For many in-house lawyers, it is important that they obtain client satisfaction feedback from internal stakeholders. However, speakers at the meeting came to different opinions as to what extent an in-house lawyers’ pay should be determined by such feedback. One speaker described how their bonus was – in part – derived from feedback provided by the company’s top managers related to the success of a proposed transaction. Eversheds’ David Levin cautioned people to be wary of this approach. “To work well you would need to be comfortable that the lawyers would not be too accommodating by giving the advice that their internal clients want to hear.” While he understood the logic, and indeed attraction, of this system, Mr Levin went on to suggest that an important role of the in-house legal department was to provide a check and balance against engaging in ill-advised deal making. “I’ve seen many examples of deals being driven by executives whose bonus may well be dependent on the deal being concluded. In these cases the internal lawyer, alongside his external counterpart, has a pivotal role to play in ensuring that the company’s best interests are protected.”

The appraisal system used by this particular in-house lawyer seemed to take account of this concern. If the bonus were to be directly related to feedback provided by a very small number of executives, that could certainly raise the danger Mr Levin highlighted. But in this case, feedback was provided by 100 executives – too many for one individual to have a disproportionate influence.

In relation to the relationship between the in-house lawyer and their external law firm, it was generally felt that both sides must maintain regular contact, and be clear about their respective objectives. “In-house lawyers should encourage their internal client’s business executives to scope the projects accurately, and then the in-house lawyers should agree with their external law firms what are the most important topics they should be focusing on,” said Eversheds David Levin. “If you want a due diligence report on an acquisition, but the drivers mean that there are areas that you are not interested in from a business or risk perspective, then do be sure to inform your external lawyers. In this way, we can do less work, thereby saving our time and money and also saving your resource in reviewing what, to you, are immaterial issues.”

Mr Levin suggested that, “If in-house lawyers wanted to help themselves, their boards and their companies, they should be proactive about monitoring the levels and types of legal activity across their remit. Eversheds have developed various tools to help them. Most recently, we launched our Global Account Management System or GAMS, which can provide significant management information on each matter that we or our network are dealing with. So, for example, if you are regularly spending legal fees on a particular type of issue, that may indicate that there is a systemic problem that needs to be addressed in the organisation e.g. by training.

“It is too easy with the time pressures that in-house lawyers face for them simply to be reactive, and manage their legal spend by looking purely at fees. With systems such as GAMS they have the opportunity to manage their legal spend more effectively and therefore increase their actual and perceived value to their boards and their companies.”

For one leading in-house counsel, the legal function had four major functions. First, and most obviously, the corporate legal department exists to ensure the company behaves in a way that is legally correct – existing laws are adhered to, and legal processes are followed. Second, the department should play a key role in developing and enforcing the company’s “ethics” and “brand values” – typically indicated in the company’s internal policies. These policies should oblige a company to behave in a certain way, even when a country has no particular law on that topic. Thirdly, the department should identify the key legal risks associated with the company, to allow senior management to make informed judgements. Finally, the department should always try to provide “solutions” for its clients, rather than being a handicap to innovation. However, in doing so, the legal function should always remember that it should always provide solutions that benefit the company as a whole – as represented by the company’s shareholders – rather than particular employees.

Of course, lawyers can only offer advice on legal matters that are actually bought to their attention. Howrey’s Santiago Martinez Lage, himself a former in-house lawyer, believes that some commercial directors actively avoid seeking legal advice, because they did not want to be told that their proposal was not legally permissible. His colleague, Rafael Allendesalazar, offered a slightly different perspective. “Different clients want different things from their lawyers – some want you to offer them a risk assessment, but sometimes they just want you to give them a ‘yes’ or ‘no’ answer.” The most difficult situations occur when clients want a definite answer from their lawyers – but no such answer is possible.

In relation to legal training, Eversheds’ David Levin said it was important that lawyers offered a level of sophistication that was appropriate to the target audience. “When we run a bespoke training session – for example, on competition law issues, this will typically be aimed at employees who need to investigate specific issues,” he said. “More often, companies just want to alert their employees to the general issues regarding a topic. They want to make employees aware that, if the issue comes across their desk, it is something they should ‘flag up’. For these types of training programme, CD-ROM or internet-based training programmes are normally sufficient.”

Although competition law training is an obvious and ongoing concern for many companies, in-house lawyers should not neglect training in areas of established law, if they are important to their business. One speaker from a consumer-facing company recalled that one of their most significant legal risks was a topic that had not received much media attention in recent years – data protection. Here, because the marketing department was not aware that it was responsible for keeping customers’ personal data private, it had engaged a large number of external agencies to run various aspects of its marketing campaigns – using private data they should not have access to. Once this problem was discovered, a regular “refresher” compliance training programme was swiftly implemented.

Interestingly, the same meeting also suggested that the marketing department itself could be used to promote the importance of legal compliance to the company’s internal workforce. Although they often make a valiant effort to do so, some in-house lawyers are not very good at promoting complex ideas in a simple manner. This, of course, is the marketing department’s raison d'être. The in-house legal function should therefore consider making use of the marketing department’s expertise to promote the compliance message on their behalf.

For inside lawyers who are not involved in cross-border deal-making, outside counsel can often provide valuable tips on how to make this process run more smoothly. Here, Howrey’s Rafael Allendesalazar had one particular tip for dealing with competition law approval – be selective about which jurisdiction the company first files for merger notification. “Once a deal has been agreed by one competition authority, other authorities find it much more difficult to impose additional conditions,” he says.

When making a merger notification in a market that is already highly concentrated, the company must always try to define its market share in such a way that does not raise the prospect of rejection on anti-monopoly grounds. However, Mr Allendesalazar said the company should always – if possible – avoid defining the market for the purposes of the current transaction in a way that would harm the possibility for future deal-making. “You must try to look forward to where the company will be in six months or a year,” he said.

One speaker then asked the group how proactive corporate counsel should be in maintaining relationships with regulators that oversaw their company’s main activities. On the one hand, a good working relationship may make the regulator more amenable to help the company “work through” any regulatory difficulties that it becomes aware of. On the other hand, a more distant, business-like relationship places fewer obligations on the company to disclose every infraction, however minor, that may be of potential interest to the regulator. Another speaker found it useful to actively engage their regulator – in part, to shield their business from the impact of hostile popular opinion. “We have more support from the local regulator than from the local population,” they said.

The issue of relationships with regulators has been discussed at several C2C events, and participants have come to widely differing conclusions. Participants at some C2C meetings have suggested that counsel should only focus on maintaining relationships with key regulators in key markets – and then only if the regulators’ turnover of personnel was sufficiently low to make the exercise worthwhile. In addition, it may be not be appropriate for companies to directly lobby regulators in relation to issues of generic concern to their business sector. This work can sometimes be carried out more effectively on the company’s behalf by an industry-wide trade association.