The Legal Department

Run The Board: Governance Essentials For The Legal Department With Lisa Hatton Harrington

LEGD 7 | Governance Essentials

 

It is quite the leap to go from in-house counsel to the board of directors. The transferable skills are definitely there, but there are governance essentials you have to practically learn on the job. We talk about this fascinating topic with today’s guest. Lisa Hatton Harrington has been Corporate Secretary and Chief Legal Officer to global, publicly traded companies, privately held companies and is on the board of directors of public companies, private companies and several non-profits. In this episode, she shares governance essentials for The Legal Department and also offers tips for landing your first board seat. Tune in!

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Run The Board: Governance Essentials For The Legal Department With Lisa Hatton Harrington

My name is Lisa Hatton Harrington. I’ve been General Counsel and Chief Legal Officer of several different prominent companies including general counsel of three public companies and division GC of two other public companies. I’m on 3 boards, 1 public, 1 soon-to-be public, and 1 in education. I’ve also previously been on other public and volunteer boards. A fun fact about me is I am a fourth-generation Californian and I have two wonderful daughters in college in Southern, California.

I’m so excited to have my longtime friend Lisa Harrington joining us. Welcome, Lisa.

Thanks for having me.

In putting the show together, I thought a lot about my network and people I knew. You are somebody who’s had so many different roles in legal, outside of legal, and now as a board member. I thought you had a unique background that would help our audience see all the different facets of the role. Thank you for being here. I don’t want to go soup to nuts on your career journey, but can you give a high-level overview of your career in legal?

I started out working in law firms for a number of years like most people do doing part litigation and part corporate. Eventually, I decided that going in-house sounded like a good idea. I moved in-house for a client which was an insurance company. I did that for many years and decided that I wanted a change of pace to do something a little more cutting edge so I joined Fandango, the movie ticket company. When I joined, it was only about six years old. It was still a startup. That was my first experience being GC of a smaller tech company and also being corporate secretary that was going through an exit because we ultimately sold the company to Comcast.

I think we first met when you were at Fandango.

I think so too. It was in Fandango, Comcast, and then NBCUniversal. It had a number of changes over the years but it was an interesting time going from a small startup to a huge multi-billion dollar company. You learn so much about corporate structure, governance, and compliance. There are so many things you learn both during your diligence process and as part of being a huge company coming from a startup.

LEGD 7 | Governance Essentials
Governance Essentials: It was really an interesting time going from a small startup to a multi-billion-dollar company and you learn so much about corporate structure, governance, and compliance.

 

I don’t know why Fandango is such a big brand. I didn’t realize at that time when we first knew each other that it was only a six-year-old company. How big was the legal department at that time?

When I joined, I was it, which was interesting. I was crawling around on the floor, looking through dusty boxes and file cabinets because this was 2006 and not everything was digitized back then. Trying to find the documents that we could put together for diligence to provide Comcast was interesting. Fandango started in 2000 and it was pretty much a household name but it grew and grew once we had the backing and the funding of Comcast.

When you fold it into a bigger company, you have been the GC of Fandango. Did they respect that vertical or did you integrate into a larger legal department? How did that work?

At the time, Comcast was truly a cable company and they had decided they were going to take this big chunk of money which now is called Comcast Ventures, but it didn’t use to have a name. They wanted to expand their non-traditional media investments and their footprint. That was great for us because they gave us a ton of money and said, “Go build this.”

They more or less backed out unless you wanted help, in which case, they would provide you whatever help you wanted, but it was very much a standalone role. Other than having the funding in the backing of a huge company like Comcast, you never would have known the difference, which from my perspective was the best-case scenario.

Let me ask real quickly as a reframe for our readers. In addition to you having just a real broad experience, the main reason I wanted you to talk about now was the governance role that GCs, and usually, there’s your legal secretary in that role sometimes. Is there anything from the governance standpoint because you said that you were doing your own thing just with Comcast funding? Did the governance rules persist at Fandango once it was part of a larger company or did that part just go away?

It changed because certainly when it was a privately held company, we had some backing of some large theater chains and some venture capital investors. That was essentially our board back then and then we sold to Comcast and it changed in nature. I very much still have those same responsibilities as part of the company that I was the GC of but suddenly, we were a tiny little blip in the overall gigantic Comcast.

I wish I would have been able to go to a huge board meeting at Comcast but that was never in the cards for me. However, I got more involved in policies, procedures, compliance, privacy, and technology things. All those go into both the GC role and the corporate secretary role of keeping a handle on risk and risk management and making sure that the right people are aware of the right things. In that sense, it grew and expanded as we became part of this large entity. It was a lot more formalized than when it was just a privately held company.

You’ve got to button it up when you’re part of a public company. Let’s keep going. I don’t want to harp too much on Fandango. That’s my touch point with you.

I had lots of free movie tickets and that was fun too.

I bet you were popular. You were at ASICS, the sneakers company also, right?

I was. As part of that, I was at a little startup as corporate secretary and GC as well. I then took the job at ASICS which you know is a global company that produces running shoes and apparel. They do global marketing, advertising, sponsorships, and all that, as well as global manufacturing and shipping. It was a significantly different role because it had a lot of different subsidiaries both in the US and foreign. It’s based in Japan. It’s traded on the Japan Stock Exchange, although in the US, we had to do J-SOX compliance. It was similar. It was a big role with a lot of new responsibilities.

Also, it’s a new industry. You went from media and tech into apparel and retail.

It wasn’t completely foreign but it’s pretty different. Everyone knows the name Comcast but it’s different than clothing that almost everyone owns. That was fascinating. Seeing the differences between the way that the company runs because it’s a foreign-based company versus the other companies I’ve worked out that were US-based. Certain things were exactly the same and certain things were very different. This was on a large scale as well.

From the governance standpoint, you’re the corporate secretary in a Japanese company. Do you have to know Japanese corporate law? What was the framework for those governance responsibilities?

The majority of the governance that I was doing was for the US, which was a large part of their revenues and notoriety, and also, all the subsidiaries. There were Canada, South America, Central America, and some in Asia. There were some in Australia and New Zealand.

I’m worn out even hearing about it. How many people were on your team?

That was also interesting. I ended up having procurement and corporate social responsibility, ESG report under me. Eventually, they moved internal audit under me, which was a huge group. For a brief period of time, I had the HR and employment teams under me. I was unofficially dealing with the international insurance program and a number of other things as well. The privacy team as well. It changed over time.

It sounds like you had a competency curse. “She knows what she’s doing. We’re going to keep giving her all these different functions. She can handle it.”

In a way, yes. That was part of it. At one point, I distinctly recall a conversation with the president of the company saying, “I don’t want all these direct reports. Can I have some of these people report to you?” That was part of it, too.

I know you did a stint at a law firm for a while and then back into the public company world for two different companies, right?

Yes.

You’re a little glutton for punishment.

I know. I’m not really sure what I was thinking though. During my time at the law firm, I did get my CIPP/US, my privacy certification, which I know you got as well.

Yeah. Thanks to your coaching.

That ties into the board governance that we’re having. I think that having that CIPP/US certification is useful for thinking through a lot of these issues that now are top of mind for a lot of boards and corporations. They relate to that. The new SEC, cybersecurity, and cyber liability rules that just came out give you a better background to understand those and filter them through your brain. Also, speak about it intelligently having that background. At the time, I was cursing myself for taking on that responsibility to take up that exam but now, I’m very happy that I did because I think it’s very useful.

I should give you a big thank you note because I’ve got to say privacy is not something that I feel passionate about but I do feel it’s essential for any in-house lawyers. As you said, the SEC is telling board members that privacy and cybersecurity need to be top of the list also. We were ahead of the curve in getting that certification.

I decided at that point to jump back into public companies again. I was a glutton for punishment.

There are not a lot of people our age or certainly not a lot of women that have made the jump into board service. This is a side topic to governance, but maybe you could give the readers a little bit of advice on how you got into the board seat.

From a career standpoint, aside from networking which is a huge piece, it is getting those skills as a corporate secretary for three big public companies. I had ASICS and then I worked for ChromaDex. I worked for Viant Technology. ASICS has been public forever and ever. Whereas Viant, I joined right when they became public. ChromaDex is in the middle.

Being a corporate secretary for a publicly traded company that has a lot of processes, procedures, responsibilities, certain requirements, and frankly liability also gets you thinking from an executive standpoint of, “What does the board need to hear? What does the board need to talk about? What do they need to be aware of?” Having those skillsets and saying, “I know what boards look like. I know how they operate. I deal with them very frequently,” as part of my job. That made me a more valuable candidate for boards having people like that I’ve seen both sides of boards.

A lot of times, folks that are C-Suite like a CEO or CFO are naturally thought of as candidates for those rules. They’ve certainly been in the boardroom. However, CLOs, GCs, and corporate secretaries are also key candidates for that. Not many other executives have the full board experience.

More CLOs and GCs have been getting these public board or large board seats whether public or private but I still think there’s a bit of a stigma of, “He or she’s a lawyer.” “We already have a lawyer. We don’t want a lawyer,” which is ironic because they would love CFOs to sit on their audit committee yet they already have a CFO.

A lot of the skillsets that lawyers and corporate secretaries bring to the table and by lawyers, I mean C-level type executive in-house counsel. A lot of the skillsets that you use every single day in your job of risk management, compliance, and all the things that you have to think five steps ahead for are valuable to boards if they can get over that mental hurdle of, “They’re lawyers.”

A lot of the skillsets that lawyers and corporate secretaries bring to the table are really valuable for boards. Share on X

Lawyers have a marketing problem. I was telling everyone that I’m the you know dark clouds that come rolling in the room, but I try to use that that experience for proactive risk management. Also, not to be a deal killer but to be able to have an eye on what are the minefields that you should watch out for when you’re going forward in a deal. You have a couple of boards. Each again is congrats and amazing for somebody of your age. Do you want to talk about the companies that you’re on?

At the beginning of 2023, I got my first official public board seat. I’m very excited about that one. It’s Slam Corporation. It’s owned by Antara Capital. More interestingly, A-Rod the baseball player.

Have you got you got to meet him?

Virtually a number of times. We’ve never had an in-person board meeting. They’ve all been virtual but we are on Zoom. We all say hi and wave. Everybody’s extremely professional, very well-prepared, bright, and capable. It runs like clockwork. I’ve been extremely impressed by it and they’ve also had a few takeaways for my own use in other settings as well because I like the way that’s run.

I’m also on the board of a USC Law School alumni group. I am interacting with the law school and the deans. I like being on a board in the education context and it’s very different. It’s fun for me to do something that’s not as corporate but it’s still in the professional setting. It’s not like a volunteer board like the Heart Association or something like that. That’s different.

I was on ChromaDex’s foreign boards. Those have been publicly traded for a couple of years and when I worked at ChromaDex. I did that for a while. I got to see how some of those foreign boards operate and I was only Association of Corporate Counsel board for many years. A professional board is always interesting as well. It’s different.

The board I’ve been on for about 3 or maybe almost 4 years is Iron Horse Acquisitions. We filed an S-1. We were getting ready to do an IPO and then the markets all fell apart. I can say that as of now, we are back on track. Hopefully, if all things go, well we will be back on that path very soon. Ideally, I will then be on public boards by the beginning of the year.

You’ve had several corporate secretary rules and I want to talk concretely about what those key duties are and the KPIs for that role. Also, as you’re a board member now, you’re on the receiving end of whatever you may have produced before as a corporate secretary. I want to hear about that experience on the other side of the table, but let’s start off with what a corporate secretary does.

It depends significantly on what company it is. I have worked at startups and at huge companies. Some are foreign and some are not and they’re all very different roles. I just truly do want you to just sit there and take minutes, but that’s not the ideal certainly. That’s usually what you’re assisting corporate secretary does or maybe even your outside counsel. If they’re in the meetings, they’ll take minutes and then you review them and sign them after the fact.

However, the traditional role whether it’s public or private is a lot more complicated than it seems. The word secretary is a misnomer. You are in charge of board operations and compliance. Also, identifying what needs to go on the board agendas and making sure that the right things are talked about. The right things are voted on. Also, figuring out, “This is something we need to talk about. Do we need to pass a formal resolution?” What has to be in our corporate records for the future?

There’s a strategy component with running the board calendar and pacing things out from a timing perspective. You said a compliance standpoint and making sure the terms are right, and the right people are on the right committees. It’s a lot harder. Some folks who may be new to the role think, “I get this officer title and I’m going to take some minutes,” but there’s a lot more to it. It can be very strategic actually.

Trying to figure out what you want to raise to the board and when. Whether you choose to raise it to a committee first versus the full board. Sometimes that depends a lot on people’s personalities. Maybe you think someone is very against a certain concept. Maybe it’s better not to raise it in that person’s committee and maybe with the full board where perhaps you’re going to have more allies jump in on the issue or whatever it may be or vice versa.

Maybe you are buddies with the audit committee chair and you can raise something. He or she can say, “We need to raise that. You raise the issue and I’m going to talk about it in the meeting because this is super important. I’ll make sure others chime in. There’s a lot of strategy in that too. Sometimes there are some alliances and a few behind-the-scenes negotiations to make sure that things are taken seriously and debated and discussed in decisions are made for the best interest of the company, the shareholders, and everyone else.

LEGD 7 | Governance Essentials
Governance Essentials: Sometimes there are little behind-the-scenes negotiations just to make sure that things are taken seriously, debated, and discussed, and when decisions are made, they’re the best interest of the company, the shareholders, and everyone else.

 

I’m sure this is different for the different roles but did the other board members look at you as the owner producing the meetings or was it something that they looked at the CEO for?

It was a combination of looking to me as GC and corporate secretary and looking to the CFO because big portions of the agendas and the board decks are driven by the financials.

I’ve been a corporate secretary many times and my last one was a startup board that I did for USC. I worked super closely with the board chair. That board and that agenda was always on my shoulders. He was a real he’s a real taskmaster. I certainly worked closely with the CEO, but people looked at me as like, “When do we need to do that? What do we need to do? What vote do we need? Is it a resolution or is it just emotion?” As you’re saying, the timing and the strategy on which committees need to go through votes first and that kind of thing.

They look to you to set the cadence of things. Sometimes, there’s a longboard meeting and you’ll get blamed for it, too.

What about now that you’ve been on the other side of the table? You said there are a couple of things or takeaways from some of your boards here you felt like those were some best practices.

I love being a board member, especially these more professional boards rather than just a volunteer board because those are very different in structure and how formal they are, and all those sorts of things. I have felt like I’ve offered suggestions and advice that to me, seem so obvious and straightforward. Everyone goes, “That was so great.” “Thank you so much.”

You feel like you can offer suggestions, be helpful, and help with the strategy. You think about the agenda items or whatever it is, but then you don’t have all the work that goes along with it. You can be helpful and say, “We need to think about that. We need to talk about that. Another piece that I alluded to earlier when I said getting on the board involves networking.

Once you’re on a board, it still involves networking because the other thing that I enjoy doing as a board member is offering suggestions, “Does anybody know a valuation expert? Does anybody know an insurance broker?” I’ve been able to offer some great suggestions through my network that I’ve gathered over the years. That’s an important part also of being a board member but to me, those are both fun.

I got a text message from the CEO of one of the boards I’m on who was like, “You’re the most valuable board member. I can’t tell you how useful all your suggestions are. It’s great having you.” He even said he’d come on a presentation like this at some point if I wanted. It’s nice but it’s to feel like your knowledge and your skills are valuable and are seen as valuable to others. Whereas when you’re the GC, CLO, and corporate secretary, maybe you’re not appreciated as much.

We have a GC and the secretary is carrying this. That table stakes. We expect that. When you see it done well, you can appreciate the value of those positions. It’s much harder than it looks like. There is so much to think about. I always felt like the board duties, the legal duties, the Caremark standard, it was tried and true. It’s been in place forever. Also, there’s been this spade of derivatives litigation that has accelerated or put more forward the board duties around monitoring risks and acting when there are critical risks. Have you noticed anything different in the last couple of years with what expectations are around risk management?

Yeah, particularly so with the companies where I’ve been the executive, having to be the one making sure that the board members are aware of those changing standards. In fact, I’m in the midst of putting together a presentation about the new SEC cyber liability regulations. Also, because it comes into effect so soon, we heard about it. This is one example. There are so many. I spoke about SEC enforcement and new rules and regulations on a panel. It’s top of mind but it’s our duty as corporate secretaries to make sure that we flag those issues for the board members particularly the audit committee so that they can understand the risks and make sure that they’re thinking about the right things.

LEGD 7 | Governance Essentials
Governance Essentials: It’s our duty as corporate secretaries to make sure that we flag issues for the board members so that they can understand the risks and make sure that they’re thinking about the right thing.

 

Some board members will raise their hand and go, “I don’t know anything about cyber,” because a lot of board members don’t. You put together board education or you could on the flip side proactively make sure there’s education in these areas of enhanced risk so that they’re all aware of it. They know what to think about. Related to that question, board members are asking a lot more questions about insurance. It’s because they know there’s a lot more potential personal liability. There are now these callback rules as well. There’s a lot more personal responsibility for executives and board members than there was in the past.

As a board member, you know what you’re getting into because you are an expert in governance and you are a lawyer. Do you feel that your colleagues or other board members are babes in the woods? They’re naive and they don’t quite or do you feel like knowledge is power? I’m wondering because, for myself, I feel like I’m on a board and we had a cyber-ish incident.

I was all over the administrator asking all these questions and I’m like, “I wonder if the other board members.” It’s not a public board so the SEC rules don’t apply but I feel like that’s going to become the standard of care for all boards. I’m like, “What’s our cyber policy? Who are our vendors? What are our policies around multi-factor?” It’s all those kinds of things and wondering if they are aware of what those duties are now.

Unless they worked or still do work in industries where those things are important, if there’s C-level for some company that it would be relevant to, they might be aware but there’s more and more of a push to have people in marketing on boards or medical professionals on board. Those are all awesome. It’s great to have diversity of thought but on the other hand, unless you’re a GC or a CFO or maybe a COO or a CEO of a company, I don’t think people are going to be aware of these things just organically.

More or less, the GC is doing board education around them which is another tip for the audience or for anyone in the in-house department. Even though those SEC rules only apply to public companies, I think that it is going to become the standard of care for all boards around cybersecurity.

Any board, private or public, should have an onboarding process where you educate the board members about the pressing issues and also, the details of the company itself. How it runs, what it does, and why it does what it does so that you can do a deep dive into the company itself because it’s going to be a lot harder for you to identify risks, problems, and issues if you don’t understand how the company functions as a board member. Also, ongoing education. I typically put an agenda item about once a quarter even if it’s just two slides of some board education topic.

As a board member, it's going to be a lot harder for you to identify risk, problems, and issues if you don't really understand how the company functions. Share on X

Do you mean when you’re acting as corporate secretary?

Correct. Board members do appreciate that. There are certain board members who perhaps might find it repetitive but to your point, the vast majority, it’s going to be new information for them and it’s so important for them to stay up to speed.

I support an audit committee and I do an education calendar every year for the committee. It’s good to have if you ever have any incident, investigation, etc. to be able to show, “We educated our board members on this. They’re not overseeing this regulated business with no experience.”

I agree with that. If you could put that in your minutes, it could offer you some protection if you do get hit with some litigation or government inquiry down the line.

You have these two roles. One thing I always think about because I’m in a very highly regulated industry is the learning curve for board members and those board books and packets. I think that the lawyers on boards are the ones who read all the packets. However, there’s such a tension between not overwhelming them with 300 pages of material and also making sure you’re fulfilling your fiduciary duty as a leader of the organization in giving them what they need to know. Do you have any views on board materials?

I personally tend to put the real key stuff in the board packet itself or in the slides. Assuming you go through one of the board portals, you can hyperlink things as well. If they want to do additional reading, they can do that. I’m a big fan of putting additional materials in the appendix as well. That way, they can ignore it at their peril or they can review it, whatever they choose.

I find that people serving on boards, whether it’s a volunteer board or a paid board, are busy people. A lot of people have a regular day job and they need to digest all that information relatively quickly. I try to get the key points in there in the packets. At least, that way they’ve absorbed the most important stuff and then ask for questions during the actual meeting or make sure to point out that the appendix is there for their later review if they want to.

I’ve used an appendix and I’ve also used pre-reads. We have a tab in the board book and it may be a short memo that gives an overview of a particular topic and then maybe an article or link to give folks familiarity. One thing I’ve struggled with because you do want to make sure you’ve told the board or informed the board about a particular issue. You want to have that record so you have a CYA if something happens. I wonder as a board member, what’s it been like to get these board packets? Does it feel overwhelming? I’m sure you do all your homework.

I’ve been on various different boards and they do it differently. On the public board I’m on, it could be a massive amount of information but it’s extremely well organized. Even though it felt like there were still another twenty pages, it read easily and quickly and I appreciated that. Whereas, I’ve been on other boards where I’m presented with an information dump at the last minute but without context.

Maybe without periodic updates or without a pre-read or something that you mentioned, “Why are you giving me this information? Why do I need to know and why do I care?” As a board member, you get a little frustrated, “Do I have to read this? Why am I reading this? What’s the point? Are we making a decision about this topic?” or whatever it may be. It’s not necessarily the length of the material. It’s to make it clear. “Here’s the information you’re going to need for the following purpose.” To me, that’s helpful.

That’s good advice. Many times, the corporate secretary is in charge of marshaling all the materials. When I’ve been a corporate secretary like you, try not to over-edit colleagues. They’re usually your colleagues. You don’t want to edit their materials, but I have many times had conversations with people like, “I’m reading this and I’m not up to speed on it. Do you think we could rephrase or is there any background you could give?” My advice would be to pretend you’re the reader and you know nothing about it. As what’s been presented, give the reader what they need to know like you’re saying. “Are we voting on? Is this just FYI? Why is this included?”

When I think lawyers, which would include GCs as well as corporate secretaries, we write. That’s what we do. Our words on paper and verbally are so important to our doing a good job with our careers. Whereas, certain other professions like finance professionals, they’re obviously smart people, but that’s not what they do all day. To me, sometimes those are the portions of the decks that need either things shoved in the appendix or more explanation.

They’re mired in all these numbers and details all day and it makes tons of sense to them, but then someone like me looks at it and goes, “Why are you giving me all these numbers? What’s the point here?” Think about your audience. As you said, not everyone is a finance professional so too much detail, they glaze past it and that’s not what you want. You want to make sure people get the key numbers and details.

I wanted to ask any resources for folks who serve in a GC/corporate secretary role, what should they have on their bookshelf for the governance role?

I am a big fan of NACD. It’s not cheap but if you can get your company to pay for it.

It’s the National Association of Corporate Directors. People love that. I’ve been thinking about doing that.

I found it very valuable both from a resource perspective and a networking perspective. That’s great. There’s the Private Directors Association. It’s more specific to private companies. There are other groups like 50/50 Women on Boards. That’s women-oriented. There’s the Forum for Corporate Directors.

Do you ever use Robert’s Rules or have you used Robert’s Rules?

Yes, I have but way back in the day.

Someone asked me, “What’s the difference between a motion and a resolution? How do we do the votes? Does somebody need to talk?” I was like, “Let me pull that out there because I don’t remember.” We’re going to write it correctly in the minutes so what we do in the room doesn’t matter all that much.

The NACD and some of these others do have those types of resources about the process of procedure. There’s the Society for Corporate Governance. That’s a great one. That is a good one for corporate secretaries or budding corporate secretaries to join. I know Wharton and Stanford both have corporate governance and corporate secretary courses. Some are longer than others. Neither is cheap, but they’re excellent. Also, periodically, you can actually catch free programs like Deloitte and EY, and some of the others have board governance corporate secretary-oriented programs.

You did one of those. Didn’t you?

I did the Deloitte one and they also have a service where they’ll help you with your board bio as well. That’s useful because that’s not your resume. That’s a completely different topic.

We can do a whole session on how to put your important bio together.

Law firms have all kinds of board education materials. They know a lot of things and they also hear of a lot of seminars and stuff. If you have a favorite big law firm or two, you can always ask them and they can direct you to free seminars, publications, PowerPoint decks, or whatever it may be to educate yourself.

My last question is throughout my career and my life, I’ve used music to get excited, get pumped up, and get through hard times. I’ve certainly driven to many board meetings listening to certain songs to get ready. Do you have a pump-up song?

I have a pump-up theme with a few songs within it. For whatever reason, I am a huge ‘70s disco fan. My favorite ones are when I’m trying to get myself excited and in the mood to get it going, I love hearing I Will Survive which seems appropriate given what we all have to do for this kind of job. Also, Dancing Queen just because it makes me happy and I love Abba. Also, She Works Hard For The Money because Donna Summer of course is awesome and I do work hard as do all of us.

Lisa, thanks so much. This has been a great conversation. I know I learned a lot. I took a lot of notes. I look forward to seeing you in the boardroom.

Thank you so much for having me.

 

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