Brinker International's Consolidation in Its Use of Law Firms Yields `Exceptional'Service, SVP-General Counsel Scarlett May Says

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As part of a series of interviews with in-house counsel, Scarlett May, senior vice president, general counsel and secretary of Brinker International Inc., recently spoke with Bloomberg BNA's Michael Greene on the company's evolving relationship with outside law firms. Instead of working with many firms on a variety of issues, Brinker is focusing on working with a few firms in key areas. That has enabled the company to command top-notch services from the firms, May said.

Bloomberg BNA:

How did you become general counsel of Brinker? Was being an in-house counsel always something in your plans?

May:

After graduating from the University of Tennessee College of Law, I worked several years in private practice. During the first four to seven years of my career, I started broadening my interest to employment law. I would tell you that working in the employment space has probably been the most influential experience that I've had as I moved to in-house counsel work. People are the greatest part of a business and also the most challenging part. I realized that it would be nice to be on the inside of employment issues so that I could play a role in preventing worst case scenarios from happening.

I had an opportunity to do that in Knoxville, Tenn., by going in-house in 2000 with Ruby Tuesday. I started my career there managing all of the company's litigation. I eventually became general counsel and was in that role for about 10 years before the company experienced a proxy contest, which resulted in a couple of activist members joining the board. Within a year of them joining the board, the company's founder decided to step down so I facilitated the transition to a new chief executive officer and corporate reorganization under a new executive team. In the process, I got an opportunity to join Brinker.

At that point, I had been in the restaurant business for about 14 years and I was well aware of who the big players were and who are considered the best in the business. So when you get a call from Brinker, you definitely listen. For me it was an amazing opportunity to join the best at Brinker as SVP, general counsel and secretary.

BBNA:

How does the work of being an in-house counsel differ from representing companies while working at an external firm?

May:

One huge difference is taking off your lawyer lens and putting on the fairness lens. Lawyers in outside firms often go straight into presenting factual situations in their best light, or trying to determine if something may be illegal. Instead, what we should be asking is whether something is right and fair. In-house, we have a lot more flexibility and nimbleness to try and get it right.

BBNA:

What are the challenges of each position?

May:

As in-house counsel, the hardest thing I've had to do is clean up my own messes. That doesn't happen as much for outside counsel, since the situation has already occurred and you come in on the backend. I have to tell you that when I'm part of the problem and I'm fixing it, that is a lot harder on me than when I'm fixing somebody else's problem. But, the opportunity as in-house counsel is to learn from that situation and implement changes to prevent it in the future.

BBNA:

What are some of the advantages of being in-house?

May:

I love being part of something that's larger than myself. By that I mean, we're part of a business that doesn't necessarily have the law as its core reason for being. The law is complementary to our business and it's something we take into consideration in all aspects of our business, but we are here for another reason—to make people feel special and serve delicious food.

The “number one trait that I value most in outside counsel is wisdom.”
BBNA:

As a general matter, what types of things attract you in looking for potential outside counsel? What types of things might turn you away? Is there anything that is an instant disqualifier?

May:

I don't know of anything that is an instant disqualifier. I've hired the brightest and also the most expensive lawyers in the country because I had the right project for them and it was important to have that project be a success. I've also hired solo practitioners in small towns in the past because I thought that they were best for the job.

I will tell you that the number one trait that I value most in outside counsel is wisdom. I've been a lawyer for almost 25 years, so I have a pretty long perspective. But it's that next 25 years that I need help with. So I'm looking for somebody who's got an even longer view on a situation and can give me the wisdom and the practical side of things, not just an answer from reading a regulation.

BBNA:

How do you go about finding that?

May:

A lot of times it's through word of mouth, sometimes from our financial advisers. I've worked with law firms now for 10 to 15 years, and I've brought a couple of them with me to Brinker because I know that they're great partners.

We have evolved our point of view at Brinker where we've actually started consolidating down the number of lawyers that we use on the outside. We are working with firms that will offer some discounted fee structure in return for us giving them volume. These firms must have a nationwide footprint in order to accommodate us in all the jurisdictions where our restaurants are located.

That said, we haven't evolved the system to every subject matter that we deal with. We do have an exclusive arrangement with a firm to handle our employment-related matters and they've really come in and partnered with us. They help with proactive training of our teams and they've assisted us with ensuring that our policies and employment-related agreements are best practice. Through this relationship, we've seen a significant decline in costs associated with defending employment actions. We also believe that because of the volume of work we send them and the fees they receive from us, we are able to position ourselves as one of their larger clients and we're getting exceptional client service.

“[W]e're looking more at the power of being a really big client in a relatively larger firm, and the kind of service that drives.”

Previously, my approach was to spread work across smaller or medium-sized law firms. But now, we're looking more at the power of being a really big client in a relatively larger firm, and the kind of service that drives. In that kind of relationship, I notice that I have greater access to partner-level advice, so it's helping me achieve my desire of having law firm partners be involved in Brinker's significant matters and utilizing junior associates and paralegals in other issues.

We're also moving this system to our general liability matters, though it's not totally in place yet. For the most part, we work with one firm when it comes to securities and transactional work, and we use one law firm each for franchising and intellectual property matters. Again, it's easier to communicate with one partner on those big subject matters, and we believe we're getting better service when we target more of our spending with one firm.

BBNA:

How many firms are you using now? What would tip the scales, if anything, to using more outside firms?

May:

We are using between five and ten firms right now. I would say we are at a good point. Again, these are not small firms. I'd like to keep it under 10 firms because it's just easier to manage on our end.

One of the most important jobs of the general counsel is to hire great lawyers for the company. It's hard for me to feel I'm discharging that duty if I'm meeting with more than 10 managing partners at the firms we're using.

We have a lean, but mighty in-house team of full-time attorneys. We're still building restaurants, and our real estate and development matters are handled largely in-house. The in-house attorneys also manage an IP portfolio, franchising relationships and oversee litigation to some extent. We also see to our board of directors.

And should a large transaction or agreement come up, we could tap on outside expertise and be running 20-plus lawyers at any given time.

BBNA:

Does your legal department use any alternative methods for procuring legal services, such as request for proposals (RFPs) or legal process outsourcing (LPOs)?

May:

No. However, to keep costs contained we try to handle as much in-house as possible. Second, we have flat-fee arrangements that we believe are providing us with a good deal. We also use as much technology as possible for billing and the like to keep administrative costs down.

BBNA:

As a general matter, is there a type of work you believe is better suited to external counsel, as opposed to those you have in-house?

May:

My view is that highly specialized work is better suited for outside counsel—matters we don't deal with every day, be it financial transactions or a really huge IP contract. We do most of our contract work in-house, but sometimes it can be such a specialized and large contract that we would want some subject-matter experts on it.

We do use outside counsel for a lot of litigation. We aren't licensed in all the states. With 1,600 restaurants serving millions of people a year, accidents do happen, and those are ripe for outside counsel representation. I think you can work out good arrangements with outside counsel if you can show them that if they give you a good price, they will be rewarded with volume.

BBNA:

Is there anything important in your experience as a GC that you'd like to share?

May:

One of the things that I have focused on is aligning the legal team with Brinker's business strategy. There were a couple of transitory years with the general counsel role during which the company ushered in many cultural tools to enhance the engagement of the workforce, and the legal department wasn't as aligned with those tools as other departments. We have really succeeded in doing that over the past year.

This process has emphasized the importance of keeping the legal department in synch with business strategy. So we are doing a lot to improve our internal communication. My team just started its own blog called “Loop” to keep the team “in the loop.” We are using it to continue the internal messaging around the planning process as we move into our next fiscal year. So as I get messages from the leadership team to other members of the organization, I'm making sure that my team is the first to know what the company is focusing on as we move into fiscal 2017. That allows us to reorder our priorities and ensure we are aligned.

 

Scarlett May

Brinker International is a casual-dining restaurant company that owns, operates, or franchises more than 1,600 restaurants under the names Chili's® Grill & Bar and Maggiano's Little Italy® and brings in about $3 billion in annual revenues. As senior vice president, general counsel and secretary, May oversees the company’s legal affairs including government relations, risk management, licensing, contracts and compliance.

Prior to joining Brinker in Dec. 2014, May was with Ruby Tuesday where she held a similar position with the organization for 10 years. During her tenure, she was responsible for risk mitigation strategies to protect corporate capital and profitability and negotiating and closing transactions involving debt and equity, credit, franchising and real estate. Before Ruby Tuesday, May practiced law in Knoxville, Tenn., with Kramer, Rayson, Leake, Rodgers & Morgan, which was focused on employment law and general litigation. May also served as a Judicial Law Clerk to The Honorable James H. Jarvis, Chief Judge of the U.S. District Court for the Eastern District of Tennessee, and as an Adjunct Professor at the University of Tennessee College of Law.

May holds a graduate degree in law from the University of Tennessee. Outside of work, she enjoys spending quality time with her husband and two children as well as hiking, biking, swimming and gardening.