We recently held the ILN’s Annual Conference in Rio de Janeiro, and as part of the business sessions, our host firm, KLA Advogados, invited one of their clients to speak about “Client Centricity in Practice.” It was an opportunity to have an interactive discussion with the attendees about questions that they had for our client panelist, who was open and honest about what he looks for in his outside counsel and touched on some hot issues. The session was moderated by Melissa Kanô and Alexandre Pessoa of KLA Advogados, who were joined by Waldemar Thiago Junior, Vice President, Managing Director of Brazil for General Mills.
This was such a great and meaty session that I’m going to break this up into two parts! Here’s part one.
The Background
Melissa kicked off the discussion by welcoming Waldemar and mentioning that he has been a client of the firm since its inception, 21 years ago. She herself has helped the company with all of its acquisitions in Brazil as well as their day-to-day work. They consider General Mills to be not on their client, but their partner.
Waldemar shared that he has been with General Mills for 14 years and over that time, there has been a great deal of transformation. At the time he joined, they were a 300-employee company with no plants in Brazil and only the distribution of imported products, including Häagen-Dazs, which they still have today. It was very important for General Mills to establish a solid operation in Brazil, which is the source of growth for companies like them. Four years after Waldemar joined, they acquired Yoki Alimentos, a company that makes snacks, seasonings, flours, and grains (similar to General Mills at the beginning of their 150-year history). But it was challenging because at the same time that it would bring relevant portfolio capabilities, supply chain capabilities, sales capabilities, and strong local brands, it would also bring a complexity to the company that was bigger than what they were used to.
Suddenly, they are a company with more than 4,000 employees, three plants, nationwide distribution with five distribution centers done through 50 transit points where they reach 20,000 points of sale directly and more than 40,000 points of sale indirectly. General Mills Brazil is today the fourth-largest business for General Mills around the globe (after the United States, Canada, and China). It’s a tough environment if you don’t have partners that you can trust. But they consider their journey in Brazil to be a successful one, and KLA is part of that success.
That transformation was the biggest one and now they are running their second-biggest transformation, preparing General Mills Brazil to be one of the biggest sources of profitable growth for General Mills. They continue to rely on this partnership with their outside counsel to guarantee that they are successful.
What is important in choosing outside counsel?
First, finding a firm that they can trust. Secondly, expertise, and especially in Brazil, the ability to manage complexity. It’s very important for the firm to understand how to navigate that complexity. And third, agility. They cannot work on the matters forever. Waldemar previously worked at Unilever for nine years and Danone/Mars. All big companies. Without enough speed, local competition is faster because they won’t always run the business in the way that big companies are required to. That is both because smaller local companies can take more business risks than a large corporation is willing to take, and also because they may take more legal risks than a corporation would take. Waldemar added that he thinks it’s an excuse for corporations and doesn’t accept it – corporations have other means and resources, like good partners, who local companies can’t hire, which allows them to have enough speed to win in the market. But that’s why agility is so essential. Along with expertise and trust, that’s what’s really important.
How can you develop that trust with outside counsel?
Waldemar noted that after many years, it’s easy to have trust. But in the beginning, word-of-mouth and references are helpful. He goes to friends and colleagues who are aligned to the way that he thinks and that his company operates and asks who they work with. Particularly those who may also face corruption challenges or may need to be able to speed things up in a way that is both legal and ethical.
He added that Melissa had shared with him the idea behind the International Lawyers Network, and that when it is built in a cohesive way, with shared values, shared firm profiles, then it is more than just branding. Branding is helpful, but branding by itself must deliver against the expectations of consumers and clients. Waldemar has always worked in marketing, so he understands brand building and knows that delivering on your brand is important.
What are some of the marketing activities that firms do that you find helpful?
The number one thing that Waldemar mentioned is the clarity of communication – not only with himself and his outside counsel, but also for what he needs to pass on to those in headquarters. He said in particular:
it’s very hard for me not a lawyer to talk to the headquarters about things that are very complex and they require specific language that I don’t know how to use.”
Not only are some clients dealing with legalese, but they’re also dealing with cultural issues – Waldemar said that they may need to spend a lot of time reviewing what they’re going to send to headquarters to ensure that not only is it clear on the legal issues, but that it is clear on the cultural and linguistic ones as well. So anything that outside counsel can do to mitigate that is incredibly helpful.
He also pointed that out when it comes to large law firms, the client may be in the hands of more junior people and not only does it reduce the level of expertise that they’re working with, but it also reduces the agility that they require. But when they get to mid-size, and slightly larger firms, they have access full-time to partners and senior people. That helps a lot day-to-day.
Other things that can be useful include trainings, newsletters, and secondment. Waldemar especially mentioned high-level roundtables with CEOs, such as those done by McKinsey, which are done exclusively online. They invest heavily in the expertise and it’s a gain/gain relationship.
Are you seeing trends for in-house lawyers taking on more work and do you expect AI to take on more outside work?
AI continues to be a hot topic in all legal sectors, as it is in every sector. The feeling among Waldemar and his colleagues is that it’s better to use it than reject it. There will be a need to work together and evolve fast, and so for law firms, if they can work together with clients, that will be great, especially if firms can develop good artificial intelligence tools and clients can benefit from them. Waldemar mentioned that General Mills has a commitment that has been communicated to their shareholders that they are going to be, at least in the food industry, the one that uses data analytics better in the market, and he believes they’ll need to include AI in that.
When it comes to in-house legal teams, he has worked both ways and currently, he believes more in the model that they use at General Mills, which is to have a very small team that leverages the strong expertise of their partners. The level of operating in Brazil is so complicated and the seniority required to guarantee that they circumvent the problems that they need to solve, it would be impossible to have that in-house. For other companies, it may be different, but for fast-moving consumer goods with the margins that they have, he believes that it gives them a competitive advantage to work this way.
How do you feel about law firm rankings?
Waldemar was too polite to come straight out and say that rankings don’t matter, but…
He did point out that his wife is a lawyer and she has said to him that most rankings are based on how much the firm spends to advertise with the company. So as far as he’s concerned, the rankings are only as good as how reliable the organization is. His comment was:
So if there are rankings that are reliable internationally, and I don’t know that, so it’s as one of the decision makers, if I don’t know any ranking, it’s a problem.”
Other factors are more important, such as references, networking, being exposed to the practice of the law firm, etc.
We’ll be back next week with part two, so stay tuned!
