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First annual corporate counsel roundtable

What in-house counsel really want
|Written By Jim Middlemiss

It’s still a battle for respect for some in-house counsel among their non-lawyer “clients” as they “market” their law departments. Meanwhile, regulatory overload is fast becoming an occupational hazard. It’s all in our first annual roundtable with in-house counsel about what they really want, need, and are doing to make their lives easier.

What is on the minds of corporate counsel these days when it comes to running their law departments? What are the challenges they face and the solutions they have to find to meet those challenges? How are they coping with conflicts? What do they really want when it comes to legal support and are they getting it?

We sat down with five high-powered, in-house lawyers from a diverse range of companies — financial services, energy, transport, technology, and automotive manufacturing — in Canadian Lawyer INHOUSE’s First Annual Corporate Counsel Roundtable. Together, their organizations employ over 160,000 people, earn billions of dollars in revenues, and, in most instances, operate in multiple jurisdictions. They are the faces of corporate Canada.

Canadian Lawyer INHOUSE co-editor Jim Middlemiss moderated the 90-minute roundtable that included: Tom Smee (RBC Financial Group), Laura Formusa (Hydro One), Barry Fisher (SAP Canada), Antoinette Bozac (Unisource Canada), and Rob Landry (Magna International).

Biggest Challenge? It’s All About Respect

CLI: What are the biggest challenges you face these days in doing your job?

Landry: I think one of the pressures that we all face is the perception that we’re overly complicating things and people just want us to get it done. Saying, ‘We’re from corporate and we’re here to help you’ is just not something anyone wants to hear. To win them over you have to be pragmatic in your approach. Don’t be overly lawyerly every time you are dealing with an issue. Understand what they are dealing with from a business context, and apply that business sense and rationale to your legal advice.

Fisher: I agree there is an inherent view among non-lawyers that lawyers are inhibitors to doing business. Any time I hear an officer referring to, ‘Let’s send that to the legal department or to a lawyer,’ I know we’re offside. They sense an adversarial approach to this.

CLI: So what can you do?

Fisher: We address that right out of the box by making sure lawyers understand the business objectives and priorities and get them out in the field. There’s a sense of collegiality and you’re a member of the team and not someone from head office. We have proactive training sessions with our executives and tell them we’re here to educate you. We found they were receptive because you can talk their language.

We use a ‘comma case,’ for example, to show how a business was impacted to the tune of millions of dollars by the placement of that comma so they can say, ‘OK, I guess the verbiage is in fact important.’ As long as you are providing advice to them in a timely manner, and you set an expectation, then begrudging respect that can be developed.

Smee: You want to make sure you’re not seen as a roadblock, that you’re actually presenting solutions and thinking about that first before you even talk to a business partner. What is the best way to do this? It helps if they have the sense to bring you in earlier, because you can steer the direction. You can’t go 85 miles down the road and then suddenly turn back 50 miles.

Bozac: You need to develop very close relationships with your executives. I have weekly or monthly conversations with each of them about their departments. That’s very helpful.

Landry: A second way to get around it is just to deliver. Actions speak louder than words. After a couple of successes under your belt, people are more apt to view you as a business partner than as an obstacle in getting something done.

CLI: How else can you earn business respect?

Fisher: Constantly look for ways in which you can structure what your legal department does in ways executives can understand. A lot of it is how you market your department so they see you not as just being a cost centre, but are aware of what value you add and what the legal department does. One of the things we’ve done is taken on some areas of the business. For example, customer audits [of software licenses]. By taking responsibility for that away from the finance department it becomes a revenue-generating activity. We’re in fact now a profit centre.

Bozac: We’re talking about profit centres. I am responsible for many trademarks and copyrights. I have actually have turned around and sold some. Therefore I keep the revenue for our profit and loss statement. That has helped as well.


Coping with Compliance and Regulation Overload

CLI: How are you coping with the increasing levels of regulatory and other compliance activity?

Formusa: I think in our case one of the greatest pressures we’ve been feeling is the change in the regulatory environment, both from an industry perspective and general changes around securities law. You need to make sure you are staying one step ahead, not just keeping up but anticipating. One of the best ways to do that is through participation in industry and government initiatives. We don’t want to wait until we get an email from a law firm. We try to make sure we are at the table. Of course it’s always a question of how much the government or the ministry is going to let you be involved. Most of us generally feel we have had opportunities to shape regulations and legislation and if you can be involved in that, I think you can stay ahead and participate.

Smee: We operate in a highly regulated industry and we have enough lawyers that it’s like we have little law firms, which have relationships with the businesses. They are like dual citizens. They have accountability to the business and have to make them understand [regulatory changes].
The regulatory part of this is really huge. Every business we’re in is highly regulated and there is always a new
policy and there are complications for many different businesses. We operate in multiple jurisdictions so if the U.S. comes up with a policy, chances are Canada will do the same thing. You get them all married up and everybody trained and then the [European Union] steps in and they want slightly different legislation. It makes it very complicated.

Landry: One of the other challenges we face as well is being a Canadian company with global operations is internal controls and things like document management and SOX 404 requirements. As an organization, we have to make sure we have tight controls in place both financially and in the creation and management of our documents. As you deal with things globally, the focus on some of these issues is different the further away from the U.S. you are. The focus or importance that is placed on some of the SOX 404 compliance-related issues for Europe or Asia is far different than it is for Canada or the U.S. It’s not that they don’t do it, it’s just not at the forefront of their attention, like it is for someone here who sees something in the paper almost every day. It’s some additional complexity when you’re dealing with global operations.

Fisher: One of the benefits of the SOX process is that it has brought a certain rigour to the organization and allowed me to bring forward issues that I think are important. I can now say this is a SOX requirement.
There’s [also] pressure to take on differing responsibilities. That carries compliance risk. If it’s an area nobody else wants, they say, ‘Let’s give it to the lawyer.’ There is more and more of that and it’s coming to the point at which you are reluctant to say you want to take that on.

Bozac: In terms of regulatory compliance, my president said to me, ‘I don’t want to be blindsided by any new stuff that happens. I update myself on a periodic basis on what is going on and report back to him or report to the executive team. Or, I might send an email around giving a heads up. We had a major investigation a few years ago, so I forced the executive group to take a look at updating our competition and compliance policies. I am now taking a look at our conduct policy. What I have done is actually named champions from our executive team to lead some of these initiatives so that way it was not just me. It’s been fantastic and let me off the hook for some of the nitty-gritty work and the detail work, so I can be in the background pushing the agenda along.

CLI: What about staying on top of information?

Smee: It’s kind of a multifaceted approach. We have colleagues in compliance who are very well-trained and there are law firms. Plus, there are some commercial vendors who are starting to get into compliance management.

Outside Counsel: Getting What You Want and Need

CLI: What are you looking for in external law firms?

Landry: We want someone who understands pragmatically what our business needs are. I don’t want a 50-page legal treatise when you can give it to me in a page. I assume you’ve done the research, give me a synopsis that shows you truly understand the dynamics of my business and not just the law.

Formusa: I have had some instances where [the lawyers] have not put themselves in the shoes of company counsel and they just delivered the opinion and said, ‘Here it is.’ They haven’t thought it through with what I am dealing with. Good outside counsel will anticipate what I have to do and they will put themselves in my shoes. It is a very different role than being a partner in a law firm. Firms that can address that are going to do really well. It’s worth the money if they go that extra step.

Fisher: By and large, a tax opinion from one law firm is going to mirror a tax opinion from another firm. Where the real value comes is being proactive and giving you something to seize, like a case and saying ‘I just saw this, I think I know enough about your business to see the impact.’ They customize a very large piece of legislation or case down to something that impacts me.

CLI: What about conflicts and law firms? Is that a problem for in-house counsel?

Smee: We sometimes wonder how a law firm can properly represent the other side when their firm has a large relationship with us. It’s more of a problem for law firms than us.

Bozac: I ran into a terrible situation after retaining a firm for two months. A conflict surfaced and I was stuck
trying to find a new firm. I contacted my confreres and said we might be involved in a joint defence. [She was able to line up a law firm for that company and it agreed to drop its retainer so she could hire its lawyer.] Your confreres can help in fixing the conflict.

Formusa: I can see problems in the future, as the world becomes more crowded [and law firms consolidate]. I do think there is a bit of cavalier attitude among the firms, but I have not had to deal with it and I will not be happy if that attitude is expressed to me.

CLI: Any thought on “Chinese Walls” and moves by firms to have clients sign retainers waiving future conflicts?

Bozac: I will agree to walls being set up around a certain partner if and when a case arises, but why deal with it until it arises? I am not trying to be an ostrich in the sand; I am just thinking I would rather hear about it first and then deal with it.


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