February 14, 2017
Michael Finn: Fostering Innovation in the Axalta Legal Department
When he was interviewed a year ago for Axalta's Value Champion 2016 profile, General Counsel Michael Finn wrapped up his comments on the award-winning value initiative by saying, "We wanted to drive to the future. This is only step 1 of our evolution." He has remained as good as his word.
Philadelphia-based Axalta Coating Systems was created as a carve-out from E. I. DuPont de Nemours and Company in early 2013, and went public on the New York Stock Exchange in late 2014. (Finn refers to the company as a 150-year-old startup.) The company currently employs 12,800 people and had revenues of $4.1 billion in 2015.
Finn faced the daunting challenge of creating a new legal department from scratch. With the blank slate the start-up afforded him, he set about structuring a department that not only would service the legal needs of the company but create unique development opportunities for members of the legal staff. Drawing upon his own experience as a peripatetic in-house attorney at General Dynamics who "volunteered for everything," Finn crafted roles for his people that provide in-depth experience, true legal counseling, and international exposure. He finds inspiration and ideas in multiple places, saying that he does a lot of reading, is involved with several GC groups, and enjoys learning what his peers are doing.
"We like to borrow from the best, and get some incremental improvements if we can," he says.
Structuring the 27-person department, Finn organized to reflect the company's regional structure—kind of. There are three lawyers in Asia-Pacific; four in Europe, the Middle East, and Africa; four in Latin America; three in North America; and six at corporate headquarters. However, the North American team handles Australia, New Zealand, and India; and the lawyer in Brazil, who is fluent in Spanish as well as Portuguese, handles Spain. He emphasizes that he wants his lawyers to be "business people with JDs," true partners to the businesses they serve. Both clients and lawyers benefit.
"I try to mix it up for everybody," Finn says. "For the lawyers, it gets them really excited. They're working with different business people, which broadens who they know in the company, and it broadens them as lawyers, because they're having to learn about Indian law or Australian law, which is similar but not the same as ours."
Then Finn took the company's corporate securities lawyer, whom he'd hired specifically to help with the IPO, and switched him with the general counsel for North America. "The former securities lawyer is now part of a leadership team running North America and getting those skills; and the North American GC is now at headquarters working on governance issues and getting to know our board.
"This will create some succession for our company, and broaden and strengthen those two lawyers," he says.
These moves are crucial to retaining highly functional, highly skilled lawyers, and reflect the culture of Axalta, which emphasizes driving people forward in their careers. "Some of the integral skill sets lawyers need to advance often are not given out so freely by employers," he says. "I'm hiring super talented lawyers, and I promise them that I will develop them along their desired career paths."
Finn's own role has expanded over the past year, as export compliance, crisis management, and government affairs were added to the general counsel's purview. The IPO has added a host of new governance and securities issues to think about as the company evolves to fully independent.
Axalta does business in 130 countries, which Finn says leads to its greatest challenges: managing and growing in different parts of the world, with economic conditions, currency strength and valuation, and other variables constantly in flux. Competition for business is sophisticated and fierce: "We need to get up every day and go, because many of our competitors are always ready, always thinking, and they're not four-year-old startups like us," Finn says. Further, Axalta is quite acquisitive, buying five to six other companies in the past 12 months alone.
Under Finn's leadership, the legal department strives to provide efficient and cost-effective services. His vision is "Legal Department 2.0," in which they continue to reduce costs, increase speed, and reduce complexity by "getting lawyers out of some of the situations we are going to see over and over and over." Commodity pieces of work are proactively turned into checklists, forms, and other tools "so that the business doesn't have to stop for us."
He has also looked carefully at the work he wants to keep inside the legal department, based on its value to the business, and what he wants to outsource to external law firms—trademark work, for example. "Trademark advising is just not a core function of the lawyers here."
Outside firms are selected largely on the basis of culture—a "collaborative, collegial culture that matches ours," Finn says—as well as on aligned risk tolerance, expertise over a reliance on research, interest in alternative fee arrangements, and their skill in building relationships with his lawyers, who score them annually on a satisfaction survey.
Finn has made what he calls "Batphone" arrangements with several outside law firms, to which he pays an annual flat rate. Colleagues around the world with questions on such topics as North American employment law or litigation can call the designated firm with questions; so long as it takes less than an hour to answer, the call is free. All corporate governance and securities filings are handled on a flat-rate basis. Finn constantly seeks to consolidate and challenge outside counsel by putting work out for bids and by continuing to drive AFAs to an ever-greater percentage.
"I think the hourly rate just creates conflict between law firms and their clients," he says.
Having moved to the Philadelphia area to join Axalta four years ago, Finn says his membership in ACC helped to expand his opportunities and networks. He relates how Ed Weiss, then the GC of Group 1 Software, took Finn under his wing at his very first ACC National Capital Region chapter (NCR) luncheon, and introduced him to multiple attorneys, several of whom turned out to be tremendous mentors and friends. Within just a few years, Finn became president of the chapter.
"ACC has provided the opportunity to bounce ideas off fellow in-house attorneys, network, and share best practices and war stories (which teach you sometimes what not to do)," Finn says. "Serving as President of NCR was a tremendous honor for me. The chance to help build programs that are meaningful and interesting to our members was a privilege, as was the opportunity to meet new and prospective members and discuss the benefits of being able to share issues or concerns and problems with other in-house attorneys."
Solving the challenges of the business is what keeps Finn motivated and satisfied working in-house. "I am more interested in using my law degree to solve business problems and seeing them all the way through, growing and putting together a really good department for a single client, rather than having hundreds of clients at a law firm," he says. He observes that the role and stature of in-house attorneys have changed during his two decades in the field.
"The more corporate governance and boards of directors have importance in the business, and the more regulated the world has become, the more the lawyers are at the forefront," he says. "People have decided that being in-house offers all kinds of really interesting challenges. The people flocking in-house today are really great business people as well as lawyers, and are able to drive the value chain within their organizations."