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HR's Legal Eagles

A law degree has proven handy for many HR executives, some of whom eventually landed a corner office. But is it necessary?

Thursday, November 1, 2007
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They're trained to assess and mitigate risk in heavily regulated areas of HR and benefits, sift through union contracts and mergers-and-acquisition documents with a fine-tooth comb, and handle employee relations with kid gloves.

Meet the legal eagles of HR, who once practiced law but changed careers for various reasons. Their strategic value is undeniable in smaller organizations that lack legal resources and certain areas of employment law that have become increasingly important within a larger business context.

Although there aren't too many of them around, and their place atop the corporate pantheon is questionable, they know how to keep their companies out of court and can offer helpful advice to peers who do not have a law degree.

Some accidental HR executives, such as Cindy Waring, grew tired of the legal system's adversarial nature 10 years ago. A former civil litigation defense lawyer in Los Angeles, she exited life's fast lane to become HR director on Whitman College's bucolic campus in Walla Walla, Wash., where she sought a better quality of life for her children.

In other cases, they were asked to chance a career move that seemed synergistic, given the commonality of skills between law and HR that include the ability to navigate the vast compliance landscape, negotiate, think logically and use common sense.

For example, Jeff Chambers, vice president of HR at SAS in Cary, N.C., transferred from the legal department to HR upon his predecessor's retirement. Johnny C. Taylor Jr., a seasoned lawyer and HR executive, was recently named president and CEO of Black Web Enterprises Inc., an online portal aimed at the black community that New York-based IAC will launch next year.

HR practitioners who possess legal and people skills can practically apply their skill set more easily in certain industries such as commercial aviation, which is not only heavily regulated and a moving target for bankruptcy filings and consolidation but also prone to controversy when hammering out collective-bargaining agreements.

Other HR executives with legal backgrounds say their combination of law and HR expertise has helped them identify and resolve problems that lawyers or HR professionals with no legal training might have missed.

But does this mean HR executives should seriously consider getting law degrees, or seek out law school grads to hire into their own staff? The answer depends -- not surprisingly -- on whom you ask.

"Revenge of the Nerds"

A dual specialty in law and HR is a relatively rare occurrence. About 6 percent of the 2,500 chief HR officers across North America whose resumes are on file at Korn/Ferry have a J.D. or equivalent degree.

"You'd much rather see an M.B.A. than a J.D.," says Gregory Hessel, a Dallas-based senior client partner and managing director of Korn/Ferry International's Human Resources Center of Expertise. His preference as an executive recruiter is an HR leader with deep knowledge of finance and business operations or experience in international affairs based on expat experience.

Deb Keary, director of human resources for the Society for Human Resource Management in Alexandria, Va., says in order for HR executives with legal backgrounds to leverage any contribution to their organization, they need to place as much value on the multitude of moving parts within a business as they would on the legal aspects.

"Not only do you have to keep your company out of court through an even, consistent and thorough application of employment law, but ... you have to negotiate," says Keary, the mother of two children who are attending law school. "You have to mediate. You have to be a change manager. You have to be a talent manager. You have to be so many things that I'm not sure law school teaches you."

Another point to consider is the growing cache of expertise in compliance issues associated with employee-benefits law. When Dave Baker was relegated to work on the Employee Retirement Income Security Act in his first job out of law school in the 1970s, at a Dallas law firm, the area was looked down upon by litigators, corporate lawyers and tax attorneys.

"But now, it's revenge of the nerds," says Baker, editor and publisher of BenefitsLink.com Inc., a Winter Park, Fla.-based portal for HR and benefit professionals he founded in 1995. "Who would have thought that the way employers design and run group health and retirement plans would become some of the most important and hotly debated national issues?"

Knowing these issues from both a legal and people perspective could actually translate into higher earnings. Five of the 30 highest-paid HR executives in publicly traded U.S. companies have law degrees, according to Salary.com's 2007 Compensation Analyst Executive Survey.

However, Patrick Wright, professor of human resource studies and director of the Industrial and Labor Relations' Center for Advanced Human Resource Studies at Cornell University in Ithaca, N.Y., believes it's useful but not necessary for HR executives to have a law degree, especially if a good general counsel is in place.

Wright, who co-authored a paper in which he suggested that HR executives need to "focus on what is organizationally sensible rather than what is perceived to be legally defensible," says the value of these dual credentials deepens considerably if someone serves as both chief HR officer and legal counsel in a small or mid-sized firm that lacks the resources of a large organization.

Revisiting Virginia Tech

Waring is one such example. While she doesn't officially wear two hats at Whitman College, which does not employ a general counsel, she does call on her legal training from time to time to help the school avoid potential liability.

One of her highest-profile HR/legal challenges occurred in April, when the college conducted a review of its HR policies in the wake of the shootings at Virginia Tech. In the days and weeks following the deadliest shooting spree in U.S. history, Waring closely tracked a flurry of subsequent e-mails suggesting preventive measures from United Educators, an insurance-liability company whose customers include colleges.

Waring says her background in law helps in determining whether steps taken to identify mentally disturbed students and faculty are being legally conducted, particularly since laws pertaining to these sensitive areas are constantly changing.

She believes the value of her background lies in the research and analytical skills honed by working in the legal profession, not to mention a heightened ability to think logically and synthesize information.

These talents come in handy when she's asked to help her employer manage its dual obligations to protect students without violating rights, she adds: "As a college HR director and administrator with a law degree, I work to proactively protect the rights of our campus and community members." 

In many cases, HR legal eagles are able to put their skills to work in much more mundane (albeit potentially costly) circumstances.

Pani Tademeti, HR manager for the total compensation group at the North Carolina Office of State Personnel in Raleigh, N.C., says his legal background enabled him to nip in the bud an attempted class-action lawsuit filed on behalf of a state employee whose teenager was awarded an accidental death and dismemberment claim after being injured in a car accident while driving under the influence of alcohol.

The AD&D contract's original language enabled the service provider to deny benefits in the event that a claimant came into harm's way under the influence of alcohol.

Tademeti, who challenged the plaintiff's attorney's request for data from other claimants under the Freedom of Information Act, convinced the state's attorney that the lawsuit would have a negative impact on the state government's "NCFlex" program, whose more than 161,000 participants are able to purchase various benefits on a pretax basis under Section 125 of the Internal Revenue Code.

Tademeti successfully argued that the request violated federal law, arguing that the state was shielded from providing Social Security numbers. He says his comfort level with analyzing these issues translates into something of a competitive leg up on the state's legal staffers.

"Just as it is difficult for a benefits professional to understand legalities, many attorneys do not understand the complex nature of benefits and applicable tax laws," he says. "Someone like me could ... help them see another point of view, since many attorneys do not have health and welfare benefits experience, in particular."

At SAS, Chambers plied his previous craft to help attract and retain talent with critical skills by creating a retiree health-care benefit -- a missing piece in the company's benefits portfolio -- in a way that didn't break the bank. And his legal training certainly came in handy when he sought guidance from the government on the use of health reimbursement accounts as a funding vehicle.

Chambers recognized that his proposal was an innovative approach not directly sanctioned by U.S. tax law and knew it was necessary to obtain a determination letter from the IRS before proceeding. He's certain that an HR executive with no legal background might have overlooked that step and might have risked incurring fines and penalties associated with breaching the plan's tax-exemption requirements.

"The retiree health benefit really enabled us to stand out among our competitors," he says, mentioning that SAS has landed on Fortune's "100 Best Places to Work" list in each of the 10 years it has been published.

"As a former ERISA lawyer, I understood this was a creative and innovative way to provide retiree health-care benefits in conversations with the benefits folks and others," Chambers says. "It wasn't all my idea, but I was able to sell the concept because I understood it as a novel approach to funding retiree health care."

Climbing the Ladder

Some HR leaders with legal backgrounds have reached the very top of the corporate ladder.

IAC's Taylor, a former chairman of SHRM, says he's confident that his roles in the legal and HR professions have prepared him well for his new role leading Black Web Enterprises Inc. 

"Running HR for a Fortune 300 company with 60-plus brands and operating companies with more than 30,000 employees in offices all over the world is a huge and complex job," says Taylor, who has held HR leadership roles at Viacom and most recently served as IAC's senior vice president of HR.

"So while I'm quite excited about the new job and attendant challenges, I come to it having been fully tested by an immensely intense and challenging stint [both legally and administratively] as the head of HR."

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Michael J. Critelli, executive chairman of Pitney Bowes Inc. in Stamford, Conn., took a similar path at his employer, where he once simultaneously worked as general counsel and chief personnel officer for three years. By coincidence, at least two other former lawyers also led the HR function at Pitney Bowes. They include Johnna Torsone, the company's chief HR officer, and John Herbert, who ran the department in the 1980s.

Critelli says a law degree is valuable in HR -- as long as executives resist any lawyerly urges that make them overly conservative or rules-driven and instead embrace what he describes as "the flexibility and common-sense elements of the law." His sense is that practicing law teaches boundaries and can be a liberating force for lawyers who go into HR with a refined sense of how to handle business problems.

When Taylor entered the HR field in 1996, it was a particularly litigious time for corporate America. The headlines were dominated by several major lawsuits alleging poor employment and HR practices at blue-chip companies such as Mitsubishi, Texaco and PepsiCo.

Meanwhile, legal experts and HR professionals alike were still figuring out how to help their companies navigate the legal complexities brought on by several recently enacted legislative milestones, including the Americans with Disabilities Act and the Family and Medical Leave Act. 

"What better way to kill two birds with one stone: You get an HR executive who also has a real sensitivity and knowledge base about the legal issues impacting HR," he says. "I was the go-to guy during those days as a litigation-avoidance expert."

Taylor says a law degree can help any business professional, but especially someone in HR, given the complex legal and legislative landscape today's HR professionals must navigate.

"That being said, HR professionals do not need a three-year graduate program to be successful," he says, adding that a strong annual legal and compliance update on labor and employment-law issues can go a long way toward rounding out a practitioner's skill set.

Critelli and Taylor both believe their legal and HR backgrounds proved to be a winning combination in their climb to the top and can do the same for others who aspire to higher leadership roles.

Having a legal perspective provides evidence-based logic to decision making and people skills brings an understanding of the psychological, sociological and emotional nature of organizations, according to Wright. Together, he says, these two traits can be helpful to chief executives so long as they're surrounded by people with complementary skills in finance, engineering or other areas.

A Competitive Advantage?

John Hedblom, former vice president of HR for US Airways who resigned from the carrier following its 2005 acquisition of America West Airlines, believes a law degree can be beneficial for his peers in helping them deal with the many legal and legislative aspects of HR.

In particular, he says, HR leaders who must deal with collectively bargained contracts would benefit by earning a law degree, or at least taking legal educational courses dealing with benefits issues or HR-specific areas.

For Tademeti, the path from law to HR was paved in part by cultural considerations in his native India where, he says, it's not uncommon for HR executives to expand their skill set with a law degree. After starting in HR at an oil company, he later attended law school full-time for a year and finished up after two years of night school. His hope was to gain a better understanding of case law for union negotiations.

"There were many incidents where I represented management in union negotiations, and with my legal background, I was able to negotiate better terms of agreement with clarity in the wording," he says.

Nevertheless, the experiences of Critelli and Taylor aside, such yeoman efforts might lack a more strategic payoff in terms of career development.

Harold "Hal" Johnson, a seasoned HR executive who became managing director for client development in Korn/Ferry International's New York and Denver offices, says employment law has become so complicated and specialized that there's usually a slot for it in employee relations or the legal department and "not a lot of general counsels are comfortable with HR doing the employment-law stuff, anyway."

Not everyone sees it this way, of course. Critelli believes it's important to address each aspect of employment law through multiple lenses, including legal, employee relations and community and public relations, in addition to the effect on employee engagement and business operations.

"You need the specialists, because anybody who thinks this stuff is simple is deluding themselves, but you can't be imprisoned by the specialist's perspective," he says.

Waring advises peers not to bother pursuing a law degree, noting the availability of many training and credentialed programs from SHRM's Human Resource Certification Institute and other sources. Going this route certainly is much cheaper than shelling out big money to attend law school.

"A return to three years of full-time graduate school to study torts, criminal, constitutional, property or civil law seems like a whole lot of studying to further an HR career," she says.

Mike Campbell, a labor and employment lawyer for more than 20 years, who's now senior vice president of human resources for Delta Air Lines in Atlanta, agrees that there's no cookie-cutter path to HR success.

Although he believes a law degree adds value much like a master's degree in HR, "I've also seen some very successful people in HR who have 'master's' in common sense," he says.

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