Bjarne Tellmann: Chief Legal Officer, Pearson
Who are you, and what is your role?
I am the General Counsel and Chief Legal Officer of Pearson PLC and a member of its Executive Committee.
Pearson is the world’s leading learning business. We’re a FTSE 100 company with over 30,000 employees working in more than 70 countries to help people of all ages make measurable progress in their lives through learning. We provide learning materials, places of learning, technologies, assessments and services to teachers, professionals and students in order to help people everywhere aim higher and fulfill their true potential. Our publishing interests also include a stake in Penguin Random House.
I manage the company’s legal affairs and lead its global legal team of over 170 people across six continents. I’m passionate about developing a proactive, connected, commercially curious and metrics-driven culture. In today’s interconnected world, I believe it is critical to develop and nurture networks (my own and those of my team). I advise and guide senior management and our board on projects that underwrite risk and ensure that internal and external legal resources are aligned and organized effectively across the globe. I choose and manage outside counsel; handle large, complex budgets; reduce legal spend; improve litigation management and develop the capabilities of my in-house teams. I counsel on the business and legal ramifications of material transactions, including corporate and commercial contracts and other ventures, technology licensing and intellectual property matters, litigation, competition law, employment, securities law compliance, finance and data protection/privacy and general corporate matters.
What do you think will be the single most defining feature of the next 1-5 years in law? And then, same question – but over the next decade?
I think the biggest challenge facing the legal profession over the next five years is navigating the disruption and complexity that flows from the “more for less” problem. Corporate legal teams are facing an unprecedented need to contain costs at a time when demand for legal services is increasing.
On the demand side, new laws and regulations and increased complexity, as well as increased penalties, are being imposed on businesses at an unprecedented rate. In recent years, the volume and scope of regulations have increased dramatically in the US as well as globally. At the same time, the penalties for falling afoul of these rules have become existential, with fines in the hundreds of millions, sometimes billions, of dollars. Data privacy, anti-bribery and corruption and competition law are all in the bull’s eye here. Litigation in the United States continues, of course, to be a never-ending growth business for the plaintiff’s bar.
At the same time, however, there is an incredible pressure to contain costs. Companies are asking GCs to reduce spend in ways that they have never had to before. We have to manage an unprecedented uptake in risk with fewer resources than ever before. That, I think, keeps most of us up at night. How do you do that? How do you manage to contain risk while at the same time, manage to reduce your budget?
The good news is that there are a range of tools and options available to GCs today to deal with this pressure that didn’t exist 10 years ago. Globalization and technology have given us offshoring, near-shoring, super-temps and a host of technologies, ranging from transparency tools such as e-billing, to self-help and productivity tools, such as cloud-based self service sites and contract management systems.
All of these opportunities, while fantastic, introduce complexity and demand new skills from GCs. At the same time, the disruption these new approaches deliver are being felt on the private practice side of the profession, increasing the need for GCs to become procurement experts in addition to technologists and COOs.
Over the next decade, I believe these challenges are likely to accelerate. Technology will continue to disrupt the profession and I suspect it will completely upend the pyramid law firm model and significantly restructure the in-house world. This will usher in demand for new skills, including legal process and project management experts, legal procurement specialists and technology experts. I have written extensively about this in my new book (see below).
Artificial Intelligence (AI) is touted as a game-changer for law. What do you think?
I think AI certainly has the potential to be a fundamental game changer for the profession. However, we are still in the early stages of its impact on law and it is too soon to predict precisely how this will play out. “AI” is often used loosely to encompass a range of differing technologies with a range of differing properties, including machine learning, logic, search, inference, and speech and pattern recognition, to name a few.
Another aspect to the AI revolution is that it often obscures other, less exciting, but currently more impactful, technologies that legal departments should be rolling out, including productivity, communications and transparency tools. Something as mundane as video conferencing, for example, can have a massive impact on department management by enabling a more diverse workforce to work remotely and allowing people to manage teams remotely. One mustn’t overlook the boring technologies that are hugely relevant today for sexy tools that have less immediate impact for most departments today.
Cybersecurity is often quoted as being both the next greatest risk and also the greatest revenue opportunity for legal services providers. What are your thoughts?
From the purely legal perspective, I think data privacy is perhaps an even hotter and broader area than cybersecurity (though both are certainly linked). The preventative measures that companies need to impose to deflect the data privacy risk that attaches to the collection, storage and processing of data goes well beyond the obvious liability that companies risk from a data security perspective. That exposure will continue to grow as GDPR comes on line in the EU. In the US, meanwhile, I see a bewildering array of data privacy legislation that is often inconsistent or poorly aligned. That in turn will increase the demand for expertise to cut through unhelpful confusion. On the data security side, increasing breach exposure will keep giving law firms and expert providers growing volumes of work for the foreseeable future. This space will likely continue to grow over the coming years, both in terms of the expansion of internal expertise and the expenditure on external providers.
Is Automation a “silver bullet” for law – or is law more complicated than other sectors?
Automation – and technology in general – is never a silver bullet, whether in the legal context or otherwise. Technology, automation and outsourcing are tools that can help effect a solution, but they are not in and of themselves solutions. That is unfortunately not always fully understood by legal departments, who are often too quick to pull the trigger on buying expensive tools before fully understanding the problems they face and designing solutions that will address those problems. More often than not, a true solution involves redesigning the process flow and changing related behaviors. Only once you have fully grasped the problem, optimized the process and put in place a behavior change strategy, should you think about how technology, automation or outsourcing might play a role. If you fail to observe the right sequencing you will run the risk of buying the functional equivalent of an expensive hammer, only to discover that what you really needed was a nail.
There is much more data available for both lawyers and their clients? Is more better – or just more?
From a general and long term opportunity perspective, more is usually better. But in the short term it can obscure things. The data revolution has given both firms and clients an unprecedented amount of transparency that in turn improves output and performance. However, we have reached a stage at which there is so much information available that you can run the risk of not seeing the forest for the trees.
The right way to tackle this in my view is to think carefully about exactly what you need to measure at this stage in the life of your department and focus exclusively on that. The rest is background noise, even though later, as your department matures, that “noise” can become a goldmine. In other words, approach data mining sequentially. Focus first on what metrics will move the needle in terms of the areas of performance that are essential for you to target. As Peter Drucker famously said, “if you can’t measure it, you can’t improve it.” At the same time, don’t lose sight of the value that extraneous data can have down the road. Just don’t try and track it all at once.
We see a push for greater “value” and “innovation” in both legal products and price levels, structures? Is there more to value than the price tag these days?
Value is a function of both price and output. This is nothing new; it has always been the case.
You need to consider both variables to determine the true value of a service. A cheap solution that provides a basic output might provide good value in one context but be positively value-destructive in another. Price alone won’t give you the full picture: a racecar provides value for money at a Formula One race and a much cheaper tractor is valuable for plowing a field. But don’t try to use the tractor at the race and the race car in the field!
There’s a growing trend toward litigation funding and other forms of legal financing. What are your thoughts on that?
Litigation funding is not something I have had direct exposure to and so I don’t have fully formed views on this. That said, while it may have its uses, I suspect there may be the potential for it to skew incentives or distort the allocation of resources.
We see more pricing data and a push for greater transparency in legal procurement. What do you see as the implications of this?
I think legal procurement specialization is a sorely needed development that should have happened a long time ago. For too long, the procurement of legal services has seemed to be exempt from the approach companies have generally taken to the procurement of nearly everything else. What is needed is not a mercenary, zero-sum approach, but rather a strategic one in which newfound transparency helps both parties to develop trust in each other. If this plays out in the right way, it can be a “win-win” for both parties. Law firms secure a stable partnership in exchange for understanding and accommodating client needs. Clients in turn gain a greater appreciation of what constitutes a fair margin for the level of quality provided.
Law firms should, from a strategic sourcing perspective, become extensions of the internal legal department – a variable cost component that provides expertise in areas where it is impractical or impossible to in-source. Procurement specialists can help GCs in arriving at this level of partnership. In my new book, “Building an Outstanding Legal Team: Battle-Tested Strategies from a General Counsel”, I cover legal procurement and provide an action plan for sourcing effectively from both law firms and alternative legal services providers.
Last question: what’s the one shift or change you think will catch the industry un-prepared in the next decade – whether good, bad or downright ugly?
I think the disruptive impact that technology, innovation and globalization are beginning to have on the profession will have a profound impact on the traditional law firm model over the next decade. The top tier will remain relatively unscathed, but the hourly-rate model will be unsustainable for mid-tier and value firms. I foresee significant consolidation in that space. I have written a lot about these forces in my new book.
Law firms have a narrow window – right now – to rethink their model and diversify away from only providing black letter legal advice. That window is closing fast, however, and new entrants, ranging from expanded in-house teams, ALS providers and consultants to the Big Four accounting firms, will be eating their lunches if they don’t move quickly. We are witnessing the “Kodak Moment” of the traditional, mid-tier law firm.
Bjarne P. Tellmann is Chief Legal Officer and General Counsel of Pearson and a member of its Executive team. A FTSE 40 company with 36,000 employees in over 70 countries, Pearson provides a range of education products and services to institutions, governments and individual learners. At Pearson, Mr. Tellmann leads a legal team of 160 people across six continents.
Bjarne was recognized as a “2016 Legend in Law” winner of The Burton Awards, held in association with the Library of Congress and co-sponsored by the American Bar Association. He was also included in the 2016 UK GC PowerList.