It goes without saying that financial regulators are noticeably stepping up their scrutiny these days. Or rather, it would go without saying, but RSA group general counsel Derek Walsh has quite a lot to say about it. "For a business, we feel we are putting a tremendous amount of time and resource into meeting regulatory requirements," says Walsh, who has seen a steep increase in day-to-day dealings with regulators since he joined the FTSE 100 insurer in 2010.

The pressure is clearly on. Fair enough, one might think. But Walsh points to the Prudential Regulation Authority's current consultation on a new regulatory framework for senior insurance managers amid proposals to change the approved persons regime. This parliament-backed scheme governs individuals at UK banks, building societies and investment firms. Walsh, however, has voiced concerns that this is yet another example of insurers paying the price for the regulatory failings of the banks.

"We see [the regime] as not being wholly applicable to our industry," he argues. "But it seems to be the way things are going. It is focused on banking at the moment but the potential administrative costs and obligations that it would create could be highly burdensome for us.

"The drivers for change in regulation seem to be very much banking-driven; insurers have been dragged along and had similar standards imposed on them, which we feel is slightly unfair. Making sure regulation is proportional to our industry and meets the pressure points that our industry creates is a really big thing for us."

Complexity and cost go hand-in-hand as Walsh copes with the need to hire more compliance professionals to ensure the company meets its obligations as well as having to pay higher fees to the regulator. But mounting compliance costs are only one of many diverse issues he has to handle.

Four roles
Walsh oversees a team of around 80 lawyers, leading both the legal and compliance teams in addition to his position as company secretary. But he has a fourth role as global broker relationship director, to which he was appointed after chief executive Stephen Hester joined the business in February last year, having left Royal Bank of Scotland at the end of 2013. Walsh now oversees, at a senior level, RSA's relationships with insurance brokers such as Marsh, Aon, Willis and Jardine Lloyd Thompson Group, which generate roughly 20% of group revenue.

It is a role that Walsh finds particularly refreshing, not least because he can apply his experience as former group general counsel at legacy insurance broker Benfield Group (now known as Aon Benfield). "It's quite counter-cultural that a lawyer would be taking on a non-traditional legal role," he says. "Making an extra contribution to the business adds an interesting dynamic for any GC, so for me it's a nice addition to the more traditional strands of legal, compliance and company secretary."

The demands of the business disrupt his efforts at time management. "I'd like to think I spend 25% of my time in each of the four roles across the year, but on any given day I end up spending a disproportionate amount of time in either," Walsh explains.

"The other week I was in New York and then I spent the next week in Singapore on broker relationships. Before that we made some disposals in our businesses so I spent most of my day purely in the legal role. We had board meetings the next week where I spent two or three days almost exclusively in my role as company secretary. I enjoy the variety of it – there's never a week that's the same."

At the end of 2013, RSA Ireland reported accounting irregularities that culminated in losses of £200m and the suspensions of the division's chief executive, chief financial officer and claims director. This, Walsh says, is a prime example of an unforeseen issue that "turned my world upside down. I spent a substantial proportion of my
time in Ireland looking into those issues and being a part of resolving that problem. So you have to be flexible."

Walsh's year was subsequently taken up by major programmes such as the insurer's £773m rights issue and disposals of several geographic divisions, including operations in Latvia and Poland. The flow of corporate work looks set to continue given that there are more disposals underway, including an agreed £130m sale of RSA's Hong Kong and Singapore insurance operations to Allied World Assurance Company.

On the legal side, there is a legal function for each of RSA's four main businesses in the UK, Scandinavia, Latin America and Canada. Most of those legal heads sit on the executive or core management teams of each business but report to Walsh, who oversees the global legal function.

"It is a slightly decentralised play – the alternative being that legal work is done for each business centrally," he explains. "But I prefer our model: the lawyers have their own teams and are part of the executive and very much part of the business, so for them it's a more fulfilling role. They're not recruited as head of legal but as GC in the broader sense."

Two panels
Walsh manages his relations with legal advisers through two panels. The top-tier panel handles large corporate mandates and comprises Slaughter and May, Allen & Overy, Linklaters and Norton Rose Fulbright. A separate UK panel, which oversees lower-value commercial projects and specialist insurance matters, consists of Pinsent Masons, Hogan Lovells and RPC.

An extensive tendering process for the central panel, led by head of group legal Charlotte Heiss, is expected to kick off this year. Firms were selected for three-year terms in 2011, extended last year until the forthcoming review is completed. In 2011 the process put the pitching legal advisers in the hot seat by presenting the partners with a business scenario for them to respond to on their feet.

Ashurst, which is also on the panel but is understood to be mandated less than the other four firms, is believed to be among those keen to win a place on the renewed roster. Its critical challenge, along with its competitors, will be to set itself apart from the rest of the crowd.

"Among law firms, generally, it's hard to create a level of differentiation," Walsh says. "We have our panels, which we are happy with and many others try to get on, but there are a lot of similarities between the firms. I feel they don't differentiate enough on billing or meeting clients' needs for us to want to change our arrangements.

"Many firms could differentiate either by becoming huge and therefore a market leader, or by being smaller but highly specialised – but none of them are completely one or the other. Many have become kind of big but also kind of unspecialised, and therefore caught in a squeezed middle, which is tough for them."

There is also a broader challenge that Walsh feels has not yet been met by any firms, in that he has so far not seen any particularly innovative charging arrangements as an alternative to the hourly rate. "I feel the whole charging structure of law firms needs to be revisited," he comments. "The ideal would be that firms shared the fortunes of their clients – that when we're doing well, their rates or fees reflect that, and that if business is tough then firms also share our misfortunes. No law firm has got that quite right, yet."

RSA is not close to deciding whether it will increase or decrease the number of firms on its central panel. Walsh deliberately distances himself from panel processes until the final stage of deciding the line-ups. However, he says the size of the panel is a tricky issue that the team will "seriously look at". The problem, he says, is that "we don't actually send out that much work every year. In a challenging year like last year, we sent out more work than normal but, in an average year, when there's nothing significant happening from a corporate point of view, there could be a very limited flow of external work.

"If you have a panel of firms waiting for that work it's almost unfair to have them held when we can't give them the through-flow they need to meet their numbers. I don't know what our demands will be when we next review the panel, but theoretically we want the people on it to feel that there is some benefit."

A long way from Yorkshire
Corporate life in the City was initially far from Walsh's radar, having grown up in North Yorkshire where "people didn't tell you about jobs like eurobond trading or City-type roles as they weren't things that were on the horizon". He fell into the legal profession after completing a law degree and getting swept up in the process, qualifying as a banking lawyer at legacy Norton Rose before joining CMS legacy firm McKenna & Co's insurance practice in 1995. It was the last job he actively applied for. "I've always been approached or gone elsewhere on a recommendation, so I've been very fortunate in that sense," recalls Walsh.

He left McKenna in 1997 to set up an insurance practice at what is now Pinsent Masons, as a senior associate alongside Martin Membery, who now leads the City insurance team at Sidley Austin. Four years later, Walsh was placed on secondment with his major client, Benfield. Within months, he joined the company as its new GC, becoming the youngest one in the UK at the time, he believes.

During his time at Benfield Walsh experienced "one of the best days" of his career – celebrating the group's 2003 initial public offering (IPO), which he had helped push through as part of a small team that ran the project. "That was the completion of the journey of a fantastic business. It became the first IPO in London for a year, 11 times oversubscribed," he says.

Although Walsh pinpoints the flotation as a career highlight, he takes equal pride in spotting and developing talent, such as Aspen Insurance group GC and head of group HR Michael Cain, who was appointed as chief executive of Aspen Bermuda last September and had previously worked at Benfield.

"The listing was a massive corporate success, but on a personal basis some of the better successes I've had were seeing people who had worked for me go on to become GCs themselves at listed companies," he reflects. "I get as much pleasure out of that – leaving some form of legacy in terms of an individual's development."

Benfield Group was acquired in 2008 by Chicago-headquartered Aon Corporation in a deal worth $1.4bn (£930m). Nearly a year later Walsh joined Bermuda-based underwriter Argo Group International Holdings as its acting GC.

To his surprise, Walsh was approached by RSA the following year. The company had previously interviewed him for the GC role in 2005, but he had decided to remove himself from the process back then. "I was enjoying myself at Benfield, and as a move for me at the time it wasn't right," he recollects.

"I had a tinge of sadness, though, that I'd turned it down, RSA being a 300-year-old established British insurance company. I thought it would never come back, so when it did I felt quite proud to come back here. I was excited and felt like it completed the journey of that part of my career."

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Derek Walsh CV
2010-date – group general counsel at RSA
2009 – acting general counsel at Argo Group International Holdings
2002 – group general counsel at Benfield Group
1997 – senior associate at Pinsent Curtis
1995 – associate at McKenna & Co
1992 – trainee at legacy Norton Rose
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RSA's external legal advisers
Central panel – Slaughter and May, Allen & Overy, Linklaters, Norton Rose Fulbright
Specialist panel – Pinsent Masons, Hogan Lovells, RPC, Ashurst