At Legal Week's second Corporate Counsel Forum Singapore, in-house lawyers in Asia discussed what they look for in law firms today and the pros and cons of using panels in the region

In the Gallery Room of Singapore's luxury Grand Hyatt hotel, more than 220 regional in-house counsel are gathered to hear about the latest legal trends and challenges facing them in the coming year at Legal Week's Corporate Counsel Forum. The day's programme included a debate about the island-city's ever-changing disputes landscape, a session on regional competition law and another on corporate crime, as well as breakout sessions covering the fast-growing economies of Indonesia and Myanmar.

One topical panel covered the relationship between in-house counsel and external lawyers – an issue that continues to evolve and drive industry debate. While in-house lawyers globally are seeking lower costs, more partner support and extra secondments, those in Asia have their own set of obstacles, most of which are related to working in some of the world's hottest emerging markets.

First on the agenda was how GCs choose between the international firms in Asia, which continue to grow in size and boast sophisticated US or English law capability, and the local players, many of which command respect in their home jurisdictions and whose expertise and knowledge of the local set-up is unrivalled. In Singapore, Korea and Japan particularly, the locals dominate.

"When we're dealing with just one jurisdiction we're more inclined to use a local firm, but for a multijurisdictional issue we may see some benefit in using an international outfit," said discussion moderator Lucy Siebert (pictured above), international counsel at Australian telecoms company Telstra. "Local firms tend to have specialist knowledge, and particularly of the practical implications as opposed to necessarily what's set out in the law and the regulations. That 'on the ground' knowledge is really valuable. If you don't need that overlay of an international firm it's also cheaper to go direct."

Julia Shtepa, managing director of legal for South Asia at technology services provider Accenture, was unable to attend on the day but shared her views with Legal Week after the event. She agreed with Siebert's comments, adding that she often encourages firms to work together. Sometimes Accenture will engage an international firm to play a 'deal coaching' role, she said. "Depending on the regulatory environment and the language constraints, it may be that the deal is led by an international firm and supported by a local firm."

Costs will also vary across local and international players, not to mention between the top tier and the next level down. Asked about the importance of cost in choosing a law firm, Siebert said that it doesn't top her list of priorities. "Value will dictate the choice of firm and choice of lawyer," she explained. "We obviously have a budget envelope that we have to stay within, so it would be silly to say cost isn't important, but it's more about value."

That said, Siebert stressed the need for more creativity when it comes to fee arrangements, pointing out that Asia continues to lag behind the West in this area: "Fee arrangements generally depend on the type of work we're doing. If it's a complex project and not possible to properly scope how long it's going to take, or if it's subject to external forces, such as an M&A transaction, it can be very hard to do anything other than an hourly rate. If it's a fixed piece of advice we often use fixed-fee arrangements. But I'd like to see more flexibility and firms being a bit more innovative.

"In Australia we've had inventive arrangements such as 'all you can eat' [where counsel and firm agree a flat rate for a whole sub-category of work on an annual or six-month basis], but I haven't seen those in Asia so far."

Panels – are they right for Asia?
One way to get more value from firms and reduce spend could be to create a panel for Asia. An increasing number of companies, including Chinese state-owned organisations, have been moving in this direction in a bid to control
costs. In the last year, Legal Week has reported on debut local panels for China Resources and insurer AIG.

In the US and Europe such formalised supplier lists have become the norm, but many regional counsel believe these remain difficult in Asia given the limited capacity foreign law firms have compared with in their home markets, the different practice restrictions on foreign law firms across jurisdictions, the high turnover of partners in the region and the fluidity of the markets. The different and evolving business requirements of companies in each country also make it difficult.

"The advantages of panels are that there is a deeper knowledge of business, and often through that panel appointment process you get other benefits from firms; for example, they might provide secondees or offer training, you might get a volume discount and some of them have innovative fee arrangements," explained Siebert, adding that Telstra has a panel for Australia but not Asia. 

"The advantage of not having a panel is that you can use the firm that is best placed to assist on a particular matter or the best lawyer, rather than being tied to certain firms. It gets particularly challenging when someone you have been using moves away from a panel firm."

Shtepa said Accenture is thinking ahead. The company is currently putting together a panel for Asia as part of a global initiative designed to improve the relationship between counsel and law firms. "Whether panels work in Asia is yet to be shown; the markets here are smaller and the law firm teams have less depth to them, so it's challenging because when you do a panel you commit to the firm, not the individual," Shtepa commented.

"The aim is to establish a more strategic relationship. You work collaboratively and benefit from each others' knowledge. The idea is that those firms will invest in building up their expertise in the areas that we need."

On or off panel, both Siebert and Shtepa are impressed with the degree of partner support in Asia, suggesting that there may even be a higher ratio of partners to lawyers in the region. This is in contrast to some UK-based counsel who have previously reported a lag in partner contact and increased dealings with paralegals.
Shtepa said her experience of partner support could be down to the complex nature of the deals in her space, as IT demands senior expertise. Siebert believes that it's not always critical to be in touch with a partner, depending on the deal. "For us it's about the lawyers we want to work with," she explains.

"If the lawyer you want is a partner then you need to make sure you get to work with them, but they might be a senior associate or counsel. It's about making sure you keep an open flow of communication so that you've got the level you require – so that you're not over or under-partnered."

Law firms with extras
So what about the added benefits? What might a company expect from a law firm these days, and particularly in Asia? For Telstra, Siebert favours firms that can offer diverse teams – gender-diverse in particular – even in off-panel arrangements. She explains that, before engaging a law firm, the in-house team now asks what the firm is doing to ensure gender diversity.

"We don't have quotas but we ask them the questions in the panel pitches. We've also written to them separately to ask them," she said at the conference. "We specifically look to see that they're ensuring the best possible talent pool for us – not just white Anglo-Saxon males. We've got a very strong diversity policy and so we expect that to be something that is also important to our panel firms."

Secondments are also an opportunity to add value. Shtepa said currently in Asia it can be difficult for international firms to provide senior secondees because of limited capacity, especially in practice areas such as IT given the dearth of qualified experts. At local firms, Siebert added that it is less of a 'done thing'. She asked the panel audience how many have secured secondees from local outfits, and just two hands went up.

But both lawyers agreed that secondments help lawyers in private practice gain a better understanding of their businesses. Indeed, they believe this is the key overall message to get out to firms: get to know our business; understand our drivers.

Summing up, Shtepa said: "With an IT transaction particularly, you need to be commercially astute about the issues raised – have an understanding of where the risks are. The risks in an IT deal are very different from those in an M&A transaction. You also need to know the practical implications that might or might not impact on that risk. That can only come with IT knowledge and knowledge of IT deals."