The full legal Monte Carlo

It was a meeting of some of the biggest movers and shakers in the profession, a chance for leading in-house counsel and private practice lawyers to hammer out the issues that count and forge valuable business links. Anne Mizzi reports on the key debates heard at The Lawyer's Legal Monte Carlo '99 conference.

Laurence Harris, partner at DJ Freeman, advocates polygamy in a relationship. The one between in-house counsel and its external advisers, that is.

His proposal for a radical way of approaching such relationships - espoused in his Legal Monte Carlo '99 seminar - raised a few eyebrows.

"You might think it odd that a solicitor in private practice who spends lots of time developing new business and keeping hold of existing business would stand here and advocate sharing his clients with other firms," he said. "Just a few years ago I would've been labelled eccentric by the wider world and a liability by my own partners."

He said polygamy benefited both sides of a legal relationship but warned clients would see through a skin-deep commitment. To make a relationship work, he said, required a rethink of structure and service provision.

Traditional relationships, whereby law firms provide all or most of the services to a client, are now the exception rather than the rule, said Harris. "Increasingly phrases like 'Horses for courses' or 'A variety of providers' are heard in the legal director's office."

Law firms can add value in a variety of ways. But Harris said polygamy demanded a new agenda - and that meant a firm sometimes having to work with its competitors.

"Most firms remain structured in broadly the same way as they have always been, by legal specialisms: the litigators are in one department or building, commercial/company lawyers are elsewhere and property lawyers somewhere else. That's not a way of organising a law firm which necessarily benefits clients."

Instead, he advocated re-organising by market sector: "This approach is the way to add real value to the relationships between clients and external lawyers," he said. "What it strives to achieve is the seamless extension of the in-house function."

Such a rethink probably gave many delegates the jitters, but Harris pointed out: "The law firm has nothing to be concerned about and a lot to gain from the fact it is only one of a number of firms that act for a client."

Michael Ball, Weightmans' head of employment, tackled transparency and developing trust as a key element in a businesses choice of firm. He said lawyers tendering for a job had to be aware of a tender document's contents, but also had to identify the culture of the business or law firm.

He said firms should not only know a company's background, but also focus on the reason for a tender. They should look at the current set-up and the reasons behind a proposed change to determine what was required.

Ball also suggested that the duration of an appointment should be specified. And to encourage unity in the tender panel, he said in-house lawyers should remove competition for instructions and reveal how work was to be allocated and who was accountable for what. A realistic framework should be devised and stuck to consistently, he said.

Sally Shorthose, head of legal at pharmaceuticals and health group Novartis UK, and Gillan Switalski, group legal director of brokering service Garban PLC, spoke of the role of the in-house legal department, advocating a strategic approach.

"A pure service department can be outsourced at any stage and if you are a pure service department, at some point in time, in a cost-conscious business, the value you can contribute is bound to be questioned," Shorthose said.

The in-house lawyer, she said, was in a more tenuous position than private practice colleagues: "If the in-house lawyer fails to deliver added value then he is asking to be replaced by an alternative."

Switalski added: "Some of us are quite expensive and unless we can add value and make ourselves indispensable we will be out on our ears."

But they faced a problem. "External lawyers often fall down on applying the solution to the business. You can bridge that gap if you know enough about the business. But if you don't... you will be regarded as a fool and be in a worse position than you were before you started getting involved in strategy.

"The objectives of an external lawyer can be completely different. In litigation it is to win the case... [or] to settle the case, but for the in-house lawyer the objective is to continue to do business at a profit and the litigation is often secondary. There are very few clients who really say and mean 'This is a point of principle', but there are many law firms who seize the day with both hands and the client ends up with an enormous bill and not much else."

Switalksi said understanding the role of the in-house lawyer helped law firms recognise the skills they should bring to solve an issue. She said it was important to understand the client's culture and whether budget, management time, expertise or public perception was most important in driving advice.

While in-house and external lawyers ironed out their differences, other speakers focused on topics such as the use of IT and how to minimise risk to companies.

Martin Coleman, head of competition at Norton Rose, reminded delegates that from March next year it was up to companies to ensure they met the new European Union competition rules and warned of the penalties for infringement of restrictive agreements and abuse of dominant position.

The Office of Fair Trading (OFT) will be able to fine a company up to 10 per cent of three years' turnover, while companies may face a fine of up to 10 per cent of worldwide turnover from EU competition authorities. Coleman added that the OFT was expected to be robust in its enforcement to achieve good results.

He said remedies, including injunctions and damages, may lead to a hike in civil court actions: "We can expect to see an increasing use of the courts as companies become more aware [of the rules]. From March... production of documents and information will not be restricted to the parties and these documents will include emails.

"Compliance programmes must be effectively implemented," he insisted.

He also advised in-house lawyers of the importance of striking a balance between compliance and protection and not to give out more information than was required.

Risk management weighed on the mind of Paul Meadows, legal director of Coca-Cola Schweppes Beverages. He shrugged off suggestions from Tim MacCaw, legal director of Gillette Europe, that procedures weren't effective when Coca-Cola in Eastern Europe was raided by the EU over allegations of illegal sales practice. "They are a new business and they suffered from a degree of inexperience," Meadows explained. "The regulators went in with a very aggressive approach."

Meadows said the advantages of risk management included the avoidance of investigation and fines, and minimising adverse publicity. He also said it provided information that might prevent agreements from being rendered unenforceable.

He suggested treating compliance training as part of corporate policy. But he added that it was important to keep things simple: "Avoid going into detail. Put it in context and give real examples."

But he pointed out disadvantages in having a compliance procedure: "It raises the bar for the level of compliance expected. Regulators may have a perception that a company has something to hide. And it may create documents evidencing non-compliance."

Meadows said while the onus was on in-house lawyers to achieve compliance with EU rules, the "extra weight" of external lawyers sent a good message to regulators.

It fell to Richard Wiseman, general counsel of Shell UK, to provide a summing up of proceedings. "What you do is first driven by the size of your business and then by the type of business. You then have to work out how much work you keep in-house and how much you are going to contract out.

"You choose horses for courses. It is more about choosing the firms you trust, not necessarily the cheapest. Everyone should know where they stand and be open with each other."



Experts' Advice to the in-house lawyer

Attend key business and staff meetings. It's easier to grasp an issue first-hand when you can put it into context.

Don't use the word "no". If your client suggested an idea he liked it, so be tactful if you disagree.

Return phone calls promptly. As an in-house lawyer, you have only one set of client relationships - preserve them.

Get to know your clients as people. How can you be treated as one of the team if you don't act like one?

Learn about problems early on. It is easier to persuade a client to revise a plan early on than when it's in full swing.

Learn the business. One of the values of an in-house lawyer is to understand a business and its legal principles.

Get to the point. Nothing upsets a client more than an analysis of a problem with no answers.

Wander the corridors. Valuable meetings can be impromptu.

Avoid memos, communicate orally - don't be a bureaucrat.

Integrity is crucial. Respect confidences and be honest and fair with clients and opponents.

Make the coffee. Don't be too proud to do the mundane.

Be a problem solver whether the question requires help outside the area of traditional legal advice or not.

Be enthusiastic; it's a sure-fire way to be invited back.

Hire people better than you. It's good management and a poor team will drag you down.

- Devised by the general counsel of Reebok and espoused by Sally Shorthose, Novartis UK head of legal, and Gillian Switalski, group legal director at Garban Plc.,