A Calming Influence

In times of crisis, in-house lawyers' unique role within the company structure can often provide a valuable perspective on the situation. John Malpas reports on the often undervalued problem-solving ability of corporate counsel.

The trouble with crisis management is that crises are, by their nature, unpredictable. But that does not mean that you should not plan for them, agreed a high-level panel of corporate counsel at the latest Martindale-Hubbell Counsel to Counsel roundtable, which took place in London.

One panel member described how their company has devised a sophisticated crisis management strategy. Not because the company was unusually foresighted, but because over the years it has faced a procession of crises - forcing it to develop well-honed response procedures.

This served the business well when its New York offices were rendered unusable in the immediate aftermath of the 11 September terrorist attacks. Indeed the company won several awards for the way it coped with the disaster.

Nevertheless, there were many problems that the company could not possibly have predicted - including the difficulty of reaching the back-up facility in New Jersey when all the bridges and tunnels were closed and traffic was gridlocked. This particular conundrum, as one panel member quipped, left the corporate counsel concerned with the vital task of "finding out where New Jersey is." In fact, the exact roles the corporate counsel sitting round the table played in their companies' crisis management infrastructure varied quite widely.

One panel member's prime responsibility was dealing with her company's regulator to ensure it was kept abreast of any potential difficulties it was experiencing.

Another was at a company that had its own group control department with responsibility for auditing, risk assessment and insurance premiums. But, however the panel members' individual companies organised their risk assessment, the group agreed that when a crisis did break, they were called in to play a leading role, often forming part of the team responsible for dealing with the problem.

One panel member said corporate counsel were naturally good in a crisis because of their professional skills. "We are able to be more objective and calm and act as a source of brainstorming," he said.

Corporate counsel often complain that because the value they provide to their employers is difficult to quantify they are often undervalued. But many on the panel agreed this can work to their advantage in a crisis because they are seen as neutral problem solvers who do not have any hidden agendas.

One panel member said: "In-house lawyers can play a crucial role in the investigation of the facts because they are broad-shouldered and they do not mind making themselves unpopular. They can get the facts established as soon as possible and have the skills to ask the right questions to the right people."

But if corporate counsel are adept at solving problems, they should also be suited to preventing them from happening in the first place.

To succeed in this area, corporate counsel need to be in a position to influence decision making. And that depends on how close they are to the decision making process. "If you are going to play a crucial role in helping companies avoid crises you have got to be there at the table when the decisions are being taken," said one panel member.

The panel acknowledged this could be a problem for those corporate counsel who were not board members or company secretaries.

However, the panel agreed that all corporate counsel can play an important role promoting good practice within their companies - whether or not they sat on their company's board.

One panel member recommended asking senior managers what they were most afraid of happening. The results of this exercise were often surprising, the delegate said, and alerted the company to potential weaknesses the chief executive and the board had not identified.

However, the panel member added that this was a practice the company's US-based lawyers found disconcerting for fear that documents relating to the exercise may be unearthed during litigation. Indeed, the fear of litigation - and the existence of incriminating documents - emerged as a key concern for all the corporate counsel present at the meeting. "You have simply got to have a thorough document retention policy," said one of the delegates, although the panel acknowledged that it would be more accurate to talk of document destruction policies.

It also quickly emerged that corporate counsel have most sleepless nights over the e-mails that ping around their company. The panel agreed that the informal nature of e-mails meant staff often recorded thoughts that were better left unrecorded.

One panel member recommended that e-mails should be destroyed unless people made a conscious decision to keep them - and that all e-mails should be destroyed after a period of a few months.

However, one Counsel to Counsel delegate challenged the general assumptions that e-mails were likely to hinder, rather than help, a company's cause if it got embroiled in a piece of litigation.

It was a suggestion that cut little ice with the rest of a sceptical, and perhaps realistic, panel.