Global Growth Drives Agenda of In-House Lawyers in Top Companies

orporate Counsel Share Their Views at New York Event

Washington, D.C./London (June 30, 2008) – Top in-house counsel in large global companies have revealed that what most impacts their work right now is the pace and scope of global growth, far more than rising law firm costs or the economic downturn. The fast pace of globalization and the complexity and diversity of risks and demands was the top issue for more than 100 senior corporate counsel polled at a June 12 conference entitled “Wake Up to the Future: How Global Corporate Legal Services Must Change.”

The New York City event was organized by the Associate of Corporate Counsel’s Greater NY Chapter and international law firm, Eversheds LLP. As the first full-day conference organized to help multinational corporate law departments structure and manage their function for the future, leading heads of legal from many Global 500 companies provided concrete approaches and tools for in-house counsel to adapt and put into practice. 38.2% of in-house lawyers attending the event saw the pace and scope of global growth as having the biggest impact on the corporate legal function today. Lagging behind was rising costs of outside counsel, viewed by 20.6% as the biggest issue, and the economic downturn, viewed by 14.6% as issue number one.

Paul Smith, Partner at Eversheds who co-chaired the conference with Tom Sabatino, General Counsel of Schering-Plough, says, “Over the last year we’ve had anecdotal evidence from clients that their global demands are mushrooming, whether in Abu Dhabi or Bucharest or China. At this conference we saw broad consensus on a global tipping point. Mix global growth with pressure on costs, with aggressive regulatory enforcement, with the economic downturn – that’s a heady cocktail for in-house lawyers.”

An audience response system was used to survey the conference attendees, of whom 36% were counsel of companies with more than $10 billion in revenues, and 34% with $1-10 billion in revenues. 85% of the respondents were corporate counsel, with 62% in a chief legal officer (CLO) role or a direct report to the CLO.

Though 84% of the counsel viewed their companies as very global, most say their legal department is ill prepared. More than 40% responded with 1 or 2 (on a scale of 1 to 5, 5 highest) regarding their corporate legal function’s readiness to meet the company’s global demands. When asked which countries or regions caused the most concern for management of risks and disputes, China was the top choice for 35%, followed by the US for 17% and Russia for 14.5%. Aggregated, the BRIC countries (Brazil, Russia, India and China) represented the greatest concern for 61% of the corporate lawyers.

Tom Sabatino, conference co-chair, said “Our struggle is neither unique nor insurmountable—globalization has brought many opportunities to our businesses. As in-house lawyers, we need, and want, to be fully integrated with the business and provide the legal infrastructure required to be successful in all markets in which we operate.”

Though global issues led the agenda, in-house counsel were critical of their law firms. 44.6% said their law firms rate ‘3’ (with 1 lowest and 5 highest) in understanding their business and their constraints, and another 38% gave their law firms a 1 or 2 rating. Respondents resoundingly find their law firms highly inefficient, with 87% giving their law firms a 1 or 2 on efficiency and not a single in-house lawyer rating them as 4 or 5 for efficiency. 50% rated their law firms as 1 or 2 in “preparing comprehensible estimates and budgets and following them, and 18% gave their law firms a 4 or 5 score.

Conference speaker Jeffrey Carr, General Counsel of FMC Technologies, commented, “It is time to engage our firms in meaningful dialogue about how to get back to providing value. We need our law firm partner/providers to be successful and profitable — they need to change their business model to focus on profits as opposed to top line revenue growth in a cost-plus world.”

Despite concerns about law firms inefficiency and discussion that the billable hour is often the culprit, when asked if the billable hour would disappear during their career, 71% said “No, because it is simply too ingrained.” Only 21% answered yes, it would disappear.

“In-house counsel forums such as this one give us useful feedback, and while many of the attendees didn’t see the billable hour going away, ACC is committed to develop a set of best practices that include alternatives to the much-reviled billable hour,” explains ACC President Frederick J. Krebs. “We have a group of leading in-house counsel from around the country considering a number of options, including alternative fee structures, early case assessment and better use of technologies.”

The following significant findings from the event related to corporate counseling on cross-border transactions and disputes:
• The most challenging or frustrating feature of international M&A transactions is differing legal systems and principles (36%) with poor teamwork in 2nd place (28%)
• 56% of corporate counsel surveyed said their international transactions could benefit from a formal project management system, with another 40% saying they could ‘maybe’ benefit
• 57% have seen a rise in litigation in the past two years
• 67% expect to see an increase in “U.S. style litigation” in Europe

The fast pace of globalization and the legal risk issues that come with it require a fresh look at resource allocation and approach. By providing in-house counsel with productivity tools and web-based resources during the one-day conference, in-house counsel are better equipped to handle the challenges that come their way. A conference with the same topic and title will be hosted by Association of Corporate Counsel and Eversheds in San Francisco on September 17th. In-house lawyers interested in attending should contact [email protected]

The Association of Corporate Counsel serves the professional needs of attorneys who practice in the legal departments of corporations and private sector organizations worldwide by promoting the common interests of its members, contributing to their continuing education, and providing a voice on issues of national importance. With 24,000 members in 81 countries, employed by over 10,000 organizations, ACC’s community connects members to the people and resources necessary for both personal and professional growth. Visit ACC online www.acc.com. By in-house counsel, for in-house counsel.®

Eversheds LLP and its world wide associate offices have over 2,000 legal and business advisers providing services to the private and public sector business and finance community. Access to all these services is provided through our network of international offices. Eversheds combines local market knowledge and access with the specialists, resources and international capability of one of the world’s largest law firms. www.eversheds.com.

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