Sari Granat is General Counsel and Managing Director at IHS Markit, a public financial data technology company. As part of our ongoing breakfast series, we sat down with Sari to discuss how she runs a successful legal department in a rapidly growing, worldwide business.
Priori: What does legal department success mean to you? How do you measure it?
Sari: Success can be measured in many ways, but in my opinion, you have a successful legal department when you’re seen as a partner and not as a bottleneck or ivory tower. The most successful departments I’ve been in are those that are really partners to the business.The lawyers at Markit are heavily involved in things that most people don’t think of as lawyering, such as business and product development.
It’s difficult to come up with a set of metrics, but it becomes more possible the more lawyers you have, the more you do, and the more operations and finance folks you can connect to your business. Most legal departments don’t have the bandwidth to collect metrics until they’re at a certain size and can get dedicated resources from operations to build that. We’re just now at that point at Markit. I have a business manager who helps me run the function, and she recently pulled together metrics for all of 2015–on number of contracts modified, on our handling of the budget, on legal fees, on spend, and on M&A.
Volume control, managing costs, managing external counsel costs are all elements of success, but those metrics can’t be totally determinative because you can’t look at a legal department and say, “Well, we hit our budget every year.” There are so many unexpected costs and needs. It’s hard to show you’re cost efficient or cost effective in a given year. Even more, it’s not always clear that cost efficiency makes legal a good business partner. For example, we just did a survey among 180 business partners to see what they thought of the legal department and what their priorities are. They want more, faster. They’re not interested in cost efficiency.
Priori: You mentioned the importance of integrating your department into the business. How do you approach making a strategic impact beyond legal matters?
Sari: I was hired a little over four years ago to basically build structure and create what our current legal team looks like. A year ago, I was promoted to the company’s executive committee, and now I’m the company’s General Counsel, so I’d say for the last year, I’ve been much more involved in strategic issues and integration planning, and I’m at the table the entire time for any deals we’re working on.
When I first got to Markit, I knew nothing about the industry. I started working on the legal arrangements around new business ventures and partnered closely with the product manager and strategic manager of that team so that within a couple of months, we were all interchangeable. I could give a sales pitch as well as I could describe the legal structure of the deal we were putting on the table. So again, I think it’s very important to make yourself a member or a partner with the business because that’s when our jobs become the most interesting.
Priori: Can you tell us a little bit more about your budgeting process?
Sari: Budgeting is big issue for everyone, and it’s not an easy thing to do for a legal department because of the lack of foresight you have on what’s going to happen in a given year. We budget and hope that anything else that comes in becomes a balance sheet item, or we can call it an exceptional expenditure. During the course of the year, if we have volume issues, and I need to add to the team, I have to go to the business, and say, “If you want things done faster, we need to hire an additional lawyer.” I do stick to my budget, but budgeting is an issue, and it’s a very hard thing to do.
In terms of process, we do a combination of top-down and bottom-up budgeting. The finance team comes up with a number, we do bottom up budgeting, and then we compare the two figures. The process is done over a month or so, and then the budget is presented to the board. In terms of trend lines, with legal, other than having headcount, we largely keep it flat every year. I think this is fairly typical. I’ve been involved in the budgeting process in my last couple of jobs, and it seems to be that most legal departments add headcount, keep everything else flat, and then categorize anything unexpected as exceptional and run it through the balance sheet.
Priori: How do you approach hiring for your department?
Sari: Some of it depends on the role, but I tend to prefer hiring lawyers that have already worked in-house. The transition from working in a law firm to working in-house is significant, and I like to hire people who have in-house training already. Still, as we’ve gotten larger, we’ve been able to hire more junior people, some directly from firms, which is harder to do in a smaller legal department because you don’t have the time or people to train them.
More generally, I think humility is really important when you’re in-house. You need to be able to sit in a room with people who are experts in their fields, who are talking about things you know nothing about, and have the humility to ask for help in understanding. I look for that attitude when I’m hiring.
Sari Granat is the General Counsel and Managing Director of Markit. She is based in New York City.