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NZLawyer In-HouseMay 2013 Issue 05

Being an ‘agent of influence’ in the procurement of IT systems

School’s out? Not a chance...

Keeping an eye on the trends

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8The ever-changing landscape for in-house counsel in a rapidly growing company 4By Amber Trebitsch, Carla Wellington, Jane Wellik, and Meryn Hemmingsen

Being an Agent of Influence in the Procurement of IT Systems 8By Simon Martin, Edwin Lim, and Anchali Anandanayagam

Making meaningful connections 11Angela Jacobsen explores how making connections can lessen feelings of professional isolation

School’s out? Not a chance… 12Helen Mackay talks with Craig Sisterson about what’s ahead for in-house counsel as the local legal profession moves towards mandatory continuing professional development

Heads Up: Sweeping changes in health and safety: A new challenge for corporate lawyers 14By Hanne Janes, partner, DLA Phillips Fox

Keeping an eye on the trends 17Angela Jacobsen reviews the global landscape for in-house legal teams

In-House counsel and the art of influencing 20By Emily Morrow

What is the Non-Monetary Value of In-house Counsel? 22Natasha Mellersh finds that showing ‘value’ is key for in-house legal teams

Angela Jacobsen [email protected]

I attended a meeting recently where we approached the subject of being busy. It has become an, almost, stock answer for me; be it with friends or colleagues, when I’m asked

how I am, my answer is inevitably “busy”. I’m sure that many of you are likely to feel

the same. And, yes, we are busy; our workloads never get smaller, and expectation on our delivery always gets higher. But what are we busy with? How much of it can be avoided by tweaking the way we work? How can we be more effective and make a bigger impact?

The theme at this month’s CLANZ Conference is “Agents of Influence”. As in-house lawyers, you play a critical role in protecting and shaping the companies and organisations

you work for, whether it’s those who work directly with you, the board, or anyone else who instructs you. Much of the time you’ll be instructed when the issue or risk is already there, so, in essence, you’re putting out fires. As an agent of influence, you play a more strategic role: learning about all aspects of your company or organisation, getting to know your clients’ individual needs, foreseeing issues and risks before they arise, and then influencing accordingly.

Last week, I attended a lecture organised by Auckland University Law School, at which the United States Attorney General, Eric Holder, was speaking. As one of the world’s most powerful in-house lawyers, Holder spoke of the best, and worst, parts of his job – mobilising 160,000 members of the Department of Justice and “having the opportunity to shape the American legal system” were among the things that Holder relishes. But it was refreshing to hear that Holder also has bad days – dealing with “toxic atmospheres” in Washington when it comes to disputes, like increased security checks for purchasing guns (which Holder supports), that “get in the way” of what would make sensible policy.

Of the responsibility upon Holder’s shoulders, combating terrorism, human trafficking, and corruption are among his highest priorities. And along with an over-arching duty to “protect the most vulnerable members of society”, he must also fight to protect the safety and civil rights of every US citizen. In a time of “unprecedented difficulty”, it’s fair to say that Holder is “busy”!

So how does one of the most powerful global legal forces deal with the pressure? “We are not a country that has all of the answers,” he says. Adopting a collaborative approach with his team and global counterparts, partnering and learning from one another, is key for Holder to reach meaningful agreements. He also admits to having to tell his boss, President Obama, “I’ll get back to you”, when he needs some time to stop and think about questions posed to him that he doesn’t know how to answer.

We don’t have all of the answers, but we sure can influence others with our answers. I hope you’ll find some compelling inspiration in this issue of NZLawyer In-House. As always, a big thank you to our sponsors and authors, and if you see me at CLANZ do come and say “hello”.

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By Amber Trebitsch, Carla Wellington, Jane Wellik, and Meryn Hemmingsen

When new companies are starting out, generally little thought is given to adding a lawyer to the team. The initial focus is usually

on capital raising and establishing a viable operation, and any legal issues that do arise are outsourced to external providers.

As these companies grow and expand - sometimes at a very rapid rate - there often comes a tipping point, where a decision is made to bring an in-house lawyer on board. These lawyers often face challenges that are unique to working in a business undergoing

rapid growth or change. In order to better understand these

challenges, we spoke to in-house counsel in a number of companies undergoing rapid growth and/or change. They gave us valuable insights into the skill sets that are most valued in such an environment, the unique challenges that arise, and ways that counsel seek to manage those issues. We also spoke to several lawyers who regularly advise start-up companies.

When to hireThe decision to hire an in-house lawyer is often not made until fairly late in the game, when the company is past the initial establishment phase. Retention of

The ever-changing landscape for in-house counsel in a rapidly growing company

institutional knowledge is also a significant consideration, according to Tim Matthews, general counsel at Two Degrees Mobile Limited. In his experience, outsourcing is good as it gives a deeper pool of legal knowledge in specific areas. But there comes a point where the benefit of retaining institutional knowledge outweighs the flexibility that outsourcing offers.

Sacha Judd, a partner in Buddle Findlay’s corporate and commercial team, believes the reasons for delaying appointing an in-house counsel may be twofold.

Judd, who regularly advises start-up companies, commented that start-ups can be reluctant to deal with lawyers, including external lawyers. This can arise because they have either gone to the wrong type of law firm which doesn’t understand the issues they’re facing, or they’ve dealt with the wrong department within a law firm, eg, a technology start-up consulting with an IT lawyer, when what they actually need is basic corporate structuring advice.

The other factor, according to Judd, is New Zealand’s DIY “Number 8 wire mentality”. She sees start-ups as being wary of spending money up front on legal advice, when any legal risk seems a far off and nebulous notion.

For Xero, a company founded in 2006 that is now listed on both the NZX and ASX, an in-house lawyer was appointed when the scale of operations became such that they needed someone who knew the business, the stakeholders, and the issues, and who could manage the myriad legal issues, while not necessarily dealing with all of them

5NZLawyer In-HouseMay 2013

personally. According to Natasha Hubbard, general manager of human resources, “it was a natural point in the business life cycle where it warranted having a dedicated head of legal...when you are successful you want to ensure you are growing responsibly.” Hubbard says that the founders of Xero have always been respectful of expert advisors and conscious of following best practice in their business, so it wasn’t a hard sell to bring on their first in-house lawyer.

The growing cost of outsourcing legal work can also trigger the decision to appoint an in-house lawyer. According to Rebecca Janes, general counsel for Icebreaker Limited, this was the motivation for Icebreaker bringing a legal capability in-house: “They looked at the global legal budget and saw that they could justify having an in-house counsel. They needed someone to do the majority of the legal work and also manage the external lawyers – it becomes a significant part of a finance person’s role to manage external lawyers and it just makes sense to have a person dedicated to that.”

This is reflected in the success of the appointment of Shane Bidois, corporate counsel of MetService New Zealand. MetService now has 250 staff based in New Zealand, Australia, Asia, and Europe. Bidois estimates a 40 per cent decrease in outsourcing legal matters since his role’s inception. He attributes a significant part of this to being able to identify legal issues at the onset, and being able to chat with external providers briefly by phone rather than the time and cost involved in non-legal staff

meeting with external legal providers each time an issue arises.

In some circumstances, the decision to get a lawyer involved will be made earlier in the piece. This was the case for Powershop, an online electricity provider and wholly owned subsidiary of Meridian Energy which brought Monique Greene on board as legal counsel a year before Powershop was launched. Greene was initially brought in on a part-time basis as the company couldn’t, at that time, justify allocating resources for a full-time person.

Greene is both general counsel and on the management team of Powershop, and has responsibility for legal, regulatory, governance, human resources, and stakeholder relations. She was working in Meridian’s legal team doing work for Powershop, along with other legal work for Meridian, when the chief executive of Powershop decided they needed an in-house lawyer. According to Greene, he foresaw various legal, compliance and regulatory risks and identified the need for a lawyer to effectively manage these risks.

We noticed that companies in highly regulated industries tended to bring in an in-house counsel rather earlier on than in companies operating in a less regulated sector.

We need a lawyer. Now what? Once a company has decided that it needs to hire a lawyer, it needs to carefully consider what the main focus of the role will be. For example, Victoria Stewart, a partner at Simmonds Stewart which deals with a lot of

start-ups, particularly in the ICT space, notes the focus for many start-ups, particularly those in the knowledge economy, is on the global rather than the domestic market. This can mean that they tend to buy more legal expertise in overseas jurisdictions than the domestic market and accordingly will factor this into their hiring decisions.

Icebreaker, in a nod to the global outlook of the company, originally had a US lawyer based out of Portland before they decided to bring the position into head office in Wellington and appoint Janes.

Matthews of Two Degrees suggests that it’s crucial to think carefully about the legal expertise needed for the company both now and in the future, bear in mind your anticipated growth, and then take on the person with the experience to meet the company’s longer-term objectives. “Generally start-ups need someone with a strong broad commercial background, to deal with the multitude of things that come across the desk,” he suggests. They may also need an added bent, for example telco experience is essential for a senior legal role with Two Degrees.

Janes suggests that to identify the ideal attributes required from your first in-house lawyer, that companies monitor the legal spend for a while. This can effectively create a job description and give an idea of what will be expected of the new lawyer coming in.

Hubbard reiterates the need to undertake a scoping exercise before someone is brought in. She said that Xero took a lot of time to get the process right, including seeking advice from all internal Continued on page 6 ➔



stakeholders who had legal needs to help understand all stakeholder requirements. This helped to confirm that there was enough work for a full-time role that would keep someone engaged and motivated. They also got external advice on the recruitment process, and had external lawyers from law firms that are partnered with them to sit in on candidate interviews.

Greene recommends that start-ups consider not just the legal aspects of the role but also the risk management aspects of someone who is a legal resource, and to think of lawyers as risk managers rather than purely legal advisors.

Attributes and experience needed Of course the exact experience and skill set that will be required of an in-house lawyer will differ between companies. However, several common themes emerged from the people we spoke to about the experience and attributes necessary for an in-house lawyer in a high growth company.

A key theme was the need for an in-house lawyer to be flexible and agile in their approach. Bidois stated that it’s important to keep an open mind and always be adding value. Be an enabler, not a disabler. Find ways to make a company’s vision a reality. Bidois wears many hats as Corporate Counsel, including that of Company Secretary. Accessibility to staff is a major component of the role, and water fountain discussions / walk ups are an integral part of the success in this type of role.

Matthews also recognises that in-house Counsel need to be outgoing and positive. He has a number of walk-ups during the day and “it’s really important to build good relationships with your client. You need to

be able to spend time in conversation ... it’s sometimes hard to get the balance right in relation to tackling technical work in a quiet space and keeping in touch with the client. You need to be adaptable”.

As an in-house lawyer it is likely that an incredibly wide range of legal issues will come across your desk and you need to be able to respond quickly and appropriately. When a start-up company is in its infancy, it may also be common for a legal counsel to take on responsibility for non-legal roles, such as managing the human resources function.

Hubbard stresses the importance of counsel being able to change their plan for the day as issues arise, and being commercially savvy about time management. “Undoubtedly, the pace in an in-house role in a high-growth company can be intense and relentless, and the ideal in-house lawyer will need to thrive in an environment that has high volume, a fast pace, and a wide variety of work,” she says.

Another key theme that emerged was the need for counsel to be able to identify legal issues and risk quickly, rather than being merely the technical expert. Hubbard sees a key skill for an in-house counsel as being the ability to ”diagnose and prioritise”, to clearly identify the issues with the most risk and prioritise these, including knowing when to bring in specialist help. Often companies will seek someone with general legal experience as their first legal appointment, because of their ability to identify risk across a range of areas within the business.

Many articles about in-house lawyers say they need to be commercial. They must cut through the legalese - plain English is key, opinions and long technical emails do not fit within a commercial environment. In-house lawyers must deliver concise and pragmatic advice in a format that is easily digestible.

Challenges faced Interestingly, the challenges faced by lawyers within a growing or changing company are part of the appeal of the role, and add to their interest and engagement. One interviewee made the point that, contrary to popular perception, they actually work longer hours in their in-house role than they had in private practice. However, they are so intimately engaged with the business and understand the drivers of the legal work, and so feel less resentful of those long hours than they might in private practice.

Challenges or mistakes identified by those interviewed include:

❯ Learn the business before making too many recommendations, as every business has different plans and goals and it pays to know those before jumping in to make too many changes.

❯ Maintain resilience in yourself, and your team, in the face of a relentless pace of growth. This is partly a question of hiring the right type of person. It’s also about crystal ball gazing, in terms of predicting future workflows. One interviewee conceded that they should have hired more lawyers sooner, but they kept expecting the peaks of work to subside to enable them to get to the less urgent, but still important tasks. What actually happened is that their in trays and hours just got bigger, until they were almost too busy to take the time required to recruit.

❯ Develop solid relationships with your client. Be accessible and take time to talk. A brief conversation at the water cooler may eliminate hours of work down the track.

❯ Be aware that when you become known as the internal legal resource, more legal work than anticipated will eventuate – the sorts of things that would have been glossed over or considered too minor to bother briefing external law firms will suddenly find a home at your desk.

The Way Forward Pundits do not foresee significant growth in the number of ‘start-up’ legal roles in New Zealand in the near term. In part, this reflects the wider economy as well as a natural parsimony of entrepreneurs operating in a cash-strapped environment. It is also symptomatic of the global focus of many such companies. However, it is apparent that when a company reaches that tipping point between outsourcing and in-sourcing legal advice, there can be significant benefits both in terms of risk management and cost containment, and that the benefits to be gained by lawyers working within this environment far outstrip merely continuing to develop their legal expertise.

Continued from page 5 ➔


Expert Career Guidance

A Selection of Our Current Opportunities

As New Zealand’s leading recruitment specialists for the legal professional community, our dedicated team is qualified to assist you in career management and recruitment practices.

Our national team works on a confidential basis to assist the profession (both employers and job seekers) with strategic advice in identification of talent, career pathways and opportunities. Our contacts, insight and experience provide us with a depth of understanding within the legal professional world that is unparalleled.

At Momentum Legal we provide the inside knowledge of the profession, developed through consistent and ongoing investment in New Zealand’s best professional legal networks. This allows us to have a window into the differing organisational structures, sector specialisation and opportunities within a wide range of legal career pathways. If you are looking for holistic and tailored career advice and talent management, we are here to help.

Commercial/Property – existing partners or seniors ready for partnership – options available within established firms. If you have the makings of a client base, contact us to discuss options. Auckland CBD & North Shore.

33122 Senior Criminal Lawyer – Category 3 or 4 required. Mentoring, leadership, high calibre trials.

33160 In House Commercial – global business. Come in as the MD’s right hand to strategise, negotiate and close deals.

33164 Banking & Finance 2 – 4 years – top tier.. If your current firm isn’t a culture match for you, there are alternatives, and the top tier are not all the same.

33205 PPP Lawyer – know of anyone coming back from OE who has picked up some solid PPP experience? Very rare opportunity.

32686 Employment Lawyers 2 – 4 years – in demand! Various options available - filling fast. Some straight employment and mix of employment/civil.

32513 Commercial Property 2 – 5 years (x 2) – top Auckland firms. Experience gained from mid to large firms, or solid experience from within a provincial firm highly desired.Set yourself up for the future.

32639 Commercial Property Intermediate – this role is made for a social person who loves the technical side of law, as well as client interaction. Fun, committed team.

33208 Senior Property / Commercial - fast track to partnership. Family focussed firm. Client base desired.

Contact Meryn or Amber for these Auckland opportunities

JN32632 Senior Associate / Partner – Bring your clients to the table. Visionary firm. Wellington.

JN33238 Elder Law expert – great career opportunity. Well established firm. Supportive, friendly environment. Nelson.

JN33340 Litigation lawyer – 6+ pqe. Top Tier firm. Contribute to excellence. Wellington.

JN33143 Junior litigation lawyer – capable, pro-active, willing to learn. Be mentored by experts. Mid-sized firm, Lower Hutt.

JN33281 Environmental Law solicitor – 2+ pqe, High quality work, high quality firm. Outstanding firm. Christchurch.

JN33288 Employment lawyer – 5+ pqe. Ministry role. Excellent written and verbal skills. Varied role. Wellington.

JN33106 Senior Property lawyer – highly reputable firm for competent, confident and career focused practitioner. Christchurch.

JN32898 General Practice – Junior/intermediate level. Busy, supportive environment. Lower Hutt.

JN33248 Ministerial Writer – short term (2-3 months). Experience in Ministerial writing / OIA. Ministry. Wellington.

Contact Jane or Carla in our Wellington office

We are seeing more contracting roles come into the market, and are aware of several senior in house roles coming up in the near future. Please contact us if you would like to be kept informed about these opportunities as they arise.

Firms are seeking senior associate/partners, particularly in property law. Wellington has a constant stream of policy roles at all levels, plus intermediate/senior roles in private practice. Go to www.momentum.co.nz/search-jobs daily for any updates.

For our Wellington office, please call 04 499 6161 or contact

Carla Wellington [email protected]

Jane Wellik [email protected]

For our Auckland office, please call 09 306 5500 or contact

Meryn Hemmingsen [email protected]

Amber Trebitsch [email protected]

Jane Wellik Carla Wellington

Amber TrebitschMeryn Hemmingsen


it proCurement

Today, information technology forms an important part of most businesses. The procurement of any IT system is typically accompanied by a myriad

of contracts that govern the licensing, development, installation, and support of the software, hardware, and other components of the IT system. As businesses become immersed in a sea of technology, in-house counsel for both suppliers and customers are frequently involved in advising and assisting their businesses in the supply or procurement

of those systems. Through their involvement, in-house counsel can, starting from the early stages of any IT system procurement, influence the supplier-customer relationship.

By engaging the supplier or the customer (as the case may be) in the right conversations from the outset, in-house counsel may be able to assist the parties to achieve a fair and equitable deal more quickly, as well as manage expectations to avoid frustration, and possibly discord, between the parties during contractual

negotiations and once the contract is on foot.Typically, the relationship between

suppliers and customers of IT systems is a long-term one. Ensuring a transparent solution-focused relationship between the parties from day one will help to strengthen both businesses and can help achieve mutually beneficial outcomes for both businesses through all stages of the procurement project. As with any successful relationship, key success factors include establishing each party’s expectations

Being an ‘agent of influence’ in the procurement of IT systems

By Simon Martin, partner, Edwin Lim, partner, and Anchali Anandanayagam, senior associate,Hudson Gavin Martin


Good ideas are elusive. Building your idea into a business requires experience. Sometimes you have to start again.

We have a passion for technology and intellectual property and how they affect business. It’s what we do because we like doing it.

www.hgmlegal.com Technology & Intellectual Property Lawyers

Level 8, 2 Commerce StPO Box 105900, Auckland CityAuckland 1143, New Zealand

TEL +64 9 308 7300FAX +64 9 308 [email protected]

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from the outset to minimise any misunderstanding further down the track, and to proactively address issues before they turn into problems.

In-house counsel (whether for the customer or the supplier) can play an important part in ensuring the relationship has a sound basis and influencing the way this relationship is structured. From our experience, there is immense benefit if in-house counsel get involved in IT procurement projects early before any contracts are put on the table - in many cases, once the contract review stage is reached it may be too late for in-house counsel to have as much influence over the deal. Ideally, in-house counsel for a customer should be consulted prior to going to market in search of a vendor, and in-house counsel for a supplier should be consulted prior to responding to a Request for Proposal, tender, or otherwise.

Once you are involved by the project team, there are a number of questions you can ask that will help tailor the deal, even before the contract negotiation stage, in a manner that is mutually beneficial to each party. These questions fall into three main categories.

Understanding the expectations and requirements of your businessWhether you act for the customer or the supplier, it is important to understand the drivers for the project. This will help you ensure that the deal that is eventually documented achieves the business outcomes you were looking for. In particular, you will need to work with the business to determine its priorities – is a particular outcome really a priority for the business or something that is nice to have?

For example, as a customer you may be looking for a turn-key solution where it is a priority that the supplier is a ‘one-stop shop’ for all of the functionality and services the business requires, and one that will be ultimately responsible for the entire project. If this is the case, then a solution that leverages the supplier’s multiple partners in the region is not going to meet the customer’s needs. If you are licensing software from the supplier (such as an Enterprise Resource Planning (ERP) system), can the supplier provide the services that you require to implement and support the solution, or can another supplier provide those services? Although the business may be able to benefit from the in-depth and valuable knowledge and experience that the supplier has in its own products (which other suppliers may not have), in the event of a failure by that supplier to provide the services or to the levels agreed, can the software be implemented by a third party , while retaining the software licence with the supplier?

As a supplier, the business may be looking to offer significant savings on licensing fees early in the relationship on the expectation that these costs can be recouped in later years. If this is the case, then allowing the customer to exit the arrangement at will or at a low termination threshold will not be attractive. As another example, the business may be trying to ‘break into’ the market with its products and services. If this is the case will the business pull out all stops to get the customer’s business and, if so, does this clash with the risk profile of the business? What will the business get back in return – the right to use the customer as a reference site for its products or services?

Once you understand what your business’s expectations and requirements are, it is important that you stay involved in documenting these expectations and requirements. Further, you should not be limited to just advising on the legal contracts, such as the services contract governing the implementation. You should also review any statements of work which are created under the relevant services contract and, which on the face of it, are commercial and/or technical documents. In our experience, a well-drafted services contract is sometimes undermined by statements of work that lack sufficient detail, are Continued on page 10 ➔


inconsistent with the services agreement, or do not place definitive commitments on the parties. In some cases, statements of work may amount to agreements to agree or resemble marketing brochures and it is therefore important that the statement of work is drafted in a way that makes it clear what each party will do, what is being delivered and when, how much it will cost and so on.

Understanding the expectations and requirements of the other partyOnce you understand the expectations and requirements of your business, you should undertake the same exercise from the other party’s perspective. Ask yourself what might be important to them and what risk, obligations, or liabilities might they want your business to assume. Understanding the end game for the other party will help you to strike a deal that is reasonable and fair to both parties. It will also enable you to identify areas where compromise is possible and areas that cannot change. Drawing these out early can ensure that time is not wasted where a deal cannot be done.

For example, as a supplier it is important to establish whether the IT system is business critical for the customer. If it is business critical, then it is likely that the customer will look for strong recourse in the event the system does not function or perform as expected – if your business is not willing to provide adequate warranties in relation to the functionality or performance of the system, or is not willing to offer extensive service levels and related service credits if those service levels are not met, then the customer may be reluctant to put its business at risk and may walk away from the deal.

It is equally important for the customer to understand the motivations of the supplier in entering into the transaction. For example, it may be that the supplier’s software used in the IT system is licensed and then configured for use by the customer. If this is the case, it is important to establish early on each party’s expectations as to payment of the licence fees. The supplier’s business model may require recognition of the licence fees from the date of delivery of the software to the customer. However, from the customer’s perspective, payment of the licence fees from day one may be unacceptable on the basis that the software is of no value to it until all of the acceptance tests for the configured software are successfully completed.

Understanding the consequences if the relationship does failIt is important to understand from the outset how bad things could get if the relationship breaks down. In IT procurement projects sometimes it is difficult for parties to walk away if problems arise.

In the case of the customer, too much money, time, and effort may have been invested for it to terminate the contract and source another solution.

For the supplier, its reputation may be at stake if it cannot deliver a solution that meets the customer’s requirements – the New Zealand economy is small enough that it does not take long for word to spread to others about a failed solution or relationship (just consider how some failed IT projects have recently been reported by the media and the negative effect this has had on one or both parties).

It is therefore important to mitigate the risks of the relationship failing by ensuring well-established, and open, lines of communication between the parties to avoid misunderstandings and allow identification and management of issues before they become problems.

However, despite each party’s best

intentions, some relationships do fail. So what are the kinds of issues you should consider prior to, and during, contract negotiations to mitigate the fallout of a failed relationship? Here are a few examples:

In the case of the customeris the solution provided by one supplier or multiple suppliers?;

❯ if there are multiple suppliers, who is ultimately responsible for the solution (is it one of those suppliers or is each supplier responsible for the component it supplies)?;

❯ are there other suppliers in the market who can implement and/or support the solution?;

❯ is payment due up front or is it payable on a milestone basis once the solution (or its components) are tested and accepted?;

❯ if the business is considering terminating the contract, what assistance will the business require from the supplier, following termination, to transition the services to a third party?; and

❯ will the source code for the supplier’s software be held in escrow and can it be accessed on termination of the contract?

In the case of the supplierif the contract terminates will the business require the customer to pay for all work-in-progress regardless of the state of completion?;

❯ if pricing has been calculated on the expectation of a fixed term, then what will the supplier be looking to recover if the agreement is terminated early at will by the customer or for the customer’s breach?;

❯ if the business is providing assistance to the customer to transition its services to a third party, in what circumstances will the customer pay for those services?; and

❯ what will the business’s response be if the customer requests the business’s source code to be held in escrow?

ConclusionBy asking the right questions and being aware of the expectations of each party from the outset, you can influence the relationship between the customer and the supplier in a manner that results in a solid partnership between the parties and arrangements that mutually benefit both parties.

Simon Martin and Edwin Lim are partners, and Anchali Anandanayagam is a senior associate, at Hudson Gavin Martin, a boutique technology and IP law firm. For more information about Hudson Gavin Martin please visit www.hgmlegal.com.


Understanding the end game for the

other party will help you to strike a deal

that is reasonable and fair to both parties.

it proCurement


networking

Over the past few weeks I’ve spoken with various in-house lawyers about the most prominent issues they face. A recurring theme among those I

spoke with was that, because they are working so hard, they can sometimes be prone to feeling isolated from what’s happening in the legal profession.

Many don’t have time to ‘lunch’ with their external legal providers and due to budgetary constraints find that they cannot go to conferences, or other paid-for events, to network with their peers.

Unlike lawyers in private practice, in-house lawyers do not externally market their services, however, networking holds much merit for raising their personal profile within the wider legal profession, and also opens up opportunities to develop strategic relationships that are of benefit to their company or organisation.

The introduction of compulsory CPD from April next year will open up opportunities for in-house lawyers to connect with others on a more regular basis. Another opportunity for in-house lawyers to connect with the legal profession is by doing pro bono work. Even if it’s just a few hours a month, working on unfamiliar areas of law, at a Community Law Centre for example, will provide a challenging environment while creating the opportunity to work alongside other lawyers outside of existing networks.

But it’s not just about expanding your external networks. When it comes to networking, be it internally or externally, Helen Mackay Executive Director of CLANZ

suggests tailoring your approach: “It helps to take a focused approach to networking within your industry so you are seen as a passionate industry player and not just ‘one of the lawyers’.”

In a recent article written for our student publication NZLawyer2B Darise Bennington discussed the importance of building “authentic and genuine” relationships. And while this was an article directed at those about to embark on their legal career, the principles of “making connections” hold true for anyone who wants to network.

In my many years of attending various legal events I’ve discovered that genuine networking has led to strong, lasting, and meaningful business relationships. For me it’s easy, I’m energised by other people, I love hearing about their jobs, lives, and what inspires them. It’s about taking a genuine interest, not thinking ‘what’s in it for me’. I’ve had many people politely saunter across the room to say ‘hello’ and then, after a minute or so, cut off the conversation and move on to their next prey after concluding that I wasn’t important enough for them. I used to be offended but now I think that those people, particularly in the early stages of their career, soon learn that if they’re not authentic then they’ll make the wrong kind of lasting impression. And it’s a small town.

For me successful networking is about good listening, identifying opportunities to partner with others – being a facilitator for connecting others, even when it doesn’t directly benefit you.

Mackay adds that among the attributes

needed for good networking, having the ability to make connections between ideas and other people is important. Also, having “a curious approach to life…a good memory for names and faces or the ability to hide a poor memory with some memory tricks”.

But for some, networking doesn’t come naturally - if you’re not completely comfortable with entering a room full of people and exchanging pleasantries with entire strangers, then taking a focused approach will work wonders for building confidence. Mackay suggests establishing a CLANZ satellite group in your area and / or the CLANZ community LinkedIn group.

As Mackay suggests, being focused when networking will quickly identify you as a key industry player, after all, our time is limited so a ‘hit-and-hope’ approach to networking will not lead to any significant short-term achievements.

Networking isn’t just about going out to events. You can also network internally, and not just at drinks when it’s someone’s birthday or leaving party. If your company has an intranet, take the time to learn about what others in your company are doing. If there are any projects happening that you’re interested in then offer to lend a hand. Even stepping away from your desk and eating lunch in a communal area will give you an opportunity to form relationships with other departments.

CLANZ offers many ways to assist in-house lawyers in connecting with the legal profession and internally within your workplace. For more information visit www.clanzonline.org.

Making meaningful connections

Angela Jacobsen explores how making connections can lessen feelings of professional isolation


Cpd

Last month, the New Zealand Law Society issued guidelines and approved proposed rules for the launch of its much-awaited continuing professional development (CPD) initiative. From 1 April 2014, following a six-month transitional period, every

New Zealand lawyer will be required to annually complete at least 10 hours of CPD activities (and, in addition, is “encouraged to complete a minimum of 50 hours of self-study each CPD year”, see Guidelines: Lawyers and Conveyancers Act (Lawyers: Ongoing Legal Education – Continuing Professional Development) Rules, 26 April 2013).

But what does that mean for in-house lawyers? What counts as a CPD activity? What type of self-study should in-house counsel concentrate on? And how can they ensure that any ongoing education they choose best benefits them, their company, and their career?

Most New Zealand in-house lawyers would already undertake sufficient CPD to meet the requirements under the proposed Rules, notes Helen Mackay, Executive Director of CLANZ. However, in recent times “many may have had difficulties in maintaining appropriate training budgets or in finding the time to devote to personal development”. The mandatory nature of the new Rules will impress

upon in-house counsel and their employers the need to provide and protect training budgets, and allocate time for CPD.

Once you secure the time, and budget, how can and should you use it?

Your needs, your choiceUnder the proposed new Rules approved by the Law Society on 26 April, which are currently before Minister of Justice Judith Collins for her approval under the Lawyers and Conveyancers Act 2006, all lawyers will be required to develop and implement their own annual CPD plan and record (CPDPR) and complete the minimum hours of activities each year.

The new Rules create “a modern and innovative scheme” driven by current educational thinking, and are “a big step forward from the more traditional approach to continuing professional development,” said new Law Society President Chris Moore. “Individual lawyers will be responsible for identifying and fulfilling their own learning requirements through a structured process of self-assessment and reflection.”

School’s out? Not a chance…

Helen Mackay talks with Craig sisterson about what’s ahead for in-house counsel as the local legal profession moves towards mandatory continuing professional development


Cpd

Rules 4 and 5 outline the requirements:

“ 4. Continuing professional development requirements 4.1 A lawyer must comply with the following CPD

requirements: (a) to develop and maintain a written CPDPR in accordance

with rule 5; and (b) to undertake the required hours of CPD actvities

specified in rule 6.

5. Continuing professional development plan and record5.1 The CPDPR of a lawyer who provides regulated services for

all or part of a yearly period must include: (a) a description of the lawyer’s current learning needs; (b) a description of the lawyer’s proposed actions to be

undertaken to meet the learning needs; (c) a description and details of the activities undertaken by

the lawyer to meet the learning needs including; (i) a record of the hours involved and undertaken in

respect of each activity; (ii) a reflection on each activity; and (iii) documentation verifying attendance at each

activity. (d) in accordance with rule 6, or as modified by the Law

Society under rule 7.4, a statement of the number of hours required within each yearly period; and

(e) a record of any period of time greater than three months during which the lawyer did not provide regulated services.

5.2 The CPDPR of a lawyer who does not provide regulated services may include the matters referred to in rule 5.1 (a) to (c).

5.3 A CPDPR must be retained for 3 years.”

The benefit of the unique approach the Law Society has adopted, says Mackay, is that it enables lawyers “to reflect on their own competencies and areas of weakness and undertake training to improve in those areas rather than it being a tick-box compliance exercise”. This is particularly of benefit to in-house lawyers, who can have an extremely broad range of practice areas ill-designed for any type of ‘one size fits all’ CPD model.

The Guidelines issued by the Law Society on 26 April state (at 3) that when deciding on his or her learning needs when creating a specific CPDPR, a lawyer should consider:

❯ reflections on any CPD activities undertaken; ❯ his or her strengths and weaknesses; ❯ new law and procedures; ❯ his or her career goals; and ❯ pending changes in his or her role, responsibilities, and practice

areas.

The Guidelines also note the Rules “are flexible enough to allow all lawyers to complete the requirements regardless of their areas of practice, location and experience and to enable them to take account of their preferred learning styles” (at 3).

Mackay tells NZLawyer In-House that CLANZ welcomes the introduction of mandatory CPD “that is tailored to practice, and has appropriate flexibility and ease of compliance”, and that given that flexibility and choice within the looming new regime, New Zealand in-house lawyers need to “think very broadly about what they need to do to make them better at their jobs”.

CPD benefitsWhile the completion of specific levels of CPD will now be a requirement for New Zealand lawyers to maintain a practising certificate, there are many more benefits to continuing with such ‘lifelong learning’ as an in-house counsel, including:

❯ Keeping up to date with legal and industry changes so that you are continually aware of the current ‘playing field’ and best able to help your business;

❯ Adding new skills and knowledge so that you retool and grow as a professional, becoming more and more valuable to your business;

❯ The marketing value provided by attending legal, or industry, educational seminars and other events, affording the opportunity to interact with others in the legal profession or within your business’s industry, and develop a range of professional contacts;

❯ The excitement and engagement created by learning new things, meeting new people, and feeling as if you are continually growing in your role and your career.

As in-house counsel progress in their role within their business, and their career, they are unlikely to serve the exact same function. It is imperative that they embrace the fact that law is a learning profession, a career of lifelong learning.

There is already a “widespread culture of continuous learning” among the New Zealand legal profession, said Moore when announcing the approved Rules and releasing the Guidelines. “We know the legal profession is ready for introduction of a formal CPD initiative. Our overriding objective is to maintain and develop a high standard of legal services for the benefit of all New Zealanders.”

Moreso than lawyers in private practice, in-house counsel have the need, and opportunity, to embrace broader training and development as part of mandatory CPD. “For many it could be a mixture of industry training, leadership skills and core black letter law competencies,” says Mackay. “Many in-house lawyers say they need to improve their financial literacy so if this is you, look out for the CLANZ-Deloitte workshops on understanding financial statements for in-house lawyers towards the end of the year.”

Develop a plan of attackA key plank of the new CPD regime is the creation of a personalised CPD plan and record. Planning can be essential when it comes to ongoing education, says Mackay, who advises in-house lawyers to get working on their CPD early each year. “Look at all of the current and future CLE you are being offered, whether through CLANZ, Law Society CLE, law firms, or other providers and try to plan how you will address your own training needs throughout the year rather than leaving it to the end of the declaration period,” she says. “If you are in a provincial area where in-person attendance could be problematic, look at establishing a study group of two or more people.”

In an article in Canadian Lawyer looking at in-house counsel and the mandatory CPD regime in force in Canada, former Weyerhauser Canada and Imperial Parking Corp vice president and general Counsel Alex Shorten said that the biggest mistake in-house counsel can make when it comes to continuing education requirements is poor planning, which can lead to scrambling to complete hours near the end of the year, and sitting through less-relevant training just to tick boxes, rather than getting the full benefit of proactively choosing and arranging things that will have good value to them (“Lifelong learning”, June 2011).

Moving forward, CLANZ will be increasing the CPD options it makes available to members, says Mackay, and will ensure such options “continue to be high quality and tailored to in-house practice”. CLANZ has been working with other organisations on future CPD options for in-house counsel, which will be announced in due course.

For more information on the proposed Rules, go to www.lawsociety.org.nz.


health & safety

By Hanne Janes, partner, DLA Phillips Fox

Just when you thought the vast legislative change generated by financial markets reforms were complete, and there may be some respite from further

reform, another raft of significant legislative change comes marching over New Zealand’s horizon.

This time, following the Independent

Taskforce on Health and Safety Report on 30 April, the reform focuses on health and safety in the workplace. This reform demands immediate attention by in-house counsel.

In the wake of the Pike River tragedy, and other serious health and safety incidents, the Taskforce’s recommendations are wide-ranging. The significance of the proposed changes is considerable for management, directors, and employees.

For corporate lawyers, they will have to respond and act rapidly, as steps may be required as early as July 2013.

Earlier, the Taskforce recommended that the government set up a new stand-alone workplace health and safety Crown agency. This has been adopted by the government and the agency was announced in February. This new agency will replace the existing Health and Safety group which operates as part of the Ministry of Business, Innovation and Employment (MBIE). It will be responsible for enforcing workplace health and safety regulations, will have its own governance board, and will operate at arm’s-length from Ministers. A dedicated unit is being set up

Heads Up: Sweeping changes in health and safety: A new challenge for corporate lawyers


health & safety

DLA Phillips Fox is delighted to welcome Hanne Janes to the partnership as head of the Healthcare practice.

WELCOMING

HANNE JANES

DLA Phillips Fox is a member of DLA Piper Group, an alliance of independent legal practices.

Hanne brings significant expertise and experience in all areas of medical and health-related law to the firm. Together with our existing Healthcare team members, she will spearhead the growth of this national practice.

Read more about Hanne on our website www.dlapf.com/our-people/hanne-janes

within the MBIE to help establish this new unit. Legislation to establish the agency is likely to be introduced in June, and it is intended to be up and running by December 2013. Corporations will have the opportunity to make submissions on this proposed legislation.

The government wants to reduce the rate of workplace incidents and injuries by 25 per cent by 2020. A further Taskforce recommendation is that MBIE, along with ACC and the new health and safety agency, work together to oversee the delivery of workplace injury-prevention activities. The Taskforce considered there was greater potential for ACC levies to be used to incentivise good performance, by introducing a greater differential between good and poor performers.

A key change in emphasis, recommended by the Taskforce, is that both management and directors need to shift from identifying ‘hazards’ to ‘risk management’, which is the norm internationally. Identifying hazards that are low risk means that the current system is inefficient and ineffective at reducing workplace injury. This is also in line with the Pike River Commission of Inquiry, which noted that although hazards were documented,

much larger risks were not. Most importantly, the Taskforce proposes

that the existing Health and Safety in Employment Act 1992 be replaced, with a recommendation that the new Act be based upon the Australian Model Law, and its associated regulations. This has serious implications for both directors and management.

The Australian Model Law imposes a duty on company officers and directors (including company secretaries) - and arguably all senior management with the ability to influence the health and safety decisions of the organisation - to exercise ‘due diligence’ to ensure the company meets its safety objectives.

This means that those officers must: ❯ Actively acquire safety knowledge and

keep up to date with workplace health and safety matters.

❯ Understand the nature of the company’s operations, and the hazards and health and safety risks associated with those operations.

❯ Provide adequate and available resources to identify, eliminate, minimise, or control risks.

❯ Ensure resources are available to receive and consider business incidents, hazards,

and risks, and respond in a timely way to that information.

❯ Ensure that the company has in place (and implements and monitors) processes to ensure legal compliance.

❯ Audit and review health and safety processes and use of resources.

Clearly, if implemented, these Australian requirements will impose a far higher obligation and onus upon directors and top management than those currently in place.

Directors will have to ensure there is an effective linkage between their health and safety goals, and the actions and priorities of management. They are likely to be required to independently review serious incidents and be personally satisfied with the adequacy of both the management investigation methodology and remedial responses; be able to demonstrate that they asked the right questions and were convinced that management assessed the risks of the business adequately; and appropriately moderated and managed them.

The audit requirement means that directors are likely to need to independently audit to ensure that systems are adequate. DLA Phillips Fox Continued on page 16 ➔


Summary of changes to health and safety legislation:

❯ Establishment of a new stand-alone workplace health and safety Crown agency. Legislation to set-up this new agency is expected to be implemented by December 2013. It will be responsible for enforcing workplace health and safety regulations and will have its own governance board and operate at arm’s-length from Ministers.

❯ Management and directors will need to change from identifying ‘hazards’ to ‘risk management’.

❯ Existing Health and Safety in Employment Act 1992 may be replaced by an Act based on Australian Model Law and associated regulations, which will have sweeping, and serious implications, for directors, executives, and senior management.

❯ The Australian Model Law imposes a positive duty on company officers and directors to exercise ‘due diligence’ to ensure the company meets its safety obligations. These will have a far higher obligation and onus on directors and top management than those currently in place.

❯ Under the Australian Model Law, liability can arise even where there has been no fatality or serious harm event. The penalties are serious for both individuals and corporations.

❯ The existing manslaughter offence in the Crimes Act 1961 may be extended to corporations, and the corporate liability framework may be revised so it applies to all offences (including manslaughter).

❯ If the Taskforce recommendations are accepted, companies found guilty of health and safety offences could also find themselves subject to adverse publicity orders. This could require them to advertise their failures by publishing advertisements in newspapers or sending letters to shareholders

considers that boards may need formal health and safety sub-committees to address these issues. There will also be a requirement to ensure internal and external reviews are undertaken to ensure the organisation meets ‘best practice’ industry standards and that health and safety policies, and procedures, are ‘fit for purpose’.

In summary, and rather chillingly, the Australian Model Law imposes a positive duty upon senior management and directors, whether or not there has been a health or safety incident. In Australia, an officer can be prosecuted for failing to comply with the ‘due diligence’ obligations. The penalties are severe: a maximum fine of $600,000 and/or up to five years’ imprisonment for an individual, and up to $3 million for the company.

The Taskforce also recommended that the existing manslaughter offence in the Crimes Act 1961 be extended to corporations. Likewise, it recommended that the corporate liability framework be revised so it applies to all offences (including manslaughter). This means that criminal liability may be applied to a corporation for acts or omissions of employees and officers.

The Government has said it will consider the Taskforce’s report and recommendations, and provide its response by the end of July 2013.

In-house counsel should note these proposals and be actively considering their likely implications. Some of the changes may require corporate lawyers to reach outside their organisation for special legal expertise.

The Royal Commission Report into Pike River recommended that the new health and safety agency issue an improved Code of Practice to guide directors. While that would be useful, given the enormous tasks already faced by the proposed new agency, DLA Phillips Fox does not believe directors and managers can wait to see if this eventuates. They are going to have to be proactive.

The changes, like those to the adventure tourism industry and the financial services industry, signal a philosophical and practical change. New Zealand is moving from ‘light-handed regulation’, introduced in the 1980s, to much stricter regulatory and compliance requirements.

Gone are the days when purely commercial matters, such as profitability, can be regarded by management or the board as more important than employee health and safety in determining priorities of a business’ focus. Managing health and safety risk is going to be just as important as managing financial and reputational risk. In fact, managing health and safety risk will help an organisation reduce financial and reputational risks.


health & safety


global trends

Keeping an eye on the trends

The last time NZLawyer In-House looked at global trends was back in May 2011. Key trends, at that time, were having to do “more with less” - with increased

workloads and limited resources affecting the way some in-house teams were advising their internal clients. Other areas were “re-engineering the legal department”, and “being held to a higher standard”.

Less for moreFast forward two years, and what are we seeing? According to the The In-House Lawyer and Legal Business survey: The In-House Survey 2012 (IHL/LB Survey), published in October, it appears the story in the UK remains very much the same where a key theme of needing to “extract more value from fewer resources” resonated among most survey participants.

Despite the IHL/LB Survey suggesting that generally “the size and shape of in-house legal teams has remained largely unchanged,” according to Ron Pol of Team Factors, a dip

in the total number of New Zealand in-house lawyers, the first in many years, may be explained by a failure for executive management teams to see the value of a legal team. “These views have some currency amongst executive management teams, and match the downsizing and degrading of some legal functions that [has] occurred over the past few years,” says Pol.

But while the nine per cent dip in in-house lawyers within companies suggests that legal budgets continue to be cut, a three per cent increase in government in-house lawyers could elude to “those who have more effectively started to develop new ways to focus on improved ‘outcomes’ and help reconnect legal work with strategic organisational goals.” Something that Pol says is “heartening” to see.

Money, money, moneyIt has been widely reported that many in-house lawyers find themselves working within complex

Angela Jacobsen reviews the global landscape for in-house legal teams

Continued on page 18 ➔


global trends

management structures of companies, and it’s not uncommon for in-house lawyers to eventually find themselves on the board of their company, this is especially the case with lawyers working in highly regulated industries that have ended up in CEO positions.

But even if in-house teams are not engaged in the overall strategic management of the company, there is still an expectation that in-house lawyers meet new challenges, in the face of continuing global uncertainty, to “embrace different ways of doing things and further improve business efficiency,” says David Lombe, Partner and Deloitte Legal Sector Group Leader in the Deloitte Corporate Counsel Survey 2012 (Australia) (Deliotte Survey).

A strategic trend found in the Deloitte Survey was the increase of “outsourcing” or “offshoring” work to external legal providers

and given the increase in international firms seeking growth opportunities in the Asia-Pacific region, fees are likely to be more competitive than ever.

Ninety-eight per cent of Deloitte Survey respondents reported having outsourced “at least some” legal tasks externally, even though 50 per cent said their budgets had not changed in the past year. Key areas where work was outsourced were litigation, M&A, industrial relations, and contract management.

There was a similar number of unchanged budgets for UK respondents in the IHL/LB Survey, with a large proportion of budgets spent on regulatory matters given the “swathe of structural and regulatory reform” in a changing economic environment. The average proportion of budget spent on external law firms was 49 per cent, however, in-house teams reported that they are spending with caution, and that the “cutting-

back of legal spend is yet to peak”. When NZLawyer In-House spoke with

several in-house lawyers back in December, there was an ever-increasing eye upon external legal spend. In-house teams were having to think more strategically about their external spend in order to justify it to their business and this hasn’t changed. Only certain work is drafted out externally, especially when it’s highly specialised and will obtain a faster and better result than doing it in-house.

Procurement of external legal services in New Zealand has highlighted differences between how the corporate and government sectors select law firms to work with. Pol says that panel structures remain reasonably common, with corporate having a greater need for flexibility in selecting the “right” external lawyer for each transaction. While a “centralising theme” within the government sector “went



global trends

the other direction”, locking down a large panel of external law firms. “Even within government, however, some agencies have quietly resisted the centralised approach; some have calculated that they can demonstrate higher savings, greater choice and, sometimes, more innovative ‘outcome-focused’ solutions in line with international trends that local firms have increasingly been offering.”

InnovationMore than ever, in-house teams are expected to deal with highly complex matters of risk, compliance, and regulatory issues. And it’s this global trend that requires an ever-increasing need for innovation to be demonstrated by in-house teams.

In cost-saving tactics, new technologies have led to an increase in work being outsourced or offshored by in-house teams. For example a trend towards outsourcing

to more cost-effective LPOs and litigation support providers, the Deloitte Survey reported. “The pace of change and the speed of technological innovation will have profound effects for the economy. Much of the change is being driven by individuals – employees and customers. To engage with their customers and structure their internal operations and people management... and this includes their in-house legal teams, will be those [individuals] that are able to embrace the potential of the digital economy,” said Ric Simes, Deloitte Access Economics.

Technology aside, the FT Innovative Lawyers Report 2012 outlines several other key areas where in-house lawyers can innovate; talent engagement and development, how internal functions and external providers are managed, risk management, and being strategic advisors to the business.

But, in general, the New Zealand legal profession falls short on innovation according to Pol, and this can be a catalyst for companies not seeing the value in their in-house legal function. “lawyers don’t effectively demonstrate value in ways more meaningful to emerging client needs and changing environments, or if New Zealand’s regulatory environment inadvertently constrains lawyers from delivering the most valuable services to corporate, government, and personal clients alike, the business of law will continue to be increasingly constrictive for many lawyers, irrespective of international advances.” However, Pol added that he was optimistic that there were law firms and legal departments “quietly building and implementing genuinely innovative solutions to modern market conditions”, and that this would ultimately lead the way to a bright future for New Zealand’s legal profession and, clients.


influenCing

By Emily Morrow

What do the following have in common? Jeremy, general counsel for a large publicly traded company, needs to

deliver difficult information to the board and obtain their support for a potentially controversial action. Karen, an in-house lawyer who reports to the CEO, is trying to get more CEO ‘face time’. Bill, an in-house lawyer wants to better motivate his direct reports who do important, but routine, repetitive work. Anne needs the support of her professional colleagues in connection with some challenging personnel decisions within the general counsel’s office.

The situations in which Jeremy, Karen, Bill, and Anne find themselves involve the use of influence, and their success will depend

on their ability to deftly practice the art of influencing. I define influencing as ‘the ability to lead others outside your control so they make better decisions affecting you and your work’. Influencing, therefore, is a critical leadership competency. The inability to influence those to whom you report, your peers and/or your subordinates can derail your career more quickly than your lack of a particular technical skill. Therefore, underestimate the importance of the art of influencing at your own peril!

Influencing versus Advocacy or AuthorityHere’s an interesting point in regard to lawyers, who are trained to be advocates and/or negotiators. We know how to frame arguments, make a case, present it in court, or elsewhere, and be assertive (if not aggressive) when appropriate. You might expect, therefore, that lawyers would naturally be highly skilled influencers. In my experience, this is often not the case. In fact, counter-intuitively, your skills as an

advocate may get in the way of your ability to influence. Advocacy involves direct and often transparent presentation of arguments, frequently in an adversarial context. Influence has to do with leadership, suggestion, active listening, and careful management. It relies heavily on ‘people skills’, an understanding of human nature and emotional intelligence, capabilities lawyers often do not cultivate in themselves. In fact, as lawyers we often underestimate the importance of these ‘soft’ skills.

Further, there are significant differences between exercising authority and the art of influencing. The former can appear in the short term to be an effective tool, but is often a very blunt and transient instrument. The latter is subtle, elegant, and can ultimately be more effective and enduring. When stressed, managers often instinctively use authority to obtain results, even though the use of influence might be more appropriate. Think about this as you work with peers and direct reports and when you observe how others to whom you report manage you.

In-House counsel and the art of influencing


influenCing

Types of Influence Consider first the exercise of internal influence in your workplace. What ‘unspoken’ networks exist behind the scenes, as opposed to the defined lines of power and authority? Whose advice is sought and followed? Whose opinion causes others to change theirs? Who confides in whom? At whom do people look when they make a recommendation? Identifying these networks, getting feedback from others about how you are seen, and developing relationships with the key players will be critical to your success. Indeed, ‘personal selling’ - selling your views, ideas, and self to others, expanding your network of ‘allies’ and successfully negotiating with others both within and outside of your immediate work environment - is essential.

Although having a high level of internal influence at your workplace is important, in today’s turbulent business and legal environment, you would also be well advised to develop external influence and allies. Doing so will enhance your reputation and that of your office, will strengthen your future position, and will provide you with greater insight and objectivity. Try to develop an entrepreneurial attitude. Set realistic and achievable goals, monitor those regularly, and expand your network of external allies. For example, schedule one networking luncheon weekly, plan to make four presentations to external groups annually, liaise monthly with each member of the board of directors etcetera. The cumulative effect of these small, but regular, actions will be much greater than that of the occasional ‘big thump’ event.

Influencing can be done both formally and informally. Formal influencing is generally done through oral presentations or in writing, both of which require well-developed self-presentation and communication skills. The key with formal influencing is to tailor your presentations to the interests and needs of your audience. Use a bit of imagination and put yourself into the shoes of your listeners or readers. What are their concerns, interests and goals? What background do they have on your topic? How much detail is it appropriate to provide so they understand critical concepts while not being inundated with data? How formal, or informal, should the tone of the presentation be? To what extent is it important to establish rapport with the audience versus just transmitting information? How can you best establish such rapport?

Informal influencing depends upon excellent relationship-building skills and the ability to network by connecting people with other people and with new ideas or opportunities. It’s helpful, but not essential, for people to like you in the context of informal

influencing. That said, informal influencing is most effective when others respect and trust you. Without that, the scope of your influence is likely to be limited and short-lived. As with other ‘intangible’ skills, some people are naturally gifted with excellent relationship-building skills or networking capabilities and are therefore better informal influencers. However, with some focus, attention, and practice, such skills can be perfected by anyone.

Influencing Up, Across and Down Different skills and approaches are appropriate depending on whether you are influencing someone to whom you report (influencing up), a peer (influencing across), or someone who reports to you (influencing down).

For in-house counsel, influencing up typically occurs when you report to the general counsel or other senior manager, or if you are the general counsel reporting to the CEO or board. Frequently the person(s) whom you want to influence may not be lawyers, so you will need to tailor your approach accordingly. Pay close attention to your use of technical language, define terms, ask open-ended questions that will let you determine the extent to which your ‘audience’ understands your position, and so forth. Actively listen to how those whom you seek to influence discuss issues (what type of language and approach they use), as this will give you clues about how to structure your formal presentations. Make it clear how your suggestions will add value organisationally; what will the return on investment be, and how do your suggestions further the work of the CEO / board etcetera? You are there to help, even when you have to raise concerns. Be scrupulously and consistently respectful, but do so firmly and self-confidently. Gravitas is critical when you seek to influence up.

When influencing across with your professional peers, you will need to gain their goodwill so they respect and trust you, and hopefully like you as well. Be flexible and good-natured where appropriate, “give until it hurts”, support the success of others, be an excellent team member, and let others know your intentions are positive and benign. I call this ‘making deposits into the bank of goodwill and social capital’. If you’ve got a healthy deposit on account at this particular bank, when you need to step into the ‘withdrawal queue’ and ask for help from others in achieving your objectives, you will find that influencing across occurs naturally and easily.

The more senior you become in the workplace, the more critical influencing down will become to your long-term success. You

may be put in charge of a team of lawyers and other professionals, all of whom will need to collaborate with you to achieve essential outcomes. Again, goodwill is critical here. Get to know each and every team member, take note of their unique contributions and let them know how highly you value them. This is all part of cultivating and retaining high-potential employees, and as someone who manages other people, you must always be investing in the success of others. It never stops; you will never arrive in this regard, so embrace the journey. Building loyalty and trust is a key component of influencing down; your team must fully believe that you always ‘have their backs’. If the work of those you manage is sometimes repetitive and even boring, you would be well-advised to articulate why and how such work is critical to the team’s overall mission and success; what is it that makes even the most pedestrian work meaningful and compelling? A little bit of ‘creative inspiring’ can go a long way in influencing down.

Interestingly, I have noticed that those who work in the not-for-profit sector, such as non-governmental organisations, are often highly skilled in the art of influencing. Because they frequently work with volunteers and donors, over whom they have no authority, they must deftly use influence to obtain results, while avoiding being viewed as manipulative. Perhaps those who work in the business sector can learn something from the not-for-profit sector in this regard. You might want to consider this the next time your workplace is designing a leadership development programme, or the like, for high potentials. What can lawyers learn about influencing while working as volunteers?

Ultimately, influencing, like many other capabilities, truly is an art and not a science. You must rely on your intuition about people and situations to get it right. You must be genuine and honestly motivated by a desire to support the success of others and attain meaningful organisational outcomes. If you do so, I expect your scope of influence will be extensive and robust.

One final thought. If you have any comments, questions, or thoughts about this article or other articles I’ve written for NZLawyer, I’d be delighted to hear from you. Please do be in touch if you’re so inclined. You can contact me at www.emilymorrow.com

Emily Morrow, BA (Hons), JD (Hons, Juris Doctor), was a lawyer and senior partner with a large firm in Vermont, where she built a premier trusts, estates, and tax practice. Having lived and worked in Sydney and Vermont, Emily now resides in Auckland and provides tailored consulting services for lawyers, in-house counsel, and law firms focusing on non-technical skills that correlate with professional success; business development, communication, delegation, self-presentation, leadership, team building/management, and the like.


exhibiting value

In-house counsel often have to justify their value to companies who may fail to recognise their importance. The role of internal legal counsel has been

subject to criticism especially in today’s harsh economic climate and there has even been debate regarding the necessity of in-house legal departments. The financial crisis has put pressure on in-house lawyers to be more cost-effective and to offer more value for money, as many companies are feeling the squeeze. Surveys such as Nabarro’s 2011 Report General Counsel: Vague about value? (Nabarro Report) and the ValueDynamics study and leadership toolkit by AddleShaw Goddard published in April 2013 (ValueDynamics Study), look at several different factors relating to both the financial

benefits of in-house counsel as well as the non-monetary value to the business as a whole.

Globally, executive management structures of companies question the high cost of legal departments outsourcing work to external counsel, as they expect all legal issues to be dealt with internally. While many in-house counsel handle low-level matters themselves, they may lack the resources and expertise to deal with more complex or specialised legal issues. Outsourcing and internal costs are at the heart of the debate on cost-effectiveness; however it is important not to ignore the other factors which make in-house lawyers integral to a business such as technical skills, innovation, and simply measuring performance.

An interfaceIn-house counsel have the advantage of being both in the legal profession and part of a company. They not only have an insight into the company and are familiar with its aims and interests, but are also legally trained and understand the workings of external law firms providing an interface between the two worlds. In-house counsel are important in avoiding expensive litigation by offering a regulatory function and mitigating risk.

Hidden ValueThere are opposing views on the significance of the contribution that in-house counsel make to the commercial value of a company. A number of respondents to the

What is the Non-Monetary Value of In-house Counsel?Natasha Mellersh finds that showing ‘value’ is key for in-house legal teams


exhibiting value

ValueDynamics Study noted that while there is a substantial input by in-house counsel to the commercial value of a business, many respondents felt this is often overlooked. In an article in LegalWeek explaining the findings of the study titled The importance of understanding differing priorities on 07 May, Tim Hamilton, a corporate partner at Addleshaw Goddard said: “One of the most surprising findings from our study was how undervalued some GCs feel within their organisations.”

However, Hamilton also added that this was sometimes due to a lack of communication on the part of in-house counsel. “[A]nother key insight was that GCs do not always report the full picture about the value that they add to the business. “

The physical and psychological proximity of an in-house legal team to the business is undeniably beneficial. By identifying risk, in-house counsel sidestep costly legal wrangling, although ‘avoided problems’ are naturally not flagged by the company as money saved. In-house counsel strive to keep the goals of the company in mind, serving the interests of the business, identifying risk before it threatens, and knowing when to bring in external counsel. Numerous respondents to the Nabarro Report said that they strive to constantly improve their understanding of the business.

“Our first priority is obviously to understand the commercial objectives of the business. This applies to the in-house team and also to our external lawyers. I look for an active interest in learning about our business. The best way is just to ask questions – most people love talking about their job,” said one respondant.

Nevertheless the traditional roles of in-house counsel are changing but the rigid image of lawyers is still widely prevalent, as Intelsat assistant in-house counsel Robert Cummins notes in the LegalWeek article Business brains – how in-house lawyers can become more influential in the boardroom (19 Apr 2013) that “[l]awyers normally aren’t seen as people who can show the way forward for a business – we are seen as reactive and retentive, rather than proactive or creative.”

Promoting the value of the legal teamCommunicating and building key relationships on the business side is key to promoting the value of the legal team to senior management. Almost all respondents to the Nabarro Report emphasised the importance of understanding the commercial objectives of the business.

According to the report, commerciality was seen to be the single most important factor in recognising the value of the legal team. In an article in LegalWeek titled The ValueDynamics leadership toolkit on 22 April, Tim Hamilton, a corporate partner at Addleshaw Goddard said that “GCs need to be aware of how the advice that they deliver adds to the success of an organisation - and not to be afraid to communicate this contribution to the executive board.”

CommunicationCommunication is seen as a key non-legal skill by in-house counsel. In addition to explaining complex legal issues in relation to business decisions within the company, in-house counsel play a crucial role in effectively, and concisely, communicating the goals of the business client to external counsel. Conversely it is important to note that the ability of in-house counsel to disregard any ‘legalese’ and to speak the language of the company. In the LegalWeek Business brains article Kellogg Europe chief counsel Orla Muldoon commented: “As a lawyer, we have a unique know-how that others on the board may not necessarily have. But the way to channel it is to talk financials – the language CEOs understand.”

Changing rolesIn recent years the function of in-house counsel has shifted from being strictly legal to a more business-focused role. Many in-house lawyers are interested in expanding their role into the field of business strategy and decision-making. The Nabarro Report indicated that only three per cent of in-house lawyers are involved in strategic decision-making in the top tier of a company, however it concluded that in the current climate there is a greater possibility for in-house counsel to assume a more central role within a business. A small percentage of those asked, felt it was not up to them to focus on the commercial side of the business at all, as this goes beyond their legal function. “I do not think it is our job to have a commercial impact. We are here to be legal advisers not business people tasked with making money. Our role is to advise and to mitigate risk,” a respondent noted.

Measuring PerformanceIn-house counsel are, at times, and rather unfairly, perceived as being superfluous. There is a wide consensus among in-house counsel, that there is a need for legal teams to measure their value and efficiency. This is not only to keep track of their own

performance, but also to convey the value of their work to the company. There are suggestions on how this can be done, from measuring performance internally and compiling annual reports to using Key Performance Indicators (KPIs).

KPIsThe Nabarro Report found that only 21 per cent of in-house counsel measure the performance of their legal teams with KPIs, however it is still a significant measure as its use is on the rise. As well as making it easier to justify the existence of a legal department, the report suggests that measuring performance can help the legal team align itself more closely with business strategies.

Although KPIs are still relatively new to in-house legal departments, according to the report 14 per cent of in-house counsel were planning to use them to measure their performance in the future. This indicates that there is a growing interest to use such methods in demonstrating value to executive management teams of a company. Further development of these indicators could prove largely beneficial to communicate the overall value – monetary or non-monetary – of in-house lawyers in relation to the business.

The future of in-house counselMany businesses do not fully understand what the legal department actually does, and are often unaware of what business-minded lawyers are capable of. The recent surveys of in-house counsel reveal that although the monetary value remains a key concern for CEOs there is increasing awareness of the broader significance of in-house counsel.

The unique and pivotal role of in-house counsel within companies and in regard to external law firms, can make them multifaceted, and essential, even outside of their legal function. Even though only a small percentage of in-house lawyers are at the highest levels of the business decision-making process, this could shift in the next few years. There is a growing trend of in-house counsel wishing to gain greater influence in the decision-making process. The reports also suggest that it is important for counsel to show what they contribute, as there can be a disparity in the perception of their work and the reality. As the role of the in-house counsel continues to evolve in changing economic climates and fluctuating work loads, one thing is clear the nature of their position allows them to ever adapt to the unexpected and this is an asset in itself.

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