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Peter Wong is the general counsel at LeapFrog Enterprises Inc., the Emeryville-based company that designs and manufactures educational toys and games for young children. Wong, who became GC in April 2006, previously served as vice president for legal affairs and as corporate counsel at LeapFrog, where has worked since 2001. Before coming to the company, he was an associate general counsel at Quokka Sports Inc., a digital sports entertainment company. In addition to his in-house experience, Wong earlier in his legal career practiced business law at Cooley Godward Kronish and at Howard, Rice, Nemerovski, Canady, Falk & Rabkin. He received his undergraduate degree from UC-Berkeley and earned his law degree at Hastings College of the Law. Wong was interviewed by Steven Pressman, editor of GC California Magazine. Q: During a panel appearance at the Association of Corporate Counsel’s last annual meeting, you said, “I’m looking for risk takers, which is a weird word for lawyers.” You were talking about the kinds of attorneys you like to see in in-house positions. What kind of risks do you like to see your lawyers taking and why do you think that’s such a hard thing to ask for? A: One of our primary roles as in-house counsel is to be a risk manager for the company. We identify, analyze and inform our business colleagues about legal risks and try to eliminate or reduce them. So for us lawyers, being a “risk taker” seems antithetical. I look for people who are not afraid of failure and are not afraid to try new things. Often in modestly sized, fast-paced companies, the line between what is a “legal” decision and what is a so-called “business” decision is blurry. Lawyers don’t have to be pigeonholed into thinking only about legal stuff. Rather, they are smart, analytical people who can really contribute to business decision-making if they understand and are interested in more than just discrete legal issues. Q: How does that thinking play out in terms of members of your legal department? A: We try to encourage that broader interest in our legal team even though operating in this broader area often requires us to stretch outside our core comfort zone as lawyers. Therefore, we want people who are not afraid to stretch — and who are not afraid to make mistakes when they do stretch. In a fast-paced business environment, we need to make decisions based on less-than-perfect information and keep driving forward. Under those circumstances, sometimes we make mistakes, and we need to live with them and learn from them. This is what our business executives have to do all the time, and in order for our legal team to keep pace and be a useful resource, we need to think similarly. Q: During that same ACC presentation, you also mentioned that you ask your lawyers to take someone out to lunch a few times each month and try and find a couple of new things about whomever they’re having lunch with. What are some of the things you can learn about someone that will be helpful in terms of doing your job better as an in-house lawyer? A: Anytime you can better understand your client’s business and your client’s individual situation, the better you can serve them. We have a lunch program to encourage our legal team to build strong personal relationships with their counterparts throughout the enterprise. Brownie points are given if someone invites a co-worker with whom they rarely work or if they snag a senior executive. The goal is to get to know people better. We are trying to learn more about what our colleagues do, what motivates them, what their goals are and what keeps them up at night. You can learn a lot about your co-workers when you get them out of the office and away from the problems at hand. Are they having troubles with their boss? Do they have concerns about the project? Do they understand what purpose the legal department serves? Things like these lunches help improve our understanding of the business and build more trust with our colleagues. Plus, when people get to know us, they realize that we are not always mean and nasty ambulance chasers, but team members who are trying to help them accomplish their goals and keep them out of trouble. Q: You’ve described your law department as a “half-mile wide and half-inch deep.” Does that description inform how you go about deciding what matters to keep in-house and what matters you will send to outside counsel? A: What I mean by that description is that our legal team has a variety of areas of expertise, such as trademark, licensing, patent, corporate, regulatory, etc. There are the core areas that we handle in house, such as domestic trademark prosecution. But there are still gaps in our coverage of legal expertise, especially given the variety of issues that may arise in our industry — that’s the “half-mile wide” part. There are other areas where we rely primarily on outside counsel, such as litigation or patent prosecution. Also, we don’t have a lot of overlap or redundancy in our areas of expertise. In most cases, it’s just one person — that’s the “half-inch deep” part. Given all that, we need to bolster our in-house capabilities in two ways. First, we need outside counsel to provide expertise in areas where we have no experience internally and where we are looking for them to provide us with advice and to train and educate us on these subjects. This generally requires very experienced, senior lawyers who can provide high-level strategic advice. Second, we often need outside help just to keep up with the workload. This often requires cost-effective, project-type work from, in some cases, less senior outside lawyers, with oversight by internal counsel. Q: Speaking of outside counsel, what is the best way, if any, for a firm with whom you’ve never worked to get some of your business? A: Demonstrate the ability to apply top-notch legal expertise in a practical, business-oriented manner and be responsive. This can happen when I see lawyers put their “bedside manner” on display when they present at conferences or when I work across from them on transactions. I notice the way in which these lawyers apply and communicate their expertise, which is as important as the level of their knowledge. And if you don’t have the opportunity to demonstrate your abilities directly to me, demonstrate them to a lawyer who meets that description because I tend to ask for referrals from lawyers whom I respect and whose judgment I trust. Generally, I don’t react well to cold-calling or overt trolling for business. Q: Standing the question on its head, what’s the quickest way for an outside firm to lose your business? A: Don’t overlawyer and don’t oversell. When I seek advice from outside counsel, I need expert advice quickly and have it reduced to its simplest terms — and no further. I don’t want lengthy memos or “white papers” that are laden with CYA language. And please do not populate calls with an army of lawyers — the relationship partner, the subject matter partner, the senior associate who is really doing the work, the $300-per-hour first-year associate as well as the summer associate. On those calls, I can almost feel the partner profit points being divided up as the meter runs. Our business moves too fast for that kind of formal interaction and my budget can’t support that kind of behavior. My other pet peeve is a situation where I feel like I am educating my outside counsel on my dime. Sometimes, firms will profess to have expertise in a particular area but really don’t have it and are seeking to build a practice or simply just do not want their client to go somewhere else. I have greater appreciation for counsel that will refer me to someone outside their firm if they think that is best for LeapFrog rather than reflexively trying to keep all my business. Q: GCs constantly talk about the pressures they are under to keep a lid on outside legal expenses. How much leverage do you feel you have when it comes to working with outside firms and paying their fees? A: I don’t feel like I have sufficiently explored the extent to which I can control or negotiate fees. Our business challenge has generally been to deal urgently with a variety of crises. As a result, we have often looked for the most effective assistance but not necessarily the least costly. We try to manage costs by trying to keep the scope of the engagement well defined and by staying tightly connected to the case. We also look for boutique firms or solo practitioners who have “big-firm” experience but small-firm rates. This is true particularly when we are looking for additional capacity to deal with the “half-inch deep” problem. With the continued consolidation of law firms, we increasingly are finding that we just can’t afford the large firms for most of our work — matters other than the most specialized or highest stakes projects. Large-firm rates are too high and the projects get staffed too heavily. Q: Some GCs say they like their outside lawyers to have a fairly detailed grasp of their businesses and the overall industries in which they operate. How important is that to you? And how good, relatively speaking, are outside firms at demonstrating that kind of knowledge? A: Knowledge of our business and our industry by our outside counsel is critical. We have found that firms are mixed on demonstrating this knowledge or demonstrating the ability to quickly grasp our business dynamics. I find that firms that regularly deal with technology and other fast-moving companies, like many of the firms based in Silicon Valley, are nimble enough to grasp our changing business needs. Others, much less so. There definitely are cultural differences between how firms deal with their clients, particularly with respect to the day-to-day counseling services that we seek on a broad variety of issues. I suspect the megafirms don’t find that kind of low-dollar work as interesting as the big ticket M&A deals or high-stakes litigation cases. And when it comes to those high-billing matters, every firm will spend the time and money to get up to speed on our business. Q: As a general counsel, what do you like best about working with outside lawyers? And flipping that around, what’s the least desirable part of working with outside counsel? A: The best part is working with really great, experienced lawyers who help me continue to learn about various legal matters and areas of expertise. One of the things that I miss about working at a firm is the chance to get a real broad exposure to different businesses at different stages of development and in a wide variety of industries. In a larger law firm, you get down-the-hall access to so much knowledge and experience. The worst part? By far, it’s the cost of getting that expertise. Working with outside counsel would be a blast if I didn’t have to pay for it. I wish they would take me on as their pro bono client. Hey, can I change my answer to that question about the best way to get my business? Q: I’ve heard you mention that you like to send your in-house lawyers to product development meetings, factories in Hong Kong, etc. What specific benefit do you think a lawyer gets out of doing things like that? A: This goes back to one of your earlier questions. I believe it is of the utmost importance that our legal department understands every aspect of our business strategy and operations. For example, if someone is working on an agreement with our manufacturers, it would be useful for her to visit our factories to see how our products are actually made and to see how our key operational partners do business. Equally as important, it makes our work more interesting. I challenge my colleagues in the legal department to know our business better than any other department in the company. One way to get this knowledge is to get out of our offices frequently to see our business in action. We work with every corner of the business — marketing, engineering, supply chain, sales, international teams. You name it, there are legal issues everywhere so we need to learn about all of these different functions in order to provide well-informed, practical legal advice. One of the reasons I went in house was to get closer to the business. So for me, whether I get to watch our products roll off the production line in Asia, attend a marketing meeting where the discussion is on how address customer concerns or observe a focus group test for a product concept, it is all really fascinating and it helps me appreciate all of the things we do to put products on the shelf. Q: You’ve worked at LeapFrog both before and after the company went public in 2002. From your vantage point as an in-house attorney, what’s the biggest day-to-day difference in terms of overseeing legal issues at a privately held as opposed to a public company? A: I was hired by LeapFrog in November 2001 to help prepare for the company’s IPO so much of my private-company time here was to think about and prepare for life as a public company. And as soon as we went public Sarbanes-Oxley kicked in, which is obviously the biggest difference — the public reporting requirements, particularly as amplified by SOX. One of the ongoing challenges of becoming a public company was the daily effort to change the mindset of an employee base that had defied gravity and built a successful company in an unstructured, entrepreneurial environment. Our IPO was an early step in the transition from a small, entrepreneurial startup to a larger, global enterprise. I often think of this process as growing from our toddler stage, where everything we did was cute — that is, successful — through those tough and awkward adolescent years and into a polished adult, where our processes and operations are smooth and stable. When we went public, we had to establish policies and controls that were new to many people who were used to the freewheeling culture that is found in many startups. At a company that is so reliant on creativity and innovation, we needed to be careful that we didn’t overdo the emphasis on rules and processes. Constantly finding that right balance was a new challenge for us after the company went public. Q: OK, I have to ask this one given where you work. What’s your favorite LeapFrog product? A: Right now, it is a brand-new, hidden gem of a product named WordLaunch. It is a learn-to-read product that plugs into the TV and helps kids put letters together to make three- and four-letter words. I have a 4-year-old son who was on the cusp of that learning moment when he understands that C-A-T spells cat. When I brought the WordLaunch product home to test it earlier this year, he immediately took to it. He got the concept of how letters create words and had a ton of fun. Every day, he would ask me, “Dad, can we make some words?” How can you not love that?

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