At this year's Legal Week Corporate Counsel Forum Middle East, a group of experts debated how in-house lawyers can effectively manage their companies' risk as political unrest in the region coincides with a global clampdown on corruption

Having the authority to say 'no' to senior executives is one of the greatest weapons in the armoury of effective general counsel. But it is also a word they must use sparingly, or else they risk losing their influence.

"My mantra is that I only tell my business colleagues 'no' in three situations," quipped a senior delegate at Legal Week's Corporate Counsel Forum Middle East, which took place in Dubai on 14 May. "One, when it is going to put them in jail; two, when it is going to put me in jail; or three, if it is going to cause me to lose my law licence."

Walking the tightrope between facilitating deals and managing risk was a key theme of the conference. The event took place against the background of soaring business confidence in Dubai tempered only by fears that another unsustainable property boom may be brewing, especially as Dubai will host the 2020 World Expo, a six-month extravaganza that is expected to attract 25 million visitors over six months.

The keynote speaker was His Highness Sheikh Maktoum Hasher Al Maktoum (pictured, right), executive chairman of SHUAA Capital and chairman of Dubai International Holding Company. He said: "We had our big car crash in 2008 and lawyers, investment bankers and auditors were all in the firing line because the public asked 'where were you when the contracts were being signed? Where was the risk officer and the head of legal?' The job of in-house counsel is extremely challenging as they must balance risk, fiduciary duties, ethical responsibilities and keep people like me who keep pushing to go faster at bay. It will be your job to ensure that businesses do not fall into making the same mistakes."

The conference chair, Anneliese Reinhold (pictured, below), GC and senior vice president of legal and regulatory affairs at regional telecoms operator du, picked up on the theme. "How can we as in-house lawyers help the businesses that we work for profit from the exciting new opportunities that are available to them in a way that ensures that the growing governance and compliance requirements that they face are also met?" she asked. "This is a key challenge and it is a balancing act that in my view lies at the heart of what being a truly effective in-house lawyer is all about."

Arab Spring and regulatory pressures
A key factor fuelling economic growth within most Gulf Cooperation Council states is their role as a safe haven within a wider region dogged by instability. The conference heard that the impact of the Arab Spring on much of North
Africa had significantly increased the risk of corruption, given the associated breakdown of the rule of law. At the same time there has been a global crackdown on corruption by regulators under pressure to clean up global capitalism in the aftermath of the credit crunch.

Desiree Sayde, General Electric's chief compliance officer for the region, said: "Third parties such as channel partners, like agents and distributors, and administrative service providers, like customs clearing agents, are obviously a big risk area for us and we spend a lot of time, effort and resources building teams to manage due diligence, conduct monitoring and carry out audits."

One delegate noted that many corporates operating in the region had complicated corporate structures that they were now looking to simplify. "Over the last 12 months, I have noticed that several companies have been restructuring and streamlining their businesses with a view to achieving operational efficiencies, but also to address the inherent compliance risk of having fragmented corporate structures with multiple third-party relationships," he said. "I'm sure it is a combination of the Arab Spring and recent prosecutions that is prompting this."

Influential role
Armed with the carrot of being able to help their companies grow and the stick of alerting their employees to the risks associated with the worldwide regulatory clampdown, GCs in the Middle East are at least in theory in a strong position to wield more influence.

But it doesn't always work like that in practice. When Elias Hayek, vice president of legal for Europe, Middle East and Africa at Starwood Hotels & Resorts Worldwide, said he regularly attended management programmes with other senior executives, one speaker from the floor remarked that those kinds of opportunities to mingle with senior management were few and far between in the legal departments of local companies.

However, Cherine Ghali (pictured, right), GC of Dubai Group, was optimistic about the prospects for local in-house lawyers. "A lot of local firms were in start-up mode pre-recession and running at 100 miles an hour," she told the conference. "They hadn't settled on many of the functions within their organisations, and when you talked to them about legal matters they had more important things to worry about. But after the recession there was a completely different attitude to the lawyers; they started to have a more strategic role in companies because businesses were concerned about making mistakes and incurring losses."

Given the complexity of the Middle East, with its pockets of prosperity and its ongoing political instability, there will be plenty of opportunities for ambitious in-house lawyers to be unpopular in the coming years as they seek to manage their companies' risks. 

It seems that the long-term prosperity of the region at least partially depends on whether they are listened to.

• Legal Week Regulatory and Compliance Forum Middle East will take place in Dubai on 19 November. For more information go to regulatory-compliance-middleeast.com or email [email protected]