Suzanne Rich Folsom, GC of U.S. Steel
No one in the compliance field seeks out pressure, scandals or crises, but these types of problems come with the job. In her career, Suzanne Rich Folsom has taken on these challenges head-on.
After serving tenures at global conglomerations including the World Bank, American International Group (AIG) and private security firm Academi (formerly Blackwater Worldwide), Folsom was recently named general counsel and senior vice president of governmental affairs at U.S. Steel. While the organizations she has worked for vary by industry and size, Folsom has a consistent record of ameliorating crises for companies in transition.
Folsom’s dive into ethics and compliance happened shortly after being named deputy general counsel and chief regulatory and compliance officer of AIG, where she ultimately implemented widely praised regulatory and compliance processes that helped remediate the global insurer, which had been taken over by the U.S. government after the economic crash of 2008. Yet despite earning such accolades, the decidedly modest Folsom attributes her successes to her multinational team of regulatory/compliance professionals at AIG, where she established a global compliance program responsible for monitoring the company’s business operations in more than 130 countries.
“No one person alone can handle a crisis. It takes a team,” Folsom told InsideCounsel in a recent interview. “By that I mean that these days, you need to make sure that you have a diverse, talented team of individuals that you can call upon that have a skill set—what our CEO calls ‘skills for the future’—and one of those skills is to be able to deal with crisis. This cross-functional team of lawyers and compliance professionals need to work seamlessly with the public affairs and business departments and must be able to handle any challenges that arise.”
GCs without borders
To effectively handle the more prominent role of general counsel in today’s business world requires the right combination of business acumen, legal expertise and a schedule that allows for middle-of-the-night phone calls common for senior-level executives within global organizations.
“The new GC has to be borderless, globally connected, and available at a moment’s notice. I am available 24/7, as are the people on my team…you have to be. There are issues that occur in the middle of night in different parts of the country and the world, and you have to be ready to handle whatever they are,” says Folsom.
In dealing with a crisis, Folsom explains, “First, you deal with the emergency and tragedy and the human issues connected to that, and then you have to deal with the legal ramifications of that.”
Folsom says her background, which encompasses international assignments during her tenure with the World Bank, forced her not only to live and work in other countries, but also to adapt to new cultures and new laws, which have helped prepare her for her current role as GC of U.S. Steel.
“These experiences helped me to be more versatile and to take on a new role and handle situations no matter how quickly they come at me and no matter what time of night they are,” she says. “I think most GCs would agree that the position of GC has undergone a sea change in the last several years. The position has grown within the corporation with respect to stature and reliance on the business side.”
A seat at the table
Today’s GC has to be more than a lawyer that senior management goes to when there is a problem, says Folsom. The GC also has to be a businessperson armed with sophisticated skills that go beyond the fundamental skills of a successful general counsel.“As a lawyer you have to be an expert with respect to the law, because you are the one person in the C-suite that the CEO will turn to; but now the GC has become more of a go-to person not just for the CEO, but other members of the leadership team as well,” she says. “You’ve got to have an understanding of how business operates; you need to have some financial management background. For example, I am a subject matter expert in regulatory, governance and compliance issues. But you also need to be a practitoner with a broad level of expertise.”
General counsel also need to be able to anticipate problems before they happen, analyze the risks and be proactive to mitigate them, she adds.
“Part of that is being at the table at the beginning of the conversation. [Before the financial crisis], the GC and the legal department people went to the board and the CEO after the problem occurred. Now there is an expectation and a need for the GC to be at the table when the conversation is happening to assess the risk upfront and take the business risk you want to with the least amount of risk,” Folsom says.
But compliance is not just about risk management; it’s become a critical focus for boards of directors across the Fortune 500 and beyond—especially since the financial crisis six years ago.
“In order for the board to fulfill their share of responsibilities, they want to make sure they have a GC who is ethical and transparent and will provide them with the information they need to ensure they can fulfill their fiduciary responsibilities,” Folsom says.
Folsom revamped Academi’s Foreign Corrupt Practices Act (FCPA) compliance program, which was in place before the company went through a U.S. Justice Department investigation. Folsom developed a more robust compliance program that was recognized for its anti-corruption systems. Such corporate scandals amid worldwide economic demise have taught businesses to put ethics and compliance at the top of both their cultural and governance agendas.
“We talk about compliance more than corporations years ago did; when you are thinking about compliance and how many resources you need to dedicate in your company, this is a key business differentiator. People don’t want to do business with companies that are not transparent or if they have question marks as to whether they are ethical,” says Folsom. “Boards are hypersensitive to the question of compliance and asking, ‘Is the company operating to the highest levels they need to be?’ They are asking questions, and they should also be asking company executives about managements’ commitment to compliance.”
When the financial crisis hit in the fall of 2008, the knee-jerk reaction of many regulators was to shut the doors of financial organizations or seize their assets to make sure they wouldn’t leave the country, explains Stasia Kelly, partner at DLA Piper and the former general counsel of AIG who hired Folsom as the company’s chief compliance officer in 2008.
Folsom already had an impressive career in the compliance sector, particularly at the World Bank where she handled several sensitive, high-level issues, recounts Kelly.
“Suzanne came to AIG knowing how to deal with complex issues, directors and sensitive issues. Who knew that when she came to AIG she would eventually be thrust into this epic financial crisis that required sensitivity at such a high level?” says Kelly. “The beauty of what Suzanne did was she had these phenomenal global connections; she and her staff were on the phone night and day.”
Folsom, who accepted the role of CCO of Academi in 2011, faced reputational and compliance challenges there as well. Academi independent director Jack Quinn, who served as White House counsel to President Clinton, describes Folsom as “a remarkably strong, intelligent and persuasive person.”
“Right off the bat, Suzanne and I formed a really terrific collaboration and had a real determination to work together and make sure that in her role as CCO there was complete transparency with the board and the opportunity to set in place as she did, the kinds of plans, programs, structures and reporting persons that would lay the foundation for the turnaround, which we can more than fairly say she did,” says Quinn.
The absence of a crisis management plan and strong compliance program has cost companies millions of dollars, but more profound is the immeasurable price to their reputations.
“You see companies pay millions of dollars, not to mention the incalculable costs to their reputations when they just didn’t have in place good enough systems,” Quinn says.
Sometimes, in a time of crisis, the right person comes along, a person with the right combination of connections, experience, skills and personality to handle a difficult situation, and Folsom has just what it took to get the job done.
“Suzanne is a remarkably, strong intelligent and persuasive person, and she was able to get everyone on board with this program. She put in place systems by which whistleblowers could whistle, that people could ask questions when they were in doubt; employees at every level of the company had access to the board members if they wanted,” adds Quinn. “I have worked with a great many corporate lawyers and GCs. I don’t know anyone who is more thoughtful, more hardworking and more committed to doing things right than Suzanne Folsom.”