Meet the new boss: changing role of the country’s top GCs
25 June 2014 | By Hannah Gannagé-Stewart
We’re coming out of the back room and helping to shape strategy, say our shortlisted lawyers for this year’s In-house Lawyer of the Year award.
In-house lawyers are no longer the forgotten back office box-tickers they once were, next-generation general counsel are masters of the boardroom. Dynamic, often young, and surprisingly good-humoured, considering they’re also corporate’s front line defence for every legal, reputational and cyber threat going.
The Lawyer gathered a diverse group of the finest talent from in-house legal departments – all of whom were up for the In-house Lawyer of the Year gong at the year’s The Lawyer Awards – for a roundtable discussion, sponsored by Thomson Reuters, about the pressures their teams face and the tactics they employ to overcome these.
Round the table
Sarah Nelson Smith, legal director, Yum! Restaurants
Michael Ellis, group GC, Abercrombie & Kent
Thomas Brown, head of legal, PayPal Uk
Ijeoma Okoli, director, commercial banking, legal, Lloyds Banking Group
Jeremy Cross, legal head and company secretary, Anesco
Nicola Shand, company secretary and solicitor, Scotia Gas Networks
Martin English, Sales Director, Thomson Reuters
Hannah Gannagé-Stewart, reporter, The Lawyer
Taking a retail perspective were Kentucky Fried Chicken and Pizza Hut legal director Sarah Nelson Smith, Abercrombie & Kent group general counsel Michael Ellis and PayPal UK head of legal Thomas Brown.
Nelson Smith has a team of four lawyers at her disposal on a day-to-day basis, but 120 she can draw on globally, so there is always extra resource to tap into if she needs it. Her primary concerns revolve around the rapid growth of the two restaurant chains she is overseeing and the reputational risks that can arise from fast-food urban legends.
“The legal department is me and my large ego,” said Ellis, who said his job at luxury travel company Abercrombie & Kent is akin to someone giving him the keys to a pick ’n’ mix shop and forcing him to eat all the sweets – even the sour ones.
Brown joined PayPal in February 2011, having worked at Addleshaw Goddard and Pinsent Masons. His team at PayPal UK has grown from two to five, and the e-commerce business is recruiting another lawyer at the moment.
The drive to become a mainstream payment method means PayPal is facing numerous challenges, according to Brown. He believes that having a lawyer sitting on the board in each region means the legal team can help drive the business forward.
Bankers and industrialists
Representing banking, energy and industry were Lloyds Banking Group director Ijeoma Okoli, Anesco legal head and company secretary Jeremy Cross and Scotia Gas Networks company secretary and solicitor Nicola Shand.
Okoli is Lloyds’ only American regulatory lawyer in London, despite there being 80 lawyers in her sub-division. She said regulatory demands from the US and UK businesses are the greatest challenge she faces.
Anesco has just been named the fastest growing company in the UK. When Cross arrived on secondment two and a half years ago from Greenberg Traurig Maher he was the only in-house lawyer at the company. Since then he has grown the team to five.
Shand joined Scotia Gas Networks in June 2007, having been a trainee in the company’s independent commercial arm SGN. She said her team of three was under-resourced, with the company facing a welth of ever-changing regulatory challenges.
“We’re a very young and ambitious team, so keeping everyone developing at the rate they want to has been tough,” she reflected.
Nevertheless, she is adamant that the bulk of the work should be kept in-house.
The public sector view
Last but far from least Kent Legal Services head of law litigation and social welfare Ben Watts was on hand with a unique perspective on broadening the remit of an in-house public sector team through an alternative business structure (ABS).
Kent County Council is the biggest public sector litigation organisation in the UK, with 125 lawyers. The authority formed a joint venture with East Midlands and Wales firm Geldards in 2010, branded as Law: Public. The in-house team was granted an ABS licence and now generates a turnover of around £10m, and £2m in annual profits. At the end of 2012/13 the ABS contributed more than £3.7m to council coffers.
The dreaded budget
Our varied in-house lawyers all share a common concern: budget. Each said taking control of the budget gives them sleepless nights.
How do you tighten the purse strings on an already tight budget?
The consensus at the roundtable was that sending work to external firms is an unnecessary drain on resources. Keeping legal work in house helps keep costs to a minimum, but also, one lawyer commented, has the bonus of allowing teams get stuck into the meatiest deals.
“I feel sorry for people who have to watch the best work go out of the building,” one lawyer said.
Another agreed: “I’m against outsourcing good quality work. So we do the majority of our work in-house and if there is a resource issue we try to get a secondee in or outsource the smaller bits of work.”
All agreed that it is better to have a panel firm send in a lawyer on secondment to assist with a project rather than send work out to an external consultant. This efficiency drive has not resulted in the wholesale culling of panel places, but it does mean there are fewer adviser spots available, forcing firms to jostle for position by offering ‘value added’ services. These might include rate deals, additional training or being able to offer secondees when necessary.
For certain projects – big disputes or multi-jurisdictional work, for example – having external lawyers on the other end of the line is always going to be helpful. That said, in-housers are breaking the chains of co-dependence and skilling up.
If the outside lawyers are called in the demands from their in-house counterparts are weighty. They should take instruction, pay close attention to why the matter is business-critical and do their utmost to embody the values of the brand they are working for.
Good intentions are fraught with challenges, however. It is often the very board members who are clamping down on legal spend who will be pushing to outsource the work. A changing internal perception of the legal process – what it entails and how it should be managed – presents its own demands.
“Sometimes the board likes the gold-plated service offered by firms – and the lunches that go with it,” said one lawyer. “So you do have to upsell yourself to convince them keeping it in-house is beneficial.”
Others suggest that cost is not always the main concern. Having the right relationships with the right lawyers is just as important – if not more so. Furthermore, there still firms that will refuse to fix fees, even if it guarantees a panel place.
Some firms will refuse to cap fees when asked, several of our panellists said. Even if quotes have been offered on projects upfront, the expectation is that if budgets are exceeded the bill will have to be settled. This is unpopular, and met with unanimous disapproval from our in-house lawyers.
The best that outside counsel can offer their in-house clients is a clear and concise understanding of their business that will enable them to pre-empt legal bumps in the road.
Aside from the obvious pressure on budgets and the risk of litigious customers seeking legal recourse, there are many more industry-specific, sometimes brand-specific threats that the in-house team are expected to deflect on a daily basis.
The rise of social media brings with it a fresh wave of problems that now end up in the hands of the legal team where they once would have been the responsibility of the press team or complaints department.
Likewise, the global nature of business means in-house departments will have to respond to varying challenges spilling in from different timezones, while paying attention to all the usual inbox issues.
One lawyer explained: “You have to work so quickly. If something happens at midnight in Singapore you come in in the morning and you’ve already got 20 emails about it.”
“The threat of someone going to the media worries us too,” another commented.
Another makes the point that a sense of urgency is important, but acting in haste can be a mistake.
“There’s a danger in moving quickly because if you respond too soon you can jump in on the wrong side of the argument,” said the attendee. “It’s all about having a tactic for dealing with the fact that there can be 15 different stories coming out of one event”.
On the whole, it is agreed that core role of a general counsel is to facilitate whatever the brand’s business strategy demands, but operating within the confines of the many laws and regulations that bear on these companies means it is not always possible to facilitate.
Sometimes, managing expectations and diverting strategy around a non-compliant or legally dubious business plan is the only way. Arguably, this is becoming easier as more companies place lawyers on the board of directors and task them with shaping strategy.
There is no doubt that the role of the in-house lawyer has changed beyond recognition in recent years, forcing private practice lawyers to think again about how best to meet the demands of their clients.
Sponsored by Thomson Reuters