State Farm CLO Jeffrey Jackson on Ranging Experience in the Legal Office

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In-House Legal

State Farm CLO Jeffrey Jackson on Ranging Experience in the Legal Office

01/19/2017

Intro: Welcome to In-House Legal, where we cover a variety of issues pertinent to the general counsel and in-house legal departments of small, mid-size, and large organizations.

Join host Randy Milch each month as he discusses the latest developments, trends and best practices for this very busy and often complicated area of law. You are listening to Legal Talk Network.

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Randy Milch: Hello. My name is Randy Milch and I am the host of In-House Legal on the Legal Talk Network. I am honored and happy to have as a guest today Jeff Jackson. Jeff is the Chief Legal Officer at State Farm Insurance Companies and he has been with State Farm for over 28 years.

Jeff is on the cusp of retirement and so we are lucky to catch him at what usually is an introspective moment for general counsels. I am sure we are going to have a fascinating discussion with one of the Deans of the General Counsel Bar.

Jeff, welcome to In-House Legal.

Jeffrey Jackson: Thank you Randy. It’s very nice to be here.

Randy Milch: Jeff, you have been in a few different jobs at State Farm, leading the legal teams there, and in fact, now as Chief Legal Officer taking on additional responsibilities, but let’s wind the clock back a little bit and talk for a second about how it was that you decided to become a lawyer and what your first jobs were?

Jeffrey Jackson: As I was growing up in Central Illinois my father was a trial lawyer, a lawyer that would come home every night over the dinner table and talk to us about hypothetical stories and to get our reaction to those stories. At an older age I realized what he was doing was bringing home real life cases that he was working on and wanting to get our reaction to kind of give him a gut check, if you will, for what he was thinking about on those cases.

And it soon dawned on me that this type of work, if you will, involved complexity, problem solving and working with people. And it was through that process over the years that when I got to college, even though I still didn’t know what I wanted to be when I grew up, I had a pretty strong feeling I would end up being a lawyer.

Randy Milch: And so you went to law school and then you took a turn in private practice, tell me a little bit about your private practice sojourn and what you think you took from that as you went in-house?

Jeffrey Jackson: When I was graduating from law school, I had a desire to experience a corporate legal background, if you will, and to get into that. And when I spoke to several then general counsel types at very large organizations, they consistently recommended that I experience private practice before going inside in a large corporation.

And so I ended up practicing law in a mid-size community in Peoria, Illinois for nine years at a private law firm, where I eventually became partner, and instead of corporate law, I ended up in trial and appellate law, because we developed a need for additional capacity there once we started getting involved in some fairly significant antitrust litigation.

So I spent the better part of my years in private practice learning how to try lawsuits and writing appeal. Since no one in my firm liked handling appellate work, I actually got the opportunity to, not only learn how to communicate face-to-face with people in the courtroom, but I also got the opportunity to learn how to craft the English language in a compelling way that would support the positions we were taking on cases that ended up on appeal. So it was a real benefit for a young lawyer like me to get that kind of an opportunity to see the beginning of the case, all the way to the end through an appeal.

Randy Milch: And as you think about it from the framework of younger lawyers who may be interested in going in-house, do you still believe that a stint in private practice is a good educational and preparatory phase for a young lawyer?

(00:05:01)

Jeffrey Jackson: That’s a great question and it kind of takes me to this whole notion of diversity of experience and diversity of background, among other things. We have at State Farm a combination of both experienced practitioners who have left private practice and come into our organization, and we also have brought in through our internship program lawyers directly from law school.

So we have got a mix, and what we tend to look for in our lawyers, regardless of whether they are coming from private practice or coming right in from law school, are a number of characteristics that I am sure, Randy, you dealt with in your experience as the general counsel as well.

So there’s a human aspect to this, an intellectual aspect to this, and this whole notion of humility that we kind of look for, for lawyers, but I would not say that it is a job requirement or a hiring requirement or condition that one has private practice experience. It can’t hurt, but it’s not an overarching consideration.

Randy Milch: Well, Jeff, as you undoubtedly know, you are on the cutting edge, because that’s a topic of conversation among general counsel now, largely in response to the diversity question, also in response to the concern that law firms today may not be investing in the requisite level of training.

But how do you at State Farm organize training for what we could nicely call baby lawyers, right? They don’t come out of law school with a lot of skills, most of the time, and how have you arranged to fill that skill gap in the context of a company that has a bottom line and very distinct needs about getting these folks up to speed quickly?

Jeffrey Jackson: We take great pride ensuring that our lawyers have the opportunity to handle as many different legal matters as they can when they first start practicing law at State Farm. We have a pretty strong mentoring program whereby the newer lawyers have the opportunity to pair up with more experienced lawyers or more seasoned lawyers, so that’s in play as well.

But we also have a training program that we developed several years ago, I want to say now it’s probably been over a decade in existence, and in that orientation — and this orientation is open, not just to new lawyers, although that’s the genesis of it. We also invite other lawyers that are in more specialized fields in the law department to participate as well. So it’s not a closed program.

And what we did is we sat down over time and walked through the significant legal areas that a lawyer ought to have some familiarity with when they are practicing for our company. Our company is heavily regulated by all of the states’ Departments of Insurance. It has been increasingly more regulated since the passage of the Dodd-Frank Wall Street and Consumer Protection Act, and as a result whether the lawyers in our department are dealing in say securities law, banking law, life insurance matters, bad faith litigation, antitrust work, contract negotiations, we believe that by going through this training, and I think the last time I reviewed this there were like 18 components of it that our lawyers, one, get a better appreciation for when they need to visit with more senior lawyers. Two, they get the opportunity to kind of confirm the areas of law that they are most interested in practicing.

We try not to force lawyers into specialties that they are not excited about, for many obvious reasons Randy. We believe that if you are doing something you love, you are going to spend whatever time is needed to accomplish your goals and you will do that more readily if you really love the subject matter that you are working in.

(00:09:48)

Randy Milch: Well, it sounds like you have filled that gap, which is, one of the major issues that general counsels always face, and it also, I have noted in my research that you have a number, as you said, of different areas that you can put your lawyers in. One I am interested in is the area, the group that you were headed up brought on to create for State Farm in your first job there, which is essentially creating a multi-office series of law firms for your insureds.

Can you tell me about that, what kind of cases those people did and whether that’s a great training ground? Does that still exist as a training ground for the State Farm lawyers?

Jeffrey Jackson: Sure. What you are referring to Randy is what some organizations might call a Staff Counsel Program, whereby we hire lawyers to practice full-time on behalf of State Farm’s policyholders. So they become lawyers in the overall law department at State Farm.

What their job consists of primarily is defending lawsuits brought against our policyholders. At any one point in time State Farm would have hundreds of thousands of policyholders, these are our customers, who have been involved in an auto accident, or if they are a renter or a homeowner customer, maybe they have got a lawsuit pending against them because of somebody falling at their home, for example. Those types of lawsuits in large urban areas, where our market share can be very, very high, over 20% in auto in some of those cities, even 30% in some of those cities, so we have a big volume of those types of cases, and so the lawyers that we hired over the years, starting in 1988 when I came to State Farm, were hired to be trial lawyers.

Your question about that being a training ground, absolutely, when we were looking to hire these lawyers, and more importantly, we have continued this practice, this is one of the things that’s continued. Sometimes things should be discontinued, but this one has not. What we did is we said, okay, we will hire these lawyers to try lawsuits, but let’s also look three blocks down and two over and ask ourselves, can we see this lawyer doing a different job someday, and if she would be interested, can we get her into some developmental opportunities, maybe we bring her back to the home office and spend a couple of weeks working with other lawyers in other specialties. Maybe we bring them back for a particular orientation of other peers that work in other offices around the United States.

And that’s worked out very well. At last count, I looked at our management team, this was when I was still general counsel, when I became Chief Legal Officer I took on a different set of obligations, but we had a significant amount, probably up to 40% of our managing lawyers; those are lawyers that are practicing law, but they have supervisory responsibility for lawyers, paralegals, support staff, whatever, about 40% of them actually had experience in these other satellite offices.

So we clearly have benefited having those offices up and running over the years and our policyholders have benefited as well with the specialized approach that these lawyers take in defending those cases.

Randy Milch: I think that you have hit upon a great structural suggestion for general counsels, if they can do it from the perspective of their budget and the willingness of the company to have the heads. But having a place to bring people in more easily in some respects, but as a Farm team or as a bullpen for talent is incredibly valuable for regenerating a law department. And it sounds like the staff counsel positions that you created are working out really well. You get to see people in tough situations and you get to bring them along, which is all you can ask for when you are trying to keep a department strong and diverse and interested.

Jeffrey Jackson: Yes. One of the things that we have consistently struggled with that many general counsels struggle with and that is the cost benefit of taking certain actions in your department that might have short-term costs associated with them and then put some downward pressure on your budget. And yet, we want long-term to maintain a very loyal group of legal professionals in our department; whether that’s paralegal, support staff and lawyers, and we want them to know we care about them. And one way we can do that is by giving them these development opportunities.

(00:15:06)

Many of our employees thrive on having these different opportunities to work in, because it shows them that the company cares about them, the department cares about them. We win because they get a broader field of vision regarding the legal matters that they are facing.

And maybe to bring up a topic that most general counsels get a little nervous about is sometimes even great companies with great employees find themselves looking at some kind of an investigation of some type or another that hopefully at the end pans out to be nothing. But if you study some of these large companies that have sometimes found themselves in hot water, if you will, oftentimes there’s an element of overspecialization, and that some of the lawyers that might have been in a position to ask some pretty tough questions along the way may not have known what questions they should have asked, because they might have been really narrow in their work-life experience.

So there’s a company benefit, we believe, in that it just increases the number of trip wires, if you will, to ensure that if in that unlikely event something doesn’t look right, feel right or smell right that somebody in our legal function will have the opportunity to raise their hand. And we have got pretty strong cultural experience in ensuring that we reward people for reporting issues. We don’t criticize them for reporting them, because in the end, that’s not in the best interest of our client.

So I am not sure how well into the future companies are going to manage those types of things if they are so pressured by the company on their legal expenses that they end up making some short-term decisions that have longer term ramifications, that might have been avoided if they had a little more flexibility.

Randy Milch: Jeff, I would like to continue with our discussion of some of the more substantive areas that you as Chief Legal Officer seem to have had some opportunity to delve into. I was very taken with your discussion a minute ago of having a legal office with a wide range of experiences as a silent compliance plus.

You have had the opportunity as Chief Legal Officer to spend a little more time it seems advising State Farm on the issues of character and quality and being a coach to the very senior team. Can you tell me how did you arrange that, first of all, just as a personal matter, but tell me what kind of things that you have taken from that view of a large and successful corporation?

Jeffrey Jackson: Randy, this is getting into an area that had you told me when I started practicing law in 1979 that I would be spending the last focus of my work in, I would have questioned you. And by that I mean I have been spending the last several years at State Farm, in addition to the day job of being a general counsel, and then Chief Legal Officer, of working directly with our senior executives, both at the C suite level and then at, I would say, maybe the next two or three levels below that.

Five years ago I had this opportunity to work on a project our CEO gave me. He wanted me to be involved in long-term strategic planning and innovation. That led to the creation of an innovation function that we turned over to other business leaders, but that raised a couple of questions in my mind about how to effectively lead an organization in the future that does business in just the United States.

And I started taking small groups of our executives to China on 12-day trips, where we would meet with other large companies and small companies, both in the insurance and financial services area, so that these business leaders could get a broader view of the world themselves. And it’s the kind of thing that we talk about with our lawyers, about getting that broader view.

(00:19:51)

Those trips allowed me to spend very significant time in a coaching, mentoring role with the senior leaders. We weren’t really even focusing on legal matters, but the friendships and the relationships developed on those trips eventually led to more coaching opportunities, not necessarily that I was seeking out, but that developed as a result of maybe feedback from some of these executives to other executives about how much they learned from these trips.

That then led to another opportunity that recently was completed, and that was to revisit the question of, how do you develop a top-notch strategic, planning and innovation function at State Farm? And I revisited that whole question with the help of 13 hand-picked executives from around the United States; these are all State Farm executives, at multiple levels. And we were able to work in an environment that I might describe as more of a starfish environment, where people were completely free to speak their mind and work on this project, raise questions, and try to develop some very concrete recommendations on how we can improve innovations at State Farm.

And all of these experiences kind of related, Randy, to a desire on my part, and it started about five years ago, I was looking down the road understanding that people in my position at State Farm, we had a requirement of retirement at age 65, it’s a very small group of people for the most part and it is a legal practice, so I started thinking, you know what, I have got to do more before I leave at State Farm and supplement the legal experiences that I had with giving back to the organization by helping coach, mentor leaders in the organization. And I took in that same approach in the law department by developing, as best as I could, the lawyers and the talents that we have.

But this was a different experience and one that I have really enjoyed. I think it’s given us an opportunity to do some subtle marketing, where you are actually spending time with executives, they know who you are, they know what your real job is, and yet you are not working on a legal catastrophe per se, and you are able to actually show how you can be a normal person.

I know that sounds horrible, but it’s a real valuable thing.

Randy Milch: Yeah, I agree with you there, Jeff. People in law departments underestimate the need to have those personal relationships at times with their business associates, to get that across, and so people don’t see the lawyers as you say only as harbingers of doom or people there when there is a crisis. So it sounds like a very, very appropriate role for you and role for the lawyers.

Let me ask though from your vantage point as having taken this deeper view at State Farm, how do you feel as though Corporate America is viewed today and what steps any other corporation might need to take to revive the reputation of Corporate America, but I guess I have just betrayed my view that Corporate America is suffering somewhat of a reputational low for quite some time, and I am wondering what you think that would be a good antidote to that problem?

Jeffrey Jackson: The Public Affairs Council over the years in working with an outside research group has been testing that proposition of whether or not large corporations have lost stature in the eyes of the walking around American. And the research seems to suggest there have been some issues, and that the large companies in particular have taken a hit. And whether that’s caused by scandals that have been discussed in the mainstream media, whether it’s congressional hearings about corporate wrongdoing, there has been increased awareness in the public’s eye I think that sometimes large companies do bad things.

(00:24:49)

Everyone is familiar with the Enron story. There have been other corporate stories over the years. And in our view one of the things that you have to try to ensure you are able to do as an organization is you have to walk the talk and look at how you can ensure that your organization may have a profit motive. But in this environment we are in today, and in the world environment, whether you are in India or in China or other parts of Asia, there seems to be an expectation that large companies do more than just run a business to make money.

And so by that I mean you could have a company that provides housing for some of its employees, for example, or companies that have very strong neighborhood programs, whereby their employees devote time, free, to help associations, whether it’s on infrastructure issues, whether it’s on safety issues, there is a whole — it’s endless.

I don’t think that the large companies lost their reputation overnight. As a result, I don’t think they can build back their reputations or trust in the communities without a sustained effort.

And it’s a big challenge, but speaking from a law department’s perspective, we want to be recognized by our own company and our own employees as a place you can go for the true feedback that you want, a place you can go for advice to be viewed as a partner, as a thought partner, as a problem solver, as a relationship builder, and there is no reason why those same things can’t be taken by the business leaders, and then look at the societies that they come in touch with and ask themselves, what have we got, what are we doing to do that with the people in the countries that we serve. I think it’s doable.

Randy Milch: I think you are right. I think it is doable. Part of the issue that I see is that it’s a little bit like, I hate to say it, Congress. You know how Congress has one of the worst reputations conceivable, yet most people seem to like their own Congressman or Congresswoman. It’s a little bit local, and I think that that’s true in many instances where large corporations and one like State Farm, that is a presence everywhere in the country, with offices and 70,000 employees and many, many offices and agents, these are local folks who are not going to — who are probably going to have a very good reputation locally, yet that same person who admires the State Farm agent and recognizes the good works that that person does in the community still may have a pretty jaundiced view of large corporations.

And I wonder whether part of it is the perception that large corporations pay obscenely and that the people who run them have so apparently lost touch with everyday concerns, and I wonder whether that is a larger problem that’s going to require larger solutions than just the good works that the State Farms do. And I know when I was at Verizon, Verizon was very invested in local good works. And you wonder how you turn the corner from the local to the national.

Jeffrey Jackson: Well, you are touching on a whole host of issues that could take years to unwind, but one of them in particular that I would react to is, and I agree with your observation, is that the changes in technology, the changes just in the population shift in the United States, the move to urbanization, the changing demographics of the customers that we serve, the practical changes that we are seeing in how consumers even view relationships with organizations, whether is it the Airbnb model, the Uber model, is it — what’s the application I can use on my phone. I don’t need a person.

And so this whole question of relationships and building those relationships may be needing to be viewed in many different ways through many different lenses, because you still see companies trying to educate the consumer that, by the way, we have somebody 24×7, a real person that you may speak with, in addition to being an Internet-based type of organization.

(00:30:10)

And I see this continuing, and it will be perhaps even a bigger challenge down the road for particularly the larger more traditional companies to figure out how are they going to continue to reinvent themselves and do it in a way that provides value to the customer and helps the customer solve a problem or do a job. And if you do that well enough, over time, hopefully what you end up with are customers that not only come to you because you have something that helps them in their everyday life, but they also look at you as someone who is important in their life. And that may sound a little saccharine or a little corny, but longer-term it seems to me that that’s something that could also improve this perceived drop in the reputation of large institutions.

Randy Milch: Well, Jeff, I can’t think of a better way to close out our time together with that hope that we can repair Corporate America’s standing and a way to do it.

Thanks very, very much for speaking with us on In-House Legal Today. It’s been a hugely informative half hour and I very much appreciate it. I wish you all the luck in the world in your next phase of life.

Jeffrey Jackson: Well, thank you very much Randy and best wishes to you too.

Randy Milch: And I want to thank all of you who have listened to our podcast today. For all of you listeners who would like more information about what you have heard today, please visit  HYPERLINK “www.legaltalknetwork.com%20” www.legaltalknetwork.com or follow us on iTunes, RSS, Twitter and Facebook.

That brings us to the end of our show. I am Randy Milch and thank you for listening. Join us next time for another great episode of In-House Legal.

Outro: The views expressed by the participants of this program are their own and do not represent the views of, nor are they endorsed by Legal Talk Network, its officers, directors, employees, agents, representatives, shareholders, and subsidiaries. None of the content should be considered legal advice. As always, consult a lawyer.

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