Joshua Stein, general counsel for San Francisco-based humanresources software company Zenefits, is half-coach, half-soldier.Literally.

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Related: Zenefits was the perfect startup--then itself-disrupted

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Stein joined the Army in 1992, fresh out of college, lookingforward to a 20-year career complete with what gets shown incommercials—“jumping out of airplanes, running around in the woods,firing off weapons systems,” he said. But a drawn-down army,lessened in ranks following the end of the Cold War, Stein said,proved less exciting.

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So, after four years of being a soldier, he became a coach. Or aski instructor, at least, in Colorado.

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Then, inspired by his uncle, a criminal defense attorney, Steinwent to law school.

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More than 15 years later, Stein has served as a judge’s clerk,an assistant U.S. attorney, a senior associate at Quinn EmanuelUrquhart & Sullivan, an associate general counsel for privatemilitary company Blackwater USA and general counsel at OptumRx.

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In 2015, he joined Zenefits as its general counsel, but waspromoted to chief compliance officer in February 2016, in responseto the company’s insurance licensing scandal. Some of the company’sinsurance sales reps were found to be unlicensed—in violation of the law in California and otherstates.

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In the wake of the scandal, former chief executive Parker Conradwas ousted, scores of employees were let go and incoming CEO David Sacks promised a new company.

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Related: Zenefits: A story of confidence, culture,and resignation

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Stein helped the company settle with multiple states’ insurancedepartments and, in November 2016, became GC again.

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Our sister publication, The Recorder, recently sat down withStein to discuss his company’s response to its licensing issueslast year, project management and leadership skills, and what Steinvalues in outside counsel.

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The following interview has been edited for clarity andlength.

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The Recorder: How big is the legaldepartment?

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Joshua Stein: [We have] 14 positions, 10 are filled and we’rehiring for four. It’s [all] legal and compliance. The legal folksare all lawyers. There’s no paralegals, no assistants, no overheadlike that. It’s six lawyer positions and eight compliancepositions.

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TR: That’s a beefed up complianceteam. Has it always been that way?

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JS: No. Our first full-time compliancepositions started in February 2016.

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TR: And it was a response,essentially, to the firing of Parker Conrad and other regulatoryissues?

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JS: Yes, it was. That’s when I was named chiefcompliance officer. That was the first compliance position. Butit’s also something that’s driven [our company]. Our product ishighly regulated and covers such a broad waterfront. Benefits—bothinsurance and noninsurance—[are] complexly regulated on state andfederal level. Payroll—complexly regulated, with tie-ins onregulations on federal and state level. And then HR andemployment—again, highly complex, both federal and state componentsso, our folks are not just compliance like you think about incompanies where they focus on the company’s behavior. Here, they’revery much focused on product, and that’s part of what makes it sofun to work here as a legal compliance professional. You havereally deep input into the product.

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TR: Can you lead me through what thecompany experienced beginning in February 2016, when there was thisflurry of activity to steer the ship, get settlements with stateinsurance departments and get back to operating in those statesreally quickly?

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JS: We never stopped operating in any state.There’s been no action to restrict our ability to operate in anystate, and we’re proud of those outcomes. The departments ofinsurance were tough but very fair, and they recognized that we didan extraordinary level of remediation. We reconstituted our boardof directors, we changed our executive leadership, we weretransparent and open with our regulators, we engaged a third-partynational consulting firm to give an exhaustive report on priorcompliance issues. We fixed all those issues.

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Not only did we put in place these high-tech controls, but weopen sourced them. It’s called Licensing Plus, it’s available toanybody in the industry. Our compliance folks created a softwarepackage as a free app on the Salesforce app exchange so that anycarrier or any broker agency that uses Salesforce can use [the]open source, free app to enforce licensing controls with all theirinsurance producers.

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It was developed by our own staff here. Several nationalinsurance carriers are using it … And I think what’s reallyimportant though is we got through that and we did it in a way thatallowed the business to continue to operate and focus on being thebusiness. From the legal department’s point of view, we’re dealingwith all this fallout, but from a business point of view, thebusiness didn’t pause.

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TR: If you’re hiring a firm for a newmatter, what separates all the teams from the rest of the, say,Harvard grads?

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JS: The usual is deep expertise in the law,really good analytical skills, et cetera, et cetera, but the thingsthat are maybe unusual, or things that maybe that outside counseldon’t think enough about— one is project management skills. I’llgive you an example. Our primary insurance regulatory counsel is[Orrick, Herrington & Sutcliffe] partner Tom Welsh and histeam. On March 1, 2016, we delivered to all 51 state departments ofinsurance, 50 states and D.C., each one got—[these are] severalhundred pages—got an individualized, customized report. Thatnational accounting firm had gone and reviewed all the transactionsthat had taken place for the prior two years and analyzed them. Itwas a report on those transactions, the methodologies they used,in-depth [information] on the company and what happened. Those arevery complex reports. To assemble all that and get that all out thedoor in one day is a huge logistical undertaking, and Orrick did afantastic job.

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Project management probably isn’t the right term, leadership isthe right term. You always have different groups on any project,you’ve got outside legal, in-house legal, other folks inside thecompany, and keeping all those wheels turning and having them workefficiently so you get high quality output on time, is a lot harderthan it seems.

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TR: How do you screen for thatleadership quality when trying to find a new firm?

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JS: You can get a good sense of it just byasking them about some matters they handled before and how theyorganized [them]. I’ll see it other ways—how well do they delegate?When I go to a meeting, is there an agenda distributed ahead oftime? Do we know all the action items from the last meeting andwhat their status is?

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For instance, internally here, there’s a punch list, there’s anagenda for every meeting, and if there’s not, we don’t meet. Andthen after every meeting, we track the action items and we seewhere we are.

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A lot of times things won’t happen. Everybody’s got 10 pounds ina five-pound bag, but the only way that you do a good job is byruthlessly prioritizing what you do do, and what you don’t do, andyou can’t do that if you’re not tracking what’s on everyone’splate. That sounds very basic, but you’d be surprised how manypeople don’t do it. I’d say the two greatest management tools are,one is a checklist or punch list, and the other is a huddle. Whenthings were hot and heavy, we were meeting every single day, and Iwould put everybody on the call. Not just the partner at the lawfirm. Everyone on their team, who is participating in that matter,should be on that call …It’s very empowering. It improves moralewith those associates where they’re on the call with theclient.

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