Redefining the CFO / Legal Relationship

Megan - 00:00:18: Today, my guest is Eric Bouchard. Eric is the Chief Financial Officer of Axiom, responsible for overseeing financial operations and driving strategic initiatives. With extensive experience in large corporations, Eric brings valuable knowledge and a strong track record of success to his role. He has held key financial positions at Nestle Health Sciences, Atrium Innovations, Bombardier, and Alcan, and has expertise in financial reporting, corporate accounting policies, M&A, and structured finance. Eric is a chartered financial analyst, a chartered accountant, and a certified public accountant. He holds an MBA from the John Molson School of Business in Montreal. In addition to his professional accomplishments, Eric is passionate about sports and actively engages with the CPA Order through teaching and writing engagements, demonstrating his commitment to ongoing learning and engagement in the field of finance. Eric, thank you very much for being my guest on today's episode of CFO Weekly.

Eric - 00:01:52: Thank you, Megan. It's a pleasure to be here.

Megan - 00:01:54: Yeah, today our discussion focuses on the relationship between CFOs and their legal teams and how that relationship can and should be leveraged to explore alternative, more innovative, and more cost-effective solutions to their resourcing challenges in order to optimize legal spend. So first and as always, Eric, let's start with a little bit about you and your background and how it is that you are where you are today.

Eric - 00:02:21: Well, thank you. Well, I have to say I feel really blessed. I mean, I had the chance to work at many great organizations, building strong relationships along the way. I started my career with five years at KPMG. So, you know, going up the ranks in the audit firm. Then I did three years at Quebecor, which back then was the biggest printing company in the world. I did two years in trading at Alcan, now Rio Tinto. After that, it follows with nine years at Bombardier, doing planes and trains and structure financing. It was super interesting. And now I'm just finishing nine years at the Atrium that got acquired by Nestle Health Science. So in the food and beverage CPG world. So as you can see, I've got a pretty significant range of different industries and working across many geographies and stuff. So again, I really feel privileged and blessed. And I've got a very strong network coming from it as well, you know, having learned a lot. So that's been fantastic. Most recently, I just joined Axiom as of December 2023. It was actually funny because I was not looking at all to switch. I was very happy at Nestle Health Science. Things are going well. It's a great company and all. But when Permira called that the private Equity Firm that owned Axiom. I had been with Permira before when we at Atrium and I had a really good time with them. So when they called I'll be see I listen a bit. And the more we had those discussion and I got I learned about the industry. We had a fairly long interview process and I got to meet my new colleague, got to discover more about Axiom industry itself or an industry, I know very little about and it got my curiosity and then the more we were going to the process, the more I realized that this was actually meant to be my new home. So, you know, it's one of those things that you don't think at all that will happen from the beginning. And just as you evolve, you're like, you got to be open-minded in those things. And you realize, hey, you know what? Maybe that's the right place for me. And the way they operate, like, it's so interesting to me. Like, I want to be part of making that a greater thing and making more of my colleagues and other companies benefit from it. So when you feel you really want to be part of something, when you feel you believe in it, I think as a CFO, as any finance person, actually, it is the key, right? You've got to believe in what you're doing, got to believe in the industry and practice. So that's what it got me going.

Megan - 00:04:24: So I'm just curious, as a CFO, how hard is it to switch industries?

Eric - 00:04:30: Well, I personally find it easy in a sense that because it just gets your curiosity going, right? It gets your juice flowing and stuff and you want to learn everything. So I personally think it's easy in a sense that it got your juice flowing, it got your full attention. And it's actually quite healthy because at some point, like you never want to become complacent in those things, right? Then once you know an industry or a company too much at some point, like you want to make sure you continue pushing the boundaries to make sure that the company gets to the best place it can. So to me, that the new industry like this, especially the service business fully, which I hadn't been since my KPMG days really in that service industry. So it completely changed the dynamic. Like I don't have to deal with inventory and manufacturing issues anymore. And I've had a lot of engineering in my past as well. So it completely changed that dynamic, like in the KPI you look at and stuff and how you observe the business, which to me, obviously there's an adjustment at first, but it got your curiosity going so much that I think it gets the best out of you.

Megan - 00:05:22: And this is your third role as CFO. Is that correct?

Eric - 00:05:26: Yes, I think we can count it like that. Yes, absolutely. I was a CFO at Bombardier, at Atrium, and Nestlé Health Science. So yeah, that would be my third.

Megan - 00:05:33: So how do you think your approach to starting out as CFO has changed over the three times you've done it? And do you think that's out of necessity that the world is changing or simply yourself growing as a professional or maybe a bit of both?

Eric - 00:05:49: I would say definitely all of the above. I mean, I think your points are bang on. First of all, I mean, those different industries require a different approach. I think the state of the business and the team you're inheriting as well is a big delta, right? I mean, there are strengths and weaknesses in any team. And therefore, you need to adjust your style based on that. And then based on your previous knowledge versus where you are. Obviously, you grow as an individual. Like being my third time over, as we just said. Obviously, you learn some from past issues or past things that went super well. And you want to make sure you leverage those things. So all these things have an influence on how you're onboarding. The one thing that remains critical and that should never change. And you should start by listening. That's why I guess it's humbling to switch industries as often as I have. Because you kind of have to start by listening. There's so much you don't know. But even if you're switching from an industry that you already know, you should really start by that. Because there's a lot of knowledge within a company that is so critical to know. You also don't want to judge a book by its cover, as they say, right? You want to make sure that, yeah, you get a first impression of the people that you deal with. Maybe your colleagues, your employees, and whatever. But you need to make sure that you have enough depth, that you validate different opinions and stuff before you completely make up your mind about them. And it's meant to evolve anyway. Because by being the new CFO, your leadership style will evolve. And some people maybe were thriving under a previous CFO and will struggle a bit more with you or vice versa, right? So you want to make sure that you adjust. And you adjust your style as well for that company. So to me, that part makes you remain the key. But for the rest, obviously, you do need to constantly adjust your style as you move forward and as you get better. And the world is also changing, let's be clear. There's a lot more automation now. Systems are stronger and stuff like that. So you need to adjust a bit as well.

Megan - 00:07:24: And let's talk about Axiom. What is it that they do? And what is it that excites you about what they do?

Eric - 00:07:32: I think it's such an innovative model at the end of the day, because basically what they do is somehow they found a way, which is magical, I feel, to get all these amazing attorneys, that legal talent that is really top-notch. We have more than 14,000 lawyers actually in our inventory. More than 3,000 of them are actually fully active. And to link that with needs at corporation, that allows those corporations two major things, I would say. First of all, like legal work is fairly lumpy by nature, right? It's not as recurring as, for instance, finance, where you have month-end every month and stuff. So you can kind of assess how much in-house people you need. Legal work, there's a part of it that is more recurring, but a lot of it is actually more lumpy and stuff. So you need to flex quite a bit the resource that you need and the skill set that you need as well, because it's a very specialized field. So instead of having like just a core in-house team, you can have the perfect team for exactly the time you need it. And also for the skill set that you need, either junior or senior with a different expertise. So that's one thing. The second thing is we all know how law firms could be quite expensive, right? I mean, performing quite a good work, obviously, but very expensive. We can basically get the same talent that those law firms for like about a third of the cost. So when you think about it, obviously, as a CFO, these things talk to me because we talk about getting really more with less. Like it's rare that you have such a perfect equation of being able to do more with less. But this is clearly the case, both from an in-house standpoint, again, because of the flexibility and the right skill set that it provides. And even more so versus law firms where, you know, at the third of the cost for the same kind of talent, this allows you to do so much more. And I'm a big believer in the legal function across my various world, I always spent a lot of time with legal and was one of the strongest partnerships I needed to have. And now to see that I can enable that function to do so much more and therefore save money, but also deliver so much more for the finance function in the organization. By saving that money, allowing you to do more projects, to me, it's kind of a game changer.

Megan - 00:09:26: And choose the ideal client. Is it enterprise? Is it small, medium-sized business? Small business?

Eric - 00:09:33: That's the magic of it. It's literally everything. Obviously, our current strength right now is mostly on the bigger accounts. And we have a crazy proportion of the Fortune 500 or Fortune 1000. So like a fantastic penetration with big companies. But at the same time, small corporations have a lot to gain as well. Government entities have a lot to gain because, again, there's such a volume of work that is needed there. Last year, we just celebrated the one-year anniversary, but we're actually the first and still only one offering this. We have Axiom Advice and Counsel, which is actually registered in Arizona as a proper law firm where we can actually do supervised work, supervised by attorneys and partners that can fully supervise the work exactly like a law firm, but still respecting at a fraction of the cost versus normal law firms. So this is actually a fantastic offering, even for small and medium businesses that don't even have a legal team, don't even have a general counsel that can supervise the work because we can do all of this on their behalf. So it's really like across the whole spectrum.

Megan - 00:10:27: And the pricing? Is it subscription-based or project-based?

Eric - 00:10:31: It's 100% project-based. I mean, you pick the talent you need or the service you need. We provide it to you for the duration that you need. If it's five hours per week, if it's 50 hours per week or whatever, like in between, for the duration that you need. So everything is heavily customized on a talent-by-talent basis or project-by-project basis.

Megan - 00:10:47: Wow, that sounds amazing. One last question about it. So you mentioned that you're able to find talent for a third of the cost. How is that possible?

Eric - 00:10:57: Well, obviously we don't have the nice Manhattan office, right? So we build the, we work in here. So the overall structure, I mean, we try to be fairly lean on overhead. At the same time, it's a real white glove approach, just to be clear. Like we have an extensive sales team. Again, I'm discovering all these things and you can see how amazed I am. We have this talent team, like we have full team that are just in contact with talent, recruiting, churning and stuff. Just to be clear, like we hire 3% of the lawyers that come to us and apply. So, I mean, it's a super highly selective process, which is why we get the top-notch talent. But by matching that top-notch talent with the client, like in a fairly streamlined process without the big relationship, without the, obviously we won't wind down you like the law firms would do. Again, we don't have the nice office, but that brings a very different overhead structure that we pass in basically all the savings to the clients.

Megan - 00:11:47: And let's switch gears a bit and talk about legal departments. But how do you find that legal departments are run differently than other parts of a business? And having been a CFO at multiple companies, what's your assessment about the kinds of demands that set legal apart?

Eric - 00:12:03: I think legal is indeed a special animal. I mean, it's run a little differently. Some of it is right. Some of it maybe doesn't need to be. But legal is a little bit of a black box sometimes. And obviously, there's different reasons for it. First of all, it's a very specialized expertise. Let's be clear, right? I mean, those attorneys and what they need to do is difficult and often actually misunderstood by the rest of the organization because it's a little different than the core business, obviously, in terms of what needs to be performed. So I think that specialized expertise bring a very different mindset. It's also the department that probably have the biggest portion of its spend externally with the law firms and others that could be very quite expensive, as we know, depending on the industry. Whereas, most of your functions within a corporation usually are mostly internal spends, except probably marketing. But marketing is usually very well understood by the company and you know where you put your money. When you get to legal, there's a big part of that external spend. And it's, again, a bit of a black box that is not fully understood. So that makes it a little different. All the regulatory piece as well, that depending on the industry, again, but will vary a lot from organization to organization. But that's oftentimes very key, very specific and also not fully understood. Finally, I think that legal is a very key component of risk management. And that one I take to heart because it's also a key component of finance. At the end of the day, as a CFO, safeguarding of asset is core to what we need to do. And risk management is a very important part of that. And legal, that's where like, it's one of the most important. Because it's also a core part of their function. And that's where like finance and legal are often two misunderstood functions from that standpoint, because we often need to go against the business, which is not obviously appreciated, like you'd never want to go against the commercial success of the organization, but you need to wear that risk management hat and to make sure that we're not taking undue risk as an organization. And that's where legal and finance can work so closely together, both being misunderstood and underappreciated for that fact. But by working together, you obviously gain a lot of strength and can do it better.

Megan - 00:13:57: Do you find at most companies that legal and finance are not working together?

Eric - 00:14:02: It's hard to say because despite the fact like, I've been to different organizations, but I understand it's still a very small sample of what's happening out there in the world. But this is my gut feeling that indeed it is the case. A lot of times when I started my position, I realized that there was not a strong link, at least not the one I was hoping. I'm proud to say that this is something I was able to build in pretty much all the organizations I've been in, because to me, it's so fundamental. And I really believe in the strength of that link. So that's something that I always wanted to nurture and build. But at the same time, what I've observed, if that strength is not necessarily seen across the organization I've been in, at least, and then from talking to colleagues, that's not something that they have in their organization as well. And that's something that maybe it's me, my expectations are too high, but I believe in that relationship so much that I think it should be closer. Plus, let's be clear, there's a vested interest from the CFO standpoint. It is a very expensive function and one that can definitely do more with less. So I think there's a lot to be gained by building that very strong relationship between the two.

Megan - 00:14:58: And what questions should CFOs be asking general counsels?

Eric - 00:15:02: Well, I think it's a very strong mutual understanding of each other that you need, right? I mean, I wouldn't start the relationship with being focused too much on cost, even though at some point the relationship needs to get to that. But I think I would start first from understanding the mutual interest and benefits that you have on working together. And again, risk management is a very important part of that, I believe. That's a good way to start. Depending on the industry, there could be other factors. Like again, I was in pharma at some point, like with Nestle Health Science. Obviously, there's a very strong regulatory compliance. If there's clinical trials and stuff, there's a lot of money being spent there. So by working together, you can accomplish a lot. Obviously, as the relationship is evolving, I think it is important to ask those questions. Like, okay, in-house, you don't have that strong recurring business. So how do we undo the peaks and valleys? How do we have the different skillsets that are needed? How do we actually understand that? And do we feel that in-house is the best way to do that? Or flexible work would be actually a better way to get there because we can get the exact skillset that we need for only the time that we needed as opposed to full-year employees that may not be optimal. And obviously, the last straw is understanding that legal span that often is, again, just happens like this. And it's definitely a black box. Oftentimes, built on very strong relationship. I was mentioning that overhead structure in law firm. There is a reason that it exists. And it's very pleasing to some corporation, but obviously, it's not necessarily pleasing for the bottom line. So I think it's important that you learn to challenge that. You don't lead with that necessarily, but in time, that it's important that you start understanding it and challenging it. I think finance overall, we do a pretty good job like, managing the accounting firm, for instance, keeping them honest and going to open bids when need be. And I haven't necessarily seen that same discipline in the legal function overall. And I think there's value to be there. And there's value to be gained as well for the legal team. And that's what they need to understand. The point is not just to control the cost, but allowing you to actually do more with less. Because if you can reduce those costs, that means that you can now take all of these projects, which would be beneficial for the legal function. And by default, heavily as well for the finance function.

Megan - 00:17:03: And switching gears a bit, let's talk about artificial intelligence. So it's obviously a game changer in lots of different areas. It's opening up opportunities, but there's risks that come along with it. So how can legal and finance work together to mitigate these risks and maximize the benefits of integrating artificial intelligence into business models?

Eric - 00:17:26: I love the way you positioned this because indeed, that's the way we see it. It's risk and opportunity. And what's fascinating about this is we're at the infancy of what it can do, right? So, I mean, we're still very much assessing it. And as in anything new, you want to make sure you don't miss the boat on it, especially for something as transformative as this can potentially be. But at the same time, everything that it brings. And in that case, obviously, there is a heavy legal risk to it. I mean, think about it like this. And we hear like with media, for instance, how it's transforming media, but how it doesn't, you know, it struggles to respect like all the IP and the copyrights and things like that, because it's not programmed for that necessarily. So I think you need to be to stay very, very close to legal to manage those risks. And again, it's in the best interest of finance because there are tremendous potential financial implication to that. So the overall risk assessment, the monitoring, the communication, the reporting, the governance, the accountability, we see heavy regulation being potentially rolled out and starting to be rolled out. We see some of that happening in Europe right now around AI, you need to be on top of these things because there's potential big financial implication if you don't respect those things, as well as company reputation. So I think legal is very instrumental in following that. It's such a new field as well. It's actually not that easy to get that necessary expertise because it's changing so much. So you really want to make sure you've got the top talent there to help you stay on top of it and bring fully control. But I'm talking a lot about the risk side where legal can be very instrumental. But again, it brings so much unfortunately, going forward as well, it will very heavily based on the industry that you're in. But if you can tap that potential, you can automize tasks that you would never think of before. And you can do things so much quicker and actually better. And legal actually itself is one of the functions that is being impacted by that. Finance is definitely will be one of those functions as well. So I think you want to make sure that you don't miss the ball on that to leave all these potential cost savings and better output out there. It also removes potentially tasks that were not necessarily that much fun to do in the first place anyway. And so, you can better use those resources to actually do more value added activities. Like in finance, we've talked about for many years about how you want to go from crunching number to actually analyze number and be able to do FP&A. I mean, we've evolved a lot as organizations towards that as a finance function, I should say. And ERPs are a big enabler of that. But now AI can bring it like several notches above if well-handled. And same thing for legal.

Megan - 00:19:49: And speaking of cost savings, how can CFOs optimize legal spend? Where is it that you see most of the money being wasted in this area?

Megan - 00:22:28: So I'm sure you just touched on it a bit, but I'm just curious if there's anything more. But what are some of the most innovative solutions that you've seen for financially streamlining legal spend?

Eric - 00:22:39: Obviously, again, we did touch a bit on, I've seen some amazing things being done on the in-house front. I've done also some amazing things done for the external console, but maybe to add a bit of color more, one thing I've seen as well that is super interesting is we often have these special projects, like a new regulation comes in, or I need to go through like a massive amount of data and stuff. And we have this teams approach that we call it, where we come in and we have a team leader. We give you exactly the various skill sets that you need for exactly the time you need them again. And basically, it's pretty much a turnkey project from A to Z that is fully managed by that team. And we are seeing teams of tens of people and stuff actually coming at company. And it's actually quite innovative because we know how disruptive those projects could be for a corporation. I mean, again, I'm well-traveled, so I've seen it. And then you end up mobilizing a big chunk of your core resources on these projects. And then the day-to-day of the business starts to suffer and you see the commercial things dropping. And that's not what we want. By coming in with that turnkey solution project, like team project, to me, that's super innovative. I've seen it work so well in various different fields. And that's something that Axiom is able to do that I think could be quite innovative on top of, again, the in-house and external spend that we just covered.

Megan - 00:23:50: I'm curious again, but are there any projects at Axiom or any legal projects that Axiom would not touch or take on?

Eric - 00:23:57: Well, we have our alleys like everybody else. Like I would say, like, for instance, I did a lot of high level M&A. We can definitely help on some areas like the due diligence and things like this. But overall, like the actual contract reduction, everything like this is one of those things that I think the big law firms are actually extremely good at, where they can throw like an army, like 10 lawyers if they have to, like working almost 100 hours a week kind of thing. And then really crashing through these hundreds of pages of agreement. I mean, it's not that we wouldn't touch it, but I think those big law firms are probably more suited to do these things than an Axiom would be. But then after that, when it comes, that's the thing, like you want that piece to be with those big law firms because they're amazing at it. But then after that, you have all the registration, all the regulatory piece of it that is a bit more recurring, that is not such high pressure because you have to work at the same pace as the actual M&A negotiation. And for those things, why do you have to pay again that big high fee when you can go to an Axiom and get it for a third of the cost? And it will be as well done in the same time. So to me, like, again, it's the combination of it. It's never instead of it's a lot of it is in combination, I think works amazingly well.

Megan - 00:25:03: And as a CFO, what safeguard should be put in place to ensure that financial solutions don't have an impact on the quality of legal support? Because obviously, poor legal work might actually drive up your legal costs.

Eric - 00:25:19: I'm such a big believer in that. And I'm so happy you're asking because indeed, to me, that is key. Again, I told you how much I'm a believer in the legal function itself. And again, fundamentally, it's there to assist you. Like, does the risk management ensure you're compliant everywhere? You cannot screw that up. I mean, this is super duper important. So as much as a finance person, you want to start cutting costs and you want to be conscious about those things. These are areas that actually you cannot let down. And that's often why we end up going with big law firms, because you want to be three seatbelts sure that you're not going to mess this up. So to me, that's why at the end of the day, you want to be conscious about this. You want to be aware that there's something out there, but you cannot go cheap. You cannot just say, hey, I could save a third. Maybe I can actually save more than that if I go with like a cheap talent or like a more junior person and stuff. You need to make sure that these things are properly staffed. If not, you're going to regret it. And believe me, you're going to go back running to those law firms and pay those big rates because the cost of that noncompliance is much more than any saving you can get by doing this. My point is, there is a way to do it with even better talent. We see it. I mean, those law firms, usually they will send you to their junior people and they will be supervised. We can give you senior talent. I've been doing these things for 15, 20, 25 years. They know exactly what they're doing. Don't go cheap on that. Make sure you have the right talent. If not, that outsourcing model would be a complete failure.

Megan - 00:26:38: And how would you advise planning for 2024 with legal departments amid all of the economic and global uncertainty that we have in the world right now? And how can legal and finance benefit from working together?

Eric - 00:26:52: I think the key word is to be flexible. I mean, the economy is evolving quite a lot, as we know. Like 2020 years was one of those years of uncertainty. There was big fear of recession. We didn't really know. As we embark on 2024, following that 2023, you got to be ready because at some point, will the economy going down a little bit more? It seems less and less a risk, but at some point it will also take off. But how much will it take off? So we're not in a position that you can say, hey, let's gear up and let's be ready for ramping up. We expect a ramp up, but we don't know at what speed it will be ramping up. And if it keeps dragging like it did in 2023, you need to keep that cost-cutting mindset a little bit because top line will be difficult. So you need to manage that bottom line. So to me, we embarked 2024 on a journey that you need to really watch the KPI, see where the economy is going, and then really remain flexible. So if you see that it keeps going down, you keep driving costs down. If you see that it starts ramping up, you can progressively ramp up as well because you don't want to miss those opportunities. If it really starts peaking and we're going back to like a booming economy, then you want to ramp up quickly. So that requires a lot of flexibility, requires to really keep your eyes on the road and looking at exactly what's happening. So you adjust a little bit proactively if you can to make sure you've got the right resources not to miss the opportunity.

Megan - 00:28:08: And last question for you, but what is it that is keeping you up at night? Is there anything on the horizon that worries you?

Eric - 00:28:16: I try to sleep well. I think it's important to be awake the whole day. At the end of the day, I think what allows you to sleep well is to surround yourself properly. Obviously, finance, we're number crunchers. We love our numbers. We love our Excel or ERP. But especially at the CFO level, it's a people business. If you surround yourself with the right expertise, it will allow you to sleep well at night because your people will be on top of things. This way, that allows you to be on top of things, make sure that all the risk is properly handled, that all the transactions are properly processed, and that you get the right analysis at the end that doesn't omit major things. And that obviously includes not just the finance function itself, but that relationship with the other department. That's why, again, I've mentioned several times how strong I feel about that relationship with legal because it's a very key area that allows me to sleep well at night. Because if we go cheap there, if it's not done well, and we have big regulatory issues or whatnot, this will significantly undermine the company. That close partnership as well with the commercial team is super critical because you want the business to be doing well. You know, my past, and then demand relationship with manufacturing was critical. So the point is to make sure you surround yourself with the right people, to have the right relationship with them, that allows you to properly manage the overall risk in the business. And with that, hopefully, you can get some quality sleep and not be overly worried.

Megan - 00:29:29: That's great advice. Eric, thank you so much for being my guest today.

Eric - 00:29:33: It was a pleasure and thank you. And always happy to help drive further the overall finance function and role.

Megan - 00:29:38: Yeah. Thank you for finding the time to be here with us today to share your experience and knowledge. And I wish you and Axiom all the best.

Eric - 00:29:47: Thank you very much. A pleasure. Anytime.