Karen Shaff is right at home as GC of Principal Financial

Shaff Picture April 2012 4x6Karen Shaff may not have known at an early age that she was destined to be a lawyer, but her family and friends did.

Shaff grew up in Clinton, Iowa, where she attended elementary and high school. Shaff decided to head to Northwestern University for her undergraduate degree and majored in political science.  “We used to travel to Chicago a lot when I was a kid, and I loved the city.  Being in the area along with being a top tier school, made Northwestern an easy choice,” she says of her decision to attend the prestigious Evanston, Ill.-based university.

But even by her senior year of college, Shaff was unsure what she wanted as a career, so she decided to take the LSAT. Possibly influenced by her lawyer father, she applied to and was accepted into Drake University Law School in Des Moines, Iowa. “At the time, I really hadn’t thought about going to law school,” she says. “But when I told my friends and family, they all just knew that would be my next step.”

Shaff enjoyed law school and did what almost every new lawyer does after graduation: She joined a law firm. But it wasn’t long before an in-house counsel opportunity came knocking—and that was the opportunity that led Shaff to the executive vice president, general counsel and secretary position at Principal Financial that she holds today.

Please tell me about your career path immediately after law school?

My first step was to join a small firm (it no longer exists today) with about six lawyers in Des Moines.

I worked closely with one of the partners, who was a mentor to me. He had two primary areas of practice. One was prosecuting ethics cases for the Iowa State Bar Association. I spent a fair amount of my time investigating complaints against lawyers who may go before the grievance commission.

The other area of practice he had was very different from the bar association work. It involved representing one of the suburbs of Des Moines that was growing at the time and had a lot of planning and zoning issues. It had been rural for a long time  and was seeing tremendous growth which brought with it a lot of issues.  There were factions on both sides, and it was a very intensive situation. As the city attorney, that partner led the legal services the city needed.  I helped him by  working with the planning and zoning commission and board of adjustment in addition to prosecuting traffic cases. I also filled in for him at city council meetings. I learned a lot about municipal law.

You ended up at Principal early in your legal career. How did that happen?

I was with the firm for a little over two-and-a-half years when I learned of a position at Bankers Life Co., which in 1986 changed its name to Principal.  I knew people who were in the law department, heard there was an opening and investigated it.

At the time, my partner’s work was shifting and he was going to need me to do a lot more hands-on litigation. I wasn’t interested in that, so I interviewed with Bankers and was particularly intrigued with what was going on with their investment operations.

I joined in 1982 and have been here ever since.

Why did you decide to go in-house?

It was an opportunity. I hadn’t thought about going in-house before. The idea of doing that wasn’t really well known within the legal practice. I always thought I would just be with a law firm.

I was intrigued with the opportunity and the work that was going on at the company. At the time, I found—and continue to see to this day—that we have the most sophisticated legal practice anyone in the country does. It’s been an incredible opportunity in so many different ways.

How has your role evolved over the years?

Well, it was the investment transaction work that initially intrigued me, so I spent many of my first years focused on that.

After a number of years, I was leading the investment team in the law department. I loved what I was doing and did fascinating transactions both on the fixed income side and real estate side.

Then the leadership team wanted me to get broader exposure to other businesses in the company. So I was asked to move over and lead the legal team that supported our retirement and life and health insurance businesses, which included our litigation team.

After I had done that for a while, we started being more proactive in looking at M&A opportunities. I then worked closely with the person leading our capital markets area and got involved with a lot of significant transactions we were doing as a company.

In late 1999, I was appointed as general counsel, and I’ve been GC since.

 

How has the legal department changed since you’ve been there?

I was the 15th lawyer when I joined, and today we have around 55 lawyers in Des Moines and 35 outside the U.S. There have been a lot of changes. Back when I first joined the department, a lawyer had his or her particular area of responsibility, and when he or she brought another lawyer in, it was almost exclusively because they needed a tax lawyer.

But today, we do more in teams because we may need an ERISA expert or a governance expert or a transactional expert or litigator.  All kinds of different specialties are required than we needed years ago.

It sounds like the company has changed as well.

It has grown a lot. Back when I joined, it was a mutual life insurance company and we were only domestic. We became a public company in 2001 and now,we have lawyers around the globe. It never occurred to me when I joined that one day I would have lawyers reporting up to me who are located in places like Hong Kong, London and Santiago.

What are some of your biggest challenges?

We never seem to have enough time to do everything we want. We really have to make sure we’re prioritizing appropriately. Resources are always an issue. Expense management is a major focus day-in and day-out.

When I think about my challenges as a lawyer, the biggest these days is the increasing regulatory environment. We’re a heavily regulated business, but it continues to ramp up and up. It takes a lot of resources, dedication, and time and effort.

What do you love most about your work?

The people I get to work with, both the lawyers and businesspeople. I work with the most incredible people. The businesspeople have made me be a better lawyer. They want to understand how we arrive at the advice we have given them. So you have to be able to articulate how you came up with your opinions. That’s a lot harder than just saying, “do this.” It’s that constant intellectual challenge that is really stimulating.

How do you add talent to your department? What are you best practices?

The quality of the work our lawyers do day in and out entices great talent.  We are challenged by our home office location.  A lot of people who don’t have Iowa connections have a stereotype about Iowa (we can’t see cornfields from our offices). We look for things that might be a hook for them. It might be that they grew up in Iowa, are now practicing in a major metropolitan center and want to come back for a different lifestyle. When we see someone who has expertise we are looking for, we do what we can to let them know we can give them an incredible, sophisticated law practice.

And the opportunities the lawyers have to work with lawyers outside the U.S. on a regular basis is something not found in a regular company, by any means. The nature of the work, the breadth of people they get to work with here and around our operations are all things that make us an attractive location. Our lawyers today are our best ambassadors for doing that so whenever we’re looking for new talent, we leverage the relationships they have. And we’re committed to building a diverse legal team.

Please tell me about the mentors you had growing up in your legal career.

The partner I worked closely with at my law firm was a great mentor. He, in many respects, threw me into the pool and let me swim but was there when I needed help. He showed me the ropes and gave me great tips about how to best deal with businesspeople.

Also, the GC at Principal when I was hired had great relationships with the businesspeople and was very focused on lawyers’ development. There’s a misconception that when you go in-house, you no longer have to rainmake.  But you do have to build relationships so the businesspeople will come to you. And that’s something the GC who hired me really emphasized—and I have passed it on to the lawyers in the department today.

Have you been involved in any formal or informal leadership training programs?

Anyone who has been in a company has gone to some kind of leadership training. It’s good in that it makes you open your eyes, listen and develop relationships both with the people that work for you and those you work with.  These programs are great for building relationships with other leaders in the organization.

What advice would you give a young lawyer who wants to be a GC in a large company someday?

Earn a reputation as a trusted advisor. They need to work hard and be dedicated to the company. And they have to learn the business.  Businesspeople love to talk about their business. You can’t go in pretending to know their business because you don’t. You have to have an interest in knowing the business, you have to listen and build relationships with your colleagues and the businesspeople.  You can’t be shy.  Be a team player.  Communicate well.

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