Given the limited size of their domestic market, Swedish corporations have been remarkably successful at developing themselves into truly global corporations. The continuing growth of Swedish companies' overseas subsidiaries, and the corresponding stagnation in employment growth in their home market, have increased the global spread of the country's largest corporations to an unprecedented level. In the mid-1990s, Swedish multinational corporations employed more people overseas than at home.

The logistical issues that surround the running of major multinational networks from such a narrow domestic base have provided an organisational challenge for the management of these companies. One of those responsible for meeting that challenge is Eva Persson, senior vice president, general counsel and secretary to the board of AB Volvo. Persson, who has held the general counsel role since 1997, is responsible for the legal function of a company with eight business divisions, each headquartered in a different region.

The company's 60-lawyer in-house legal function is split between these eight bases: a dedicated general counsel heads each. "You could essentially arrange the legal function in one of two ways," Persson says. "Either keep the lawyers close to the business operations, or gather them in one place. We have chosen to have different legal departments in different places, to keep the lawyers in close contact with the business people with whom they work."

While each legal department stands alone, major decisions are subject to a central overview. The general counsel report first to their area managers and then to Persson. All general counsel meet once a month with Persson to discuss operational issues. "One thing we are looking closely at is the use of external counsel," she says. "The responsibility of appointing counsel lies with each department, but we do have a system of preferred advisers. If someone wants to use an outside lawyer, they will need a good reason for doing so."

The Volvo panels of preferred advisers consist of domestic and global firms. "If we have a very complicated matter to deal with in a specialist area, we will need a larger law firm," Persson says. "Global firms with a large number of offices in different countries give us an advantage when we are dealing with a multinational transaction, because it is easier to co-ordinate their activities."

Despite this, Persson maintains that smaller, local firms are far from obsolete in most jurisdictions, even for a company as large and international as hers. "When it comes to quality and speed, I do not believe the larger law firms provide a better, or faster service than the smaller local firms," she says. The larger firms can also be considerably more expensive than their smaller counterparts – a major consideration when appointing counsel for bulky, commoditised work.

Within the Swedish market, Volvo makes limited use of local resources – Persson estimates only one-tenth of its total legal spend goes to domestic firms. "We use Swedish firms in a couple of areas," she says. "AB Volvo is listed on the stock market in Stockholm and overseas, so for company law and stock market regulations we will use a domestic firm."

For overseas work – the vast majority of AB Volvo's activity – an overseas law firm is almost always appointed directly through the company's existing business connections.

"If we do not have existing relationships in a country, we will often talk to the general counsel in another company based there, to get recommendations from them," Persson says. "We might also turn to a firm we had worked with in another country for input, but we would not use a firm solely because it had bases in many countries. Even if a firm is of a certain quality in one country may not mean it will be the same in every jurisdiction. It can be dangerous to hang onto one law firm."

Having worked with numerous firms on a national and multinational basis, Persson has grown to appreciate the flexible cultural parameters of the global market. "When you are dealing with lawyers who are used to working with companies in other countries, there is automatically more flexibility in the way they work," she says. "If you go to a firm that has not worked as much internationally, it will tend to be more local in the way it approaches things."

The company has also made extensive use of the lawyers affiliated to the accountancy firms, a position now likely to change thanks to regulatory reforms such as the Sarbanes-Oxley Act in the US.

"We have always felt comfortable using lawyers linked to accountancy firms," Persson says. "If you are a large company with a sizeable in-house legal function, you are generally in a better position to judge the competence of the lawyers you are hiring. But those lawyers are now disappearing thanks to Sarbanes-Oxley."