Conference report: The European Legal Summit 2004
Corporate governance – a practical case study
A senior Schroders lawyer said the investment bank’s business model requires it to take greater account of regulators’ demands than in many other companies.
Sandie Okoro, head of legal for corporate services at Schroder Investment Management, said the highest standards of compliance with the Combined Code on Corporate Governance are required by Schroders because it investigates equivalent policies in other organisations. “We can’t be in a glass house while throwing stones at others,” she said.
Okoro’s comments, made at The Lawyer European Legal Summit 2004, come in the wake of suggestions that Schroders’ corporate governance needs improvement.
Schroders’ 2003 annual report outlined its failure to comply with the Combined Code on two key points, which included the continued presence of Bruno Schroder as a member of the bank’s remuneration committee. He remains a non-independent non-executive director, which is considered appropriate by the Schroders’ board.
Okoro said that Schroders – which has, in the past, been criticised for aspects of its corporate governance – can still do “a little better”. Criticism has focused on its number of voting shares, its board compostion and director remuneration.
Next year, Schroders will do a second round of corporate governance for its 2005 annual report. Okoro delivered her presentation in conjunction with John Bennett, departmental managing partner at Berwin Leighton Paisner.
Brendan Malkin
Global demands – global needs? Fusing UK, US and European practices
GE’s European legal counsel Kevin Dunn and the co-chair of Weil Gotshal & Manges’ litigation and regulatory practice Carl Lobell used their Saturday session to debate the impact of globalisation on the role of in-house counsel and the implications this is having on the service provided by external advisers.
Dunn argued that as regulations have increased in complexity internationally, an increasing number of corporations have sought to hire more experienced in-house counsel and placed greater responsibility on them to manage corporate and legal risk.
This has, in turn, placed greater pressure on external advisers, with law firms expected to provide legal advice tailored not only to the client’s sector, but also to the client’s business model itself.
Dunn warned that this has been made increasingly difficult as more firms have sought to develop a global presence. He said in such scenarios, firms should ensure that their international offices provided a consistent service, did not duplicate costs and did not compete against each other.
Lobell gave the example that Weil Gotshal had several ‘ambassadors’ assigned to GE, whose sole role was to ensure the firm’s international partners were aware of the corporation’s structure and needs, and provided an efficient, consistent service.
Gemma Westacott
Lawyers’ role with board of directors
HBOS company secretary Harry Baines and Addleshaw Goddard senior partner Paul Lee kicked off this year’s European Legal Summit by posing the question: how can in-house legal teams position themselves to be perceived as critical business partners?
They highlighted the conflict between the pressures on in-house lawyers to drive down costs and submit to procurement processes, while proving they are also critical business partners. They noted that there is also increased pressure to meet the interests of several stakeholders.
They said that current concerns relating to corporate governance could provide a greater opportunity for in-house lawyers to become key players by aligning themselves with other board members who see the critical importance of core values.
Lee highlighted a study by Harvard Business School on the relationship between shared values, strong cultures, and company values. The research found that companies with strong cultures outperformed other companies – their revenues grew four times faster, while their share price grew 12 times faster.
The pair concluded that in-house lawyers cannot fulfil their role adequately without the support of a well developed set of values. To achieve this, they said in-house lawyers need to be proactive, aware and commercial.
Husnara Begum
Keeping your advice privileged: the risks in-house counsel face on losing privilege as they get closer to the business
DaimlerChrysler UK’s general counsel Chrissi Evans and Simmons & Simmons litigation partner Colin Passmore formed a Saturday morning double-act to talk about legal privilege and the implications for in-house counsel.
Passmore began with a run-down of the House of Lords’ judgment in Three Rivers, handed down on Thursday.
For in-house counsel, the Lords’ judgment has clarified the relevant legal context for legal advice privilege to apply. However, pure business advice is still a grey area. As in-house lawyers can more easily become involved in giving business advice – for example as members of a board – Passmore and Evans warned against assuming that privilege will apply here.
The Lords did not rule on what constitutes a client, and this could cause real problems for in-house counsel. Passmore said that it is not safe to assume all the employees in a company count as clients.
Electronic communication is another area where it will pay to be wary. Emails should be limited to fact, not comment, and forwarded on a need-to-know basis with the original writer’s permission. Evans said if in doubt, it is best not to write anything down.
Finally, the duo warned against believing that just because a problem has arisen, litigation will ensue and so litigation privilege will apply. This is not necessarily the case.
Joanne Harris
Riding the outsourcing wave – the business outsourcing function
Lloyds TSB’s head of group IT legal Angela Main explained how she transformed her legal group, boosting it to 11 lawyers after being on the verge of outsourcing just about everything.
Following a £250m outsourcing deal with Accenture, Main’s team found itself swamped with work. Main asked Latham & Watkins, Tite & Lewis and Wragge & Co to tender for the work.
While Tite & Lewis and Wragges put forward competitive bids, Latham’s partner Andrew Moyle put forward what he called “the non-compliant bid”.
Moyle suggested that rather than outsource more work, Main should build a stronger in-house function.
Main said: “They reinforced the benefit of having a strong in-house function as opposed to having an ongoing cost and an annual battle to justify that cost.”
Latham provided three lawyers full-time. The plan was to implement new processes and methodologies, recruit, share the knowledge with the new recruits and then back out.
“We’ve been asked to expand our operations to non-IT commercial functions. We were getting about 60 per cent of the work that should have been coming through the legal department, now it’s 90 per cent. We’re involved much earlier in the process, which gives us the opportunity to prevent projects going off on the wrong track rather than being brought in at the last minute to undo things that have already gone wrong,” explained Main.
Steve Hoare
