Ready to ride out the storm

With the credit crunch starting to impact on businesses outside the property and investment sectors, one of the key issues discussed at this year's Legal Week Corporate Counsel Forum Europe was the effect of financial constraints on in-house legal functions.The credit crunch and its influence on the relationship between general counsel and external firms came in for major scrutiny at the event, which was held on 23-24 September in Switzerland.HSBC's head of legal Richard Hennity noted that law firms had been successful in protecting their clients from litigation risk in the fallout of the credit crunch.He said: "Litigation lawyers have been rubbing their hands with glee waiting for litigation tao hit and I haven't seen it happen. I do not know what that says about firms trying to protect their clients' interests, but it appears they have done a reasonably good job."Fellow panellist Mike Henley, commercial and dispute resolution partner at Hammonds, suggested that while the credit crunch continued, law firms would, as a result, pick up more work from their clients.Henley said: "We are starting to see a pick-up in litigation between corporate clients, who have more reason not to pay and more things to argue about. Also in financial services, with institutions looking at the possible falling of asset values and what they can do about that."But what will the upshot of increased litigation mean for client fees? InBev chief legal officer Sabine Chalmers hinted that relations between advisers and clients would increasingly depend on fee levels. She said: "There is a lot of talk about cost and trying to keep cost down. The two main areas that freak us out are legal fees and investment banking fees. How will firms react to the level of fees?"With risk high on the agenda, HSBC's Hennity said general counsel would be looking for a new approach to risk management through their contracts.He said: "There is a focus on risk. Risk has become a buzz word. Risk managers deal with numbers - lawyers deal with words. We could reach a point where legal contracts work on a numerical scale of one to 100."The discussion also touched upon the importance of maintaining control over in-house legal teams as a means of combating the effects of the crunch. Richard Shoylekov, group company secretary and general counsel of Wolseley, said it was important that the legal head and the internal function had clear goals to sustain a healthy future for the business."One of the important things that I would like to achieve is clarity in the reasons for the team working with you," Shoylekov said. "What are the values sustaining your long-term business propositions?"Lawyers as leadersDomestic general counsel have long glanced across the pond at their American counterparts and seen lawyers who have more responsibility and a stronger leadership brief with their business.In recent years, UK-based general counsel have emerged somewhat from the shadows, but a healthy debate was held on how lawyers can establish themselves as leaders within their business.David Brimacombe, the head of legal and compliance, Middle East, Pakistan, Africa and Europe for Standard Chartered Bank, said the most important attribute in legal leadership was integrity. "Without integrity you cannot be a leader," he said. "You have to be firm and fair; you have to be able to deliver to the corporation but also to your team."Brimacombe added: "There is an old adage which says it is better to be feared than loved. That is true, but what you really need is to be respected."The Royal SunAlliance (RSA) Insurance Group's legal director Humphrey Tomlinson, suggested that leading as a lawyer involved working closely with your team and taking stock of their needs.He said: "To lead you have to know what is going on. You have to be looking for areas where you can make actual change. "You have to get people in the team inspired by following collective goals and you must unlock doors for your team."One of the issues raised was how general counsel were able to know if they were doing a good job and how they could measure their leadership skills.Jeremy Barton, general counsel of The Boston Consulting Group, said without a system of performance metrics all steps taken to ensure better leadership would be rendered useless."One of the key questions is: how can all these things be measured?" Barton added. "You have to keep a clear focus on how the team is performing and how you measure up in reality. "Reviews and feedback are crucial to the process."

October 08, 2008 at 09:04 PM

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