We bring you candid, thought-provoking interviews with the world’s leading corporate counsel conducted by long-time TCL contributor, Marcie Shunk of BTI Consulting. BTI’s senior researchers conduct thousands of interviews each year with corporate counsel, delving into the nuances of client satisfaction, probing for new, undefined issues and delineating drivers behind key market trends.
This month, we are delighted to feature Ron Kuykendall, Executive Vice President, General Counsel and Secretary, Sandy Spring Bancorp, Inc.
MS: Good morning, Ron. Thank you very much for being with us today to talk about the state of the economy and how the bailout bill and new administration will impact companies—especially those in your industry, financial services. I’d like to begin with some background. Could you please describe your role and key responsibilities at Sandy Spring Bancorp?
RK: I’m the General Counsel and Secretary for Sandy Spring Bancorp, which is a financial services company that’s publicly traded on NASDAQ’s global market index. We’re about $3.3 billion in asset size, and I have the combined duties of law and regulatory management as the General Counsel and the publicly-traded corporate governance side as the Secretary.
MS: What are your top goals and priorities for your legal dept in 2009?
RK: 2009 will be a difficult year if what the commentators are saying about the economy comes true. It’s impacting our department, in that we’re expected to do more with less, to hunker down and get through. If the economy turns around towards the end of the year as some people are saying, then there might be light at the end of the tunnel. Right now, we are trying to identify mission-critical objectives and give our best attention to those. In other words, this will not be a year for new projects and expanded resources.
MS: Have you come up with any specific steps that you will take to handle the next year or two?
RK: One of the things that we try do with some regularity—made even more critical because of the economy—is look at process improvements. Over time, we often find ourselves doing things without remembering why we do them; when, perhaps, the original need has long since evaporated. We’ve also developed a departmental cross-skills training approach to what we’re trying to do so that as we have to move from one fire to the next, we will have people who are ready to pitch in and help. It’s an “all hands on deck” mentality. Cross-skills training will help get more people to the problem faster, and help us prepare for sudden changes.
MS: What impact do you think the bailout bill will have on your company and in particular on your legal strategy for the coming year or two?
RK: We are trying to sort through that. My company participated in what is referred to as the US Treasury Department’s TARP Capital Purchase Program, and we’re in the process, even as we speak, of finalizing much of the legal work associated with it. We think that ultimately, the federal program will result in a lot more government regulation and oversight. As lawyers, we celebrate the purpose of a program such as this, but we are mindful that it will ultimately be much more work for us and for outside counsel as well. This particular approach, as a solution for economic ills, given its magnitude, is going to involve very significant oversight from many different agencies.
MS: Have you seen or do you think you will see a change in the types of matters you are facing at this time?
RK: I don’t have a definitive answer to that. My best guess, and what I have heard, is that regulations are going to be comprehensive and broad and the impact of the congressional or government oversight process in general will be significant. From that standpoint, we’re anticipating the worst and trying to prepare for it by staying on top of the other day-to-day issues; we don’t have any other specific focus at this time.
MS: How do you think that the financial challenges will affect your organization’s legal issues in the future?
RK: I think part of the natural fallout of the economic situation is going to be consolidation within the industry. We’ve actually seen some of that already. Weaker financial services companies are not going to be able to survive. The infusion of TARP capital will help bolster the balance sheets of the stronger institutions. Overall, the market dynamics will cause the industry to shrink somewhat. For example, Capital One, whose headquarters are in Northern Virginia, recently announced the acquisition of Chevy Chase Bank, a longstanding institution serving customers within my company’s market footprint. Capital One, as a national company, will have a much larger marketing budget, so the competition, for us, in this case, naturally, is going to get more intense. With that said, we believe our company is well-positioned to earn the business of small businesses and consumers that prefer dealing with a locally owned and operated company, so we’re gearing our legal services toward the business products and services that will foster that approach.
MS: How about the new administration? Could you describe any particular impact you foresee the new political regime having on your legal department and corporate policies?
RK: With regard to the legal department, it will be sort of an after-effect, like when you squeeze the bottom of a balloon and the top bulges. The full impact of the administration’s philosophy toward business will be felt at the business unit level, but that will ultimately impact the legal department in terms of regulation and oversight. As a result of that, we see things happening quickly. President Obama has indicated his intention to be right on top of things; we expect him to be very proactive with his agenda and, consequently, what he accomplishes will play out not only over the course of his first year, but take perhaps a year or longer to reach its full impact. The team he has put together, especially his economic team, is strong. We’re excited about having the right brainpower in the room trying to solve the problems banks are facing. To me, as an observer only, the problem is so massive that I’m not sure what the answer is. We’re seeing experts first try one thing and then reverse course and try something else. As a bank lawyer, it’s a little unnerving, but right now I’ll defer to the administration’s expertise and expect that they’re going to get the job done.
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