The hidden risks of a poor government affairs strategy and three steps to overcome them.

by Todd Mitchem

 Todd Speaking at CWAG to Attorneys General about Marijuana Standards

A call came in, and a new potential client was on the other end, just a bit frantic. As it turned out, her company had attempted to work with key regulators in her state around important, albeit simple, violations which had occurred in three of her marijuana businesses. She was feeling overwhelmed because her last lawyer had been rude to regulators, went over their heads to senior bosses in the division, and, overall, she felt as though she was being treated like a criminal for basic violations. Luckily for her, we were able to assist.

Our first step was to execute what we call, “Walking it Back.” This is essentially our team of government affairs leaders talking directly to regulators in an attempt to walk back the tension or hard feelings that have been created. Because we are not attorneys, this is a simple process of relationship building, mixed with negotiations. However, it’s only simple if you understand three key factors for success. Below are the three key facts for success we utilized to walk back this client’s challenges, build strong relationships with the same regulators her attorney had upset, and utilized the time regulators gave us to help the client clean up their act.

1. All companies are not criminals and not all regulators are against you – This is a lesson for all of you. If you are a company working with government officials, remember not all government officials are against you. Sometimes I need to remind my clients they must drop the victim mentality. If you are a company with a violation or many violations, you need to acknowledge the issues. If you act and think like all regulators are against you, you immediately put yourself in a position of defense, agitation and hostility. The way to work with regulators is to operate on a professional and personal level. Take ownership over your mistake, use it to find solutions, and always work toward collaborative solutions. Never threaten to sue, take action or refuse to cooperate. This only spells trouble for you because, even if you win this one, you are certain to lose a bigger fight down the road. Remember, ego can destroy your business and you. In the world of working with government, you are not trying to win, you are working to get it right.

On the other side—for all you regulators reading this—not all companies or leaders are criminals. Sometimes people run a business in a sloppy fashion. Other times they simply have below par team members who caused issues. And, as in my story above, they can often get very bad advice from attorneys, other consultants, or colleagues in their industry. This happens in every business sector. As a regulator, if you have your mind set on collaboration to solve challenges, you can find better solutions.

 Posing with Attorney General Kamala Harris

Posing with Attorney General Kamala Harris

When people are legitimately breaking the law and show no remorse, then you can turn on your law enforcer tools. Until then, act as if people are doing their best and simply need the right push to turn things around. For example, we have successfully negotiated many solutions for our clients which turned out to be caused by sloppy business practices rather than bad behavior. As in my example, once the regulator worked with us, let our firm solve the challenge with the client, and gave us time to do so, the companies were able to turn things around for the long term. The hardest journey for many of my regulator colleagues is to give people the benefit of the doubt for being human and then give them a chance to make things right in the system. Ask yourself, as a regulator, do I need to kill a company to push them to do the right thing?

2. Respect, Respect, Respect – Recently, I was sitting at the negotiation table with a company we represent in the marijuana industry. On the other side of the table were regulators from the state our client was operating in. We were just about to begin the negotiation where we were asking the state to allow our client six months to solve one critical issue around pesticides. The CEO, my client, came walking in with his team. He was wearing shorts, a t-shirt, a weed-centric baseball hat, and flip-flops, while the rest of his team were wearing business attire. The regulators also were wearing suits. As they began to enter the room, I intercepted and immediately pulled the CEO out of the room and said, "Go change and come back!" He first looked stunned. When he said, "Why?" I said, “Because these regulators earn far less than you and work each day to enforce regulations, while oftentimes getting disrespectful commentary from people in the industry. Therefore, you are going to demonstrate respect or this negotiation will not go well." We started without him and when he returned with a suit on, it definitely set a tone. The negotiation ended up with a very positive outcome for both our client and the regulators, and my client learned a lesson.

 Todd Mitchem on a panel discussing regulatory framework and how to make it better. With key leaders from Washington, Colorado and Rhode Island

Todd Mitchem on a panel discussing regulatory framework and how to make it better. With key leaders from Washington, Colorado and Rhode Island

Respect is something we have forgotten in our society. We think, because we may earn more than others, we immediately get respect. We believe anyone on the other side of a table in negotiations needs to earn OUR respect. We are always spouting about respect but we often show very little of it. Respect is frankly something you not only earn but must demonstrate, even when you are not getting your way at first. Respect is not “you first.” Respect is NOW! You may not like a person on the other side of the table, but you must demonstrate a respectful behavior from the start. This works on both sides. As I’ve worked with regulators all over the country, I have met some who—no matter what a client does to demonstrate respect—simply do not reciprocate. This is also the wrong path and will not get the right results on behalf of consumer protection, consumer health and safety and the rule of law. My father, a master negotiator, would always come into any union negotiation with a suit on, showing respect for the other side, and he always acted in a positive, pleasant manner. This behavior set him up to be one of the most respected leaders in his company. I want you to always take ownership over your respect for others. If someone e-mails you, take the time to respond.  When you enter a room, always show respect for everyone present. When you are negotiating, and even if you have the strongest position, ALWAYS act with respect.

3. Never reach top down to solve a problem - One of the early lessons I learned as a leader was this: just because you know the leader of an organization, or the top person in a government office, that does not mean that person needs to solve your small problems. I have often witnessed the peril of fellow government affairs advisors who shoot far too high in government to solve a surprisingly small challenge. This almost always backfires and leads to negative results all the way through the system. It inevitably can damage the person or company’s reputation for a long time.

Relationships are the key to building thoughtful negotiations. When solving problems, my team and I work very hard NOT to start at the top. For example, just because my team and I are in close contact with many top officials at both state and federal levels, it doesn’t mean we reach to those levels to solve simple issues in a local jurisdiction. NO. Why? Because no one wants pressure from a high-ranking official to solve a challenge which they can solve by themselves. It's a little like someone running to mommy when siblings argue. “I’m gonna tell mommy on you,” starts sounding the same as, “I’m gonna tell the Governor’s Office on you.” Neither is effective at achieving real resolution.

If you want to solve a difficult situation within your company or with a government agency, work to build lasting positive relationships with the people, division or leader you have the challenges with. While a more demanding endeavor, I promise this yields better—more lasting—results. The one exception to this rule is if someone at the level you are engaged with is acting improperly or doing something unethical. Then, AND ONLY THEN, should you seek to climb up the levels of influence. I recommend to you, as I do to our clients—work with people in front of you without going around them as your first means of problem solving.

The next time you are going into a heated meeting with lawmakers, law enforcement, or businesses you regulate, take these simple yet effective tools with you. You will be surprised at the positive results you can achieve, without lawsuits, aggravation, or aggressive negative outcomes.