ACC/Eversheds Conference And Global Growth Same Topic - San Francisco, September 17

Friday, August 1, 2008 - 00:00

Top in-house counsel in large global companies have revealed that what most impacts their work right now is the pace and scope of global growth, far more than rising law firm costs or the economic downturn. The fast pace of globalization and the complexity and diversity of risks and demands was the top issue for more than 100 senior corporate counsel polled at a June 12 conference entitled "Wake Up to the Future: How Global Corporate Legal Services Must Change."

The New York City event was organized by the Association of Corporate Counsel's Greater NY Chapter and the international law firm Eversheds LLP and was cosponsored by The Metropolitan Corporate Counsel. The purpose of the conference was to guide multinational corporate law departments in structuring and managing their functions for the future. Leading heads of legal departments from many Global 500 companies provided concrete approaches and tools for in-house counsel to be adapted and put into practice. Thirty-eight percent of in-house lawyers attending the event saw that the pace and scope of global growth was having the biggest impact on the corporate legal function today. Next was the rising costs of outside counsel (20 percent), followed by the economic downturn (14 percent).

Paul Smith, partner at Eversheds who cochaired the conference with Tom Sabatino, general counsel of Schering-Plough, said, "Over the last year we've had anecdotal evidence from clients that their global demands are mushrooming, whether in Abu Dhabi or Bucharest or China. At this conference we saw broad consensus on a global tipping point. Mix global growth with pressure on costs, with aggressive regulatory enforcement, with the economic downturn - that's a heady cocktail for in-house lawyers."

An audience response system was used to survey the conference attendees, of whom 36 percent were counsel of companies with more than $10 billion in revenues, and 34 percent with $1-10 billion in revenues. Eighty-five percent of the respondents were corporate counsel, of which 62 percent were either the chief legal officer (CLO) or reported directly to the CLO.

Though 84 percent of the counsel viewed their companies as being global, most said their legal department is ill prepared. More than 40 per cent responded with 1 or 2 (on a scale of 1 to 5, with 5 as the highest) regarding their corporate legal function's readiness to meet the company's global demands. When asked which countries or regions caused the most concern for management of risks and disputes, China was the top choice for 35 percent, followed by the U.S. for 17 percent and Russia for 14.5 percent. Aggregated, the BRIC countries (Brazil, Russia, India and China) represented the greatest concern for 61 percent of the corporate lawyers.

Tom Sabatino said " Our struggle is neither unique nor insurmountable - globalization has brought many opportunities to our businesses. As in-house lawyers, we need, and want, to be fully integrated with the business and provide the legal infrastructure required to be successful in all markets in which we operate."

Though global issues led the agenda, in-house counsel were critical of their law firms. Forty-four percent said their law firms rate 3 (with 1 lowest and 5 highest) in understanding their business and their constraints, and another 38 percent gave their law firms a 1 or 2 rating. Respondents resoundingly found their law firms highly inefficient, with 87 percent giving their law firms a 1 or 2 for efficiency and not a single in-house lawyer rating them as 4 or 5 for efficiency. Fifty percent rated their law firms as 1 or 2 in preparing comprehensible estimates and budgets and achieving them, and 18 percent gave their law firms a 4 or 5 score.

Despite concerns about law firms' inefficiency and discussion that the billable hour is often the culprit, when asked if the billable hour would disappear during their careers, 71 percent said "No, because it is simply too ingrained." Only 21 percent answered yes, it would disappear.

"In-house counsel forums such as this one give us useful feedback, and while many of the attendees didn't see the billable hour going away, ACC is committed to developing a set of best practices that include alternatives to the much-reviled billable hour," explains ACC President Frederick J. Krebs. "We have a group of leading in-house counsel from around the country considering a number of options, including alternative fee structures, early case assessment and better use of technologies."

The following significant findings from the event related to corporate counseling on cross-border transactions and disputes:

• The most challenging or frustrating feature of international M&A transactions is differing legal systems and principles (36 percent) with poor teamwork in second place (28 percent);

• 56 percent of corporate counsel surveyed said their international transactions could benefit from a formal project management system, with another 40 percent saying they could "maybe" benefit;

• 57 percent have seen a rise in litigation in the past two years; and

• 67 percent expect to see an increase in "U.S. style litigation" in Europe.

The fast pace of globalization and the legal risk issues that come with it require a fresh look at resource allocation and approach. By providing in-house counsel with productivity tools and web-based resources during the one-day conference, in-house counsel are better equipped to handle the challenges that come their way.

A conference with the same topic and title will be hosted by the Association of Corporate Counsel and Eversheds in San Francisco on Wednesday, September 17 (see page 2). In-house lawyers interested in attending should contact futurelaw@eversheds.com.