Editor: Why was this a good time to make the switch from being a general counsel to a partner in a law firm?
McCarthy: For the past 27 years, as general counsel of two international financial services companies, AT&T Capital and HP Financial Services, I have been a keen observer of the various trends, both good and bad, affecting the legal profession. Today, competition is fierce in all business sectors. Business and legal complexities are increasing as more companies operate on a cross-border basis but are not adequately prepared for new, related challenges, such as changing EU privacy laws; trade restrictions; and host-country environmental, licensing, accounting, tax, and regulatory requirements. The businesses I supported as general counsel always produced outstanding financial results, but they also avoided becoming entangled in any significant legal, compliance, or regulatory problems. Those results did not happen by accident. I have learned a thing or two about how to successfully navigate the choppy waters that most companies face, and I believe that many of the strategies I developed would be equally valuable to other companies. Our profession is at an inflection point, and it is the corporate law departments and law firms that stay ahead of the market’s ever-changing realities that will survive and prosper.
Editor: How do you think your in-house and industry experience will inform your client service and legal work going forward?
McCarthy: I have been fortunate to have worked with a number of great executives and outstanding lawyers (16 of whom went on to become general counsel of other companies) and have gained experience in a broad range of legal and business disciplines, even before my service as general counsel. For example, as a federal prosecutor in Philadelphia, I tried a variety of criminal matters, such as fraud, bank robbery and narcotics trafficking. In private practice in Washington, DC, I gained valuable corporate, commercial and regulatory skills while litigating civil, criminal and administrative matters.
At AT&T Capital, I oversaw numerous M&A matters, served as the legal officer of a publicly traded company (1993-1996), and managed a broad array of financing programs in such areas as project financing, telecommunications, aircraft and maritime, media, automotive, inventory and receivables, as well as computer, small ticket, and general equipment leasing and financing. My experience at HPFS was very similar to my experience at AT&T Capital, except that HPFS is not a separately traded public company. HPFS operates in narrower niches – computer leasing and software and services financing – but is regulated as a bank in a variety of jurisdictions, including almost all of Europe. I also had the good fortune to simultaneously manage various business functions at both companies. At AT&T Capital, I was the chief risk management officer from 1992 to 1996 and oversaw all risk functions, including credit, pricing, residual setting, syndications and insurance. At HPFS, I managed worldwide government affairs for its then-parent organization, Compaq Computer Corporation, from 2001 to 2002.
The most significant learning I garnered from this long-term, diverse experience is that all risk – legal or business – needs to be viewed holistically. The worst mistake many companies make is to segregate and isolate risks to the point that the aggregate risk position of a company is never fully understood by senior management. Lawyers, both inside and outside counsel, are in a unique position to prevent that from happening. Lawyers have both the ability to see and understand the broader picture and the skills to sort through and understand the layers of ever-increasing business, political, legal, compliance and regulatory risk. The trick, however, is to create the right structures and support networks that foster effective communication, collaboration and teamwork between legal and business personnel, and to put in place a funneling system that ensures that all significant risk issues flow to a group of highly experienced senior managers for prompt review and decision. I was fortunate at HPFS to have a great CEO, Irv Rothman, who placed me on the Company’s Global Credit Committee and the board of the European Bank of HPFS, so that the total risk exposure of those entities would always be factored into the overall business equation. The public financial results of HPFS speak for themselves, and its European Bank was one of the few banks in Europe that completely avoided the credit problems that ensnared so many of its competitors over the past few years.
Editor: What are the current market conditions and client issues that make your experience valuable?
McCarthy: As I mentioned previously, this is a very difficult time for both inside and outside counsel. Most corporate law departments are facing shrinking budgets, and most large law firms have created pricing structures that make them almost prohibitively expensive. Nearly all the general counsel I know are under immense pressure to “do more with less.” Gibbons has a unique advantage in today’s market. The services Gibbons offers are as good, if not better, than the services offered by many Wall Street firms – but Gibbons’ costs are significantly less. Patrick Dunican, the firm’s chairman and managing director, has done a remarkable job managing the financial affairs of the firm so that it is lean and nimble, but populated by a group of incredibly talented and highly motivated lawyers who are regularly singled out by clients, peers and legal market observers in the most prestigious industry publications and peer-review rankings.
One of the beliefs I have long held and put into practice is that all lawyers in a company law department, including managing lawyers, need to be practicing attorneys who keep their legal skills sharp. I have always carried a fairly healthy, hands-on workload, which makes my current role at Gibbons both attractive and an easy transition, with a team I look forward to being part of. Gibbons lawyers are responsive, pragmatic and incredibly efficient. When I was their client, they handled my matters with the ingenuity and skill required without ever losing sight of fiscal realities. When in-house and outside counsel work together so thoughtfully, approaching projects and problems resourcefully while being completely open about the very real parameters within which to get the job done, real value and innovation will result.
Editor: Why did you select Gibbons, and what work will you be doing for the firm?
McCarthy: Simply stated, Gibbons is incredibly well positioned to continue to grow and prosper in today’s difficult market. As general counsel of HPFS, I started using Gibbons about five years ago. I ultimately moved almost all of my available business to the firm because it consistently out-performed all the others. As to what I will be doing, I will, first, be conferring with as many of my former general counsel brethren as possible to encourage them to consider my new firm for their legal work. My view is that Gibbons’ value proposition is compelling and speaks for itself.
Secondly, I will be handling a wide range of corporate, commercial, financing, regulatory and governance/compliance work as part of the firm’s Corporate Department, led by Frank Cannone. My practice complements the department’s incredibly well, and I look forward to being part of this high-profile team of more than 30 attorneys providing multifaceted, practical corporate and transactional representation to domestic and international business and finance clients, in complex to routine matters covering all aspects of corporate law. The department also includes specialized corporate teams providing value-added, focused services to meet clients’ evolving business needs. As I’ve mentioned several times, such an entrepreneurial approach to recognizing and meeting the changing market demands is a critical criterion to in-house counsel in selecting outside law firms.
In addition, I have a great deal of hands-on legal and business experience from helping to establish and manage a very significant financing business in Ireland, and I am interested in helping Gibbons enhance its already strong Irish relationships. Ireland may have been among the first wave of EU countries to experience the “great recession,” but its honest and forthright approach to dealing with its problems should put the country in a very good position to emerge from the scrum much earlier than many of its EU partners will.
Editor: Speaking of Ireland, I see that you were one of the founders of the Irish American Bar Association of New Jersey. How does that impact your association with Gibbons?
McCarthy: As I am, Gibbons is very proud of its Irish heritage. Patrick Dunican was honored this year as the grand marshal of the Newark St. Patrick’s Day Parade, and numerous Gibbons attorneys have been recognized by the Irish Voice newspaper over the years as being among the top 100 lawyers of Irish descent in the U.S. But what impressed me most about Gibbons is its strong support for a wide range of diverse community projects and its outstanding pro bono program. Through its dedicated community outreach and pro bono program, “Gibbons Cares,” the firm donates more than $1 million annually, as well as extensive volunteer service, in support of those communities in which the firm has offices. Gibbons actually makes a difference in all the communities where the firm operates, and that is a very attractive aspect of its culture.