Your GC Summit correspondent files this copy from the Penha Longa hotel in Sintra, near Lisbon. He has stayed in shabbier places to be fair. Tough moments of this ‘tour de law’ have included drinks overlooking the golf course and dinner in a fort with a sea view. No stone has been unturned in ensuring that all details of the Summit are shared with the reader.
As the sun comes up on day two of the Summit over the manicured lawns I can see from my balcony (okay, we get the picture, Ed) I’ll try to summarise the legal medley of ideas, issues and topics discussed yesterday.
And where better to start than a view from the boardroom about the job that its lawyers do, or at least should do. There are two types of GC apparently. The GC who is very comfortable in the legal world. And the GC who likes to get involved in a wide range of activities. No surprise to hear that the board prefers that latter beast, the strategic thinker. Not really a top tip for seasoned GCs, but worth thinking about for more junior in-house lawyers just beginning to tread the boards in commerce and industry.
Perhaps of more surprise (or disappointment!) is the fact that the board “doesn’t think about lawyers in its day to day deliberations”. What?! We lawyers are not front and foremost of our CEO’s thoughts each day? Before you destroy your practising certificate in a fit of pique, there is an exception to this, the board will need to bring its lawyers into play when there is “a good reason to do so” such as a big transaction or litigation. In summary, the board leaves the GC to keep the trainset running but will shout when help is needed. Phew, all is not lost.
A quick side note was the view that the GC needs to sit physically close to the rest of the board in order to ensure the are involved day-to-day “in the flow”. An old-fashioned notion perhaps in this technological age, but the point was well made (if put differently) that out of sight can be out of mind.
In the context of the GC’s relationship with the board (and interestingly, no debate this time of should the GC be on or sit with the board, I think we’ve moved on from that theme which would have been prevalent a few years ago), ethics is a recurring issue. The GCs here are firmly of the view that with their ‘ethical guardian’ hat on it is right to challenge the board in difficult questions, not by advising “what must we do (legally)” but instead challenging “what should we do (ethically)”?
A couple of more specific ethics related issues included, how do you due diligence ethical concerns in an acquisition? Answer: you can’t, but you can do a “culture check”. And, a note to be careful in joint ventures in certain overseas countries where the ethical landscape may not be what we are used to, that you are not “outsourcing your ethical obligations”. Nicely put.
From the boardroom we moved to the legal innovation lab as both legal service providers and in-house teams put their Innovation hats on. The mood music from the in-housers at one session I attended was mixed. Whilst GCs recognised that they have “no option” but to innovate and consider how to do things better, it was generally felt that “inertia” existed preventing them from going as fast as they’d like to.
The reasons for this? A lack of support from over-stretched colleagues in IT; a lack of technology budget within legal teams; capex constraints within corporates generally; and a lack of time.
These frustrations almost gave way to worry as GCs acknowledged that the legal team needed to innovate, on the basis that “all aspects of a business need to focus on continuous improvement and legal should be part of that”, otherwise it will cease to be relevant and lag behind the corporate culture. In turn, this will not help GCs keep their CEOs focused “on value rather than cost”.
It’s clear that law firms and other legal service providers have a role to play here. The now familiar menu of process improvement, automation technology, flexible resourcing models and data analytics are no longer pie in the sky concepts, but important parts of day-to-day service provision now deployed by a range of suppliers. Although I’m generally one whose bias lies with the in-house community, I did feel there was a little too much skeptism in the room when it was suggested that law firms are keen to help their clients with technology solutions because it binds them into the firm!
Innovation summary – some good work has been done, but there is much more to do. A slightly unsatisfactory position perhaps, but it’s the reality.
We moved seamlessly from discussions around tech to compliance. Compliance is a funny topic at these conferences – it’s a bit like eating your greens – everyone knows it has to be done, that it’s good for you, but nobody likes doing it. Yet this turned out to be one of my favourite sessions of the day as the panel debated how best to instal a compliance culture in any business.
The big compliance challenge was well put – how do you devote limited resources to what looks like an endless risk of tasks? A few succinct points conveyed powerfully what the foundations of a good compliance programme look like.
First, anything that is worth worrying about in a business will not be recorded in an email, you’ve got to get out of your office to manage compliance effectively. Second, it’s important to understand human behaviour and the levers you can pull to influence it. Third, yes do start to look at Big Data which can paint a picture of where problems in a business are likely to crop up, but it’s humans not computers which behave badly and getting in front of people is critical, “people will tell you more to your face than they’ll put down in a spreadsheet”.
My favourite point of all during the compliance debate, and perhaps the best point made all day, was by a GC who challenged the idea we’ve all heard before in the context of in-house legal teams “becoming more commercial”, which is the much floated challenge that the legal department should be turned from a cost centre into a profit centre. The GC poured scorn on this notion – “have we lost our minds?” – on the basis that there is no good reason to incentivise the legal team to take the wrong or unncessarily risky decisions. Not the fashionable view perhaps, but I thought a strong point well made.
Finally, we looked at strategies for minimising costs and saving time, perhaps best summarised as how to get the best bang for your in-house buck. We were (rightly in my view) taken back to first base in this debate with the advice from one GC that before one even starts thinking about how best to do this you need to think “what is the purpose of this legal function”. Without doing this, it’s hard to galvanise your own thought processes.
Think about what different divisions within your business need. Some will need specific expertise. Others greater firepower. Break down tasks across your team, see who does what and where time is spent. Is it being spent in the right places? Don’t underestimate how long certain tasks, like the creation of playbooks to improve efficiency, will take. Above all, take a pro-active approach to budget management.
One point made here which I’ve not heard too often before was a general consensus to involve procurement in the budgeting process and even negotiations with legal service providers. This is a very different stance I’ve heard in the past, where procurement were oft regarded as the enemy and to be kept away at all costs. That view has now changed as GCs recognise the value procurement professionals can bring to the party. The general consensus was the in-housers should choose the providers they want to work with, then bring in the procurement big guns to help you agree pricing.
I finished the day by attending a session on crisis management. We heard a couple of anecdotal tales which were enough to make you think “I’m glad I wasn’t involved in that” and received a reminder that crisis management is not only for Communications Directors, all senior management need to be at the table with a view, not least the GC. As well as yet another reminder on ethics, that “doing the right thing is usually the right thing to do”.
It’s hard to draw a pithy conclusion from debates across such a wide-range of subject areas. Suffice to say, I think today’s GCs have a much clearer vision in their heads than a few years ago of where and how they are driving the in-house and wider business agenda. There is less talk about achieving undefined “added value” by “being at the table” and instead stringent focus on where in the business the GC should be spending their time and how to go about doing that most effectively.
As someone best summarised the first day of the Summit, “The GCs who really do add value are those who ask the difficult questions and poke their noses into difficult problems.” Amen to that.
Right, blog post written, the sun is up. The hardship of a cooked hotel breakfast awaits before we plunge into another morning of debate. Signing off from Lisbon, final copy will be filed next week from the London bureau.