Deborah McMurray facilitated this Martindale-Hubbell sponsored Counsel to Counsel session in London, as part of the SuperForum, October 23, 2003.
In-house lawyers are finding that more and more is expected of them as regulation increases, reports Lucy Hickman. Part watchdog, part business hotshot, part super hero - the new in-house lawyer is multi-faceted and very different to a few years ago, a collection of international in-house counsel agreed.
Siegfried Schwung, general counsel, product, at DaimlerChrysler and co-chair of the roundtable session at Martindale-Hubbell`s Counsel to Counsel superforum, which was held in London, claimed greater regulation of lawyers has affected the role of in-house counsel, but that it was client demand that was the real driver. He said: "We were perceived as pea-counters, as more of an obstacle to business than help. The reason for the change of our role is to do with client desire - clients want solutions, not just advice. They want us to share responsibility. If we give advice we have to take a position and know the risk involved."
He said in-house lawyers have had to change the way they communicate: "Our language must change. Reports should be in corporate, not legal speak. There is no use in having a one-page memo with three pages of caveats."
What role in-house lawyers should now take and who they should answer to was cause for heated debate at the session, Managing the changing in-house counsel role: watchdogs or business partners? One panel member said in-house lawyers were no longer watchdogs. "We are viewed as a business partner. We are not watchdogs. We are part of the team. Legal departments used to get the blame if something did not move forward. It used to be a case of `legal killed it`," he said.
Schwung said an "entrepreneurial spirit" within the legal department was essential. "You should be on the side of the client. We have to be process-integrated and not on the sidelines. We may wish to go beyond our legal qualification.
There is always a conflict. As counsel in many countries, you are an officer of the court which makes it difficult to push out the envelope. In other areas you want to be on the safe side but can take more risks to further business purposes."
Some of the lawyers claimed the responsibility of general counsel was to the company and the shareholders and they had to be independent of senior management. Many agreed that the Securities and Exchange Counsel reporting requirements serve as a good way of finding out what is going on in their companies - especially a global company with several offices.
Helen Fletcher Rogers, consultant counsel with Lawyers in Business, said: "It serves as an early warning system." She added that criminalisation will help lawyers get the message about the importance of compliance across to company management. "There is nothing like a dawn raid to concentrate the mind. I know from US colleagues that criminalisation has helped the education process enormously, especially those cases where general counsel have been implicated."
Natalie Jobling, director of legal affairs and company secretary at FCE Bank, said her employers see her as a "safe person" within the organisation and have even installed a special telephone on her desk to serve as a hotline for whistle-blowers. "I am seen as someone who would look after the company but would not act against a whistle-blower," she said.
Some in-house lawyers argue that compliance issues throw up good examples of the dilemma between business partner and watchdog. For example the anti-money laundering regulations say banks cannot open an account until they have the right documents from the customer, although parts of the business may be eager to go ahead and tie in the client by opening the account straight away.
Many at the meeting agreed that education was key and an important role for the in-house lawyer. Anne Fletcher, group general counsel at BT, said that standardised training packages, accessible via BT`s intranet, providing essential legal, regulatory and compliance information for employees, enabled BT to ensure that relevant messages reached all employees.
A panel member said training took the form of regular lecture tours around the firm`s offices. He said having a centralised law department, combined with this roadshow, gave him the best of both worlds. Schwung argued that decentralising was a good way to go. "Mentally, it may be a problem for clients to go to a centralised headquarters. If the lawyer is on site they can attend to the risk earlier. They see you as a colleague and a friend and confide to you their problems."
Fletcher commented: "There are advantages and disadvantages in both models. The decentralised model means that the lawyers are closer to the colleague whom they are advising and to the relevant business issues. "However, you have to work harder to eradicate any duplication of effort which would give rise to increased costs and to ensure that the individuals out there in the field are not just taking a localised view without considering the company`s wider interests."
Matheson Ormsby Prentice partner Andrew Doyle, one of the few private practice lawyers present, said secondment of lawyers from his firm to client organisations had been extremely successful. "There were advantages in terms of communication and in getting a real understanding of the needs of the in-house counsel. "As a broad generalisation, I would say it has enabled us to occupy a position that is a good deal closer to the client organisation - more akin to that of a business partner, rather than a legal adviser, who is consulted on a more remote and arm`s length basis," Doyle said.
Fletcher Rogers agreed the practice was beneficial but warned private practice lawyers not to overcharge for the privilege. "It is great for the lawyer to get commercial experience and build a relationship with the client. "To charge normal hourly rates for this is not realising the value of secondment. I have met reluctance from law firms to provide secondment on a realistic basis."