Managing risk during the downturn is of prime concern to general counsel, who will be discussing problems businesses are facing at this year's Legal Week Corporate Counsel Forum Europe in Switzerland. Leigh Jackson reports

As the credit crunch exerts pressure on companies around the globe, the outlook facing general counsel gathering for this year's Corporate Counsel Forum Europe has changed dramatically since 2007.

On the one hand chief legal officers, especially those in the financial services sector, face an environment of mounting regulatory, market and litigation risk. On the other, they have never been under more pressure to contain costs as companies struggle to conserve cash.

With this in mind, this month's Legal Week Corporate Counsel Forum provides a timely opportunity for general counsel to discuss the implications of the downturn and how to balance these competing priorities.

The forum, which takes place in Lausanne, Switzerland on 23-24 September, will be co-chaired by InBev chief legal officer Sabine Chalmers (pictured) and David Brimacombe, Standard Chartered Bank's head of legal and compliance for the Middle East, Africa and Europe.

Chalmers says the current environment is putting pressure on general counsel to have complete command of their costs and risks.

She comments: "Inevitably the credit crunch has meant all businesses are looking more carefully at their cost structures, and legal teams have had to do more with less. If you obtain a very detailed understanding of your cost structure and where your main risks arise, allocate your limited resources against what is really effective, it can make a difference.

"The starting point is really understanding what your key risks are and then ensuring you are allocating resources against really managing your risks."

Speakers at the event include senior legal representatives from leading organisations such as ITV, Wolseley, The Financial Times, HSBC, Boston Consulting Group, Shell International, Siemens, Coca-Cola, Christies and The World Bank.

Jeremy Evans, acting general counsel of document management company StreamServe, says the effect on the role of legal heads is closely linked to the company's potential exposure to the credit crunch.

He says: "If the effects of the credit crunch worsen the internal function is no more sheltered than any other function and will have to look at ways to save money and help businesses become more stable."

Another issue up for discussion in Lausanne is legal risk and how it can be managed both during the financial downturn and more long-term following the recovery of the economy.

Evans says it is important for businesses to minimise exposure to risk at all times and not just during financial uncertainty.

He adds: "It is important to look at the long-term picture to avoid future litigation and risk exposure. At any time it is about making sure that both the company and staff follow proper internal procedures and do not 'cut corners' to win business."

Fellow speaker Richard Hennity, HSBC head of legal, argues that the test of the credit crunch should result in companies dealing with risk in a more efficient manner, leading to an increased focus on risk by in-house legal teams.

"There are two things that can be done from a legal perspective to lessen the effect of the credit crunch," he says.

"The first is working on the handling of risk. In the recent past there has been a lack of understanding of risk and we need to work on better quantifying inherent risks."

Topics up for discussion at the event reflect these issues. Panel debates include identifying the legal implications of the credit crunch, engaging with boards and a discussion on the risks for companies from class action litigation.

Tony Wales (pictured), senior vice president and general counsel at AOL International, argues that the role of general counsel grows in prominence when a business is faced with economic difficulty.

He says: "Effective management is more important than ever during hard financial times, as people in the business will look to you for guidance. As a leader you will be expected to decide the way forward and make decisions for the future."

Wales adds: "We have to be ever more vigilant, especially in the management of legal affairs. It is important to work efficiently and still be effective in spite of cost constraints.

"That is the essence of what we do. If we are not generating growth then the company is moving backwards. To do our job properly we have to ensure that we are always managing risk and safeguarding the future of the company."

Methods for gathering the required skills sets for high quality legal management are especially important for general counsel hoping to lead effectively and, as such, the issue will be debated at the forum.

StreamServe's Evans says in-house lawyers can develop their leadership skills by learning from others.

"You have to have, in my opinion, the innate ability to deal with all personality types and to communicate clearly," he says. "In addition, you will pick up tips and ideas from various sources that you will store for later use, such a toolkit is built up over time and used when appropriate."

His views are echoed by Avanade's director of legal affairs for Europe, Manoj Paul, who reiterated that both a natural ability to lead and a willingness to learn new skills are fundamental to legal leadership.

"The people I have interacted with who have tended to have the most success have had great vision and oversight," he says.

"They can take people with different skills and abilities and different backgrounds and mould them into a successful legal team."

Paul adds: "It is a bit of both – some people are born leaders. For example, some sportsmen have natural talent and enjoy doing what they love. Others need to read the books on coaching and mentoring. It is simply two different paths to the same goal."

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