Zoe Baird's Briefcase Is Brimming With Ideas

Soon after becoming general counsel at Aetna Life & Casualty Co. last year, Zoe Baird was named a lead negotiator in an antitrust suit waged against Aetna and six other insurers. She seemed an odd choice. Soft-spoken, with a polite, gracious manner, Baird had little experience in insurance matters. The case had dragged on for three years, frustrating seasoned insurance lawyers and threatening the underpinnings of the industry. But Baird settled the case in three months. "The stumbling block had been forming a consensus," says James W. Walker Jr., general counsel at CIGNA Corp., one of the other defendants. "She was particularly impressive in helping reconcile differences."

The 39-year-old Baird is considered a legal wunderkind. One of the youngest general counsels of a major U. S. company, she counts among the highest-ranking women in Corporate America. At 27, she was a legal adviser to President Jimmy Carter. At 34, she was picked by Chief Executive John F. Welch Jr. for General Electric Co.'s legal team. Now, as Aetna's top lawyer, she's angling to shape public policy and rewrite the relationships between companies and their attorneys. Says Editor Steven Brill of American Lawyer magazine: "She's a trailblazer."

LEGAL LAB. Baird has ambitious plans for reining in legal bills. For one, she urges abolishing hourly rates. "It doesn't make any sense," she says. "Lawyers sell their time, but that's not the product." Along with Robert E. Litan, a fellow at the Brookings Institution, Baird is studying various fee arrangements to determine which will best improve productivity and save money. They plan to unveil their findings at the American Bar Assn.'s annual meeting in August.

For now, Aetna is Baird's testing lab. A key issue is "value billing" -- charging not for the time taken but rather for the work actually performed for a client. She also is experimenting with "full purchasing." Common in manufacturing but rare in law, the law firm agrees to discount its fees in return for a set number of cases.

Other companies are taking note. "Some of these ideas have been around for a while," says Price Waterhouse corporate legal consultant Rees W. Morrison, "but they've really picked up pace since she got to Aetna."

Baird describes the job of general counsel as "strategic activist." "Her role isn't just as a lawyer," says Aetna President Ronald E. Compton. "She sits in on all major Aetna policy decisions." At the same time, Baird is pushing her 100-lawyer department to use litigation to advance Aetna's regulatory interests and to be active team players. Aetna attorney Katherine McG. Sullivan, for one, is working with the problem-loan workout team. Says Sullivan: "Hopefully, not one extra dime comes out of a deal."

'RARITY.' The daughter of a union organizer and a jewelry designer, Baird grew up outside Seattle. From early on, she was interested in public policy. As a sophomore at the University of California at Berkeley, Baird took a break to run the congressional campaign of Democratic Representative Brock Adams. She graduated from Berkeley's Boalt Hall School of Law in 1977. At the Justice Dept., she was recruited by Carter's counsel, Lloyd N. Cutler.

When Ronald Reagan became President, Baird moved to the law firm of O'Melveny & Myers. There, she teamed up with former Transportation Secretary William T. Coleman Jr. on a Supreme Court case testing the federal government's role in municipal labor disputes. They lost the case, but by a 5-4 margin. "Zoe is a superb lawyer who understands how the federal government works," says Coleman. "That's a real rarity."

That talent attracted GE's Welch. At the end of a breakfast meeting in 1986, recalls Baird, "he asked me to come work for him and do what I thought needed to be done." A great deal, it turned out. She handled crisis management for the then-scandal-ridden defense contractor and developed GE's compliance program. Following Baird's recommendation, Welch hired Benjamin W. Heineman Jr. as GE's general counsel.

At first, Baird wasn't interested in Aetna's offer. But executives at the company convinced Baird that she could help shape public policy affecting Aetna. She still is formulating her ideas, but health care is a key concern. One goal is to devise a private-sector initiative that keeps the government from controlling health care reform. It's too soon to tell whether Baird will live up to her own expectations. Friends predict she'll make her mark at Aetna and head back to Washington if a Democrat is elected President. Says Cutler: "Zoe would be a strong candidate for a Cabinet position." Wherever she lands, Baird is sure to be noticed.

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