Now lawyers are strategic advisers

In-house general counsels are facing diverse challenges as demands on their expertise rise, with increased regulation in the wake of the financial crash, along with the need to create value

The role of general counsel (GC) has evolved sharply since the financial crash in 2008. The mood for governments to regulate and invigilate has raised the workload. In many firms the legal budget hasn’t risen fast enough to compensate, ramping up the pressure. At the same time there has been a long list of new challenges.

New technology means straightforward things like storing data is suddenly a headache. In the old days the data was stored on servers onsite. Now the data could be stored anywhere in the world. Privacy laws means the location is an acute legal concern. Plus, there are cyber attacks, data protection issues and new e-disclosure issues to master. And there’s the small matter of intellectual property (IP).

Once upon a time the management team would worry about how to commercialise IP. Now the GC is a key part of IP strategy, making vital commercial decisions about how the law can be used as a weapon of commerce.

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Value creators

An example of a GC as a strategic business partner is Galit Gonen, legal counsel in Europe for Teva Pharmaceutical Industries, the world’s largest generic drug maker. She comes with a big reputation, having scooped the International Law Office European and global counsel award in 2013, the Legal 500 award for IP individual of the year in 2014 and Editor’s Choice for the European woman in business law award in the IP category in 2015.

When you look at her job, it’s easy to see why she gets the applause. Teva is not only a giant in generic drugs, it also has a huge specialist drug section, and both divisions are subject to differing regulation and commercial imperatives. It’s a difficult beat.

Dr Gonen says the idea of the GC as a strategic adviser is spot on. “We serve as the business partners to our business functions and strive to be substantial value creators to the business,” she says.

The trickiest aspect of her job is adjudicating the balance between commercial and medical imperatives. “Some see a conflict in the role of a pharma company,” she says. “On the one hand, shareholder value has to be generated and on the other, the ultimate ‘consumer’ is the sick patient. So the balance is skewed in pharma with a simple desire to help sick people.

“My role is to ensure these goals are met within the boundaries of the law as it exists in any jurisdiction, at any particular time, and also to use the law to facilitate market access by making it profitable to the business and a win-win.”

Each decision, for example patent litigation, must be looked at afresh in each territory. “At present and for the foreseeable future, patent litigations are conducted in each European market rather than centrally. This creates huge challenges.

Understand the business strategy and problems, and how legal can best support that

“The business considers Europe one market. Ensuring pan-EU market access where legal precedents, judicial attitudes, procedures and outcomes may differ from member state to member state is a huge challenge. Factor in differing rules around pricing and reimbursement, and the complexity increases significantly.”

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Legal can finally prove its worth

This view of a GC as a strategic partner is echoed at Unilever. Glenn Quadros is GC for Unilever’s enterprise technology solutions division and says GCs ought to love their new role as consultants for other departments as it finally means legal can prove its worth.

“Legal has always been like the child with high potential – very bright and capable – but has never reached that potential because of how costly the service is,” says Mr Quadros. “There has also not been a way to measure and demonstrate value and performance which is a problem because most organisations are very metric driven. This is changing.”

He says to maximise performance GCs need to gather insight from a wide spectrum of sources: “Understand the business strategy and problems, and how legal can best support that – to not do this alone, but leverage both the insights of your panel law firms as well as the various stakeholders themselves.”

Risk Changes made by general counsels

Increasing regulation

The role of GC is getting tougher because lawyers themselves are subject to increasing regulation. Christian Mancier, data protection officer at Gorvins Solicitors points to one particular headache. “The forthcoming Europe-wide overhaul of the data protection regime, which is expected to come into force in 2017, will introduce a universal obligation to report all data breaches ‘without undue delay’,” he points out.

The result: “With general counsel often being ultimately responsible for data protection issues, the thought of having to notify every data breach each time an employee or contractor mislays a laptop or memory stick, or sends something to the wrong address, e-mail or fax will be causing general counsels all over Europe to wake up in a sweat in the middle of the night,” says Mr Mancier.

A requirement already exists for law firms to report misdemeanours. Natasha Chell, head of compliance at Laura Devine Solicitors, finds the Solicitors Regulation Authority (SRA) guidance a constant demand. “The ‘grey areas’ can keep you up at night, especially as there is a requirement to report any material breaches of the regulations to the SRA,” she says.

The trick is to stay calm. “Maintaining a common-sense approach and balancing risk management so that it does not stifle the business is important,” says Ms Chell.

With so many duties, the only way forward is for GCs to make the most of their team and partners. Teva’s Dr Gonen has a good personal tip. She says: “In order to get people to work with me, I may need to abandon my litigato’s persona. I need to let go of it to relate to people when there are differences of opinion or approach.

“It is a lot about applying soft skills optimally so the extraordinary talent that I have in the team is leveraged and my team members can realise their full potential to do amazing things standing beside me.”

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