Not only has pro bono become a watchword and a shared value among in-house legal departments, it is now an essential criteria for Corporate Counsel magazine’s “Best Legal Department” Award.  Exelon Corporation, a Signatory to the Corporate Pro Bono Challenge℠, was recently selected by Corporate Counsel as one of two finalists for its fourth annual Best Legal Department 2009 award.  Under the helm of Executive Vice President and General Counsel William Von Hoene, Jr., Exelon has expanded its legal department’s commitment to pro bono and diversity, making them two of his department’s top priorities.  It is this commitment, among other strengths, that made Exelon a contender for this honor.

In 2008, nearly all of Exelon’s legal staff, including all of its paralegals, voluntarily participated in pro bono projects.  As the article notes, “Last year, 54 of the legal department’s 59 attorneys, and all of its 15 paralegals, spent a combined total of more than 1,600 hours on pro bono projects.”  Exelon’s legal department has worked on a variety of projects involving homeless and family shelters, senior centers, and child advocacy centers, and two of its lawyers and one paralegal have spent over 400 hours working on a death penalty appeal case.

Corporate Counsel distributed a questionnaire, developed by editors and reporters, to the general counsel of all Fortune 500 legal departments.  Along with pro bono, the survey asked about a range of issues, such as budgets, staffing, and litigation strategy.  The magazine’s editors and reporters evaluated submissions and selected the winners.

Corporate Pro Bono would like to congratulate Exelon on its achievement and wishes the department further success in its pro bono endeavors.

Carrot and Stick Finalist: Advancing Minorities and Helping the Poor Are Top Priorities at Exelon
Corporate Counsel
Amy Miller
June 1, 2009

The painting of Muhammad Ali standing over a prostrate Sonny Liston is hard to miss in William Von Hoene, Jr.’s office overlooking Lake Michigan. It hangs from floor to ceiling. The general counsel of the Chicago-based Exelon Corporation, the country’s largest electric and gas utility company, is clearly a sports fan. Autographed baseballs line his bookshelf, while a side table made from his little league baseball uniform sits beside it.

The portrait of The Champ, Von Hoene’s personal hero, is more than sports memorabilia, though. It reminds Von Hoene that Exelon’s legal department can be, like Muhammad Ali, an agent of social change. “I want us to be the best law firm in the country,” Von Hoene says.

The well-dressed Von Hoene may not look like a social activist at first glance. But he’s made expanding pro bono work and improving lawyer diversity two of his department’s top priorities. And this emphasis, among other qualities, made Exelon’s legal department one of our two finalists in this year’s Best Legal Department competition.

When it comes to diversity, Exelon isn’t just trying to hire more female and minority attorneys in-house. It’s making sure that its outside counsel are doing that, too. And Exelon doesn’t stop there. Von Hoene and his department carefully track whether women and minorities at outside law firms actually work on Exelon’s legal matters. If they do, Exelon rewards them with more work. If they don’t, firms might not have Exelon as a client for long.

“It’s not just a stick they’re chasing you with,” says Dennis Johnson, a partner at Pugh, Jones, Johnson & Quandt, a small minority-owned Chicago firm that has handled a wide variety of work for Exelon for more than five years. “It’s a real carrot.”

Exelon’s attorneys are just as dedicated to pro bono work. Nearly all of Exelon’s legal staff voluntarily provide free legal services for people in need, from helping seniors write wills to assisting a death row inmate with a post-conviction appeal. Last year, 54 of the legal department’s 59 attorneys, and all of its 15 paralegals, spent a combined total of more than 1,600 hours on pro bono projects.

“We walk the talk,” says associate general counsel Kevin Stepanuk, who helps coordinate the pro bono program. “We do it because it’s part of who we should be as good citizens. And it probably makes me a better lawyer.”

That commitment might not be what people expect from lawyers who work for the largest operator of nuclear power plants in the country. True, Exelon’s attorneys deal with a mind-numbing array of federal and state regulations. They fight lawsuits all over the country. They’re orchestrating a hostile multibillion-dollar takeover bid of wholesale power generator NRG Energy to diversify Exelon’s business portfolio.

Yet it’s the legal department’s efforts to champion diversity and community involvement that’s made the legal community take notice—and recognize it. In 2007 Von Hoene won the Association of Corporate Counsel Pro Bono Award. Last February he won the American Bar Association’s 2009 Spirit of Excellence Award for his efforts to promote diversity in the legal profession.

“I only wish there were more corporate concerns with that kind of commitment,” says Manuel Sanchez, a partner with the minority-owned Chicago firm of Sanchez Daniels & Hoffman, which has handled cases for Exelon for about ten years. “Even in this down economy, I don’t see a downturn in their -commitment.”

Von Hoene, 55, has advocated for more workplace diversity for years. Before joining Exelon in 2002 as deputy general counsel in charge of litigation, he was a partner at Jenner & Block in Chicago handling white-collar and civil litigation. There, he cochaired the firm’s diversity committee and developed a comprehensive diversity program for all the firm’s offices. He says that encouraging diversity is a personal and a professional mission. He was raised by a single mother. His wife is African American—she gave him the portrait of Muhammad Ali. “I’ve been exposed to challenges many white men don’t get a firsthand view of,” he says.

Exelon actively recruits minority and female attorneys in its Chicago and Philadelphia offices, and takes part in a summer associate program for diverse first-year law students. But progress among new hires is slow, thanks to a low turnover rate. The percentage increased slightly in 2008 to 21 percent, up from 19 percent the year before. Meanwhile, the number of female attorneys fell from 38 percent to 36 percent.

The department is also trying to improve diversity outside the company. In 2005, after his elevation to acting general counsel, Von Hoene helped set up a system to track who actually handles Exelon’s legal matters at its 33 preferred provider law firms, which include Morgan, Lewis & Bockius, Jenner & Block, and Mayer Brown Rowe & Maw. The firms give Exelon a breakdown of their attorney rosters by race, gender, and ethnicity. Then Exelon’s legal department uses monthly billing information to determine the number of women and minority attorneys working on its matters. Each year, Exelon sends the firms a report, showing how they rank. Good diversity numbers are rewarded with more work.

“We have some blunt conversations with them,” says deputy general counsel Joan Fencik. “We have really objective data.”

The program is having an impact. While Exelon declined to say how much it spends on outside counsel annually, it did say that the department’s spending on minority and women-owned firms is increasing. Of the department’s total outside counsel budget, it said 17.8 percent went to five minority or women-owned preferred provider firms. That’s up from 3.7 percent in 2005. Meanwhile, spending on work done by diverse professionals at the firm’s 28 nonminority and women-owned firms now makes up about 31 percent of all spending on outside counsel.

“People get it now,” Von Hoene says. “At first, we had a few firms that declined to give us the information we requested. And when we told them they couldn’t have a relationship with us, they acquiesced.”

But sometimes even certified minority and women-owned firms struggle to do well on Exelon’s annual report. “I haven’t always been entirely pleased with the report card we get,” says Dennis Johnson, a partner at Pugh, Jones. “But overall, I respect they way they do it.”

Von Hoene is just as passionate about expanding pro bono work as he is about improving diversity. He also chaired the pro bono committee when he was a partner at Jenner & Block. The firm’s pro bono program was ranked number one in the country by The American Lawyer in 2008. “Pro bono is how I grew up,” Von Hoene says. “I was taught that it’s our obligation as attorneys.”

Exelon encourages its lawyers to do pro bono by counting some of the time they spend on projects toward their 1,750 billable-hour requirement, which some attorneys routinely exceed. They get full credit for the first 20 hours of service, and one credit for every two hours after that, up to a maximum of 50 hours. And work done on pro bono projects is also tracked over time. “From the moment you step in the door, you know it’s a priority,” says assistant general counsel Amy Tarr, who was recently appointed to help coordinate pro bono projects for Exelon’s eastern region.

It’s not hard to find Exelon’s attorneys providing free legal services in their communities. They work in homeless and family shelters, senior centers, small business centers, and child advocacy centers. They’ve monitored elections on Election Day.

But again, the law department doesn’t just encourage in-house lawyers to do more pro bono work. The department tracks it, too. Two coordinators report what Exelon’s attorneys do to Von Hoene. They also rate outside counsel, and require them to provide data about their attorneys’ pro bono work.

Exelon’s lawyers frequently pair up with outside counsel on pro bono projects. Last June, 12 people from Exelon’s legal department hosted their first ever “Wills for Heroes” event in Philadelphia, along with lawyers from Ballard Spahr Andrews & Ingersoll and Reed Smith. The program was founded in the aftermath of September 11 and helps police, firefighters, and other emergency personnel prepare wills, living wills, and medical power of attorney documents. The lawyers spent one Saturday at the Limerick Power Station helping almost 40 clients.

All these projects help polish Exelon’s public image. But the legal department isn’t afraid to get involved in politically sensitive projects as well. Two Exelon attorneys and a paralegal teamed up with attorneys at Sidley Austin to help a death row inmate in Alabama appeal his death sentence. Glenn Newman, a deputy general counsel who worked on the case, says he’s long been opposed to the death penalty. But Newman decided to help appeal the inmate’s conviction because he believes the inmate didn’t receive a fair trial. Exelon’s staff has logged more than 420 hours on the case since June 2007. “Whatever you want to do, within the bounds of reason, you can do it,” Newman says. “It’s one of the things I like best about the legal department.”

But expanding pro bono and diversity are hardly the department’s only achievements. Exelon’s lawyers deal with a wide array of litigation, much of it handled in-house. Cases range from typical employment, personal injury, and rate cases to litigation related to tritium, a radioactive substance that’s discharged from nuclear facilities. In April of last year, the Northern District of Illinois granted a partial summary judgment in favor of Exelon against a uranium supplier. The supplier had refused to deliver 1.4 million pounds of uranium even though it had guaranteed delivery. The parties settled that month, and Exelon recovered legal fees, cash, and uranium valued at more than $50 million.

The law department is also charged with helping the company meet a goal of reducing, offsetting, or displacing more than 15 million metric tons of greenhouse gas emissions per year by 2020. That means retiring less efficient fossil fuel plants, increasing energy efficiency, and improving the fuel efficiency of its vehicles. In April the Environmental Protection Agency announced that Exelon had already reduced emissions by more than 35 percent from 2001 levels.

Von Hoene and Exelon’s legal department face many more challenges in the months ahead, though, not the least of which will be cutting costs. More work will likely be brought in-house as the company’s budget shrinks because of declining demand for energy and lower prices for natural gas. Von Hoene says he will likely start renegotiating with outside counsel for lower fee arrangements next year as current two-year contracts begin to expire.

Meanwhile, the biggest day-to-day challenges will remain: helping the business side keep Exelon’s power plants operating and customers’ lights on. “If we don’t do that well,” Von Hoene says, “everything else is window dressing.”