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"I'll Call You When I Need You"

Some business managers believe they don't need their in-house legal counsel to attend business meetings and be involved in decision-making. They think they know when to call the lawyers in. "I'll call you when I'll need you, they say." The right answer comes from Wim Bossens, a seasoned in-house counsel (and good friend of mine): "Precisely, you need me to tell you when you need me." That is a very good point. Business managers, however talented and knowledgeable they may be, may not always be aware of the legal issues involved in their decisions and actions. There are legal risks they ignore. They may be incentivized to overlook legal obstacles in their rush to "get results" and "get things done". That's why you need the lawyer in the board room and at the management committee table.

Antoine Henry de Frahan

July 07, 2011 in General Counsel | Permalink | Comments (5) | TrackBack (0)

Reporting on Legal Risks: Global vs. Reactive Approach

When in-house lawyers say they do reporting on legal risks (or at least when they say they want to set up a procedure for it), they actually mean two different things. 

For some, it means reporting on legal risks that relate to specific projects or matters. The reporting, in that case, will look like a list a pending issues whith a certain level of legal risk: a litigation case, a difficult negotiation, a transaction, a claim from a supplier, a new European regulation that might impact the business, etc. This is all right, but it remains very much reactive.

Another approach is to define a global model of legal risk identification and assessment, and to apply it proactively to assess legal risk. It is not based on an ad hoc assessment of projects or matters, but on an understanding of the business model and a definition of the main legal risks pertaining to it. It is not ad hoc description, but a systematic, global and proactive risk mapping that allows to anticipate problems, instead of reacting when they materialise. 

Antoine Henry de Frahan

 

February 21, 2011 in General Counsel | Permalink | Comments (1) | TrackBack (0)

The Growing Power of In-house Counsel

Two separate reports this month, one of Deloitte and one of Eversheds, confirm what players in the legal market already know: in-house counsel gain power, both internally, within their companies and externally, in their relationship with legal advisors.   

 

From operational to strategic: in-house counsel follow the status of legal risks.

 

Cynics will say that in-house counsel are just taking advantage of the crisis and the intensified competition between law firms to increase their bargaining power. While the crisis has certainly pushed in-house counsel to negotiate discounts and alternative pricing schemes more firmly than they were used to before , this is only part of the explanation why in-house counsel are moving up the ladder.

 

The driver behind this trend is the status of the primal fuel in-house counsel manage: legal risks. For companies, legal risks have developed, over the last decade, from operational risks to strategic risks. Astronomic competition fines, brand destroying litigation, regulations and directives closing down product lines, patent wars, shareholder rebellion, penal and criminal prosecution…  For the first time in economic history, legal risks have become a permanent and fundamental threat to shareholder value and to the careers of executives and directors.

 

The janitor of legal risks, the legal department, suddenly became the guardian of one of the company’s strategic interests.  It enjoyed increased attention from CEO and Board with all the benefits this entailed: higher budgets, better remuneration, higher calibre people, direct reporting lines.  Downstream, law firms had a ball: rates soared, leverage escalated, profits per partner reached all-time highs.

 

But, as ancient tragedies abundantly demonstrate, operating close to the Sun-God does not only bring pleasure. It also brings bigger challenges, more competition, greater expectations and a tougher business environment. With the changing status of legal risks, the responsibilities of the legal department grew more important and the role of the General Counsel changed quite profoundly.

 

Our FrahanBlondé General Counsel Survey 2009 clearly showed that General Counsel key priorities are not about solving legal problems, but about pursuing strategic, organisational, and managerial goals. One of the most important and complex challenges for General Counsel is to find the right balance between being a guardian of the corporation and a business facilitator (see Antoine’s cartoon: The Homo Legalus Matrix). Another one is to define the role of the General Counsel in emerging business trends such as compliance, CSR, risk management, the Code of Conduct, diversity etc. (see our article: "Compliance : quels contours pour une nouvelle fonction stratégique?")

 

In 2008, crisis struck the financial markets and, a few months later, the rest of the economic fabric. Financial pressure hit the legal budgets and, consequently, law firms’ profits. But, again, the situation is not the same as in earlier crisis: legal departments, while suffering budget cuts as any department in the company, resist, across the board, remarkably well. The attitude of legal departments toward law firms is even more striking: not only do they put pressure on fees, but for the first time, they dare to question law firms’ business models. Some law firms have taken notice and are already responding (See our article “Legal departments and law firms: a widening gap?”). Change is in the air. We witnessed this again last week during the annual intellectual legal profession party at the Georgetown Center for the Study of the Legal Profession.

 

The Belgian Institute of In-House Counsel  (IBJ-IJE): a new force in the Belgian legal landscape

 

Ten years ago, the Belgian Institute of In-House Counsel  (IBJ-IJE) was established. We see a clear link between the evolution of the role of in-house counsel and the increasingly compelling presence of the IBJ-IJE on the Belgian legal scene. Few people could predict the impact the IBJ-IJE would have: over the last decade it has become an intellectual meeting place for attorneys and in-house counsel, it has spun networking and word-of-mouth and it has inspired in-house counsel with innovative ideas on legal management.

 

 

Barend Blondé

Antoine Henry de Frahan


 

March 30, 2010 in General Counsel, Governance & Strategy | Permalink | Comments (26) | TrackBack (0)

The Emotional Cost of RFP

The problem when you use requests for proposals is that you necessarily have to say "no" to the all of the respondents except one, and who likes to do that?

Antoine Henry de Frahan

January 08, 2010 in General Counsel | Permalink | Comments (0) | TrackBack (0)

Why General Counsel Call on Law Firms

Because:

-    They don't have the manpower in-house

-    They don't have the expertise in-house

-    They have the manpower and the expertise, but they want a second opinion.

Antoine Henry de Frahan

January 08, 2010 in General Counsel | Permalink | Comments (4) | TrackBack (0)

Reporting Lines

Do lawyers in the business units report to the CEO of the business unit, to the head of legal at HQ, or to both of them? This is a critical question for the standing of the legal function in a company, with clear cultural differences: in US companies, in-house counsel tend to report to the general counsel. In French companies, they tend to report to the CEO of their business unit. Some companies try to combine both with a matricial reporting system differentiating between "functional reporting" and "structural reporting. 

Antoine Henry de Frahan

January 08, 2010 in General Counsel | Permalink | Comments (1) | TrackBack (0)

High End Commodities

We have come to see the legal market as a superposition of three different markets: a market for standard services ("commodities"), a market for expertise, and a market for big, strategic transactions or litigation. We often represent these three markets as a hierarchy: commodities at the bottom, strategic transactions at the top, and expertise in the middle. (This also reflects the differentiation in hourly rates). There may be more to it, actually.  It may be wrong to believe that commodity work is necessarily low-end and at the bottom of the pyramid. There is a market segment for "high end commodities", and you will find a lot of it in banking and finance work.

Antoine Henry de Frahan

January 08, 2010 in General Counsel | Permalink | Comments (0) | TrackBack (0)

Stop Database. Start Connectivity.

Knowledge sharing is like the Loch Ness Monster. Everybody’s talking about it, but who has actually seen it? The sad truth is, it does not work. At least the way most people are trying to do it. The good news is, it can work if you shift your focus from producing and storing content to connecting people.

Databases: the end of an illusion?

Enhancing knowledge management within the law department is on the to do list of nearly all the general counsel, and has been there for ever, but execution is lacking. Let’s face it: it is wishful thinking. There are many possible explanations:

-    People are not producing the standard documents, not updating the templates, or not filing them properly in the database;

-    Documents exist and are properly filed, but quality sucks and nobody wants to use them;

-    The filing system is so complex that none really knows how to use it, so the hell with it;

-    It does not make sense to use a NDA written to meet City standards for a due diligence of a family business in Slovakia;

-    Lawyers only trust documents they have sweat on themselves;

-    Lawyers are reluctant to give up for free and without any kind of recognition the outcome of their work. 

Whatever the reason, despite huge efforts and investments, most of the time the database initiative eventually crashes down or produces lilliputian results compared to the hopes and the investment.

Connectivity is the key

Smile! There is an alternative. Stop thinking about templates, standard documents, state-of-the art opinions, etc. Stop thinking about how to file everything that everyone knows or has ever produced. Stop dreaming about building up the ultimate corporate library where lawyers will be able to find top quality, up-to-date and user-friendly documents and models for everything they need. In other words, stop thinking about content. Think about people instead.

When it comes to knowledge sharing, focus on sharing first, on knowledge after. It is not about building and centralizing content, it's about connecting and empowering people. It is about creating opportunities and platforms where colleagues can meet and interact, discuss, share, ask for help, and provide help. It is about making sure that people know each other and what they do, and have a chance to bring on their concerns, ideas, projects, questions to the community. With Web 2.0, technology is now offering amazing tools to do exactly that. But it is not just about technology. Old style networking works wonders as well!

Thinking about people instead of content, going for connectivity instead of a database, is a frightening move for the general counsel. You loose control over content. You don't control what people are asking to each other, what answers they give, and how they interact together. But did you really have control before? Everyone was using their own documents anyway, because the database never worked. So, are you loosing something else than an illusion or a wish of control?

Knowledge sharing that works is about creating a vibrant community. It is fun, interactive, ever-changing, it works in real time, and it saves everyone the over-boring and painful perspective of producing and updating for the rest of their life an entire library of templates. Who can beat a social network? Not a database, for sure.

Antoine Henry de Frahan

December 24, 2009 in General Counsel, Knowledge Management | Permalink | Comments (4) | TrackBack (0)

Does Your Law Department Need Team Spirit?

The purpose of this article is to help general counsel make the right analysis and the right decisions on matters relating to teamwork and team spirit in the law department.

In short, it is always right to pursue external teamwork, but often a waste of time to pursue internal teamwork. General counsel should find out exactly what their department need, and that is often something else than internal teamwork: effective management, organization and process; networking; or simply more fun, togetherness and recognition.

Internal and external teamwork

It seems common sense that team spirit is a good thing and a goal worth pursuing, doesn't it?

In many situations, working as a team is indeed a necessity. The job simply can't be done without people working together. Examples? Football: there is no winning unless the team wins. Another example? Web applications. Forget it unless the designer and the programmer are really working together. No teamwork, no performance. In these situations, there is an objective and fundamental need for teamwork, and promoting team spirit becomes a strategic priority because it fuels teamwork.

But do law departments fit into that picture? Is teamwork of the essence of legal work? Is it intrinsically linked to high performance in legal matters? To answer this, you need to distinguish external and internal teamwork. External teamwork happens between an in-house lawyer and people outside the law department (CEO, business managers, finance professionals, HR manager, outside counsel...). Internal teamwork happens among the members of the law department themselves.

My opinion is that there is obvious added value in external teamwork, but the value of internal teamwork is more questionable.

External teamwork is always essential

There is no question that the company will be better off if the lawyer assigned to a particular matter or project works hand in hand with colleagues from other departments working on that matter or project. Most  in-house lawyers are already convinced of that and eager to cooperate (there are still some in-house lawyers suffering from the locked-in syndrome, but it is a species on its way to extinction). The challenge is rather to convince the colleagues outside the legal department to involve the lawyers. Developing a strategy to develop external teamwork, in particular by giving non-lawyers good reasons to involve lawyers in their work, should always remain a top item of the general counsel priority list and a closely watched indicator.

Internal teamwork: what’s the point?

But pursuing the goal of internal teamwork is more problematic. I see many general counsel eager to reinforce internal team spirit, but unable to spell out the common, fundamental objective that requires team work. They think they need team spirit and teamwork, but what for?

How much operational integration do the members of the law department really need to perform well? Maybe each lawyer is working with different clients, or on different practice areas, and the whole idea of a "team" does not really make sense, because the individuals are not interdependent to achieve their goals (they can do it all by themselves) and because there is not a single shared goal, but a multitude of different matters and projects that different lawyers are tackling on their own.

The eagerness to enhance team spirit is going nowhere if there is no objective necessity for teamwork. Will the company be better off if in-house lawyers are working as a team among themselves? Not sure. Should team spirit be branded as a value as such in the law department? Only if you come up with a good reason for it.

Actually, I see many fine law departments where the lawyers don't work as a team: each lawyer is working on her own files with her own clients, under the supervision of a senior lawyer as the case may be, but with limited interaction with other lawyers. They may not have a lot of internal teamwork, but the job is done and well done, the clients are happy, and the lawyers as well. And that does not prevent them from having good relationships with their colleagues in the law department. So, no internal teamwork, but so what? Who cares? Where is the problem?

I am not saying that internal teamwork is always an irrelevant concept for law departments; what I say is that it is a mistake to take if for granted that teamwork and team spirit are necessary and good for the legal department.

My recommendation to general counsel who wants to “do team spirit” is therefore to step back and answer the following questions: 

-         Why exactly do I wish more team work and more team spirit in the department? The answer must be very practical and down-to-earth. Don’t take “vision”, “mission” or “values” for a satisfying answer.

-         What dead-serious damage is threatening us if we don’t work as a team? Here again, accept only very practical and tangible answers.

-         What obvious and tangible benefits would we or the company get from more teamwork within the law department? Is teamwork the best way to get these benefits?

It is dangerous for the general counsel to launch a teamwork initiative if there is no compelling reason for it, because that teamwork initiative will most probably not work, and that will hurt the credibility of the general counsel. All the team spirit in the world will flow in the work to be done does not require or seriously benefit from teamwork. Team spirit for the sake of team spirit is a lost cause.

But then, why do so many law department nevertheless spend time on team building seminars? If not internal teamwork, what is it that they really need?

Find out what you really need

You might very well come to the conclusion that:

-         Your department really needs teamwork and team spirit. The lawyers of the department have to work together to get things done, because projects are complex and require a multi-disciplinary approach, or for whatever other reason that is making the lawyers fundamentally interdependent to get their work done.

-         You don't need internal teamwork at all. Each lawyer works on different matters, and it does not make sense to want them to work together. They'd better focus on external teamwork. That’s not a bad news for the management of the law department. Actually, you can ensure a high and consistent level of performance across the law department without teamwork. Effective supervision, well-designed processes, training programs, strict recruitment standards, performance management are different means available to the general counsel and don't have much to do with team spirit and teamwork. In other words, you don't need team spirit to make the law department perform. 

-         You need internal teamwork, but only for specific, limited tasks. You may for example be creating a working group within the law department, and teamwork is necessary within that working group until it has reached its purpose. I would call it "circumstantial teamwork", as opposed to "structural teamwork" where teamwork is of the essence of what the law department is doing. The point is, you don’t need to make too much of a fuss about it. Be pragmatic. If you set up a working group, check out whether it works and give the right impulsions if necessary, but don’t embark your department in the full “team spirit journey”, it would be a counter-productive waste of time and credibility.

-         You don't need internal teamwork, but more connectivity among the members of the law department would cheer up everyone and empower them to better do their job. It helps to know one’s colleagues, to know who is doing what, to know where to find what sort of information, etc. Basically, what you want is not a team, but a club: a cool place that people are happy and pride to belong to, where they make and develop effective contacts, share information as they wish, etc.

-         Maybe the members of the law department feel isolated. Their expressed need for more teamwork actually translates a need for more “togetherness”. They want more social interactions, more fun, and the feeling of belonging to something big and inspiring such as a “team”, etc. “Team spirit” in that case is not linked to objective performance, but to psychology and motivation. There is no real need for teamwork, but there is a real and shared desire for more fun, more social interactions, and a more rewarding self-image. I am not suggesting that these needs should be ignored. On the contrary. But the desire for more togetherness, however legitimate it may be, is not the same as the objective need for teamwork.

Antoine Henry de Frahan

 

December 23, 2009 in General Counsel | Permalink | Comments (1) | TrackBack (0)

Law and Ethics: Study Case "Pollution"

The affiliate in a developing country is asking you whether they can dump toxic substances in the river. You investigate local law and discover that there is a legal vacuum. Technically, the affiliate could not be prosecuted for dumping the toxic substances. There are no internal policies on pollution in the company. What do you answer?

Antoine Henry de Frahan

December 23, 2009 in General Counsel | Permalink | Comments (0) | TrackBack (0)

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