The International Man Of Mystery?

7 06 2011

Are you the law’s international man of mystery? The answer to the prayers of corporate counsel in global companies? Can you leap jurisdictions with a single bound? Effortlessly unravel the tangle of law, culture and procedure? Wrap your arms around a wriggling mass of seemingly conflicting regulations, and fearlessly work with them to make compliance a reality?

Toby, the firm's anti-trust specialist, was convinced he'd got the right look for the international project kick off meeting

No?

Well don’t worry, you’re not alone.

Conversations with in-house counsel about the difficulties supporting business overseas often have familiar themes (more on this later), but what’s becoming clear is that these challenges are becoming more acute.

Whether it’s the sheer volume of international business increases, the interest in emerging markets continuing to heighten as western markets stagnate or become saturated, or technology adoption increasing the ability to communicate effectively across the world, more and more in-house lawyers are being asked to operate in jurisdictions which are often way outside their comfort zones.

Bear in mind also, that many of the challenges described below might be experienced by those in a law firm that is supporting an inhouse client with an overseas project (and this applies even with a global firm working cross-office) almost to the same degree as an in-house lawyer.

The problems start with the ability to quickly identify what the relevant issues are. It may be that you have an idea of what they are – the big headline-grabbers like anti-trust, employee issues and anti-corruption legislation are obvious examples. However, it may be that there are a bunch of the infamous “unknown unknowns” which  might be substantive law, but they might also be difficulties around the legal process or simply understanding the legal system.

Some of them you might be able to get an overview from research or asking the right people, but others will require hands-on experience of the situation you are facing.

Which leads on to the next step in the journey – selecting and managing local counsel.

Given that the problems above (not knowing what the key issues might be) immediately cause difficulty in having productive, early-stage conversations with business colleagues, it’s not surprising that they can also make the relationship with local external counsel much more difficult to manage.

The first challenge is finding the right lawyers for the matter in hand. Existing contacts, referrals from trusted sources and directories (online, paper) are often the first port of call, but even then the answer might not be the right one.

When I was inhouse I had difficulties both with specific offices of global firms (delivering anything but a consistent global service) and local firms that were recommended at a firm level, but who had individuals that weren’t up to scratch.

The next step is of course instructing the local counsel, which is understandably more difficult than using external lawyers in your own jurisdiction. Lacking an understanding of the key issues means giving a tightly defined project scope is difficult, which has a knock-on impact on costs and timescales.

There may also be softer factors at play, ranging from the more obvious such as language and cultural barriers (“what do you mean he’s out for lunch and won’t be back for three hours, we close the deal this afternoon!”) to those that are more difficult to put your finger on such as differing views of risk and mismatched service expectations.

For multi-jurisdictional projects, this is the point at which project management skills come into play. Assuming those skills exist (which is not always the case), invariably the international element to a transaction adds a bigger administrative overhead to the project, and critically for the business, lengthens timescales.

Which leads nicely on to billing.

It’s horrible.

Managing billing on an international project, particularly one in multiple jurisdictions, is invariably a nightmare which would warrant its own post. I’ve found the best strategy is to close my eyes and wish really (really) hard that all the bills arrive in the right currency, on time and for the agreed (or a reasonable) amount. Admittedly it didn’t work that often.

So, there we are. A post full of problems this week. There are mitigating strategies at almost ever stage of course – getting contacts on the ground (folks in the business can be a mine of useful information) is a great start, as is developing your own network of trusted advisors in major jurisdictions. Getting a baseline understanding of different international cultures helps (have a look at Riding the Waves of Culture: Understanding Cultural Diversity in Business) as does up-front conversations about expectations on both sides of the table.

However, my point was really that as a profession, we need to crack this. To efficiently serve clients, whether internal or external, in a global business environment, we need to provide a seamless service. It’s difficult, but not insurmountable – don’t you think?





Breaking the chains: free the young lawyers

23 02 2010

As we are often reminded these days, the world is flat. Or at least flattening. Trade is global. As the economy picks up, the survivors from the Western economies pick themselves off the canvas, and look enviously at those economies that have continued to demonstrate solid growth over the past couple of years. Whether or not these economies are truly decoupled, the strength of domestic demand has undoubtedly contributed to their recent success, and I feel confident that as the West emerges from recession, the pace of global expansion from the big companies will soon pick up again.

Go on, break them....

So what does this mean for lawyers, and what has it got to do with chains? Leaving the chains question for later, for corporate counsel in companies that are entering new markets, the pressure to get up to speed quickly with local law and compliance, ways of doing deals, company secretarial requirements, labour law etc etc etc is significant.

While many corporate counsel may not be “on the ground” in these new countries (though many will be), the exposure to these new countries is significant and is often very difficult to prepare for even with the support of local lawyers.

I can recall being part of the learning process when my NYSE listed employer began to do business in Saudi Arabia for the first time. It was a steep learning curve for many of us, but fortunately a very positive experience. After a couple of years and a few deals there, the risks that we perceived when entering the market were in fact very different from the day to day challenges that faced us. As a lawyer, one of my first problems was finding the right advisor to help us. After having a less than successful experience with a global firm in the country, we ended up using an American ex-pat, who had lived there for 20 years. His understanding of the local business culture, coupled with his understanding of the modus operandi of  a US client, proved an excellent fit for us. He moved firm during my time instructing him, but the service remained consistent and I learnt a lot about the country (outside the specific legal advice he was providing) from working with him.

So where do the chains come in? Well, as legal markets deregulate, global competition intensifies. English and American lawyers are beginning to find that lawyers from outside the jurisdiction (for example in India, South Africa or the Philippines)  are giving advice to their clients, based on domestic (i.e. UK and US) law. Admittedly in many cases the advice does not extend to the most complex work, but it is substantive legal advice and the lawyers involved are learning fast and their cost structure provides an attractive value proposition.

By contrast, there are relatively few Western lawyers who are able to give substantive legal advice in the emerging markets. Don’t get me wrong, they certainly exist, (and the practice of rotating trainees in the global firms is an excellent way to get genuine experience in other jurisdictions, which can then be taken back “home” and leveraged for many clients) but they are not widespread and are often fully utilised.

But (and here’s where the chains come in), there are many, many lawyers in the US and UK, who never get any hands on experience of advising on projects in other countries. The traditional model of qualifying in one jurisdiction, and advising solely on matters subject to the law of that country is being stretched by the needs of today’s clients. Add to this the inherent risk aversion of many lawyers, and the limits their professional indemnity insurance may put on their ability to give more general advice overseas, and I think we have a set of virtual chains that need to be thoroughly examined.

In thinking about this situation, I think particular attention needs to be given to the impact on tomorrow’s lawyers. How can firms equip their trainees and junior lawyers with the ability to advise clients across jurisdictions. I’m not advocating that lawyers attempt to have a detailed (and up to date) understanding of the law in multiple countries; for all but the brightest, that’s unrealistic. But, I believe an understanding of how to do business in some key countries outside their home jurisdiction, a grasp of the culture, some key legal basics, and a good network of local contacts, would go along way in providing some very valuable assets for the firms, and a set of skills and experience that would equip the lawyers for a very different legal marketplace in future. Not all lawyers will need this training, but increasingly, an excellent grasp of domestic law may not be enough to ensure success.

So go forth and break your chains, but if you invalidate your insurance doing it, please don’t blame me…..