For law firms, there is nothing more frightening than the prospect of in-house legal teams scaling back the amount of work they outsource. Due to the financial crisis everyone is now getting edgy…
The press has had something of field day reporting on the woes of private-practice lawyers over the past year or so. From layoffs to salary freezes, law firm collapses to more ridiculous measures such as the
strict enforcement of stationery quotas, it seems many firms have felt the pinch of cost-cutting measures. But how are the region’s in-house lawyers faring in the economic crisis? Are they facing the
same pressures, and in what areas are these most apparent?
The results of the ALB In-house survey confirm that in-house lawyers, like their private-practice counterparts, are under the pump; facing cost-cutting measures left, right and centre. But when in-house teams want to cut costs they do not necessarily look to the same areas as law firms do. Rather, they look to their single largest liability: the amount of money they spend on outside counsel. And while this is by no means a new phenomenon, it is a concern which has taken on new meaning in the second worst financial crisis in living memory.
Pressure
While in-house lawyers may not have to deal with the prospect of salary freezes, equity contributions or the possibility of a law firm collapse, life in-house, it seems, has never been tougher. Shrinking legal teams, dwindling internal and external budgets, and the ever-intrusive hand of company management are just a few of the hurdles that most in-house lawyers across the region have to negotiate on a daily basis. One should not mistake these for new occurrences – they have been happening, in one form or another, for much of the past 20 years. However, they are now being given greater attention.
The extent to which these issues have become the focal point for many in-house departments may be gauged by tracking the change in the amount of work in-house lawyers are handling themselves, the complexity of this work and the speed with which they are expected to complete it, says Gavin Ingram, corporate counsel for Asia with BlueScope Steel. “An economic downturn doesn’t equate to a downturn in one’s legal obligations. We are much busier now than we have been over the last 12 months and handling maybe twice as many matters than we were in the last quarter of 2007. Matters come across my desk with a regularity I have not seen for a long time,” he says.
But it is not only the flow of work that has increased. The types of matters that in-house lawyers are handling has also become increasingly diverse.“The flavour of work has shifted. In the upturn we were looking more at acquisitions and fresh investments, but now the focus is more on meeting the individual needs of the business. Now we are looking more at receivables and the deferral of projects and, of course, litigation as well.”
While the work that Ingram and his team are handling now may be categorically different than in the past, the work being done by the in-house team at one of the world’s largest investment banks follows the flow of the international economic environment. “The work now has a different spin to it. Market volatility has created different issues in matters that were going since before the global financial crisis took hold,” says the regional general counsel at a US-based investment bank, who declined to be named. “Some of our lawyers who were previously doing CDO originations and advising on the front end of M&A transactions are now following on with back-end work, litigation, private bank work and similar things.”
But whether the work is completely different or more focused on the back end of transactions, the role of
corporate counsel across the region remains the same: to assist their company in realising its commercial objective – staying afloat in troubled times. “The key point for in-house lawyers is to be extra conscious ofproviding commercial outcomes for business units to help their companies reach their objectives,” says David Flavell, Asia-Pacific general counsel for Danone Asia. “It is a crucial time for in-house lawyers to ensure they are closer than ever to the business and understand the business environment.”
The pace at which this business environment is changing has implications for the timeframes in which in-house lawyers are expected to resolve matters. All in-house lawyers interviewed by ALB noted that deadlines for matters had been cut – and cut drastically. “One of the most visible manifestations of this crisis is that our deadlines have been shaved,” says Peter Elliot, general counsel for Fitness First Australia. “In a sense, this is similar to what private practice lawyers are experiencing. A matter will land on my desk and I will be expected to provide my board with an answer in a very, very short timeframe.”
Ingram adds: “The churn is a relatively new phenomenon. Increases in the amount of work being handled in-house and even the types of matters we are taking on have been themes rolling through the past decade, but turnaround times have been pressurised by the current economic situation.”
This is the HTML format of the ALB In-house Survey 2009 featured in the April issue.
NEXT: Multi-tasking work and filling vacant in-house positions
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