Episode 10: Cultivating Creative Disruption In-House with JP Kirkley, VSP Global

In the 10th edition of #LegalMatters, we catch up with JP Kirkley, who wears multiple hats. He is not only the Associate General Counsel at VSP Global, but also a Board Member at Travis Credit Union and an Adjunct Professor at Pepperdine Law. He discusses why law firms was not his cup of tea, how he tackles in-house problems with creative solutioning, and much more!


What motivated you to leave the law firm route and pursue an in-house career?

I actually liked private practice because of the diversity of matters one encounters, but, as someone who’s naturally curious, the bill-by-the-hour element was very restricting.

Since problem solving and creative solutioning are skill sets that significantly differentiate me, I recognized that I needed to find something where I could apply them and explore the application of the law instead of merely providing traditional, responsive legal guidance.

I also found that it was way more fulfilling to figure out how to solve business problems, rather than to just give legal guidance couched within risk parameters. But even in a business setting, legal guidance can be primarily need-based and instructive. I prefer a very hands-on approach. Leaning on the formative training from my early years in management consulting, I’m convinced that the best guidance comes from a thorough understanding of what’s happening in the business, and an appreciation of its goals, objectives and drivers - you have to understand your business partner’s business almost as well as they do.

It’s like finding a leak in a dam - you have to stop it, but you should also question its existence. In fact, most of the disruptive change I have driven in each organization starts from understanding and appreciating the leaks - figuring out how and why they occurred, and then exploring holistic solutions to prevent similar leaks from recurring - often in other parts of the organization. I believe that's what has made me a better partner supporting  business operations, because I'm much more of a creative disruptor that isn’t simply focused on the problem at hand - but rather improving the process as a whole.

Is it because lawyers have a risk-averse attitude that prevents them from approaching matters creatively?

I don’t believe that lawyers are necessarily risk averse, and many are actually creative, but there’s certainly a bias that law forces you into being so. 

Right from law school, a majority of the cases you study and assess are fringe ones that have terrible outcomes. In private practice, you likewise get the matters that warrant hiring outside expertise and spend a considerable amount of time negotiating through terms to address the worst-case-scenarios. By reflecting on horror stories every day, you undoubtedly end up expecting the worst to occur. You have to re-learn how to balance risk properly when you go in-house; most commercial matters are resolved informally.

The other factor is timing. Usually, businesses engage their lawyers after significant disputes surface, which is usually after they have made some questionable  decisions. So coming into such scenarios, the lawyer is confronted with mitigation and defense. They work through these matters often forgetting that they are extraordinary, and not commonly occurring.

Instead of being risk averse, I would argue that the job of an in-house attorney is to help discover ways for the business to become successful.

Eventually, you realize that on a risk continuum (the likelihood of something adverse occurring times the magnitude of the impact of that occurrence) the product is significantly lower than the risk tolerance that would be justified in the endeavor . This approach to providing legal guidance  enables you to adopt an appropriate risk appetite that allows the business to function smoothly.  Instead of spending your time negotiating fringe terms that should otherwise present an acceptable risk, you can help your business partners focus on the critical terms that impact the day-to-day commercial relationship.

However, it is very easy to forget exercising balance and fall into the trap of being risk averse. In organizations with large and bureaucratic legal teams, it’s not uncommon to dive deep into matters and engage in ‘over lawyering.’ I see this all the time with large organizations. Their ‘junior’ in-house counsel are usually not trained on the operations of their business, but given a playbook with little authority to make risk-based decisions, and then they’re chartered with holding the proverbial line without compromise. This can extend the contracting cycle time, indicate to the other side that they must work up the chain of command to reach the real decision makers on critical matters, and most importantly - relegate the lawyer from being a trusted business advisor to being simply a commercial legal term negotiator. 

We actively try to avoid this at VSP Global. Primarily because we have a lean team of commercial lawyers that are expected to do more with less. We better serve our business partners and drive more value to the bottom line of our organization by sitting with them at the table, providing creative solutions to real business problems, and adopting commercially appropriate terms in our commercial contracting practices. 

This does not mean that we take regulatory risks lightly, in fact, we tend to “over lawyer” those matters. But even there, instead of negotiating through the demands of each of our clients in each contract, we work with our business partners to ensure they adopt commercially reasonable practices that conservatively keep us within compliance, and then proffer related contractual assurances so that our customers spend their time understanding what we do and how we do it. This shifts the negotiating burden back to the customer to try and explain if and/or how our practices are not reasonable (which has essentially removed the need to negotiate any related terms).

As a GC, how important is it for you to have a seat at the table with the upper management?

This ties back to your philosophy of how you approach the practice of law. I think for someone who is service-oriented, a seat at the table does not matter as much. They can keep their days full by putting out fires and acting at the direction of their business partners. But personally, I feel it’s necessary to engage and understand how and why the business is making its decisions - as often, legally speaking, the business doesn't know what it doesn't know and your chief function in being a ‘general counsel’. 

Sitting at the table with the executive team includes you in the conversation. A good GC will take part in setting the course for where the business wants to go, understanding how it plans to get there, be able to surface potential issues and/or apply the right level of diligence before the initial course is chartered.

In today’s day and age, risk and compliance are significant factors that influence all decision making. The GC’s primary role is to provide that counsel at a time when it can avoid risk. That job is best done while sitting at the table.

There is inherent risk in all business endeavors, and eventually issues will surface. However, looking at it from the prism of the risk management lifecycle, the faster you are able to identify a potential issue, the more equipped you are to mitigate the impact of that risk effectively. So, a seat at the table allows you to do your job better and save the business not just time and money, but also tremendous amounts of resources from going in the wrong direction. 

At the end of the day, the more a good counselor  is involved in key business conversations, the more helpful it will be to the organization over the long-term. Being able to introduce perspective and/or ask pertinent questions as the dialogue is evolving allows the executive team to do what they do best - develop creative solutions that navigate through uncharted waters. This happens best with the GC at the table.

You have described your role as that of a creative disruptor. Can you shed more light on this position and its impact on the business?

As I shared before, if you want to be a trusted business advisor, you need to understand the business. Similarly, if you are able to fundamentally understand what is causing a problem, you can build holistic solutions that not only solve that particular problem, but avoid or mitigate similar problems from occurring in the future. Most often the solution involves making process changes that force business teams to operate differently. This way you can eliminate redundant tasks and allow the lawyer and the business partner to focus on tasks that add value - effectively doing more with the same resources.

For instance, our company operates in a highly regulated industry and handles a lot of sensitive data. Our clients always ask us to abide by their security terms when it comes to managing their data. It is impossible and time consuming for us to try and address and accommodate each client’s terms individually.

What we did instead was sit down with our information security team and understand what we do, why we do it, and how we do it. We were then able to document appropriate contractual assurances that aligned with our operating practices. When we introduced the contractual assurances in our commercial contracting processes, we were able to effectively eliminate the need to negotiate related terms proffered by our clients, simplify our commercial contracting process, and speed up our contract cycle times. 

Now, instead of addressing each client’s unique demands, we can share the cybersecurity framework we adopted, explain our operating practices and the nuances of our environment, and show our related certifications and audit findings to address their concerns. While this activity took a lot of effort initially, it essentially helped tackle an issue that was consuming attorney and information security resources, and 45% of our contract cycle time. Now we only have to engage and address one-off client demands that address novel issues.

When do you think is the best time for an organization to really start thinking about legal operations and instituting a legal operations team?

It kind of depends on how you define ‘legal operations’ because most companies don't have the size and infrastructure in their legal teams to support dedicated resources. Usually every member of the team is forced to play a role in legal matter management and operations by implementing technology infrastructure that allows visibility, transparency and archives data and key activities.

The question you are asking is “when is the best time?” That's a tricky thing and I believe most will say the sooner, the better. Ideally, you can start from day one but that may not be feasible for most budgets. Instead, I would argue that you should first identify what the organization needs from the legal department and organize the legal team and its operations accordingly.

For example, I get a lot of emails from vendors offering specialized tools for litigation management, but in reality, we don’t get a lot of litigation. So, although the tech nerd within me thinks it would be cool to use such tools, for the  handful of litigation matters we have I don’t really need a Ferrari when my electric scooter can get the job done!

How would you evaluate the cost of legal technology? Do you classify it as  CapEx or OpEx?

For us, most of the time, it's an OpEx decision. CapEx decisions in a legal department of our size are infrequent, and frankly, they are not very digestible. With a lean legal team, and a host of SaaS solutions out on the market, you can find great service that is relatively easy to implement, maintain and scale to meet the needs of the organization.

For instance, when I started at VSP we didn’t have a centralized contract management tool. I found myself spending exorbitant amounts of time trying to track down contracts and 99% of the time only parts of them surfaced. Implementing a custom add-on over our ERP solution was not practical and required a CapEx budget. Instead, I began using a combination of online SaaS solutions that have everything we need and are exponentially cheaper to implement.

COVID-19 created a disarray in the healthcare sector. How did the legal team at VSP Global step up when healthcare delivery became difficult?

This is an interesting topic in the space of eyecare, since doctors are the primary healthcare service providers and VSP functions as the insurer. Due to COVID-19, there was a precipitous drop in activity as optometry in general is considered by many to be a discretionary-type of medical service. For example, if you have a working pair of glasses, then you are more likely to postpone your annual eye exam and wait for the pandemic to pass.

Therefore, we dedicated our efforts to exploring opportunities that will help our doctors resume their practices and get patients back into their offices. This ranged from manufacturing PPE kits to providing resources to enable their practices to reopen. Our other big focus internally was to find ways to keep our lab capacity available and foreign manufacturing operational.

From a legal perspective, we spent more time on internal affairs and taking care of our employees - which is strongly in our corporate culture. With everything shutting down, we needed to ensure our legal and compliance operations remained intact. Having a business continuity plan in place proved to be indispensable. This included ensuring our people had the tools and support to work remotely, and that we have the proper infrastructure to stay connected and aligned on our operations. We historically conducted an annual mock incident where everybody is challenged to think through our response and support for critical functions. I think that helped us when the pandemic hit, because our teams were well trained and knew what they needed to do to keep our operations going.

The second critical component was having our third-party vendors properly vetted. Asking questions like what's their capacity? How many other clients do they service? Where does our organization fit into their priority of things? etc. This enabled us to ensure we had the right vendors and the right service levels to ensure our operations were not disrupted.

The third and most important task for the legal team was interpreting what laws applied as regulations changed during COVID-19. For example, we decided to jump into the PPE kit market and make special face shields for our network doctors, which allowed them to interact with patients without covering their mouths. However, face shield manufacturing is a highly regulated activity with extensive governance over materials, manufacturing, coatings and other parameters. We partnered with our  outside counsel and foreign suppliers to ensure we maintained compliance during that period.

You are also an educator, preparing the future generation of lawyers. How do you think that institutions can equip lawyers for an evolving legal industry?

I consider law school as general education that teaches you theoretical principles and how to analyze things from a legal perspective. This is certainly how my classes are structured and organized. However, historically, lessons regarding how to actually practice law are left to on-the-job training.

At Pepperdine, where I teach contract law, I’m pushing for the administration to adopt curriculum that includes practical lawyering, and training on how to equip lawyers to provide better risk-based guidance, particularly in commercial contracting.

I also encourage my students to cultivate a natural curiosity for things.  Instead of settling for a limited answer, I ask them to immerse themselves and try to understand the broader context. I remind them that they will likely run into bandwidth issues, but I encourage them to press the extra mile, as over time they will be able to deliver better value and more creative solutions that are not short-sighted.

The other thing I ask of my students is humility.

I think lawyers are guilty of feeling like they have to portray themselves as the smartest people in the room, and I think they like people having a reverence of them. But, this mindset only stunts learning and personal growth.

It is okay to ask questions if there is anything you don’t understand because at the end of the day, you will only be able to be good at what you do if you can really understand what the business needs to accomplish and how they are expecting to proceed.

If you could go back in time and change something in your career, what would it be?

Looking back, I don't think I would change anything. Honestly, I believe the better answer is if you ever feel like you should be changing something, then you should change it. And I'm not the one to typically stay in a place where I feel like something needs to change. I have learned from all kinds of experiences, irrespective of whether I liked it or not. My career has been built on the values that I gained through such education.

You can be someone who drives your career where you want it to go or you can be someone who lets your career take its own course.

For example, fresh off school, you usually don’t get to choose your first job and most of the time, you are just happy to get a job. But, if you continue to stay there and let it shape you, then that's on you. Instead, after you take that first job, keep your eyes open and plan for what you really want to do. Then, no matter where you start, it can actually be a springboard for your next opportunity in the direction you actually want to pursue.

So, you can either be reactive or proactive. I don't have a lot of regrets because I have been very proactive in my career.  I think if you have a lot of regrets, you have probably been too reactive. You need to take control of your career and drive where you want it to go. Nobody's going to be looking after your career more than you.