General counsel met in September to talk about how their roles will move forward in a post-crisis world. Alex Aldridge reports

With compliance and risk management having soared up the agenda since the financial crisis, in-house lawyers have rarely been so in demand. At the same time, in a tough economic climate, rarely have they been forced to operate under such cost pressures. It was this paradox around which the debate centred at Legal Week's Corporate Counsel Forum Europe, held in September at the Four Seasons Hotel in Hampshire.

Conference chair Peter Kurer, former chairman of Swiss investment bank UBS, set the tone for two days of discussion when he asserted in his opening address that the only way forward in such a market was through innovation. "In-house counsel need to provide more with less," he said. "And to do that they must re-evaluate their role, look at different ways of delivering legal services and explore new options like outsourcing."

Elaborating on the first of these themes, Fujitsu legal chief Jonathan Smith urged in-house lawyers to adapt to deal with a world in which information is more widely available – and therefore less valuable – than in the past. "Before, general counsel could simply present the relevant legal information. Now, in the internet age, it has become important for us to aggregate and analyse that information to make it mean something," he commented.

As Financial Times general counsel Tim Bratton provided live updates from the conference via social networking site Twitter, Legal Services Board GC Bruce Macmillan added: "There is a constant feed of information which puts a premium on in-house lawyers working out what's important and what's not. That contextualisation element of our role will become more important."

On the topic of alternative methods of delivering legal services, one word kept coming up: 'teaming'. Speakers argued that it was more efficient to select a group of three to four trusted law firms which they got to know in depth, rather than operate panels featuring long lists of advisers with which relationships are more distant. "Over the last few years we have invested a lot of time in getting to know certain key advisers who have in turn developed a really deep knowledge of our business, adding a great deal of value to the advice they provide," said Fujitsu's Smith. He also impressed the importance of fostering "triangular relationships" between GCs, senior figures in the business and external counsel.

Others talked about extending those relationships even further to create joint ventures (JVs) between in-house legal departments and law firms of the type which saw Thames Water announce plans to transfer the majority of its legal function to Berwin Leighton Paisner earlier this year. It was agreed that the incentive to create such arrangements has increased in the wake of the Akzo Nobel judgment, which ruled that in-house lawyers were not independent enough from their companies for privilege to apply to them. "It's early days on this matter, but JVs could potentially create significant privilege advantages," said Macmillan.

The topic that aroused perhaps the most lively exchanges was legal process outsourcing (LPO). It is a phenomenon that has polarised opinion in the legal world, and delegates at the conference proved no exception. On one hand, a significant proportion expressed concern about the gap between the hype surrounding LPOs and the practical reality of sending work offshore.

But there were also several, like Rio Tinto managing attorney Angela Mullany, who argued that LPO has the capacity to generate major cost savings. Speaking about her company's relationships with legal outsourcer CPA Global, which has seen it send out low-level tasks to a team of CPA lawyers in India for 18 months, Mullany said: "In this business climate, it's all about making the best use of the in-house team possible. In doing so we have both saved a great deal of money and given our junior lawyers more breathing space."

Morgan Stanley executive director of compliance Simon Pearson backed Mullany's stance but cautioned that LPO is no silver bullet, and that for it to work close ties need to be fostered between in-house teams and lawyers at the LPO. "LPOs aren't just black boxes where you can throw legal work in and expect it to be spat back at you completed. It takes time, management and commitment," he said.

Few simple solutions, then, to that riddle of how to do more with less, but plenty of signs that in-house lawyers are adapting to the challenges that lie ahead.

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Corporate governance

Speakers at the Legal Week Corporate Counsel Forum Europe agreed that failures in corporate governance were a central factor in the traumatic events of autumn 2008 when the financial system teetered on the brink of collapse. "Corporate governance wasn't the cause of the financial crisis, but, my goodness, it contributed to it," commented HSBC head of legal group counsel Richard Hennity.

There was also consensus on what was required to prevent a repeat of the banking crisis: a recognition that corporate governance is about human behaviour rather than processes and an associated commitment to more closely monitor the culture of organisations. "Boards – which are all too human – set the risk appetite and culture of an organisation. And if they get that wrong, the organisation goes wrong," added Hennity.

Lawyers have a key role to play in this supervisory process, said Macfarlanes senior partner Charles Martin: "Part of the job of in-house counsel – and also senior private practice lawyers in their dealings with clients – is to challenge group think and the biases inherent in board decisions."

But it's also important that general counsel don't lose sight of their traditional role as architects and enforcers of effective compliance programmes, argued other speakers. Kellogg Europe chief counsel Orla Muldoon commented: "The challenge of how to make compliance real to people and embed it in their minds continues."