.) at Fordham University, and was later admitted to the New York bar. In those early years at AIG, I worked in low profile, but very exciting, areas including the company’s expansion in Eastern Europe, Russia, and Central Asia. During my first 10 years at AIG, after supporting the development of the company’s network into Eastern Europe and the territories of the former USSR, I helped set up businesses in emerging markets in Latin America, Africa, and the Middle East. At the time, the AIG Law Department was organized geographically, so I did the legal work for the establishment of all types of companies—from insurance to pensions to banks. At the end of the 1990s, the department was reorganized along business units, with a corporate center supporting areas such as Mergers & Acquisitions, which had strategic interest for AIG. In the following 10 years, I developed the legal department for the AIG Property Casualty business, which was then called American International Underwriters, or AIU. Eventually, I assumed the role of General Counsel for its successor, Chartis International.

Out of curiosity, how many languages do you speak?

I was raised speaking Italian and spent a few summers working at a farm in the French part of Switzerland, where I became fluent in French. In law school, all my classes were taught in German, so I became fluent in that language as well. Over the years, I have become somewhat “rusty,” since I haven’t had the opportunity to speak German for some time. I first  learned English at an onion farm outside of Cambridge, in the UK, where I worked for a summer in my teens. By the time I moved to New York, I spoke well enough to function in an office. I also understand Spanish but don’t speak it. I know what’s being discussed but can’t participate in the conversation. While working in Eastern Europe and Russia in the early 1990s, speaking multiple languages  was advantageous because it allowed me to communicate and made my counterparts feel less intimidated . Since it was the period after the Berlin Wall came down and the Soviet Bloc fell apart, there was a lot of distrust, especially against the U.S. Being a foreigner who wasn’t speaking English fluently, and who supplemented conversation using other languages, often broke the ice and offered some opportunities for laughs. It was an interesting experience.

What have you implemented during your 20-year term at Chartis to build and expand the legal organization and develop the high-quality team you have today?

During my first 10 years, I developed a small team of lawyers who were assigned to specific transactions. After I was placed in charge of the legal affairs for AIU in the late 1990s, I had to develop a full-fledged legal organization comprised of over 100 attorneys worldwide. Except for Europe, where we had one lawyer, AIU had no attorneys assigned to its more than 70 operations across the world at that time. While AIG had a very well-developed legal department supporting its insurance business in the United States, we had to build a new legal infrastructure on a country-by-country basis overseas. It was a top-down exercise, which had its advantages and challenges. Since I started from scratch, I was able to choose the right people to put into the right positions. However, not having a deep bench or other frame of reference, it was challenging to identify the individuals who were a right fit for the company. Like anyone building a new organization, I made my share of mistakes. Over time, a legal infrastructure that is developed following this approach presents challenges from the standpoint of individual growth and internal promotion. Once a general counsel is appointed in a given country, the top spot is filled, and he or she has limited opportunities to move to a more senior role, except by moving to a different country.

The department developed over time along the basic requirement of cost effectiveness. Essentially, I assessed the benefits of replacing outside counsel by retaining the work in-house on a case-by-case basis. It is a rigorous exercise dependent on the volume of business and type of work that needs to get done and whether that work can effectively be brought in-house. To some extent, it’s a straightforward process. First, you must identify the type of work outsourced and the number of hours billed by outside counsel. To that, add the work that should have undergone legal review but did not get the necessary attention for some reason or another. Once the data is collected, you must identify whether there is sufficient volume to keep one or more attorneys busy for a year. After this review, if a new hire is warranted, we compare the fully loaded cost of an in-house attorney with the cost of retaining outside counsel for the year. In most cases, retaining an attorney in-house makes sense from a financial standpoint. Obviously, while the financial factor is critical, it’s not the only consideration. In-house attorneys are close to the business, understand the company’s philosophy and business objectives, and ultimately, function as a sounding board for management. This doesn’t mean outside counsel support can be ignored. On the contrary, there are fields that require sophistication that cannot be achieved cost effectively in-house, and outside counsel becomes crucial. In addition to sophistication, there is often a requirement for a global infrastructure to ensure quick turnaround addressing laws of multiple jurisdictions. In these cases, it is important to retain outside counsel to complement the in-house resources.

At the time I began developing the AIU law department, the organization was structured in eight regions across the world, so we started putting regional counsels in place in each of them to focus on the largest countries in their region. As I just explained, my approach has always been to keep as much work in-house as possible and hire our own attorneys whenever there is sufficient volume of work. If we don’t have enough volume, we look at alternative models like the “kiosk” approach, where a lawyer from one of our law firms spends one or two days per week in our office. This ensures that outside counsel is easily accessible by our management in a model that’s similar to an in-house structure. If people have to pick up the phone, they usually just wait. If the resource is next door, they are more likely to ask the question. It’s our responsibility to make sure management has the resource available where they need it and when they need it.

How is your organization structured today? Are attorneys assigned to a specific product line domain?

Last year, the company went through a radical reorganization that eliminated the domestic-foreign framework and moved to a structure segmented along business lines. Today, Chartis is organized along the two main business segments—Consumer and Commercial. They are supported by three geographic structures: Americas, EMEA, and Asia Pac. The Law Department went through a similar consolidation with resources reallocated accordingly.

When you deploy lawyers across countries or different businesses, is it a challenge to manage their career development?

Yes. As I mentioned before, outside of the traditional career progression within a given jurisdiction, it’s difficult to offer opportunities across geographic locations due to the nature of the profession, which requires specific credentials not necessarily transferrable from one country to another. For this reason, we started offering opportunities to grow professionally by getting involved with short-term assignments. A lawyer may come to us and indicate that he or she wants to do more, expressing a willingness to travel on short notice. There isn’t a formalized program in place, but we take note of who is interested and their skills. When a need arises, we “unplug” that person from her current assignment and send her into a different country to handle an urgent matter on a temporary basis. In time, the individual may gain the necessary skills to act as a troubleshooter and routinely go on short assignments, working three months here and a few months there. We call them “rapid deployment” attorneys. The project had just started before the reorganization and is still in its infancy, but the results have been good and the attorneys who have participated provided positive feedback.

Looking back over your experiences, what are some lessons you learned and things you would do differently now in managing the department?

To be honest, I wouldn’t do many things differently. In the end, I believe the principle of having at least one in-house attorney per country was the right approach for the organization, which at the time had no in-house resources and required a cost effective provision of legal services while developing talent and providing continuity of service. Particularly since I was starting from scratch, I needed to ensure a minimum of longevity. The key to the success of this effort was that individuals understood the organization was investing in them, which made them stick around over time. After a person knows the organization and gets through the initial few months of learning and orientation, we start seeing benefits. For that reason alone, we cannot afford losing and replacing an attorney every two years. We’ve been successful in that approach and have experienced stability and continuity, which ultimately served the organization well. There are always things we could do better, and I wish I could have invested more resources in developing the legal function in-house. In the end, like with every other service, we need to ensure cost efficiency while maintaining a timely delivery of the work product. That keeps incredible pressure on the efforts to expand the resources since there is a duplication of cost in the transition stage. Unless one is willing to sacrifice work product and turnaround time, outside counsel needs to continue to provide services, while the in-house resource is being developed. It was a compromise I wasn’t willing to make, so in many countries, we remain heavily reliant on outside counsel, even for tasks we could easily  move in-house.

What are some of the important principles you use when managing relationships with outside counsel?

Knowledge of the business is the first thing. For example, if I’m working on an insurance product, I don’t need an M&A attorney, because he or she probably won’t fully understand the issues surrounding the product. With whatever transaction we do, it is essential to find someone who knows our business and knows the organization. Every company is different, and it’s important for our outside counsel to know and understand our philosophy and modus operandi. Another skill I review is the outside counsel’s flexibility and ability to understand and operate in multiple jurisdictions. Usually, this means a law firm with partners who have overseas experience, not necessarily U.S. lawyers. I need them to have the ability to jump into various legal systems and business environments without preconceived expectations or country-based assumptions. When you work in multiple countries and jurisdictions, there is more than one way to do things. Obviously, the quality of the work product is something I value. When dealing with multiple jurisdictions, we also need someone who can filter the advice they receive from a local attorney, which may not be as sophisticated as the advice coming from another country. In the end, the outside counsel needs to be able to synthesize and interpret different pieces of advice in order to deliver a final high-quality product.

Most companies in the United States and around the world are cost conscious these days. How does the element of cost fit into your decision regarding outside counsel?

We always get bids on individual projects, unless we have an ongoing relationship or a specific retainer. We don’t trade quality for price, but we do look very closely at the price. Several years ago, I started an initiative geared toward generating synergies with our law firms. It’s based on the fundamental principle that we view the outside firms as partners rather than mere service providers. Like in all partnerships, both parties bring something to the table. The law firm offers top quality legal advice, and we offer excellent insurance solutions. Therefore, we’re looking at the relationship with our outside counsel from a quality of service standpoint but also with an eye toward what the firm contributes to our bottom line. The approach is simple: “I retain your services; why don’t you consider retaining mine?” We expect law firms to offer us good legal advice and also show us they appreciate our products. For example, they may ask their brokers to always obtain a quote from Chartis when securing their own insurance coverage. We also look at them as partners in generating business opportunities by holding joint seminars, where the firm addresses legal issues and our underwriters discuss the insurance solutions available. We have developed relationships with many firms, and they can show their other clients they have a direct line to an insurance company. If they’re working on a deal and the client needs insurance coverage, they can pick up the phone and call us. We make our underwriters available to law firms to support their activities as well. In many ways, this makes the relationship closer because the firm isn’t only looking for billable hours, but they are also looking at the value of our products. When selecting firms, I take that into consideration. In the United States and United Kingdom, the concept was fairly easy to introduce. However, in many countries, it took some convincing for our firms to embrace this philosophy. Other ways outside counsel partners have added value include offering secondments, holding CLE and other training sessions, and making their internal research materials available to us. One law firm even offered us a free hotline during the difficult days after September 2008. It represented a significant show of confidence at a time when most of our firms were calling to ensure their bills were going to be paid. In the end, if we work with outside counsel in a spirit of true partnership, we become closer and can develop a long-term relationship that goes beyond the mere client-customer relationship.

I understand you will be in a different role going forward, but what were some of your primary issues and focus areas during 2011?

Before transitioning to my current role, my main focus was the assessment of ways to implement efficient cost reduction. I dealt with the development of opportunities to create a legal infrastructure in a low-cost and highly-sophisticated jurisdiction in order to reduce outside counsel expenses in high-cost jurisdictions. I’m not a believer in the pure outsourcing model that surfaced in recent years. I tested it and wasn’t impressed by the outcome. I would rather develop an in-house version of the outsourcing approach to ensure direct oversight and quality control. There are a number of countries, and even states within the U.S., where one can get a very good quality pool of attorneys at a lower cost. They have the ability to review laws of most jurisdictions and provide a basic legal analysis, which is then finalized by the attorney in the country where the advice is used. For instance, I may have a profit center manager looking to develop and market a new product in Singapore, where outside or in-house legal costs are relatively high. I can “outsource” in-house to a low-cost jurisdiction, where I have a pool of lawyers who can review the laws of Singapore and provide a basic legal analysis. Then, the legal analysis can be sent to our in-house attorney in Singapore, who will review and finalize it.

Did you establish specific centers of excellence at different locations?

Yes, the model contemplates multiple clusters because talent in different regions is not always transferrable or fungible. It’s important because the sophistication we get in Asia for the Asian market may not be adequate to deal with the European market. We need a center of excellence tailored to the main geographic areas, such as the EU, Latin America, North America, the Middle East, and so on. In addition, we have language issues. With English or Spanish speaking countries, it is relatively easy to achieve economies of scale, but when dealing with areas with multiple languages, it becomes more complicated. In addition, Chartis operates in English, so if I issue a memo for Malaysia, it needs to be in English, but the attorney reviewing the laws needs to be fluent in Malay, or have English translation of the laws.

What is the effect of technology on cost reduction and efficiencies?

There are two areas where technology affords cost reduction in a legal department: the practice of law and the management of the department’s activities. With regards to the practice of law, technology allows us to obtain online laws and general legal information on a global basis, which instantaneously cuts research time. On the management side, technology allows us to eliminate manual reporting and ensures a global view of legal activities without diverting resources that would otherwise be spent on legal work. Both components are crucial to cost efficiency, as they allow attorneys to focus on the intellectual output rather than administrative tasks. Technology cannot replace the human element, but it can make individuals work more efficiently and cost effectively.

What other areas do you see as emerging markets or targets for expansion?

For me personally, China, of course. However, in general terms, I see big opportunities throughout Asia. Vietnam, Malaysia, and Indonesia are big and dynamic markets. Indonesia is an amazing place because technology there is moving incredibly fast. The country is leapfrogging through the various stages of technological evolution and becoming more sophisticated. For example, they have gone from no telephone to cell phones and computer transmissions, without first transitioning through land lines and fax machines. The Middle East is another area with incredible potential because there are significant financial resources and a high level of education in those countries.

One country close to home that in my personal opinion deserves attention is Cuba. I believe Cuba is going through a gradual and inevitable transition—much like China. The service industry has opened up to the private sector. Private restaurants, hotels, taxis, and other services are now common in Cuba. I believe the transition will be slow and managed by the Cuban government in a way that may not be ideal from our standpoint, while still offering good opportunities for U.S. businesses.

In the context of your new role, what topics do you anticipate addressing during 2012?

There are two components to my new role. One is regulatory and the other is government affairs. On the regulatory side, we have been working very hard during the last few years to establish constructive relationships with our regulators across the world. We now need to move to the next level and be more proactive in the way we interact with them. We have achieved a good level of transparency, and we need to make sure they feel comfortable with us and our way of doing business. A lot of the discussion surrounds how and when we provide information. My focus will be on developing the necessary tools to ensure our supervising authorities see no mysteries in Chartis. This effort will not be dissimilar on the government affairs side of my role, where the focus is aligned. We need to know and understand the various governments and governmental bodies. We also need them to know and understand us.

Is it your responsibility as the legal team to maintain the dialogue with regulators and be proactive in that relationship?

It is a team effort. There is no one stakeholder who can do it on his or her own. The local general manager is the person representing the organization in any given country. He or she is the individual who, in the eyes of the supervising authority, is ultimately accountable for the local operations and with whom regulators want to deal principally. In addition, given the nature of the role and the demands of the authorities, the CFO, the GC, and the Compliance Officer all need to actively interact with the regulator’s office. All parties need to work in sync and present the full profile of the company. As a team, we must be able to talk about our business plan, the financial requirements and projections resulting from the implementation of that plan, and the regulatory and compliance implications.

Is there a constructive lobbying effort in each country?

Lobbying, as it is known here in the U.S., doesn’t exist in foreign countries. There are different ways to make one’s position known, depending on the culture and local practices. Advocacy is important, but we should also recognize that, generally speaking, we are small players within most countries. We advocate through insurance associations and other industry groups. When there is draft legislation sent out in consultation, we review it. If it affects us, we express our opinion through formal channels. However, given our relative size in individual markets, we don’t receive the same degree of attention as the largest players, such as the local government insurance company or local private insurance companies. Depending on the issue and the severity of the consequences to our business, we decide whether to voice our concerns individually or via local interest groups and insurance associations. In serious cases, we involve the Commercial Section of the local U.S. Embassy. There is no set formula. It takes knowing the issues and local practices before making one’s voice heard.

Are there other things on your agenda that you would like to improve?

There is always margin for improvement. Internally, we will need to develop systems that allow us to operate more efficiently, cost effectively, and with better coordination. A significant amount of time is taken up by reporting, which can be made more seamless using adequate platforms and by freeing time for analysis and planning. Externally, we need to continue working on our communication strategies to ensure penetration and continued transparency. We need to reach out to our supervising bodies before they feel the need to reach out to us. We must ensure information is available to them before they ask for it. It is easier said than done, but we’ll work on it!

BIOS:

Paolo Grassi

Paolo Grassi has over two decades of multinational legal experience and more than ten years in a General Counsel role. He has a deep knowledge of overseas markets, their legal systems and political environments and has an extensive background dealing with US and foreign authorities on behalf of a regulated industry. He practiced in the common law and the civil law systems, has two law degrees, two bar admissions (New York and Switzerland) and speaks four languages. Over the years he developed substantial experience with large complex transactions in global markets, M&A negotiations as well as the establishment and licensing of start-up operations in Emerging Markets.

He developed a full fledged legal department comprising of over 100 attorneys on 6 continents, implemented global compliance and corporate governance programs and has managed internal and external legal resources. He is responsible for the company’s Regulatory Affairs and Government Relations and advises the organization on strategic decisions impacting operations and business development.

Prior to his current position, Mr. Grassi developed and managed the Chartis Global International and the Chartis Growth Economies Legal, Compliance and Regulatory Departments. His past experience includes the establishment and development of the Chartis International network of insurance and pension companies in new markets, addressing the legal aspects related to the operation of joint-ventures and wholly owned subsidiaries across the world from Europe to Asia, the Far East, China, Latin America, Central and Eastern Europe, Russia and the other Republics of the former Soviet Union, Central Asia, Africa, the Middle East and India. His career at AIG has progressed through the following stages:

1991 – 1996  AIG – Assistant General Counsel – International Division
1996 – 1999  AIG – Associate General Counsel – Emerging Markets
1999 – 2002  AIG – Associate General Counsel – Foreign P&C Insurance
2002 – 2006  American International Underwriters – Vice President and General Counsel
2006 – 2009  American International Underwriters – Senior Vice President and General Counsel
2008 – 2009  AIG – Deputy General Counsel
2009 – 2011  Chartis International – Executive Vice President and General Counsel
2011 – 2012  Chartis Growth Economies – Executive Vice President and General Counsel

Mr. Grassi graduated cum laude from the University of Berne (Switzerland) – School of Law and holds a Master Degree in Banking, Corporate and Financing Law from Fordham University in New York.  He is admitted to practice law in New York and in Switzerland.  Prior to joining AIG, Mr. Grassi was an Associate with Riva & Felder in Switzerland and White & Case in New York.  In the US he authored two publications on commercial law issues: “Letter of Credit Transactions: The Bank’s Position in Determining Documentary Compliance.  A Comparative Evaluation Under U.S., Swiss and German Law”, VII Pace International Law Review 81, 1995 and “The Duty of Confidentiality of Banks in Switzerland: Where It Stands and Where It Goes.  Recent Developments and Experience.  The Swiss Assistance To, and Cooperation With the Italian Authorities in the Investigation of Corruption Among Civil Servants in Italy (The “Clean Hands” Investigation): How Much is Too Much?”  VII Pace International Law Review 329, 1995.

Mr. Grassi is a trustee of the Franklin College and is active in various not for profit organizations.  He is married to Rebecca Nichols and has two small children. In his spare time he likes to fly airplanes, ski, scuba dive and generally spend time with his family.

Gene Landoe

Gene Landoe is currently an Executive Advisor for Datacert, Inc., the leading global provider of enterprise legal management solutions. A long-time leader in the legal technology industry, Landoe held several executive-level positions with various Wolters Kluwer (WK) companies over the course of 37 years, including as president and CEO of WK’s CCH Tax Compliance and as president and CEO of WK’s Corporate Legal Services (CLS). In his capacity at CLS, Landoe had executive oversight of the company’s day-to-day operations, which included running its five business units. Under his direction, CLS built upon its renowned service foundation to transform into a legal technology solution and service leader. In his seven years as president and CEO, Landoe oversaw CLS’s evolution and growth into an end-to-end provider of legal workflow solutions spanning corporate compliance, corporate governance, lien management, litigation management and trademark and brand life cycle practice areas.

In his current capacity as an Executive Advisor for Datacert, Landoe represents the company in industry thought leadership events and helps inform the company’s strategic direction, based on his vast experience and leadership in the legal technology industry.

Landoe holds a bachelor’s degree from Vanguard University, Costa Mesa, Calif.; an MBA from Chapman University, Orange, Calif.; and a doctorate from Golden Gate University, San Francisco.

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   Argyle Conversation: Alternative fee structures for outside legal counsel and new technology affecting everything from legal matter management to HR to finance functions to IT staffing was the subject of discussion between Lucy Fato and Mike Caplan, Marsh & McLennan and Gene Landoe, executive advisor, Datacert.
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   Argyle Conversation: Eddie Sheehy, CEO, NUIX

Rachael Heapps: I have been with the RAPP organization for 12 years. During my time here RAPP has evolved quite significantly as both a brand and an agency, while still being true to its 45-year heritage of understanding consumer behavior. We are a unique combination of art and science. I work with some of the smartest and most passionate people in the business, and we are always looking for new ways to solve our clients’ toughest business problems.

Now, as Chief Marketing Officer, I’m basically doing with our own brand what I’ve been asking our clients to do for years: understand your brands purpose, provide real value to consumers and measure the results.

How has technology helped shape the creative platform and direction of RAPP?

Technology has been the underpinning of everything that we do when it comes to creating and measuring experiences. It creates a collaborative platform, it creates efficiency, it creates an ability to understand consumers and it provides experiences that are relevant to them. For example, from a collaboration perspective we’ve launched an agency network platform called Hunch Farm that brings multi-disciplinary teams together, so that someone from the UK can participate in a brainstorm as easily as someone from another office in the U.S.  We have also been hosting an evolved version of the hackathon called RAPPathon, where we bring multi-disciplinary teams together to collaborate on creating campaigns, ideas, and working prototypes in a compressed timeframe. Working this way brings technology to the forefront and leads to innovation.

Technology platforms also enable efficiency of collaboration when our clients are looking for seamless integration. We’ve designed platforms that help create communications that are relevant to their local market, but are also synergistic and brand-compliant. And we’ve done this globally for clients as well, with a platform that enables efficiency by consolidating the number of agency partners.

The final piece is using technology to create relevant experiences in real time, by understanding exactly what people are doing and what they care about based on their behavior. We call it behavioral CRM, and it is only possible through the effective application of technology and data. So to sum up, it’s about collaboration, efficiency and customer-centricity.

Social and digital marketing campaigns are a top priority for most brands these days, but oftentimes companies don’t understand how to best utilize this medium. Can you talk a bit about the process RAPP uses to help companies understand how to leverage social and digital while maintaining the brand culture?

Companies first need to understand their consumer, as well as how their brand can provide real value to them. When you understand your role in culture you can start to create experiences that change how people think, act, feel and talk about your brand. When it comes to social media, we usually look at providing value through the lens of service, community, utility, entertainment, information and hard currency. So, if you’re a pharma company that is looking for a way to help your patient manage their condition, you can provide information to keep them compliant on their medication and offer support within their communities. If you are a retailer,  you can leverage foursquare to provide real time offers and mobile applications information at point-of-purchase.

When you provide something of meaningful value, people will share that with their friends. Clients have a tendency to jump into social media thinking they need a presence everywhere, but the real opportunity is in using it to provide utility and value to consumers and allow them to engage and advocate to their friends on your behalf.

With so many layers to social media, what’s the best way to measure the ROI of those campaigns?

People are looking for traditional ROI measurement in a very untraditional media landscape. There are two definitions of ROI in social; it’s not only a return on investment and the dollars you spend and how that leads to transactional behavior, but also a return on influence. One is more of an impactful measurement, while the other is much more of a scale and efficiency play. That said, the approach is really the same: understand the behaviors caused by exposing your consumer to the brand using metrics such as “like,” “views” and “visits, link that to engagement metrics like hosting, engaging and downloading and, ultimately, link that behavior to commerce and transactional behavior.

It’s the patterns that emerge between exposure, engagement and commerce that begin to inform the communications. True ROI will come from the right balance of all three, but the endgame is simply to deliver the most value and drive business results.

With all the technology and data that is collected and stored, how do you reconcile the various amounts and types of data that are available? And how important is it to find insights both within and beyond that data?

Right now everyone is talking about big data. Everybody has a lot of data but only 20 percent of that is meaningful and relevant. The big differentiator is not so much the data that you have access to, but the people and talent interpreting the data. Because things have evolved, real innovation is key. As a result, we have employed anthropologists, economists and data scientists to interpret data and understand the patterns that are emerging in culture and your entire digital ecosystem.

The opportunity is to use the meaningful data to create relevant experiences that are different between  customer A and customer B. And then examine the data created from those interactions to understand what’s working and what’s not and deliver true attribution to your spend. You need technology plus people to do that.

RAPP has developed an equation to represent this process at its most holistic level. Can you provide some insight on this?

Simple equation: culture + utility = commerce. Understanding culture and creating emotional experiences that people care about really drives relevance. If I care about something and it’s moved me, chances are I’m going to “like it” or share it and it will spread quickly. Next, what is the true utility-product-plus that you’re offering me? Is it a service? Is it community? Is it information that you’re giving me? If you have an understanding of culture and drive engagement through true utility and service, it will lead to business growth every time. You get real results – transactions and advocacy – because you are providing true value to consumers.

Oftentimes CMOs point out that not all consumers are going to be equally adept when it comes to social media and technology. With peer generational differences, how are customer loyalty and other such programs going to differ?

It’s not about generational differences, but about what people need and how we can use the technology available to us – whether it’s mobile, Twitter, Facebook – to deliver true value and meaning to those constituents. We may use Twitter to understand what is on sale at Whole Foods this afternoon. Our children are using Twitter to understand where the next party is or where their friends are. And if you think about it, the 50-and-older demographic is one of the largest-growing groups online. As long as you are providing what they need, whether it’s being educated on a healthcare plan or finding the best movie that’s nearest to their area, people will use it.

What advice would you give to marketers struggling to create value from their social and digital marketing campaigns?

Don’t think like an advertiser, think like a product developer. Think of social and digital as an extension of your products and services and the true value that you would deliver through any of these channels. Social media is not about advertising, it’s about making connections with people. And if you understand consumers’ behaviors, desires and unmet needs, then you can become a huge differentiator in your space. This is where people can truly leverage social to give them an edge over their competitors.

Before we conclude, is there anything else you would like to add?

I would just say that I think this is the most exciting time for us as marketers, and while the landscape is changing it actually is providing us with more opportunity to differentiate and connect with consumers, provide value and finally measure and understand behavior in ways we’ve never been able to do before. The data that we do have access to offers such a competitive advantage in understanding what people care about, what they want to share and why they’re going to choose your brand over the next one.

We are using data in three ways. INPUT: In the beginning we are using data to understand culture and discover new insights; OUTPUT: Using data to create relevant experiences that people care about and drive engagement; and OUTCOME: Using data to measure and understand what is truly driving the business. And when it comes to input, output and outcome, if you hit all three of those – whether it’s a marketing campaign or a social campaign – then you’ve succeeded as an agency and as a brand, and everyone can be accountable in this space.

BIOS:

Rachael Heapps

As Chief Marketing Officer, Rachael Heapps is responsible for establishing and managing RAPP’s brand reputation in North America.  A 12-year RAPP veteran, and a passionate advocate of RAPP’s outcomes-driven brand of marketing, Rachael draws from a broad range of strategic and creative marketing experience.  Formerly Executive Creative Director at RAPP, Rachael’s ability to imagine and create branded experiences that engage, entertain and motivate has been a driving force behind the success of her work for clients as varied as Best Buy, Mercedes-Benz, Pfizer, GSK and Johnson & Johnson.  Before joining RAPP, Rachael was design director for iDeutsch Interactive Group, working on a diverse range of clients from Zyrtec to IKEA.  She also served as the liaison between traditional and interactive art directors, ensuring synergy across all client communications. Prior to that, Rachael was studio manager and partner at Ogilvy Interactive, where she built a leading-edge team of web designers, expanding the staff from 15 people to 200, with a client list composed primarily of Fortune 600 companies, such as Kodak, IBM, Jaguar and GTE.  She was elected a partner after only two years of her tenure there, making her one of the youngest in the history of this prestigious firm.  Rachael received her degree from Syracuse University in New York and served as a judge at the Cannes International Advertising Festival in 2007.

Lauren Everhart

Lauren Everhart is a Director at Argyle Executive Forum. In this role, Lauren manages and leads client experience and client service delivery for Argyle’s content and event partners. She also manages the content development, editorial speaker recruitment, and execution of a number of Argyle’s annual business events. Lauren has been with Argyle Executive Forum since 2008. She holds a Bachelor of Arts from The State University of New York at Albany and a JD from New York Law School.

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   Argyle Conversation: On December 7, Andrew Joiner, CEO of the Promote division of Autonomy, an HP Company talked with Jason Redlus, managing partner at Argyle Executive Forum, about how his company’s Aurasma platform helps marketers engage customers in interactive, real-time experiences to enhance their brand.
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GREG WALKER: I’m a managing director and counsel at UBS AG and have been with UBS for 10 years. I am a senior member in the legal department dedicated to its investment banking business. My charge has been within the fixed income department with a focus on debt securities and other complex financial transactions such as securitizations, financings and related derivatives transactions. In recent years, I have also been actively involved in restructuring and unwinding many of these transactions as they became distressed during the recent financial crisis. I also advise internal and external litigators and have played a role in their strategy sessions regarding threatened and actual litigation, select investigations and dispute resolution. My experience runs the gamut from collateralized debt obligations (CDOs), collateralized loan obligations (CLOs), mortgage-backed securities (MBS), asset-backed securities (ABS), “warehouse” financing transactions designed to facilitate additional securitization transactions, and acquisitions and sales of various business divisions. I also played a key role in the creation of the Dillon Read investment management venture as well as its dissolution and the creation and transfer of assets to the Swiss National Bank’s fund that purchased illiquid assets from UBS in 2008, much like the original TARP idea. In addition, I analyze proposed and pending regulatory changes that impact these businesses, mitigate potential issues arising in connection with those regulatory changes and highlight issues that potentially impact other businesses within the investment banking division.

We’re coming up on the end of the first quarter of 2012. What challenges have you faced so far this year, especially regarding some of the new regulations that have come out over the last couple of years? And what else is happening for you this year?

2012 continues to be a period in which we are wrestling with legacy assets with an eye on costs associated with Basel III. Right now, UBS is following Basel II.5, and its Tier 1 equity is a prized aspect of its role in the financial markets. So working out those legacy assets, restructuring them and getting them off our balance sheet in a manner that preserves value continues to be a prime directive. In the current regulatory environment, all financial institutions are facing increasing pressure to become more efficient in handling their balance sheet in anticipation of potential regulation and to meet shareholder expectations.

For example, UBS recently announced in its quarterly report that it entered into a restructuring and settlement agreement with a monoline financial insurance company, the result of which is expected to ultimately lead to a reduction in UBS’s risk-weighted assets by more than 14 billion Swiss francs. While not yet finalized, this is one of my projects that is getting significant attention because of the numbers involved and the focus from global senior management. I also have been highly involved in other restructurings, liquidations and sales involving comparatively smaller amounts ranging from a few hundred million to a billion dollars. We’re trying to work our way through these assets in a way that’s satisfactory for all the partners concerned. Some market participants have taken the view that certain financial institutions may be under pressure to get out of these positions at fire-sale prices, but, luckily, that has not been my experience. Besides securitized products, I inherited coverage of our portfolio of auction rate securities. Although I wasn’t involved in the actual settlement discussions UBS had with the regulators, I was active in the related call/put rights offering and since have been involved in the restructuring and sales of those products.

Is the transition from Basel II.5 to III something that came with the new year, or has UBS been working on that for a while?

UBS has been working on this transition for a while. But as we get closer to the transition date, it has become apparent that UBS has been somewhat of a leader in that regard. UBS is consistently making our Tier 1 capital a focal point and our reduction of risk-weighted assets a much greater priority than other institutions. Other institutions are certainly doing it, and it is a priority for them, but I think UBS is more upfront about trying to effect that goal.

Are there peers in your industry to whom you look to make sure that you’re keeping up with developments or to see how they’re handling similar issues? Or are decisions based on regulations primarily made internally to stay ahead?

We don’t necessarily benchmark our trades against those of other institutions, but I think we do often find ourselves setting the pace. If you look back at the financial crisis, we were the only institution to effect the type of assets sale that was contemplated by the TARP legislation. Again, that initiative was achieved through UBS’s sale of certain key assets to an investment fund owned by the Swiss National Bank. UBS was also one of the early movers in identifying the impact of structured products on its balance sheet and taking decisive action to mitigate that impact. That was evident in UBS’s decision to liquidate some of our CDO exposures. And we’ve been extremely transparent about that decision.

UBS has chosen to be a leader in regulatory developments in the areas in which we focus because it’s the right thing to do and ultimately leads to good business. UBS is very reputation-conscious, which leads us to strike the right balance between being aggressive in business by trying to be the first mover in some initiatives and being a little more transparent than others. Take the CDO liquidations, for example. In 2007, the rating agencies’ sudden downgrade of residential mortgage-backed securities triggered automatic events of default in these CDOs. Consequently, some of those CDO structures proved untenable. If you were the holder of a large super-senior tranche at that time, you were witnessing the CDO assets bleed cash to lower tranches, leaving little left over to cover the senior liabilities when the CDO finally terminated. We were one of the first institutions to recognize this and took decisive action. Rather than watch these assets bleed away and pretend that it wouldn’t affect the valuations of the super-senior tranches, UBS improved its valuations and moved to liquidate the CDOs and realize on the assets as soon as possible, thereby terminating the super-senior tranches.

How much time do you spend anticipating where regulations are going to go or where the burdens will be placed on various financial institutions due to regulation? Or is UBS more focused on being forward-seeking, doing the right thing and letting the regulations catch up?

It depends. In the securitization area, UBS is very focused on current regulations like Rule 17g-5 and Rule 15Ga-1. Rule 17g-5, which requires rating agencies hired by issuers to share with non-hired rating agencies any analytical information they receive, was promulgated by the SEC in response to potential conflict of interest issues. The regulation is there to make sure that the agencies are careful in their analysis and to make the facts that are available to higher-grading agencies available to other rating agencies as well. Now other rating agencies have the opportunity to issue different ratings if they feel that a different rating is warranted. It also removed the barrier to entry for other rating agencies. If someone wants to get into the business of rating ABS transactions, they now have a web page they can visit to see that data and then have a basis of issuing a rating. Before, they may not have had that data and therefore may not have felt comfortable moving in that direction. The rule raises more operational issues for underwriters and sponsors and can lead to legal exposure through engagement letters with the hired rating agencies. There are also proposed conflict of interest rules emanating from Section 621 of Dodd-Frank, which are a concern because of their potential ambiguity and unintended consequences that are unrelated to the understandable policy goals.

Like many institutions, UBS is very focused on various aspects of the Dodd-Frank Act, particularly the proposed Volcker Rule, because it’s potentially a significant game changer and could have many unintended consequences. Some new regulations, like the disclosure required regarding the level of due diligence performed in connection with a securitized offering, are more geared toward RMBS, which UBS doesn’t issue, but impacts issuance of commercial mortgage-backed securities as well, a product UBS will soon issue directly.

Rule 15Ga-1 requires securitizers to provide certain demand and repurchase information for all assets originated or sold by the securitizer that were the subject of a demand for repurchase or replacement for breach of a representation or warranty regarding the pool assets with respect to all outstanding ABS held by non-affiliates of the securitizer. Like other securitizers in the market, UBS timely filed its initial Form ABS-15G on February 14th. In Form ABS-15G, UBS reported all such demand repurchase claims in accordance with the rule. However, that doesn’t necessarily say that the claims actually have merit. The filing just puts forth the fact that the claims were made, how the claims were disposed of and what the current status of the claims are. Given that this is a new rule with a new form that creates certain ambiguities, it is prudent for market participants to be transparent in describing how these claims are categorized. If one were to compare UBS’s Form ABS-15G filing with other institutions’ filings, it would be clear that the disclosure in UBS’s filing is far more robust and detailed. So was UBS a first mover with respect to this particular issue? No, we instead decided to actively participate in broad industry initiatives to assess where this development would go, what it might mean and how the rule would be interpreted by other market participants. However, in doing so, we set our own heightened standard of transparency.

Was that new for everybody?

Yes. In promulgating Regulation 15Ga-1, the SEC laid out certain repurchase demand categories, but market participants universally agree that certain of those categories are ambiguous and are therefore subject to interpretation. So UBS made sure that its categorization methodology was clear and well-described so that the data is easily understood by investors. We were dedicated to ensuring that UBS had superior transparency with respect to its Rule 15Ga-1 filing.

Since the financial crisis, have you seen an uptick in the number of these regulations, specifically in new types of litigation?

There have been many proposed regulations, such as the proposed risk-retention and conflicts of interest rules that have not yet been finalized by the regulators. There are a significant amount of RMBS claims against issuers and underwriters regarding disclosure, and there are claims from monoline insurance companies as well as from investors with respect to repurchase claims. A lot of those investor claims fall into the category of misrepresentation, including negligence, fraud and other violations of securities laws. Some investors have made frivolous claims in an effort to obtain loan files in discovery that, by contract, they would otherwise have no right to review for the sole purpose of furthering a repurchase claim. We’ve also seen litigation concerning disclosure on cash and synthetic CDOs, and we’ve seen some CDS litigation as well. But there’s been more of a focus on RMBS due to the sudden depreciation in housing values during the financial crisis.

Has there been structural change within your legal department in order to deal with the growing number of litigations for the last couple of years, or does it continue to operate as it was constructed before then?

We took a step back and made an assessment on how we could improve if we needed to do so. We looked at the processes UBS had in place and assessed our diligence standards, how we approved transactions and how we effected the transaction documentation. For example, we analyzed how much and what type of diligence we historically performed on RMBS and CMBS transactions. In anticipation of some of the new regulations, we determined that we would not only analyze the underlying pool of assets, but we would also describe how we undertook such analysis. This process is now required by regulation. Of course, we weren’t doing any new securitization transactions during the financial crisis, but we were prepared to proceed with new transactions by implementing this process, particularly with respect to new CMBS transactions.

Are there any ways that you, both as a legal department and as a company, have sought to mitigate risk other than what we’ve already discussed when it comes to these regulations and what they’ve imposed on us?

We now have attorneys and counsel who monitor and advise us on various regulations from the moment these regulations are proposed through the date on which they take effect. I have to stress that many of these regulations have yet to take effect, and there are many potential changes coming about through regulation litigation. Rule 15Ga-1 is one of the few regulations fully in effect. The market is still waiting on final regulations concerning risk retention and conflicts of interest. We monitor developments regarding those regulations, but there is still a great deal of debate as far as what risk retention should look like, what constitutes a conflict of interest, what the scope of exceptions to these rules should be and how those issues can be monitored. So we’re mindful of that.

You bring up a good point about how a lot of these rules haven’t passed yet. They exist as ideas, but they have no effect right now. How does that impact the business, knowing that rules are out there that haven’t yet passed but could pass or will in some form eventually pass?

The uncertainty surrounding these pending regulations has had a significantly negative impact on market participants. If you don’t know the form or scope of the final rules, it’s extremely difficult to set your strategy. For example, we’re proceeding with our commercial real estate mortgage securitization efforts with the knowledge that we may have a risk retention issue when the final rules go into effect, though how that issue will manifest itself is not yet determined. With risk retention, a securitizer may need to retain a 5 percent piece that can’t be directly hedged. However, we won’t let future changes prevent us from doing business now even as we develop potential strategies for when and how the rule takes effect. We have seen the proposed regulations prevent others from doing business, though, which has had an effect on us because it results in fewer opportunities to interact with clients.

How have these regulations, proposed rules, upticks in litigation and the possibility of new types of litigation affected either the hiring of outside counsel or the type of expertise you look for in outside counsel?

Any outside counsel will tell you that in the current market environment there is an expectation for that counsel to be cognizant of recent proposals, general consensus among market participants with respect to those proposals and the future direction of the market, which has required them to invest a substantial amount of time and effort in keeping abreast of issues that may not necessarily translate into billable time and effort. But it’s assumed that they’ll do that. On the other hand, it also provides opportunities for law firms to help us assess how we’re going to deal with a specific problem. We hire outside counsel to give us advice on a particular area and make sure that we truly understand the issue. It’s very targeted. However, with issues such as risk retention, while we are looking at it and thinking about it, we see a lot that still has to be done. We haven’t necessarily drafted a final set of proposals as far as what we’re going to do about it, where we’re going to book it and so forth, but we have engaged counsel in that regard.

As you’ve said, some of these rules have not been passed, so it’s up to leading companies like UBS to forge ahead. It seems in the financial world that so much of what is done regarding how to deal with these new rules is based on the philosophy of individual banks. So your outside counsel might have three other banks as clients, and they might be handling the same rule in three different ways because those banks are leveraged or are leaders in three different areas. Do you feel that a deeper level of collaboration or integration with your outside counsel is required, letting them in on what your governing philosophies are going to be, in order to work with them in dealing with these new issues?

There is now a great deal more discussion about our philosophy in our talks with our outside counsel. UBS is a complicated global financial institution and the potential ramifications of these regulations cannot be ignored. To make it easier, we work with counsel that know us, are cognizant of the discussion, know the proposals and can give us some idea of the big-picture perspective of where things might go for us. We gravitate towards counsel that we feel have the right blend of expertise, and we utilize different counsel for different product areas. That is certainly a focus for us now. Before these new regulatory issues came to the forefront, we took a much more targeted approach. For a transaction, we would talk to a transaction lawyer; for expertise on a regulation, we’d call a certain regulatory lawyer. Now we take much more of a composite approach.

When we partner with outside counsel, we ask them to advise us on regulatory matters and possible developments. Some of them are happy to do that as part of the relationship; but at some point, we think it’s appropriate to compensate them for their analysis. We also consider how to work with our outside counsel on our current transactions. We are doing a fair amount of business and we’re doing it quite well, and our outside counsel has been participating in these efforts as well.

Some of the counsel with which we’ve worked have anticipated our direction, steered opportunities to us and made introductions for us. I can’t tell you how important that is. If someone were to say, “You should talk to such-and-such a company,” but one investment bank wouldn’t be covering that company, value isn’t necessarily added there. Value is added when outside counsel knows of specific, sometimes unconventional or unexpected, opportunities and things that we can work on. There’s one firm in particular with which we’ve dealt on several go-to types of transactions, such as when we sold $15 billion worth of RMBS into a fund. The same counsel represented us in the disposition of illiquid assets to the fund managed by the Swiss National Bank. They’ve also advised us regarding regulatory matters as well as garden-variety securitizations, underwritings and financing, and they continue to distinguish themselves and remain necessary to our discussions by anticipating where we’re going and making introductions to opportunities for us. We very much appreciate that, which works in their favor. As UBS has shifted away from securitization outside of commercial mortgage-backed securities and toward different types of financing and strategic partners, that firm is still very much a part of those discussions and continues to be our go-to firm.

More than being just a good-faith favor, it shows that they understand your direction and anticipate what would be a good opportunity for you.

Very much so. One of the things we’ve been looking into is financing certain alternative energy sources, and the same firm has helped us make introductions and consider the structures.

Let’s talk about globalization. We’ve seen regulation changes all over the world; they’re not just U.S. based. The E.U. has some new regulations, for example. How does that affect a global company like Swiss-based UBS when they have to deal with certain regulations here in the U.S. and different regulations in other areas of the world?

We certainly have to be cognizant of global regulatory changes that affect UBS. For example, there’s Directive 22 in the European Union, which mandates that investors do a certain amount of due diligence, and if they don’t, there has to be a certain amount of risk retention associated with that. People have to keep in mind the marketing of structured products in the E.U., and one of the things we’ve been doing is not selling CLOs as much over there as we might otherwise because the demand is greater elsewhere and the regulation is such that the market is still trying to figure out how to make it work. So we are cognizant of the regulations that are currently in effect as well as those that may be on the horizon. It’s almost inverted, in a sense, in that we have to educate other parts of our firm about how the U.S. is approaching its regulations because the reach of some of these regulations goes beyond the U.S. to a surprising extent. We have global customers, and we want to make sure that those global customers don’t find themselves inadvertently dealing with a U.S. regulation or preparing to deal with a U.S. regulation.

Are there any lingering rules or regulations in the E.U. that have been unable to get the approval needed to pass, like the problems we’ve been having with Congress here in the U.S.? If so, does that create uncertainty in the E.U.? Or have those rules passed in the E.U. and it’s now just a matter of interpretation?

I’d have to get back to you on that. I haven’t really thought about E.U. products and how they’re being sold because I haven’t restructured any E.U. products in the past few years. Regarding the conflict of interest issue, I believe that there are regulations in effect, but our focus has been on U.S. regulations.

Do the E.U. regulations model themselves after U.S. regulations? Do they overlap a lot?

The E.U. regulations overlap with U.S. regulations a fair amount, but there is some divergence as well. For example, the burden of maintaining risk retention insurance is usually placed on the issuer in the U.S. model, but in the E.U. model, that burden may be placed on the investor if it does not perform the requisite due diligence.

Is there anything else you would like to add?

I think the challenge right now for general counsel is to be efficient in monitoring the status of pending regulations, how those pending regulations might be implemented and how they’ll affect businesses while tending to the current organic needs of an institution. It’s difficult to do. You have to know how to leverage, how to manage and when you really need to be an expert on an issue. There’s a fine line between keeping an eye on issues down the road and being over-prepared for something that may never come to fruition. But then, you don’t want to be unprepared for something that will go into effect soon because there will at least be operational considerations to implement a new regulation. That’s what we’re trying to work on as a team both internally regarding legal compliance and externally with our outside counsel.

I think you have to set your own priorities, know where your institution is going, try to anticipate where it may go and then be ready to respond. Internal counsel has to be a practitioner of all trades, but may not be a master of many, so we have to be prepared to do crash-course learning in order to effectively advise people when they have deep-dive questions or issues.

BIOS:

Greg Walker
Greg Walker is a mdirector and counsel at UBS AG, where he has focused for the past 10 years on fixed income securitized and structured transactions. He regularly advises on public and private offerings, principal investments and acquisitions, securities repurchase agreements, asset-based and synthetic financings, sales and trading issues, and restructurings. Prior to joining UBS, he was an executive director and counsel at Morgan Stanley, a senior credit analyst at Moody’s Investors Service and associate attorney at the firms of Brown & Wood and Cravath, Swaine & Moore. He is a graduate of the Fordham University School of Law and Georgetown University’s School of Foreign Service.

Bill Mariano
Bill Mariano is an attorney and director of electronic discovery at Applied Discovery. In this role, Mr. Mariano works in the New York and Washington, D.C., offices with Fortune 500 corporations and Am Law 100 law firms throughout the northeastern United States to help his clients improve their strategies for handling complex discovery matters while creating greater cost and control efficiencies throughout the discovery process.

Before joining Applied Discovery, Mr. Mariano served as a senior internet business development consultant for a Fortune 100 communications company. In this role, he coordinated strategic relationships with other Fortune 100 companies and spoke on the emerging internet medium as a vehicle to advance a company’s message to a global market. Previously, Mr. Mariano practiced law for over five years with a focus on securities litigation and investigations. As part of his practice, he gained experience managing document reviews on Concordance and various Web-based solutions.

Mr. Mariano earned his J.D. cum laude from Seton Hall University School of Law and a B.A. in business with honors from the State University of New York at Oneonta.

Mr. Mariano works as a guest trial advocacy instructor at Seton Hall University, where he teaches students how to leverage technology in practice. He is also a frequent presenter and author on a variety of topics, including how to develop an electronic discovery action plan, the FRCP amendments and dealing with electronic discovery, emerging case law in electronic discovery and leveraging technology to reduce discovery costs.

Related posts:

1. 
   Argyle Conversation: On February 9, 2012, Scott Robbin, Senior Content Associate at Argyle Executive Forum, interviewed Brett Johnson, Principal at Fish & Richardson, about the practice of intellectual property (“IP”) law and the expansion of IP-related issues in today’s market
2. 
   Argyle Conversation: Anne Chwat, EVP & General Counsel, Burger King Corporation
3. 
   Argyle Conversation: Lisa Conrad, Chief Compliance Officer and Deputy Counsel, Angelo, Gordon & Co.