Ernest Patrikis is senior vice president and general counsel at the insurance giant AIG. Based in New York he presides over a global legal function of about 375 lawyers. Although not the corporate secretary or a full member of the main board, he attends all board meetings and the meetings of the audit, finance and nomination and governance committees.

AIG is made up of four main divisions: life insurance; non-life insurance; investment/financial services; and retirement/asset management.

Under Patrikis, the legal function has a localised structure, organised on a regional and then country basis with no formal central support from the US. The lawyers are in profit centres like the rest of the business, and are required to adhere to a strict budget.

Patrikis keeps on top of what his team is doing by telephone and video-conference link-ups once a week for the life insurance side of the business and once a month for the other divisions. He says that he regards himself essentially as a firefighter, making himself available, when needed, for advice on disputes or new products.

A large proportion of his time is taken up in managing AIG's external advisers. This is a massive challenge in itself as the group instructs more than 1,000 law firms worldwide.

Patrikis personally appraises each firm instructed by the group but rather than setting up a strict panel of preferred firms he has created a blacklist of firms which the business is not permitted to instruct in any circumstances. If Patrikis has one bad experience with a firm it is relegated to that list.

While the group uses more than 1,000 law firms, there are a number of firms which will regularly top the list in terms of billings. These include US firms Cahill Gordon & Reindel and Sullivan & Cromwell and UK based Freshfields Bruckhaus Deringer and Norton Rose. Baker & McKenzie is also a frequent adviser.

"We expect to get a 'favoured nation' treatment from our top firms and get the best rate that they give to their best clients," he says. Patrikis chooses not to get involved in the use of secondees or the exchange of know-how, but he does make use of the various training initiatives offered by his top firms as a means of keeping his staff up to date and fulfilling their CPD/CLE (Continuing Professional Development/Continuing Legal Education) requirements.

As an insurance group AIG is naturally involved in a lot of litigation, particularly in the property and casualty divisions. There is consequentially a significant potential for conflicts of interest arising with the law firms used by the group. Individual firms will frequently ask for waivers and Patrikis says that these will usually be granted. He has only had two serious cases of a conflict in more than five years. In one of these, AIG simply refused to pay any bills covering the time from when the conflict surfaced. The firm is now on the blacklist of firms that no one in AIG is permitted to use.

Before joining AIG in 1998 Patrikis spent 30 years as a regulator at the US Federal Reserve. He is not, however, fully convinced of the benefits of regulation. "I am not a believer that all the work in Sarbanes-Oxley makes a difference. It has more to do with the integrity of the individuals," he says. "The function of directors is to have a good nose and to be able to detect when things are not right."

For Patrikis this is also one of the key roles of the general counsel. He says that there is a tradition of strong general counsels at AIG adding: "The title of senior vice president says that I speak to business."