GSV questionnaire

Background narrative

• We are being asked to do more with what we have.

—New products: crypto, deFi, DAOs

—New risk environment: more volatility (energy, crypto, equities, inflation), more risk of default (archegos, GameStop, evergrande, supply-chain disruptions

—New/fracturing regulations: Brexit aftermath, China clampdowns, regulatory investigations in aftermath of Greensill, Archegos, etc.

Additionally there is new focus on agility, recognition that we have an excellent, senior team with deep institutional knowledge that may be bogged down in lower value work and that we can get better value out of.

Realistically scope to grow our current capacity is limited: headcount are likely to be static; possibility of attritional headcount loss if departures not replaced.

Fever dream Another thought experiment is to go: ok so it is 2525, the age of Aquarius and the atmosphere is suffused with nanobots, pleasure-droids self-aware microbes and artificially intelligent homunicli floating on the aether, doing everything, and carrying out every factotal task except the formulation pure essence of brilliant, ineffable eaglery. In that Utpoian world, what would I qua res cogitans, the disembodied lawyer, now uploaded to the matrix and at one with the worldwide Singularity, still have to do? What would my role be, now we have solved all possible triage, outsourcing, and labour is perfectly and infinitely divided? And how does that compare with the decidedly non-platonic reality of how it is today?

What operational processes and process regularities are you in

• Approvals
• Escalations
• Annual certification
• Executions
• Regular meetings
• Diary events

As how these could be reorganised to empower others and take legal out of the loop

Opportunity to reassess/redefine legal role against that background to be:

• More strategic
• More advisory
• Identify process waste and overproduction
• Reset incentives inside the firm

Organisational principles

• The risk environment is complex, not merely complicated: Risk-management by rule works for BAU but not for edge cases. Edge cases require expertise and skill.
• Complex environments have long tails. Complexity differs from complicatedness on the tails and at the edges. The risk is in the tails. The middle is BAU.
• Legal’s maximum value is addressing edge cases, not BAU. This implies:
  • Legal should skew senior, not junior.
  • Part of legal’s function should be converting edge cases to BAU and operationalising it
  • If properly operationalised, business teams can understand and manage their own BAU legal issues.
• (Almost) all rules can be simplified: humans are expensive button-pushers.
  • A complicated set of rules implies:
    • A failure to make difficult decisions when building a process; or
    • bad feedback loops when running a process
• Over time teams skew senior: They get better, more experienced:
  • less dependent on lane barriers and training wheels. They also get less inclined to simplify.
  • But if the same lawyers are doing the same roles they were 10 years ago, we are not getting bang for buck out of them.
• Over time, policies and fixed rules lose value: As teams become more senior, they are less reliant on training wheels.
  • Training wheels get in the way, and become more of a hindrance.

Legal is advisory, for edge cases, novel situations, crisis response and situation management

• Operational interaction is to structure documentation processes to be seamless, standardised, low-touch, and to manage and centralise legal risk from documentation.

Goals:

• Not to defend as necessary everything you currently do, or everything you like doing, or everything you feel you ought to do. To identify ways to better deploy your skills.

Great canards of inhouse legal

• “I am not qualified in that jurisdiction”. Shop-steward behaviour from the international federation of law societies

Theories

• Lawyers should make more calls: the team is structurally more experienced than it was 10y are go. you do not, by dint of a title escalation, suddenly acquire unique insight to the questions “how likely are we do get sued” and “how much money is at stake if we lose” that you did not have before.

• Send fewer matters out: you are a lawyer. You make a call. There must be a reason you cannot make the call:
• “by regulation, it requires a written reasoned opinion I cannot give”
• “It requires the resources of a standing army and I do not have one”
• “It is a matter of great sophistication, requiring specialist knowledge I do not have, and much is at stake if I get it wrong”.

• Ignorance of the law is no excuse: BAU legal knowledge lives with the business. It therefore requires someone senior enough to make the call that this is not BAU legal.
• You cannot solve a complex system. You cannot eliminate all uncertainty. There are no rules that will prevent all risk and (ensure a return). When facing uncertainty, there is a trade off between improvising and programmatising. You can't do both with out losing something. Expertise is a bet on improvising.
• Raise escalation thresholds: All of these are predicated on upskilling, not downskilling.

—Incoming: Don’t take calls from junior people. Encourage teams to own their BAU knowlege.

—Internal: If you have a senior, expert team, let it improvise. Empower it. Remove formal rules, that arbitrarily lower escalation thresholds.

—Outgoing: Develop feedback loops that systematically remove escalations. Avoid ad-hoc concessions. Realistically, if you have done it once you will do it again. Develop programs to standardise and regularise processes through iteration. Don’t escalate the same thing twice. But, flipside: hold the line. There are two sides to “Avoid ad-hoc concessions”: it becomes much more important to hold the line on standardised terms. Don't allow wordsmithing.

• Coping strategies: optimise expertise for where there is good information, time, and tranquility.
• Build for the long term. Mend the roof while the sun shines. To put off maintenance.l because it isn’t raining and there is football in the park is human.
• The temporary tends to become permanent: short term workarounds persist. Therefore, build for the long term.