HB_Executive Shoot3780_small

Executive Insight: Q&A with Mark Friedman, Executive Vice President & General Counsel for Herbalife

Gerald Mathews Executive Features, Legal Leave a Comment

Mark shares how he creates valuable business partner relationships and develops a legal team to support a global organization.

"Bird is in outstanding, local litigation firm populated by some of the smartest people I know including former Federal District Court judges, prosecutors and others who have a love for taking the fight to the courtroom in a principled and persuasive fashion. The lawyers dig into issues and facts deeply, and simply out work the other side while maintaining dignity and decorum in this inherently contentious environment."

“Bird is in outstanding, local litigation firm populated by some of the smartest people I know including former Federal District Court judges, prosecutors and others who have a love for taking the fight to the courtroom in a principled and persuasive fashion. The lawyers dig into issues and facts deeply, and simply out work the other side while maintaining dignity and decorum in this inherently contentious environment.”
– Mark Friedman, General Counsel at Herbalife

1. You started your legal career as a litigator but made the transition to an in-house role with ARCO. Can you talk about the learning curve in making that move in-house and how you went about making that transition?

I was very fortunate in this regard. My primary client was ARCO whom I represented in franchise and commercial disputes for seven years. I had the pleasure of getting to know many of the executives, managers and in house counsel, as well as becoming familiar with the business model and contracts that formed many of the relationships with parties such as franchisees and vendors. I joined ARCO as in house franchise counsel in 1994, with established relationships and a knowledge base that I believe was incredibly helpful in making the transition from outside litigation counsel to business counsel. There were still many opportunities to learn about the business and its people, a process that never stops for counsel who desires to be regarded as a strategic business partner. Curiosity and a willingness to support new projects helped stretch and grow capabilities over time.

HB_Executive Shoot3755_small

2. How did working in-house help you gain a better understanding of business and also allow you to learn and eventually oversee other disciplines outside of legal?

I strongly believe getting a seat at the table with clients during their staff and strategic planning meetings, something outside counsel rarely have the luxury of engaging with the clients in this manner. In addition to the benefit of better learning the business, having that seat provides counsel the opportunity to offer guidance early on and before projects or ventures are developed to the point when it becomes expensive and inefficient to address legal and regulatory concerns. The reputation of the legal department being the DPD (deal prevention department) is best avoided by in house counsel taking the time to get out of their offices and in the business meetings when important decisions are being formulated. I also think part of the fun and adventure of being in house is engaging in the business, attending events, touring facilities, working on the line and trying out the products. Again, we aren’t on the clock, and the more informed the lawyers are, and the more they understand risks first hand, the better and more practical advice they give.

Sidley helped Herbalife develop its seed to feed strategy as we started our journey to control the quality of products by manufacturing those products at company-owned facilities. Knowledgeable about GMPs and nutritional supplement laws and regulations, Sidley takes an uncompromising approach to training, auditing and helping our manufacturing clients deliver exceptional quality every day, ever where. When the company’s business model was attacked by a short seller Sidley offered counsel by former FTC Commissioners, General Counsel and AUSAs.

“Sidley helped Herbalife develop its seed to feed strategy as we started our journey to control the quality of products by manufacturing those products at company-owned facilities. Knowledgeable about GMPs and nutritional supplement laws and regulations, Sidley takes an uncompromising approach to training, auditing and helping our manufacturing clients deliver exceptional quality every day, ever where. When the company’s business model was attacked by a short seller Sidley offered counsel by former FTC Commissioners, General Counsel and AUSAs.”
– Mark Friedman, General Counsel at Herbalife

3. When you joined Herbalife your goal was to make legal less episodic and have a seat at the table. How did the legal team go about earning that seat at the table to help guide clients?

This doesn’t happen overnight. It takes time to build trust and a relationship with decision makers that may think by letting you in to the meeting they’ve created another opportunity to talk about what can’t be done. Great in house counsel practice the art of the possible, finding solutions in what can be difficult or unclear regulatory environments. By openly sharing those challenges, conducting training, and bringing in outside experts who may, for example, just left a regulatory agency, the clients develop an appreciation for why you are raising challenges and how you think about solving them. Finally, if you demonstrate a genuine interest and curiosity about a client’s activities, you’ll find that most clients relish the idea about helping counsel understand what they do and where they would like to take the business. At bottom, it’s better to be asking more questions than offering advice, particularly at the early stages of the relationship.

4. Can you discuss the importance of creating that business partner relationship and the business impact?

Lawyers serve two functions: helping to drive revenue growth by propelling the business forward (e.g. timely finalizing agreements, getting compliant products and materials out to market) and protecting the bottom line by managing or mitigating risk (e.g. preventing regulatory action through compliance effective compliance programs). The more closely you work with clients, the more trust is developed over time. That in turn leads to fulsome and open discussions and information sharing, one of the most important aspects of ensuring, for example that important terms are included in agreements. A deeper understanding and relationship also leads to understanding actual, not theoretical risk, and in turn offering practical ways to mitigate risk.

“The firm focuses on consumer protection regulation compliance, with a particular focus on FTC Section 5 unfair and deceptive practices compliance. We rely on the firm to ensure our Member Compliance and Practices group is focused and effective, and our marketing materials are compliant. They help us in understanding what we can’’t say, what efforts we need to undertake to talk about the effectiveness of our products, and guide our Members on how to talk authentically about their product or business experiences (““say what’’s typical, show what’’s possible””).”
– Mark Friedman, General Counsel at Herbalife

5. How did you go about adjusting the mindset of your legal department and free up their time to sit in on meetings with business partners? How have you also developed those lawyers from a business standpoint?

Lawyers can get too comfortable as role players, reviewing contracts (often after the deal terms are locked in) or marketing materials (too often when they are about to go to publication). The leadership team looks for opportunities to free up our lawyers’ time especially on more routine, repetitive matters. One example is creating a suite of standard agreements, making those electronically available to our client groups, and providing guidance on why certain terms are important, where there may be some flexibility and alternative terms and conditions, so clients can get contracts to the finish line that contain the terms that best protect the company’s interests in a consistent fashion. Client training is another key element is becoming a more efficient department. When, for instance, we bring in FTC counsel to talk to our marketing group about complaint and non-compliant claims, the materials that are sent to legal typically require fewer revisions. Finally, establishing reasonable parameters around circumstances when clients such as HR can engage outside counsel and seek advice without consulting the legal department creates a more efficient delivery model for that advice. The key is parsing those matters that do not represent significant liability risk to the company from those that do (e.g. termination of a protected class employee) and partnering with the client groups to develop buy in to those parameters.

HB_Executive Shoot3785_small6. You also talked about the legal team engaging with members and distributors. How do you go about doing this and why is this important in your business?

Our Members are the revenue drivers of our business, and the most important people that are part of our brand. Their actions and intentions are what people will think about Herbalife globally, and they are in essence the heart and soul of our company. Direct selling, and leading a sales organization is not easy, requires dedication and perseverance, and people leadership skills. Being successful also involves understanding the regulatory environment in which our Members operate, including inherent suspicions by some regulators concerning the direct selling and nutritional supplement industry. Again, trust must be developed over time as our Member leaders are highly successful business people who have achieved that success with methods of operations that they rely on for good reason. When the regulatory environment changes (e.g. FTC’s view of how to communication typicality of results) it can be challenging and frankly a bit scary for folks to make changes in their approach and then cascade those changes throughout their organizations. By developing relationships over time, participating in meeting and attending events, our Members have become more open to accepting new rules or strictures and understand that our department’s intention is to protect their businesses and the reputation of our brand.

7. You said that good leaders are self-aware of their strengths and weaknesses and know their blind spots. Why is that important and how have you taken steps to work on yours?

In a scene from Band of Brothers, Captain Winters starting charging the enemy’s position believing his men were following close behind. He got ahead of himself, and while his intentions were good and his courage was unquestionable, the attack would have been more effective if he ensured that everyone was with him. I can be focused on getting to the result, whether it’s a change in department culture, or completing a transaction, and need to be mindful of whether I’m leaving folks behind. I also need to practice patience, an elusive virtue in what is always a fast paced business environment. Governor Jerry Brown was asked what he learned from the time he first became California leader in 1978 and his last election victory when he was 78, and he stated “patience”, noting things he started working on during his first term are still in process today. Improving on these blind spots means creating an environment in which people are willing to give me unvarnished feedback, really hearing it, and then taking concrete actions based on the feedback. It also means cutting loose of certain responsibilities and making sure others are leading, which necessarily results in a higher level of engagement and collegiality. For instance, the leadership team asked for responsibility in improving our Great Place to Work score and engaging staff to also take the lead in developing ways to continuously improving the work environment.

8. Why is it important to also be transparent about your strengths, weaknesses and blind spots with your team and other leaders across the organization?

Trust. Maya Angelou’s quote about people forgetting what you may have said or done, but never forgetting how you make them feel has stuck with me over time. I believe that you get the best from people if leadership is compassion rather than fear driven. Every member of our team faces personal and professional challenges and good leaders seek to understand those challenges, and help people develop skills and strategies to effectively overcome them. People are more likely to be open with a leader who is willing to talk about their challenges and vulnerabilities.

Mark_Friedman_2015_June_hi-res_small9. Can you also discuss the importance of building consensus and having the proper context?

The legal department must influence outcomes and attitudes across 91 countries, with 7800 employees and hundreds of thousands of Members who are engaged in the business on a part time or full time basis. Obviously, there are myriad cultural differences, and points of view about how to most effectively grow the brand and the business. And, as a US based company, with uncompromising business ethic and compliance obligations, the legal department must effectively convey those ethics and obligations to people operating in business environments whether their competitors may behaving in ways that are just not acceptable to our company. At bottom, we attempt to translate compliance and ethical conduct into business terms. For instance, FTC Section 5, prohibits unfair and deceptive conduct, and applies only to our US operations. Nonetheless, we promote Section 5 compliant behavior wherever we do business, and it makes good business sense to have a global standard that supports realistic expectations about the business opportunity and our products. In turn, people that come into to the business with reasonable expectations are more likely to be retained, creating a stronger foundation of recurring income for both our Members’ organization and the company.

Mark's Key Partners:
Bird Marella (Litigation Matters)Kelley Drye & Warren LLP (Advertising & Marketing Law)Sidley Austin (Life Science Law) | Gibson Dunn & Crutcher (Compliance & Transactional matters)

Comments, thoughts, feedback?