Jeanie Latz | Board and Governance Consultant
Better Results with Diversity | Aspiring Board Member Resources | Board Composition Trends | The ESG Question | Signs of Board Effectiveness | Hostile Takeover Story | Bill & Melinda Gates
I interviewed Jeanie Latz | Board and Governance Consultant on Friday, July 17th, 2020.
We started the episode with Jeanie Latz sharing her journey and her love of serving Boards as a consultant. We discussed the recent issues boards are faced with including the benefits of diversity. She recommended a few resources and organizations for the aspiring board member. Jeanie then shared insights for landing paid board positions and board composition trends. She shared the investor’s push for ESG and how this has impacted boards. We discussed how to recognize a board that is executing well. We discussed how decision making is made for in-house versus outside counsel hiring. We wrapped up the conversation with Jeanie sharing about her Executive MBA teaching, who her heroes are, and her in-house experience in the middle of a hostile takeover attempt.
Here are some highlights of my interview with Jeanie Latz:
Every strategy of every organization has been turned on its head in some way, shape, or form due to COVID, and probably the biggest challenge for boards today is the unknown.
To really embrace diversity, you have to be willing to go beyond your own networks. You have to set up a process in which you look for candidates in a wider and more encompassing way.
There’s a body of well-established research now that the boards and the management teams who have embraced diversity are having better results than those who have not.
As you leave law firms due to retirement, it can be a stage of your career when it’s time to give back and not-for-profits could really use your expertise.
[Boards] need people who have some breadth of experiences and have been through several crises before.
Governance is our ethical and moral obligation. We’ve got to look at how we’re impacting the environment and our obligations to be socially responsible.
You’ll never read necessarily about the good board, but you’ll see the evidence of it.
People who are very good at making decisions are what boards need.
Success or failure in your career is based on your fit. You can take the same person and put them in one organization and they will be a huge success, but you put that same person in another organization and they’ll be a huge failure.
Links referred to in this episode:
Adam J. Epstein | The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small-Cap Companies
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Chris: Welcome to The Law Firm Leadership Podcast I’m your host Chris Batz with The Lion Group.
Today, I have the pleasure of speaking with Jeanie Latz, board consultant. Jeanie has served as an Executive Vice President, Chief Legal Officer, and Corporate Secretary of Great Plains Energy, a Fortune 1000 publicly traded holding company where she held operational responsibility including legal human resources, internal audit, technology, and facilities management. Currently, she consults boards of public and private companies in the areas of corporate governance, best practices, strategic implementation, risk management, securities regulation, and legal affairs. She’s a member of the faculty of the Executive MBA program at the University of Missouri Kansas City, Henry W. Bloch School of Management. She holds the distinction of governance fellow granted by the National Association of Corporate Directors. Jeanie received her law degree from the University of Missouri Kansas City School of Law.
Welcome, Jeanie, to The Law Firm Leadership Podcast. It’s great to have you on the show.
Jeanie: Thank you, Chris, I look forward to speaking with you today.
A Love for Serving Boards
Chris: Jeanie, how long have you been a board consultant?
Jeanie: I have worked with boards, not-for-profit boards, and other aspects of boards for a period of time and primarily because that’s always been a very strong interest of mine. And also, I acquired some expertise for that earlier in my career. During my time at Great Plains Energy, not only as Chief Legal Officer, but I also acted as Corporate Secretary. I was the liaison between management and the board, and that was an area of practice that I really enjoyed. It’s where I found that I spent a lot of my extra time and was active and have been still active in a number of organizations in that area as well. It’s an area that I gravitate to.
Chris: Jeanie, with everything that’s going on right now, would you please share with my audience, the current issues boards are being faced with today?
Jeanie: Well, being a board member has always been a big job, and boards have always had huge responsibilities. But now with every business impacted, regardless of the type of business, their responsibilities, and the need for boards is even greater. Particularly, I would say the need for managing risk as we’ve entered into such an area with so many risks boards have been key. Depending on the type of organization, your risk is different. There may be liquidity risk or there may be an operational risk. But every organization is facing some type of risk now to a greater degree than it was before. Also, strategically, every strategy of every organization has been turned upon its head in some way, shape, or form. Probably the biggest challenge for boards today is the unknown. We could put another strategy and we could come up with a way to manage risk if we knew where we were headed, but we don’t. So boards are having to look at many different scenarios and actually put in place different scenarios so that regardless of how long and where we end up, they have a plan in place that will allow their company to remain sustainable. It’s a huge responsibility. Board membership always took a lot of time; it’s taking even more now. And the importance of teamwork and communication with management teams has never been greater or have been of more importance to boards as they move through this time.
Better Results with Diversity
Chris: Jeanie, in regards to diversity would you share with my audience what you’re seeing as far as initiatives of boards?
Jeanie: The people on boards that were doing a good job, were probably doing a good job prior to the last few months. The importance of diversity we’ve always known, particularly on boards and management teams, and in the ranks of employees as well. The different viewpoints and experiences are needed that are brought through diversity, whether it be expertise, whether it be race, whether it be sex. In order to build sustainable organizations, we have to be able to see the organization through all of those lenses. And to do that, we need diversity on boards, and in management teams. There’s a body of well-established research now that the boards and the management teams who have embraced this concept are having better results than those who have not. So it’s a matter of fact that in the best boards we’ve seen these practices in place for a while. Maybe this time is a reckoning to additional boards and additional management teams in that regard as well. And hopefully, if they’re not already as diverse of organizations as they should be, in order to impact the best results they can deliver, they’re moving that way.
Chris: Which roles are bringing diversity to the company, the board or the management?
Jeanie: So that would depend on the organization, and depending on that organization, it can be hard. As individuals, we are most comfortable around people who are like us, and particularly on boards. When they look for new board members, they think about colleagues, people that they’re on other organizations with, or other people who they cross paths with. Many times our paths do not cross a good swath of diversity. So it’s difficult for boards and management teams. It was the same thing when I was looking for a new general counsel or the new head of HR. What about that father or mother whose kid is on my kid’s softball team? I see them every Tuesday night, I’ve talked to them, and I know they would be good in this position. To really embrace diversity, you have to be willing to go beyond your own networks. And you have to set up a process in which you look for candidates in a wider and more encompassing way than your own devices would do typically.
Board Resource Organizations
Chris: Jeanie, as a recruiter, I’m approached by both in-house and law partners in the second half of their career. The most common question that comes up is how to land paid board roles?
Jeanie: That doesn’t surprise me as a question. First and foremost, because it’s such a rewarding thing to be able to bring together all your business and legal experiences. To be able to use those in a way that is benefiting an organization is a great way to cap a career. Certainly, beyond a shadow of a doubt on certain publicly held company boards, there are some great monetary rewards as well. But because of the rewards, I think everyone wants to do that. There is an extreme amount of competition, and there are very limited opportunities in comparison to the numbers of professionals there are who would like to sit on boards. I would recommend a couple of things. Your responsibilities are different on a board than they are in a law firm or in a corporation. I would advise attorneys to get involved in a couple of organizations, which have really good materials and good opportunities to learn about what board service is all about. The National Society of Corporate Directors, which is a national organization that has local chapters, like the one here, the Heartland Chapter. We have local programs, but you also want to have the resources from a national organization. It takes some learning, some curiosity, and some knowledge about what a board member does. The other organization is the Society of Corporate Governance Professionals. That one is a bit more geared toward professionals who are in governance functions right now. That would be people who are attorneys right now that have some responsibility for board oversight. That would be a great organization to get involved with. I just completed sitting through four days of Zoom presentations at their national meeting last week, and I’m always amazed at the great resources that they have. So those are a couple of things that you can do to learn more about boards and acquire some expertise that will help you as well. The other important thing is that there are lots of opportunities to be active as a board member and really contribute with smaller private companies, startup companies, and not-for-profits. As you leave law firms, it can be a stage of your career when it’s time to give back and not-for-profits could really use that expertise. It’s also important to be open and even to sit on advisory boards. I sit on the advisory boards of a couple of my past students who have started businesses and that’s really rewarding as well. There are lots of ways to use those legal skills to contribute when you choose to step back from law firms.
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Landing a Board Position
Chris: Jeanie, would you explain to my listeners the reality for attorneys to land paying board roles?
Jeanie: I’ve read some statistics that a very small percentage of board seats are filled through search firms, but certainly the largest, most prestigious ones are. One way to signal to your colleagues that you’re interested in joining a board is by joining The National Society of Corporate Directors or the Society of Corporate Governance Professionals. It can be a good way to network. I’ve also known people who have mapped out a five-year plan to get on a board. It’s a ton of work and it can be comparable in time and commitment to your career. There isn’t a magic bullet but it matters what you’ve done in your career. There are a lot of things in our lives that set a trajectory path. If you’ve been the CEO of a large, multifaceted corporation, you know, you’re certainly in a different place than if you have been in a smaller regional company. And if you are a partner at Skadden Arps in New York, you are in a different position than a smaller local law firm. Part of who gets different positions is just what their past leads them to. But again, there are lots of absolutely rewarding opportunities to be on boards and you’ll find those by talking to your colleagues. It certainly doesn’t hurt to let search firms have your resume in case they’re a match. If you’re serious about it, you probably go down a lot of different paths at the same time.
Boards Look for Decision Makers
Chris: Let’s talk about board make-up. Who are those people that boards are hiring or recruiting right now?
Jeanie: Initially, board members were very well rounded or multifaceted individuals in that they had a broad range of experience. And initially, way over half were CEOs of organizations. More recently, the number of CEOs has been limited, and boards have thought they needed specific expertise such as an information technology expert, an HR expert, or a supply chain expert. In addition, some diversity and age are needed as well. So, we have seen boards put their matrix in place and very purposely chart out the type of person that they need. Interestingly enough, the pendulum is swinging back now. And maybe not swinging back to just CEOs, but swinging back to individuals that have broad experience. We’ve learned that board members who come in with very specific experience can be very helpful on those issues, but may not have the breadth of knowledge to deal with the overall responsibilities of the board. And when there are issues in that specific area, the other board members tend to step back and rely on that expertise, so we miss that multifaceted input in conversation that is typically needed around issues. So, we started seeing, even before COVID, a slight trend back to people who have had a broad experience. Now, the crisis we’re in has brought even more to light. We need people who have some breadth of experiences and have been through several crises before. There are some specific characteristics that are looked for, particularly, a strategic decision-maker is needed. And that’s not always easy to see from a resume, but people who are very good at making sound decisions are what boards need.
Small Cap Perspective & Resource
Chris: Jeanie, you had referred to me a book called The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small Cap Companies by Adam J. Epstein, founder of Third Creek Advisors. Would you agree with Adam’s assessment that small cap boards do not have enough understanding about raising capital, the role of capital markets, and then selecting the right service professionals?
Jeanie: Sure, let me just step back a second. So I met Adam through both of these organizations that I mentioned earlier. I was very interested in small caps, because that’s where most of my opportunities were, and I was very interested in his perspective. He has written books and has set himself apart as an expert on small caps. He approaches small caps from a little bit narrower view than I would in that he’s primarily looking at startups or companies that are fairly new. I think of small caps more generally as it’s the number of shares they have outstanding versus their share price. Many times those organizations are fairly new, but not always. Sometimes they’re more established, and they have very reliable and appropriate lines of credit. But to the extent that we’re looking at organizations, which have not been in existence, and don’t have those kinds of facilities, super important. We know how important that is right now and how important it was in getting the PPP loans to have an established bank and have access to capital. Access to capital breeds more access to capital. So, boards have to make sure that access to appropriate liquidity is in place as part of risk oversight.
Chris: So to clarify, would you define small caps for me?
Jeanie: A small cap could be defined a lot of different ways. I look at it how the SEC looks at it. The number of shares outstanding by the marketplace price multiplied together gives you your market cap. You could be an established company that has been in existence for 20-25 years and not have that many shares. Or, depending on your industry, it might not be trading as many industries trade at a very low market price. That’s really how you talk about market caps or small caps. It’s a terminology, but Adam is talking about companies that don’t have a lot of shares outstanding, so they don’t have access to a lot of market capital. They need to find capital in other ways.
Chris: So the term would be illiquidity. Is that a safe word to say?
Jeanie: Yes, illiquidity.
The Corporate ESG Question
Chris: Jeanie, let’s talk about a trend that is sweeping public companies and bringing pressure to public company boards aside from diversity.
Jeanie: I see this trend toward ESG investing, which is the opposite of managing for the short term. We’ve got to look at how we’re impacting the environment and our obligations to be socially responsible. Governance is our ethical and moral obligation. BlackRock’s CEO has been in that space for three or four years now. And now the Better Business Bureau has endorsed that. But the most interesting thing of all is the number of funds or shareholders who say we’re only interested in investing in these companies. So these companies are thinking, “Well, how can I disclose?” or, “What can I say?” It’s caused this huge controversy at the SEC because we don’t have any standards. There’s no continuity in the disclosures. I told my investment advisor, “Going forward, I’m really interested in firms who have an interest in adding value to society.” That’s obviously the job of a corporation, and it’s your generation that’s making the change.
Evidence of Effective Boards
Chris: Jeanie, how do you know if a board is good, or doing a good job?
Jeanie: You’re not going to read in the Wall Street Journal about a good board. That just isn’t going to happen. So, how do you know what companies have good boards? You can almost always see it. When you read in The Wall Street Journal about companies that are executing very well, that means they have a really good board. I’ll use Microsoft as an example. Right now, Microsoft is executing very well. It has a very good, diverse, collaborative team on its board right now. You’ll never read necessarily about the good board, but you’ll see the evidence of it. Usually, the ones with really good boards are the ones that are doing really well and might not be undervalued at the moment. There are always those younger startup companies who, for whatever reason, have the skills that make a good entrepreneur, but they’re cocky, and they’re huge risk-takers. This, often, can make them undervalue a board. They don’t want anybody to tell them what to do and they see them as a threat instead of bringing additional expertise. WeWork is an example, but for those younger companies who really do value boards and understand what they can bring, those might be the companies that you hop on. They still have all this upside but they haven’t had time to take advantage of their potential yet.
Hiring In-House & Outside Counsel
Chris: What general advice do you have for management and board members who are considering legal counsel?
Jeanie: It depends on the size of your organization and how much legal work you have in a particular area. In the corporation where I spent much of my life, we had lots of SEC work. It was a very capital-intensive industry. We were raising capital all the time, either through the markets, issuing more stock, or issuing different kinds of bonds. We had enough work in that area to develop that expertise in-house. But if you only need a particular kind of legal expertise once in a while then it’s not efficient to have that kind of expertise in-house. It’s much more efficient to use an outside law firm. In balancing what legal work you should do in-house versus what legal work you should do through an external law firm, look at how much of that type of work you have and if it is efficient for you to have someone in-house to do that.
Chris: Jeanie, as an advisor to boards, do you have an opinion about what outside counsel should be hired? Adam Epstein mentioned that he doesn’t always recommend the largest and the biggest names in law, but you brought up Skadden. So, do you agree with that?
Jeanie: First of all, it depends on what the issue is. During my career, I was involved in a hostile takeover, and I wanted Skadden as our outside representatives. From a practical standpoint, many people are agreeing with Adam. Here in the Midwest, we are seeing a lot of people use our Midwest law firms, even from the coast, because of the pricing. They’re certainly very competitive in the quality of work, and the price of the work. So, overall, I would say that advice is probably wise.
Managing Legal Spend
Chris: Have you advised boards where they didn’t have in-house counsel? Who is managing the legal spend of the organization?
Jeanie: I bring that up because it’s an issue. Sometimes, it’s managed by the CEO. Depending on the organization, the amount of time the CEO has, the interest level, and experience determines how hard it is to manage legal spend. Sometimes, you have CEOs who are very operational and may have never had a business class, let alone a legal class. So that’s hard for them to manage. Each organization does it differently, so sometimes it might be the CFO or a Chief Operating Officer who has that business background. These are business issues and legal issues. I advocate in my executive MBA class to my managers there that you’re responsible. Every manager is responsible for legal issues that occur in their organization, and I encourage them to stay involved after turning over matters to outside counsel. They should be aware and offer their knowledge of the business to get the best outcome. Sometimes, even the managing of particular legal issues may be spread through the organization depending on where the issue arises.
Teaching Executive MBA Courses
Chris: What kind of classes have you been teaching as an Executive MBA Professor here at the local state university?
Jeanie: My background is a combination of law and an undergraduate degree in business. It would be hard for me to choose if I like business the most, or if I like legal the most, and that’s why an in-house position was perfect for me. I have particularly enjoyed the opportunities to teach those aspiring executives in the Executive MBA class a little bit about the law. It’s not to make them attorneys, but to help them understand a little bit about the law that I believe will bring them a competitive advantage as a manager and to their organizations to understand something about labor law and to understand the basic premises of a good contract. It’s an opportunity for me to practice what I believe. So much is how you cannot separate a successful business from knowing something about the law because the law impacts every aspect of a business.
Bill & Melinda Gates
Chris: Jeanie next question, who are your heroes?
Jeanie: Well, during this lockdown, I watched a series on Netflix entitled Inside Bill’s Brain, and I would recommend that to everyone. It was just three different episodes, but with Bill Gates, there is so much going on with that man and his mind and his passions. We don’t really know or hear about everything because we can’t keep up with all the things that he and Melinda are doing. They are tremendously inspiring to me with the way that they are trying to use the resources that they have access to, to improve the world, in many aspects. So he’s a little bit of a hero and Melinda is also in that same category.
A Hostile Takeover
Chris: Jeanie, you were a legal executive at Great Plains Energy, which is now called Evergy. Would you share just a little bit of the war story of the hostile takeover?
Jeanie: So that shows my age because we haven’t heard very many hostile takeovers in the last few years. There was a time after barbarians at the gate that was certainly more of a corporate challenge than today’s shareholders. It consumed a couple of years of my life and actually, almost 20 years to the day of the hostile takeover that they ended up merging. In a lot of ways, it was an all-encompassing experience, and it was a great experience. I learned more during that period of time than I had ever learned. And in order to succeed, which we did but at a cost, you had to work as a team. Not only with your internal team, but we had to have external people on our team for communications, legal, and financial. It was a fabulous experience for me to learn how to be just one cog in the wheel of a team for success.
Advancing in Your Career
Chris: What advice would you give attorneys who are stuck in their role and want to find ways to be promoted? What would you tell them?
Jeanie: You have to be a business partner. It’s really important to understand the business and how you can bring value. Whether you’re an attorney or anyone else, don’t think you can sit in your office or in today’s world, sit at home and wait for someone to bring your assignments or bring issues to you. You have to be able to see the opportunities where there are legal principles and the law can help your business and you need to be able to bring those forward. It’s constantly thinking about how you can add value to the organization and being just as fixated on that as you are on your assignments that are due at the end of the week.
Chris: What advice would you give that private practice attorney who has an aspiration to go in-house?
Jeanie: Well, most of the attorneys for at least medium size and larger corporations do come from private practice. So typically, prior to coming in-house, you will have served that particular client as external counsel, and you’ve been a very good fit for their legal needs and with their team. And that’s probably why you are interested in going in-house there. If you are interested in going in-house, and you’re a business attorney, you actually have time to test drive a lot of different corporations. I sincerely believe and tell my students this all the time, success, or failure in your career is based on your fit. You can take the same person and put them in one organization and they will be a huge success. You put that same person in another organization and they’ll be a huge failure based on their fit with the organization. So best of all worlds for us attorneys are to see where you would be a good fit. And if it’s obvious to you, it’s probably obvious to the client as well.
Strategy & Decisiveness
Chris: Jeanie, what are your superpowers?
Jeanie: What are my superpowers? First of all, I’m not sure I have any. But if I did, I think the reason I love teaching strategy is that one of the elements of strategy is that you have to be able to see the future or picture different scenarios in order to put strategies in place. I’ve always felt that I was able to see the future or get an idea of what the future was going to be like. So, if I had a strength, that might be it.
Chris: And the second part of the question was, what is your kryptonite?
Jeanie: I am very strong-willed, and sometimes I am so strong-willed in my viewpoint that I am not as open as I should be in gathering lots of information before I make decisions.
Chris: Jeanie, it’s been an honor and a pleasure. Thank you for your time today.
Jeanie: Well, thank you.
Thank you to everyone who listened to this episode of The Law Firm Leadership Podcast.