If you can keep your head...

Discussion of how general counsel should handle a crisis dominated Legal Week's forum. Alex Aldridge reports

In September, Legal Week held its annual European Corporate Counsel Forum, with the leading general counsel in attendance chewing over the events of a turbulent 12 months and looking ahead to predict how they may affect the legal services market in the future.

Speakers at the conference, held on 15-16 September at the Four Seasons Hotel in Hampshire and attended by more than 90 delegates, included Peter Kurer, who stepped down as chairman at Swiss investment bank UBS in April, and Lehman Brothers' European corporate counsel, Ian Jameson.

Kurer outlined the conflicting expectations general counsel must manage if they are to succeed in a period of fundamental change.

"When I joined UBS in 2001 as general counsel, I asked the senior management what they expected of me and they said: 'Peter, you have carte blanche.' But chatting with the various people in the organisation, I soon realised they had many different expectations, often at odds with each other, sometimes changing - and balancing these is key to doing your job well," he said.

Kurer told the audience that it was also important for general counsel to be aware of the differences between lawyers and business people as they go about their work. He concluded with the observation that different organisations require different levels of involvement from their lawyers. "It is essential that in-house legal chiefs recognise whether they fall into the role of powerful GC or just a good service provider," he said.

Lehman: an inside perspective

A timely panel debate on the role of in-house counsel during a crisis was inevitably dominated by Jameson's account of the dramatic weekend that saw Lehman Brothers go into administration.

"On this day last year [Monday 15 September 2008] at 7.56am we'd just put the various Lehman entities into administration," Jameson told delegates. "At our offices in Canary Wharf there were 4,970 people in a state of chaos. No one knew if they'd be paid in September or even if they'd have a job the next day," he continued, before going on to describe the doomsday scenario of administration as "so far fetched it wasn't planned for".

"Everything becomes a legal matter in times of crisis - redundancy rights, document issues, who owns what - meaning your services are in high demand," he added.

Boston Consulting general counsel Jeremy Barton (pictured), who was worldwide deputy general counsel at Andersen at the time of its collapse in 2002, and Sony electronics general counsel Michael Williams, who oversaw a worldwide battery recall in 2006, went on to share their crises experiences.

The consensus among the three was that understanding the personalities of those around you at such times is equally important as understanding the legal issues involved. "During a crisis you've got to be able to identify 'Panicky Pete', then sideline him," said Williams. "The impact of personalities at such times is huge - both within your team and in the organisation as a whole. The calmness under pressure showed by our interim CEO was crucial," recalled Barton of his time at Andersen.

As the focus turned to the year ahead, managing risk in a way that prevents crises from materialising proved a hot topic, with speakers suggesting few people in organisations are better placed to deal with risk issues than lawyers. "As lawyers, we've got a skillset that makes us well suited to crunching our way through risk issues," observed BAE Systems group legal head Philip Bramwell, who emphasised lawyers' ability to not only identify risks but communicate them. "From that point of view, it's crucial that in-house counsel are good communicators, which again fits the profile of our role," he added.

Lasting change

With HSBC chief economist Dennis Turner predicting the worst of the recession is over in his keynote speech on day one of the event, there was debate over whether the drive for value in the provision of legal services would endure in more buoyant economic times.

"Efficiency is the new paradigm resulting from the financial crisis," argued Belgian Post general counsel Dirk Tirez in the opening to his second-day speech on management of external counsel. He added that measuring and analysing data was the key to consolidating fixed-fee arrangements and consigning the much-maligned billable hour to the past. IT, Tirez continued, was essential to this process, with the value of technology currently "underestimated by many in the sector".

Having their performance measured was, general counsel agreed, something that law firms would have to get used to - and any friction caused by companies assembling metrics on law firms' behaviour wasn't necessarily a bad thing. "In-house lawyers shouldn't be afraid of robust exchange with their external counsel," said CISCO director of legal, emerging markets, Richard Given, echoing several other speakers' comments on the healthiness of frank and regular dialogue between in-house lawyers and their private practice advisers.

The other major theme of the conference was managing teams in an adverse business climate. Thomas Werlen, general counsel at pharmaceutical group Novartis, stressed the importance of developing talent within in-house legal departments, outlining the mentoring programme and inter-company secondments he has put in place for Novartis' 250 lawyers since joining in 2006. "This kind of initiative is crucial as lawyers move from adviser to business partner status within an organisation," he said. However, with money tight and promotions off the agenda at many organisations currently, there was widespread agreement among delegates that retaining key staff and maintaining morale was a major challenge. "Not being able to give people the promotions they deserve can make management quite challenging," commented one general counsel in the break-out session on people management.

"Recession or no recession, the reality is that the career pyramid gets very narrow at the top in-house," added Richard Hennity, group head of legal at HSBC. "As a result, it's important to be honest with your team about what their prospects are."

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Peter Kurer: Business people from Venus, and lawyers from Mars

• Business people are closure-minded. In contrast, lawyers are perfectionists who are happy to delay a process for relatively minute details.
  
• Business people live on reducing complexity. Lawyers, on the other hand, like to increase it. Business people concentrate on opportunities; lawyers on making barriers to opportunities.
  
• Business people are proactive, defining the agenda. Lawyers react.
  
• Business people want certainty on the future. Lawyers often can't deliver on that.
  
• Business people think in cycles; lawyers much less so because we all know our trade is OK in good and bad times.
  
• Lawyers are extremely rational and value intellectual honesty. Business people think emotion - and emotional intelligence - is important, too.
  
• Business people build trust. Lawyers are a source of this trust.
  
• Lawyers are cynical. Business people can't stand cynicism: it hinders the movement of an organisation forward.
  
• Business people think lawyers are boring. By talking and talking, lawyers reinforce this belief.
  

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Ian Jameson on Lehman's collapse

This time last year (Monday 15 September 2008) at 7.56 am we'd just put the various Lehman entities into administration. At our offices in Canary Wharf there were 4,970 people in a state of chaos. No one knew if they'd be paid in September or even have a job the next day.

The doomsday scenario was viewed as so far fetched that it wasn't planned for. The Financial Services Authority was in our offices on a daily basis and the SEC was doing the same at Lehman in New York. But there were restructuring and potential sale options. The political desire of the Fed to let Lehman go under wasn't considered.

I'd been up all night, having been in the office all weekend, which we went into with three alternatives: Bank of America to buy us (which ended when they bought Merrill Lynch), Barclays to buy us (which continued until Sunday afternoon) or the Fed to engineer a rescue. By Sunday evening it had become clear that we were on our own.

Everything suddenly changed. I remember seeing the number two manager for Europe walking into his office and finding a bunch of twenty-somethings from Linklaters and PricewaterhouseCoopers, the administrators, in there, to whom he said, "I've got something to do, can you come back in a few minutes?" They responded: "No, we can't - sorry but this is no longer your firm." For my part, I became an adviser to the administrators, who obviously had very different interests to the remaining elements of the firm.

Psychologically, it helped being a lawyer. Some senior commercial managers whose lives were so attached to the business were absolutely bereft. But as a lawyer you're attached to a wider profession, which gives you that bit of distance that helps you remember that organisations live and die.

I've been able to ensure that all of my team in London were looked after. But not all of those on the continent. There were some bright lawyers, some of them just hired, cast out onto a very difficult world.

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Peter Kurer on conflicting expectations

At the bottom, you have the traders and brokers, who want solutions from their lawyers, not obstacles. Going higher, you have the managers and divisional heads, who, late in the evening in the bar, put their arm around you and say: "Your function is to keep me out of jail."

Then you have the risk controllers, who want someone to share their burden. At the top is the CEO, who believes the GC is to add to the smooth running of the organisation. When I was GC, my chairman Marcel Ospel would ask me if I had things under control. To which I'd respond: "When I have everything under control, fire me because you need another GC."

For regulators it's simple: the GC is the cop within the organisation, nothing else. Your own staff expect you to be a good lawyer, a superior lawyer. And finally, there are the external law firms. Often they help you, but sometimes it's difficult - maybe because they think GCs are second-class citizens, or perhaps because they're competing for your role in a piece of work.

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