Fighting corporate counsel's corner

At a time when companies are re-assessing the value of every part of the business, it is understandable if some corporate counsel are feeling a little vulnerable.

The in-house sector has been transformed during the past 10 years, providing its lawyers with greater opportunities and challenges. However, in the current economic climate, they have fewer financial resources to work with and are under added pressure to prove their value.

At the Martindale-Hubbell Counsel to Counsel forum of 16 senior corporate counsel from across Europe, one-third admitted to feeling undervalued by the company.

The Paris meeting was convened to discuss how to demonstrate the value of corporate counsel to the executive and other commercial colleagues.

One of the conclusions reached at the forum was that in-house counsel wanting to prove his or her worth to the rest of the company must be prepared to undertake a degree of self-promotion. And one way of doing this is to ensure the in-house legal team is aligned with the commercial operations. It was agreed that in order to provide legal services that are in harmony with the business operations a certain amount of initiative is required.

When Helena Samaha, who was co-chairing the discussion, was appointed group legal counsel at Virgin the first thing she did was embark on a 'road show' of the varied business operations of the group. "I felt that I could not help unless I understood the businesses," she told fellow attendees. And she did not shy away from business colleagues, even when the reception given by them was lacking warmth. She said: "I called people up and turned up on their doorstep until they agreed to see me. I then mucked in and people started to understand the value I could add. I found that, after initial resistance, I gained more trust as the relationship developed."

In essence, counsel should 'get in' at the level of their commercial colleagues, put themselves into their shoes and ask 'If I were a commercial executive what would I want from the lawyers?'.

To answer this requires an understanding of the business and the demands of commercial colleagues - no panel members argued with the view that the in-house lawyers must be brought into major business discussions as early as possible. However, some have found that their business colleagues still do not appreciate the importance of involving their legal department. In-house lawyers complained of not being kept in the picture on important deals, not being told that companies were purchase targets until the acquisitions had been agreed and being refused requests to sit in early meetings. One even reported hearing a general counsel complain that he had not been told of a hostile takeover bid until a few days before the bid was made public. One attendee said: "The main problem is not getting the information you need. At my company it depends on the relationship with the CEO. If you know him well, you are invited to meetings. If you do not, you are not."

It was agreed that lawyers can only overcome this kind of exclusion by insisting on being part of the decision-making process. And as deals are usually tax-led it is also a good idea to work closely with the company's tax experts, which has the added benefit of promoting a better communication flow between the company and the legal department.

But the ultimate aim should be to sit on the board.

"If you have a board seat it is a completely different ball game," said one group head.

Being involved with commercial discussions allows corporate counsel to advise the company in a more informed way, which is obviously appreciated by the board. But there are other practical ways, which may be relatively easy to achieve, to increase perceived value. For example, by making administrative and legal procedures easier, be it in terms of acquisition work or employee schemes such as pension provisions.

"We continuously align with the strategic thrusts of the company such as simplification and brand focus. Taking the initiative to simplify areas, trying to make structures and processes leaner and being pro-active in this way is appreciated by the business," said Piet Grillet, general counsel of Unilever Belgium and co-chair of the forum.

Regular reporting to the board can also be invaluable when it is a struggle for the lawyers to prove value. The subject of the reports can be varied - tailored to the business and to the type of information wanted. One general counsel found that a database of all major court cases in which the company is involved could arm him with an analysis of where problems arise within the company. The result is invaluable information for the board as to where the company needs to improvement.

Quite often where the company instructs a number of firms, a large amount of duplication can occur, resulting in wasted costs. A regular update on which of the company's external firms are doing what type of work can also provide useful information on duplication. And, of course, the ultimate way of demonstrating value is to save the company money - where at all possible. Reining in legal spend involves using external advisers efficiently. To do this counsel need to use their power over the firms by making clear demands. For example, in order to cut down on the administrative burden, counsel should ask for regular reports from the firms. With the information provided by the firms, a quarterly report to the board on costs or trends is not an unnecessary burden for the counsel, yet extremely appreciated in the boardroom.

One of the first tasks for any new general counsel should be a review of external legal services to see where wasted costs lie - and it should be repeated regularly. A review may result in setting up a new panel, new terms of engagement or the reallocation of work type among firms. But whatever the outcome, at the end of the review counsel can show the board they are using the best firms for the company for the best money.

A discussion on how to run a lean legal department inevitably raises the question of whether or not it is better to have a pre-decided budget. Some counsel said they preferred to work within a budget as that can focus the mind. Others despised budgets because they left them accountable for the overspend - and overspend is inevitable. Some felt that it was impossible to budget because of unforeseen events, such as litigation or unexpected mergers, acquisitions or disposals. It was suggested that external advisers should be asked to budget in an attempt to keep close control of spend.

Further examples of how external advisers can help demonstrate the value of corporate counsel included the provision of briefings and seminars for commercial colleagues that bring legal issues into the limelight across the company. One general counsel said: "By getting people involved you can throw more light on what we do. If firms put on training workshops you can get the commercial people not just looking at the commercial angle, but also the legal angle."

Associate general counsel at Airbus Industrie, Colm Mannin, has found briefings with employees such as engineers on topics relevant to their sphere of activity, such as product liability prevention, legal aspects of safety issues and intellectual property protection, have been invaluable in raising the profile of the legal team and solving problems for the company. Mannin said: "If you talk to people about where problems can arise and teach them how to deal with them, they then start to say 'these lawyers could be of use to us'. If they later have a problem they then come to us."

Francis Delwiche, general counsel at Agfa-Gevaert, added: "Awareness programmes do a lot to add value because everyone gets to know us personally and the potential problems that can occur in the business."

Such sessions may also help to ease a heavy workload - something about which all the counsel complained. One general counsel said: "We are not intending to change engineers to lawyers, but to sensitise them so they have the reflexes to stop them coming to us for everything, but know when they need to come to us."

So how do counsel know when they are appreciated?

The two-thirds of the counsel who said they felt adequately valued based the feeling on the fact they are given bonuses, asked to do high profile work - and that they still have a job.

Key points of the forum
- Align with the business
- Report to management regularly
- Use the services of external legal advisers efficiently/save wasted costs
- Offer training sessions and briefings to commercial colleagues

Main challenges for corporate counsel
- Managing the board's expectations
- Managing resources
- Time versus workload
- Risk management
- Prioritising
- Legal training/keeping up to date on legal developments
- Getting directorships at the parent company and the subsidiaries

This is the report of a Martindale-Hubbell Counsel to Counsel forum that took place in Paris.