Christopher Stephens, the new general counsel of the Asian Development Bank, tells Elizabeth Broomhall about 'desperate' times at Coudert Brothers and why Asian companies don't need panels

After almost three decades working in private practice, Christopher Stephens decided in December that he had gone as far as he could at a law firm. From working at Cravath Swaine & Moore during the epic 13-year IBM antitrust case to enduring the collapse of New York law firm Coudert Brothers, he has certainly experienced more than many lawyers.

Armed with a desire for a new challenge, he accepted the role of general counsel at the Asian Development Bank (ADB) – a 3,000-strong organisation that provided $21.5bn (£13.7bn) of financing last year. For this well-regarded projects lawyer with more than 16 years' experience in Asia, it is a move that will test him to the full.

"I concluded that I had covered most of the major component pieces of private practice,"Stephens says. "The ADB job was a chance to step into something entirely different, and something that would challenge the whole range of my prior experiences and skills and require me to develop new ones. 

"It also presented the opportunity to participate in development work across a region that spans further than anything a private practitioner could imagine. I simply could not pass that up."

But even for someone with Stephens' experience, the transition has been quite a leap. As general counsel he is much more involved in business decisions, while the bank's mission of encouraging economic development and easing poverty has given him a different set of priorities.

"It's a huge change," he explains. "Project development and project finance is the same, but from a completely different perspective.  

"[The focus of the organisation] is also very different, [and] the nature of the work. In a law firm the principal business is the practice of law; here the principal business is to provide resources to sovereign countries to facilitate their development."

Before ADB, Stephens spent five years as Asia managing partner for Orrick Herrington & Sutcliffe, based in Hong Kong. He landed the job after leading the transfer of the Coudert Brothers' Hong Kong, Beijing and Shanghai offices to Orrick in 2005, before which Orrick had no presence in Asia. He spearheaded the firm's growth in the region until 2010 when Michelle Taylor took over.

"Like everyone else, I came to Asia for two years and 16 years later I'm still here," he says. "It's a dynamic and exciting region. It's diverse. There is a lot of growth and energy so from a practice perspective it was an attractive place to be, and after the most recent financial crisis it became the only place to be."

While the jump to ADB is an undeniable challenge, it is unlikely to prove as difficult as managing the Coudert crisis. "What we did was orchestrate keeping it all together during the time of the collapse," he recalls. 

"We had to convince people to stay with the team and then move it all over lock, stock and barrel, taking tables and chairs and clients and people – everybody from the tea lady to the senior partners – and really launch an entire China platform for Orrick.

"It was enormously difficult," he says. "China was very much flavour of the day, and there was a sense in the market that there was blood in the water. So the headhunters were calling and trying to pick people off, and other law firms were calling clients and telling them Coudert was sinking and that they should move across. So we were trying to hold the clients' trust, hold the teams together. And at some point, around July 2005, Coudert stopped paying us. 

"Circumstances were grim at Coudert. And by grim I mean people didn't just lose their jobs, they also lost their retirement plans, their savings accounts, their firm and their friends. It was pretty desperate."

Orrick offered a welcome escape route. In the previous 10 years it had transformed itself from a San Francisco bond firm to an international, full-service outfit, and had reviewed its strategy to include Asia. It paid Coudert $1m (£636.5m) for its brand in the region, banking on China's continued growth.

Moving on

Last year, it was ADB's turn to offer Stephens a new chapter in his career. Though he originally had no plans to leave Hong Kong or private practice, eight months of discussions with the bank had left him intrigued by its mission in Asia. 

ADB is headquartered in Manila, and is similar to a commercial bank but with the ethical objective of promoting development in the world's poorest countries. In simple terms it provides: longer term, low-interest loans; grants; policy dialogue; technical assistance; and/or equity investments in both the public and private sector, with the aim of boosting energy generation, gender equality, infrastructure development and environmental protection. 

Adding to its allure for Stephens, ADB's legal department has a central role in assisting the bank's operations team rather than merely sticking to the back office.

"The bulk of the work is supporting the operating departments as they execute transactions and projects," he says. "So this includes reviewing structures, doing the due diligence, verifying compliance and assessing risk, and preparing and negotiating the relevant contracts. Also, because of our long experience, the legal department's advice is sought on a range of matters that are not strictly related to legal issues."

The team is structured with a general counsel (him), deputy general counsel, four assistant general counsels and teams below. 

The deputy, whose role is similar to that of a chief operating officer of the department, also manages a programme called 'Law, Justice and Development' (LJD), which provides technical assistance to Asian countries on the development, interpretation and enforcement of laws and regulatory regimes. This sometimes includes training for judges and regulators and typically concerns laws related to gender equality, the environment, clean energy and financial or public sector growth. The team also supports private companies with land law issues and public-private partnerships.

Separately, the department has a team of lawyers who oversee the bank's treasury function, with the role of raising money through the capital markets and handling associated compliance work. As it stands, the bank has $162bn (£103.2bn) of subscribed capital and $54bn (£34.4bn) in outstanding borrowings. 

"We are capitalised by money we receive from our member countries, which we leverage through borrowing in the capital markets. We closed a $2.5bn (£1.6bn) global notes issuance in March and we're trying to issue a rupiah-denominated bond in Indonesia this year to fund infrastructure, hospitals and schools there. And we issued the first RMB-denominated bond in Hong Kong in 2010 [worth $180m (£114.6m)]."

Challenges for the team are also rather different from those of ordinary in-house counsel. Lawyers must always bear in mind the bank's mission to help fast-growing, vulnerable countries across a vast and diverse region, where there are significant differences in terms of culture, community, language, religion, infrastructure and economic sophistication. 

This can create hurdles when convincing countries to adopt certain regimes, while the bank's employees need to be equally varied in terms of language and culture.

"We've got nearly 60 nationalities in the bank and 16 just in the legal department," says Stephens. "We need that diversity of perspective to interact with all these countries. Often negotiations and documents will be in English, but then it's not always the first language of people in the department."

The team tends to use outside law firms mostly for private sector initiatives, and occasionally for public sector projects where there is an international aspect or a firm has strong local expertise. They will also use external lawyers for capital markets work and occasionally for the LJD programme. Legal spend usually doesn't exceed $12m (£7.6m) a year. 

"The support to sovereign governments we do almost entirely internally. On the private sector side, the subject matter and the markets are a little more dynamic and different structures and expertise arise, so it's a different kind of enforcement mechanism… [it involves] complying with rules locally. Sometimes we might get one of the big international firms supported by the domestic firms depending on the project and country.

"It is interesting for us to know who has done what; for example, who has the last five hydro projects in India? Then we know from that who to invite to pitch for a project. We typically invite three in." 

Fluid and informal

Some markets are mature enough that the team doesn't need to use an international firm, he says, though they tend to require local support on due diligence. But like many companies in Asia, the bank does not use a formal panel. 

"By the time we've figured out that a particular law firm has a depth of expertise we read in the paper that two partners and four associates have moved to another firm," Stephens says. 

"I also think [not having a panel] keeps us using a fairly fluid group of law firms. There are some firms that have an institutional capability and we work with them quite regularly. We have a pretty good handle on what kinds of lawyers are doing what in different countries, and so when we have a project we know which top three firms to invite."

Firms used in the past include Shearman & Sterling, Baker & McKenzie, Herbert Smith Freehills, White & Case, Milbank Tweed Hadley & McCloy and the magic circle. He stresses, however, that ADB is always open to new options. 

"It's good if firms come and tell us what they are doing because there are a lot of new developments. Sometimes a firm we're not familiar with comes in and they've got an impressive capability that we weren't aware of."

Indeed, with increasing numbers of firms setting up in Asia and local outfits becoming more sophisticated, Stephens believes there is even less of a case for having a panel. 

"10 years ago you would've needed an international firm supervising a domestic firm in a place like India, and certainly in China. But local firms are reaching a level of sophistication in quality, which means that's becoming less important. And of course there are new firms all the time too. Good people are leaving and forming their own firm and lesser-known firms are acquiring a degree of capability. So the market is very dynamic."

When deciding which outside firms to use, ADB looks at all the normal points a commercial bank would consider, with a focus on capability and experience. Price is a consideration, but not the deciding factor. ADB believes most international firms are fairly consistent on quotes. 

Stephens says his team is unlikely to expand in the future but he will look to increase capacity for the LJD programme. He is also seeking a new deputy general counsel, and will probably use the vacancy as an opportunity to revisit how roles and tasks are organised generally within the department. 

"Overall the work seems to be increasing, and we're expanding our headquarter space by a substantial amount. But it's not going to translate into additional people in the legal department, so we're going to have to do more with the resources we have."

In truth, that's what keeps people motivated, he says, alongside the commitment to the bank's core mission. "I think it's a different kind of person who wants to do development work," he says, concluding that, for those who are interested, there is certainly no shortage of work in the sector.

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Asian Development Bank in numbers

• 67 member countries – 48 Asia-Pacific regional members and 19 non-regional members
• 3,000 employees from almost 60 countries
• 27 resident missions (offices in member countries), three representative offices in Tokyo, Frankfurt and Washington DC
• Current capital: $162bn (£103.2bn) of subscribed capital and $54bn (£34.4bn) in outstanding borrowings
• 43 lawyers from 16 different countries