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Searching for Stability

A country mired in political football, Iran is still finding its feet again following years of tumult. With investors collectively holding their breath as the latest skirmish between the USA and Iran plays out, the country’s prospects for economic development are in a holding pattern. But behind the political theatre lies a country well placed to carve its own path to prosperity thanks to an enormous and highly educated population, robust economic and legal infrastructure, and a wealth of natural resources – all factors which, in the absence of political uncertainty, should be more than enticing to investors around the world.

Sanctions

Iran counts itself among a number of countries hit with targeted sanctions from the United States. At the heart of the current slate of sanctions is Iran’s insistence on pursuing a uranium enrichment programme, a move that some in the international community fear is serving as a precursor to the development of nuclear weapons. Negotiations between Iran, the US and the UN led to the limiting of Iran’s nuclear programme in exchange for reduced sanctions. But the so-called US-Iranian nuclear deal was famously collapsed by Donald Trump withdrawal of the United States from said deal and the reimposition of sanctions. The sanctions affect Iran’s automobile, gold and steel industries, as well as (most importantly) its oil industry.

While the sanctions, at least in the US, have been hailed as a political success and devastating to Iran’s economic capabilities, the reality is more nuanced. The chief effect of the sanctions it that the country’s oil output has declined, which has reduced the government’s revenues and, by extension, its ability to invest in much-needed infrastructure. Long touted as a ‘resistance economy’, Iran is undoubtedly feeling the pressure, though one only has to look as far as the other targets of the United States’ financial wrath – the likes of Venezuela – to see how much worse things could be. Still, the World Bank has ranked Iran towards the bottom of its projected economic growth rankings for 2019 – only being saved from the very bottom by Nicaragua – and the price of basic items has, in some cases, tripled in the past year, providing further cause for investor anxiety, as social discord can only increase under such conditions.

The effect of the older sanctions has been to stymie the overall development of Iran, at a time when other emerging markets have been able to pull ahead and enter a class of their own. Majid Sadjadi, founder and CEO of Iran investment firm Rostam Capital, compares Iran to another one-time emerging market: ‘China is celebrating its 70th year now, but until 20 years ago they were way behind the Iranian economy if you look at it as an investment destination. For Iran, it’s just a question of getting it done and accelerating it.’

The degree to which these latest sanctions have affected the Iranian economy depends on who is asked, but the indefinite nature of the sanctions and an apparent diplomatic stalemate between Iran and the US has investors holding their breath, awaiting some signs that the country is past the threat of further instability or worse, war.

‘Clearly, it’s a difficult market,’ says Richard Adley, CEO of First Frontier Capital. ‘There’s no way of getting around it – the sanctions aren’t making things any easier and yes people are turning away, but equally, that doesn’t mean there aren’t opportunities – companies still need financing, and the economy still goes on. Yes the currency is devalued, but the reality is it has stabilised and, for the moment, it isn’t getting worse. And it’s probably not going to get worse – it’s just a matter of how quickly it’s going to get better.’

Not Like Other Economies

Like many economies in the region, Iran’s is largely built on oil and gas production – but the specifics of its construction mean that Iran may be better positioned than its close neighbours to take advantage when the doors to foreign investment finally open fully.

‘People always think of the country as oil-dependent, but around 70% of the GDP is non-hydrocarbon,’ explains Sadjadi. ‘The majority of the government revenues are hydrocarbon, so there’s always confusion. But it is a different economy to many of the others in the region – hydrocarbon is a minority part of it.’

It is this economic fact that has saved Iran from the fate of Venezuela, which is crumbling under US sanctions on oil due to the government’s reliance on oil exports for revenue.

Another factor that distinguishes Iran from past examples of emerging markets in the region, or current examples of emerging markets around the world, is that the country enjoyed a bustling economy long before the scandal and political animosity that has been present from the 70s onwards. Unlike others, there are decades of pre-established processes and infrastructure – physical and otherwise – to lean on.

‘Iran isn’t an emerging market – it’s a re-emerging market,’ says Sadjadi. ‘When we worked China, or countries in the former Soviet Bloc, you had to wait for industrial and economic infrastructure to be developed before you could do much. All of those exist in Iran – they just need to be brought up to international standards.’

‘You have foreign investor protections – legally, you’re very well protected,’ adds Adley. ‘It’s an economy and a country that is re-emerging, rather than emerging. It has had previous good relationships and development that has gone on, they have still maintained good relationships with parts of Asia and Russia.’

‘Some of the technology and technical infrastructure may be creaking at the seams or underinvested, but that’s more of a bandwidth problem rather than a functional, basic operational capacity.’

‘There are many enablers for the Iranian economy,’ argues Sadjadi. ‘It has 10% of the world’s crude oil reserves, along with gold, platinum, LNG – and all of this needs to be extracted efficiently. Iran had state-of-the-art technology 30 years ago, but very little new investment has been able go into them because of the sanctions.’

It’s the holding pattern, imposed by the aforementioned sanctions and general uncertainty, which functions, in large part, as the true ceiling to Iran’s development in the coming years. While the UAE and Saudi Arabia are thinking about large-scale economic diversification and modernisation initiatives, Iran is still waiting to see how its complex diplomatic problems shake out before uniting behind a comprehensive vision for the future.

‘It’s very hard for them to have a long-term vision because they don’t even know where they are day-to-day or week-to-week. So you don’t have that big clear picture,’ says Adley.

Human Capital

This uncertainty has meant that Iran has not enjoyed the influx of wealth and human capital into the economy that other Middle Eastern nations have; a factor that is economically limiting in and of itself. But, unlike certain other economies, Iran has a population of over 80 million, many of whom are highly educated – so there is already plenty for business to leverage off.

‘It’s a real economy,’ explains Adley. ‘80 million people with real domestic people – that 80 million is not like the UAE or Qatar, where it’s made up of expats. It’s a real, domestic, functioning economy. So there’s less of that need to follow the Saudiisation or Emiratisation that’s going on, because the nature of the demographics isn’t the same… it’s a real economy that functions and it has real exports and real production other than the hydrocarbon.’

Iran is still waiting to see how their complex diplomatic problems shake out.

‘The country needs to preserve its human capital,’ says Sadjadi. ‘It is one of the highest educated rates in the world, and much of that is in the science and tech areas. Ordinarily, you would need to wait a generation to produce that in a newly emerging economy, as opposed to Iran, which is a re-emerging one.’

Local human capital notwithstanding, there are things to be said for fostering a multicultural, international workforce.

‘The whole international business environment, it brings a lot of new learning,’ explains Mozhdeh Pourmand, managing partner at Andisheh Consultancy Firm in Tehran. ‘It’s not only technology – it’s the know-how: how to work, how to improve, how to develop. I have seen the difference – especially now I’m working with a state-owned holding and at the same time working with multinational companies – and I can see the difference in every inch of the business they are doing: the efficiency, the integrity, the transparency of the work. So as a personal wish, I think that would be a door for improving the whole country’s economy.’

Under Sanction

In Iran, having a permanent in-house counsel isn’t common. Outside of the large, state-owned enterprises, many businesses choose to rely solely on external advice, or even make use of external in-house specialised advisory services. Mozhdeh Pourmand is the managing director at Andisheh Consultancy Firm, which provides external, in-house legal services.

‘In most companies, they do not have very much in the way of a legal department. The contract is usually handled by the procurement department, so unless they face really big issues, they do not have that intention to go to a lawyer. But, there is an exception – the state-owned companies, they do have an in-house department, all of them,’ she says.

In iran, having a permanent in-house counsel isn’t common.

‘I think it is because of the size of the businesses and the nature of the work they are handling. They’ve got the budget from the state and there are a lot of internal audits that come with that – one of the requirements for them is to have a legal department to be able to respond and cooperate with the auditing.’

Given the kinds of issues likely to be faced by companies operating in Iran, this may be surprising – especially given the increasing extra-territorial reach of anti-corruption, anti-bribery and data protection regulations, as well as the much-needed modernisation of legal infrastructure that is somewhat underway, but expected to boom if sanctions are lifted and Iran’s economy begins to improve.

‘There are increasing regulations in each sector, but that has a cost – so you have to see an economic benefit to that cost,’ says Sadjadi.

‘That’s what is being held up. Everyone knows it has to be done – the regulatory infrastructure has been out of touch for the past 30 years compared with international ones – so there’s a lot of catching up to do on the legal structures enabling trade, foreign ownership, and various things like protection of foreign investments.’

Given all of this, an underdeveloped in-house ecosystem is not ideal. Pourmand sees a shift on the horizon, however, one which she hopes will see increasingly educated and innovative law graduates push the profession in Iran forward.

‘One thing that comes first to my attention is the change in the fresh graduates becoming junior lawyers. In contrast with my time, many fresh graduates know English, so they try to use English and Arabic together with use of technology to access new concepts of law and, usually, these new legal concepts are linked to the business,’ she says.

‘What I am hoping and what I am seeing is that, maybe in the next ten years, we have more attorneys whose state of mind is more similar to the European lawyers or even others around our region – not that old-fashioned litigator working solo and not pursuing any self-improvement.’

Still, as with much of the business world in Iran, such change is stymied by the same factors: lack of maturity in the business environment, together with geopolitical uncertainties.

When to Strike

While sanctions on Iran damaged the economic outlook for the country (the World Bank’s forecasted growth for Iran was revised down to -4.5% after the US reimposed sanctions), there is a sense that these will not last forever. If the pre-sanctions growth estimates are any indication, when the day comes that the sanctions are lifted, there are blue skies ahead for the country. Because of this, optimism is easy to find.

‘Firms who are already into Iran and that wanted to disengage, generally have disengaged a long time ago, and it was almost a knee-jerk decision. We certainly see that the rate of attrition is slowing down now, so it’s down now to a trickle of people leaving rather than a flood and, at the same time, people are now more receptive to the idea of business. So the mood has switched from negative to neutral, going toward the more positive end of neutral,’ says Adley.

‘Emerging markets, by their nature, are volatile. Historically, in emerging markets there was a continuous revolution or political changes and what you’re seeing is a certain stability, even if it’s autocratic rule, but at least the stability you’re getting. Whilst it may not be attractive to us in the West or what developed markets would call an ideal scenario, at least some of these markets have stability. And, with stability, you have a clear investment horizon.’

This feature is an extract taken from the recent GC special report – Middle East Regional Insight. To read more of the report visit gcm.ag/ME_Insight

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Horizons: Global trends in employment law Edition 4: The modern employee? Contingent workers and the future of employment

The global contingent workforce has been driven by demand, with both businesses and workers enjoying the flexibility it affords. However, the use of contingent workers can pose challenges for businesses, unions, workers and regulators. As business models change and the numbers of freelancers, contractors, consultants, temporary agency, on-demand and gig workers grow, strains on the traditional employer-employee model can sometimes be played out in litigation, protest and regulatory change.

All employers using contingent workers globally, not just gig employers, need to be aware of these new developments as the risks arising from misclassifying non-permanent workers, particularly the self-employed, are evolving. That said, the compelling benefits to employers and workers of mutually acceptable flexibility means that these developments are likely to deepen rather than diminish over time.

While governments in different countries welcome the development of new ways of working that help increase economic activity, and so are wary of unnecessarily constraining new ways of working, some are responding by typically focusing on two issues: how to protect lower-paid contingent workers by strengthening their rights and how to stem tax shortfalls associated with the rise in self-employment, particularly amongst higher-paid, specialist freelancers. For example, in the UK, the government has confirmed that it will make employers more accountable for assessing the application of, and potentially paying, employment taxes where they engage some ostensibly ‘self-employed’ contractors and new EU legislation establishes minimum rights for those working unpredictable patterns.

Not just the gig economy

A contingent worker is a person who works for a business, but is not employed permanently by it. Typically, such workers are used to provide short-term or on-demand resource and specialist skills. While contingent workers’ rights differ depending on jurisdiction and the type of arrangement, they are distinct from employees under open-ended employment contracts. Unlike indefinite employees, they generally have fewer employment rights and benefits and they can offer flexibility, lower costs and other advantages to businesses. However, these arrangements do offer the contingent worker a chance to access work in a way that complements their lifestyle and their domestic commitments.

Across many countries, when assessing whether a contingent worker is an indefinite employee or, for example, a self-employed contractor, there is a surprising similarity of approach (see box: Typical global factors in employee status). However, greater convergence is beginning to emerge, spurred on by new gig workers in some countries and also by the global increase in other contingent workers, such as self-employed consultants and freelancers.

Both trends have highlighted the challenges when determining contingent worker employment status for the purpose of identifying their workplace rights and employer tax, social security, vicarious and other liabilities.

Recent developments

Reflecting these challenges, we have seen litigation seeking to re-characterise non-employee contingent workers as employees, governments introducing new legislation to make the use of contingent workers more expensive or difficult, as well as trade unions and workers organising collectively, in order to protest and to file misclassification claims. Despite these measures, it is clear that there remains a strong appetite amongst workers and employers to use contingent working arrangement and so, despite these challenges, it is difficult to envisage a future without them.

There have been victories and defeats for contingent workers and their unions, as well as employers testing the status of various working arrangements in different countries. In the UK, claims brought by platform taxi drivers and couriers have generally succeeded, subject to pending appeals, while similar claims in the US have had less success for workers, although this has varied by state. In Spain, France and the Netherlands, there have been successful misclassification claims, while some similar claims in Italy and Brazil have failed. Some of these court cases have been accompanied by strikes and protests.

The variety of case law outcomes illustrates the difficulties faced by the courts when applying sometimes old employment status definitions to modern workplaces. Each case turns on its individual facts, making it challenging for employers to draw lasting insights.

It is difficult to envisage a future without contingent working arrangements.

Governments and regulators, concerned at a decline in tax and social security contributions, and recent misclassification litigation, have also proposed new laws to address the use of contingent workers.

For example, California recently agreed landmark legislation to determine whether a worker is an employee or an independent contractor, following high-profile misclassification case law in 2018. Other US states are expected to focus on the classification of contingent workers in 2020. This activity is unlikely to be consistent, with some expected to favour business, by classifying some contingent workers as independent contractors and not employees, and others taking a more protectionist stance.

Canada, Australia, Ireland, the EU, UK, Finland, Russia, Czech Republic, Germany, Italy, France and Romania are proposing, or have already finalised, policy changes. These differ by country but, typically, include one or more of the following: greater restrictions on the use of temporary agency, fixed-term or zero hour workers; increased unemployment social contributions for fixed-term workers, new scheduling rights including minimum advance notice for shifts; minimum or equal pay for some contingent workers in relation to employee counterparts; stepping up state labour inspections or enforcement; applying discrimination and harassment laws to contingent workers; reversing the burden of proof and redefining the legal definition of employment status; or requiring businesses to assume greater responsibility for social security or tax contributions where they engage certain self-employed contingent workers.

Managing contingent worker risks

Given these recent developments, managing contingent worker misclassification risks has become a moving target, particularly across multiple countries, each with differing litigation outcomes and policy responses.

Local disputes over whether contingent workers should have received employee pay and benefits have also distracted from additional, potentially serious risks. For example, in many countries the distinction between employees and non-employee contingent workers is highly significant in terms of employer tax, social security and other obligations and has also become a PR pressure point, as follows:

  • Reputation: employers accused of using sham contracts to deny workers their employee rights have attracted adverse public attention.
  • Financial: where misclassification claims are successful, they can lead to governments seeking unpaid employment tax, pension, severance and social security payments, as well as employer exposure to vicarious liability for workplace accidents and the triggering of wider employee rights (such as those on business transfers or upon termination).
  • Operations: business models making extensive or strategic use of contingent workers may be threatened or need operational restructuring where employee status is misclassified.
  • Establishment: in some countries, where an agent or consultant is engaged to represent a foreign employer, misclassifying their employee status may trigger legal requirements to establish a legal entity in that country in addition to immigration complications.

Typical global factors in employee status

In broad terms, the factors below feature in many jurisdictions when deciding whether a contingent worker has been misclassified, although not all may apply, some may be prioritised over others and regulators are stepping in to propose change.

In a minority of countries, an intermediate employment status exists. This, typically, is a third category of worker and sits between employees and independent contractors, with less protection than employees but more rights than independent contractors.

Global factors for employee status*

  1. Personal service
  2. Works in a subordinated position
  3. Dependent on employer for work
  4. Degree of control exercised by employer
  5. Terms of agreement: hours of work, place of work, regular pay, termination
  6. procedures, minimum wage, benefits such as paid holiday, family leave,
  7. pensions etc.
  8. Integrated into employer’s organisation
  9. Open-ended or long-term relationship

Global factors against employee status*

  1. Can send substitute
  2. Runs own business
  3. Works for others and takes on financial risk
  4. Free to decide whether/how to do the job
  5. Terms of agreement: paid per assignment or for services rendered, pays own
  6. tax and social security, not entitled to employee benefits, has own insurance etc.

* There are country differences and specific advice should always be taken

Tips when using contingent workers globally

Do:

  • Consider conducting an audit of business needs
  • Limit the duration of assignments
  • Comply with agency worker (leasing), fixed term and any other special contingent worker rules
  • Take advice when drafting terms of engagement, keep them updated and ensure they are applied in practice
  • Maintain separateness (do not integrate them into the organisation)
  • Keep up to date with misclassification case law and regulatory changes

Don’t:

  • Re-engage contingent workers for long periods
  • Treat them the same as permanent employees
  • Exercise day-to-day control, including instructing when, where and how they work
  • Allow them to become economically dependent or integrated into the workplace
  • Require exclusivity

How are businesses responding?

Responding to these evolving challenges requires a nuanced approach. In some sectors and countries, both workers and businesses are embracing the benefits of contingent working and demand is growing. But, a different approach may be needed elsewhere.

In our experience, a prudent first step is to conduct a legally privileged audit of the relevant business model to identify how best to resource its needs, using a mixture of permanent, temporary and contingent labour, which will minimise the risk of litigation arising subsequently.

This should be undertaken in the light of the organisation’s appetite for risk, particularly reputational risk, and whether they prioritise a single global policy over separate, country-led practices.

Identifying risk, informed by an assessment of the company’s use of contingent workers in each jurisdiction, is an important step. Where risk is high and/or an employer is risk averse, it may decide to adopt a policy that strictly controls or limits the global use of contingent workers, for example, ruling out certain types of contingent workers, mandating terms and conditions, or requiring senior executive approval for their recruitment.

However, such a strict response is not feasible or practical for many businesses. Where this is the case, we see businesses flexing their contingent worker approach having conducted a risk assessment. For example, they may take steps to change contingent workers’ terms and how they are used in the business, reduce their numbers in higher-risk areas, ensure indemnity and arbitration clauses exist where appropriate, and redesign staffing models in some business activities or countries (see box: Tips when using contingent workers globally). Keeping abreast of case law and regulatory changes, and being prepared to adapt in response, are also important when taking this approach.

A prudent first step is to conduct a legally privileged audit of the relevant business model.

Finally, a word of warning to those businesses seeking to fashion a watertight contingent worker contract to prevent status misclassification. Many countries give prominence to substance over form, meaning that the facts and the real nature of the contingent relationship are analysed when assessing employee status, meaning that any written agreement is not determinative. As such, ensuring that line managers understand the significance of their day-to-day interactions when using contingent workers is as important as investing in legal drafting.

The compelling advantages to businesses (and in many cases workers) of contingent working arrangements mean that the contingent workforce is here to stay. Provided businesses review carefully why they are using contingent workers and ensure that their documentation, processes and risk assessments are reviewed regularly, this will continue to offer them a pathway to managing labour costs effectively whilst enabling their contingent workers to control how and when they access work in conjunction with their other commitments.

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Risk and Litigation Survey 2019

Setting the agenda

For the vast majority of organisations in the UK, the appetite for risk remains a factor that is set at the board level, as reported by 76% of those who took part in our research. While an increasing number of general counsel do have a seat at the board, the tendency to split the general counsel and company secretary roles in the UK – more so than in other jurisdictions – means that while most will offer an advisory role, direct input into the final decisions on risk appetite remains the exception, rather than the rule.

Where general counsel more commonly play a role is in setting the litigation and regulatory risk frameworks, although this was still largely the responsibility of the board in organisations. For the 77% of respondents who reported that their company had a risk management framework that covered litigation and regulatory risk, 46% said that this was set by the board, compared to 36% who reported this was a responsibility of the general counsel.

Companies where the general counsel was responsible for setting the regulatory and litigation risk framework were much more likely (62%) to cite data-related issues as a primary source of risk for the business, than for those whose framework was set by the board (40%). Organisations with a general counsel-led framework were also less likely to point to reputational and PR issues as a source of risk (20%) versus those where it was set by the board (43%).

General regulatory risk was the most frequently cited source of risk for respondents. Of the 201 total respondents surveyed, 108 said it was a source of risk for their business, with many pointing to a swathe of new rules and regulations muddying the waters for general counsel when advising their businesses.

What are the biggest sources of litigation or regulatory risk facing your organisation?

‘[There has been a] wealth of new regulatory requirements introduced – market abuse regulations, Modern Slavery Act, gender pay reporting requirements, GDPR, payment practices reporting requirements, revised UK Corporate Governance Code, revised payment services directive and new ePrivacy regulations,’ says Sara Mackie, group general counsel of French Connection.

‘Navigating what these requirements are and ensuring we remain compliant is becoming an increasingly complex task.’

A number of general counsel also made reference to changing policies of enforcement for existing regulations, which means that a lack of predictability is creating new risk to be accounted for. One general counsel working in education surmised new enforcement standards for their industry as ‘an increasing reliance on using compliance as an assurance system by central government agencies.’

Freeths Comment

‘There’s no doubt that over the last 18 months or so our clients are seeing not only a wider spectrum of litigation and regulatory risks emerging, but also increasing frequency of those risks crystallising into situations that need to be addressed and resolved.’ – Philippa Dempster

‘Over the next 12 months we expect the trend to continue; for example there will be more drivers such as litigation funding and technology being used with increasing sophistication to launch group actions against corporates.�� – James Hartley

More than 18 months on from the introduction of GDPR, data-related issues remain a concern for a number of general counsel, with 106 respondents citing it as a primary source of risk. Many noted that GDPR had been a wake-up call for their business and had led to more stringent policies and controls internally, while at the same time increasing awareness to the inherent risk apparent to a degree that most hadn’t previously been appreciated.

With the research for this project focusing purely on general counsel based in the UK, perhaps somewhat surprising was the relatively small number of general counsel who reported political risk as being a major source of risk for their organisation (24 respondents). While the uncertainty caused by Brexit – both for business confidence and from a regulatory standpoint – was frequently brought up by those who cited political risk as a concern, most general counsel say they are taking a ‘wait and see’ approach.

Taking responsibility

While it remains rare for general counsel to be directly responsible for setting the level of risk tolerance for an organisation, the overwhelming majority of respondents (85%) said that as the general counsel, it was under their purview that litigation and regulatory risk ultimately rested. For a number of those who participated in the research for this report, they viewed taking on that responsibility as an opportunity to demonstrate their value to the wider business.

This highlights an interesting dichotomy – on the one hand general counsel tend to have the responsibility for regulatory and litigation risk, but on the other hand it is usually the board that sets the level of risk appetite and the framework covering the risks.

‘It does enhance my position to be viewed by the organisation as someone who is able to predict, pre-empt and manage risk dynamically,’ says Ben Watts, general counsel of Kent County Council.

‘I am seen as someone who manages the disaster or difficult situations, and am able to gain control and create opportunity from that.’

Another general counsel – who was not authorised to comment publicly – noted that in some instances, regulatory and litigation work could be turned into a business driver.

‘It does pay to be seen as a risk manager rather than preventer, challenging the notion of what is a problem and what is an opportunity for business benefit,’ they say.

‘For example, we have been net profitable in general litigation this year, thanks to identifying opportunities and subsequently, pursuing them through the hard work from our disputes and litigation team.’

The ability to take on this role, however, did vary by sector. Those working for businesses that involved sensitive or highly regulated products and services, or those involved in public procurement, were more likely to have responsibilities for risk divested across multiple functions.

When responding to a risk that has eventuated, what should be the first priority?

‘Having both a pragmatic approach to risk and a broad view of the various factors in play, with a focus on delivering viable solutions, can enhance our reputation as counsel,’ says one general counsel from the construction sector.

‘But in our case, government approval is often necessary and that does not always result in a logical outcome.’

When assessing risk, the use of risk matrices was by far the most frequent method employed by general counsel, with 182 of those surveyed indicating it was a part of their personal and organisational toolkit. GCs tended to develop those matrices internally too, with only 16 respondents saying that they used external consultants for this purpose.

The use of external consultancies (not including law firms) in assessing risk was the second most popular method used by general counsel, with 40 of those surveyed saying that they have played a role.

While still representing a small proportion of the overall market, the use of AI-assisted tools across a range of business functions is gradually becoming more popular. While only 11 of those surveyed said that they were currently utilising AI solutions pertaining to risk, a number noted that technologies including cognitive analytics, data mining, machine learning, language processing and predictive analytics were either on their radar or being considered for use within their organisations.

One of those already utilising AI solutions for risk management was Jimmy Elliott, general counsel – Europe at the SAS Institute, who noted that while these tools present opportunities, they also came with their own set of risks.

Freeths Comment

‘Risk-management solutions, such as “Freeths Protect”, can be invaluable for businesses to evaluate a risk situation and formulate a route map for a controlled resolution.’ – James Hartley

‘Ethical data science and the use of AI have to be considered as a source of risk. We are an analytics company, so customers will look to us for enablement, best practices and governance recommendations,’ he says.

‘As with all risk management though, this also presents opportunities for us to differentiate our services in the market.’

Resource and reward

Anecdotally, it’s common to hear from general counsel that the legal department is increasingly being asked to take on more work, without the required injection of resources to facilitate it. But the results of our survey would suggest – at least when it comes to litigation and regulatory work – that businesses recognise the value and importance of this work.

91% of respondents reported that their legal department was either moderately (56%) or well-resourced (35%) to effectively assess and manage litigation and regulatory risk.

Those who felt that their legal department was well-resourced for handling risk almost exclusively had both their overall risk tolerance (84%), as well as (if applicable) their litigation and regulatory risk frameworks (75%) set by the board. It was also very likely that such organisations had been involved in formal litigation or regulatory activity in the past 12 months (84%)

For those GCs who felt that their department wasn’t sufficiently well-resourced, they were far less likely to have a company risk management framework covering litigation and risk (50%) than their well-resourced counterparts (13%). They were also far more likely to involve external law firms or consultants in their risk assessment efforts (83% vs 26%).

In your organisation, under whose purview does litigation and regulatory risk mostly fall?

Interestingly, the types of risks that general counsel reported were facing their businesses were markedly different between well-resourced and not well-resourced departments, too. Those that weren’t well resourced were much more likely to report reputational and PR risk as a primary source of risk (100% vs 21%) and far less likely to report data-related risk (33% vs 53%) as a concern.

Looking outside

For most of the in-house counsel surveyed as part of this research, the role of external law firms and consultancies in assessing and managing risk was limited. While 38% said that they did use these services in their risk assessment efforts, this was primarily limited to general consultative work. Instead, our research showed a strong preference for keeping as much work as possible in-house when it pertained to risk management.

‘I find that external advice helps to test my assumptions in difficult corners and avoids an echo chamber,’ says Watts.

Those who did utilise external firms in their risk assessment efforts were significantly more likely (70%) to have an established route map agreed with senior management to inform action and decision-making on litigation and regulatory issues, than those who did not (35%).

When a risk had materialised, in-house counsel were also divided in their approach about when the best time to consult or instruct outside was. 20% of respondents said that they engaged external service providers immediately after a risk had eventuated, 25% said that they did so only when a matter had escalated, while 49% waited until the point when they were considering litigation to engage.

Many respondents expressed dissatisfaction with the lack of certainty and predictability of external costs, particularly where regulatory and litigation work was concerned.

‘It is still a change for external law firms to accurately price with certainty across the life span of litigation or regulation work. While elements can be priced, there is a reluctance to fix prices on what might be more uncertain aspects of litigation,’ says David Morgan, general counsel at CPL Industries.

‘Cost is used as a tactical tool in litigation and the inability to forecast cost is a huge problem,’ adds Rolf Althen, group general counsel at Acteon Group.

Freeths Comment

‘There’s an increasingly tricky balancing exercise for GCs – on the one hand they are having to manage an ever widening spectrum of potentially high impact risks, whilst understandably wanting to defer going external until they really need to, because of the still too frequent problem of spiralling external costs.’ – James Hartley

‘We’re finding that our GC clients need a combination of deep expertise and insight, together with cost certainty for each stage of a matter. It is only with this combination that commercial solutions can be delivered which are of real value to the GCs we work with.’ – Philippa Dempster

‘We find that the earlier we get brought into to situations, the more control we can help GCs achieve when it comes to them managing internal decision-making by the board.’ – James Hartley

‘Corporates need to keep horizon scanning in order to pick up quickly on embryonic threats, so as to decide early on how to prepare and how to manage the risk.’ – Philippa Dempster

‘The charging structures of the firms are still in the last century. The litigation process is not controlled sufficiently by the courts; disclosure is still too complex and not focussed enough on the issues.’

When considering the type of provider to use, counsel were also divided. 47% said that they typically used domestic UK law firms, with 35% usually turning to international firms. Somewhat surprisingly, specialist litigation boutiques accounted for only 7%, with a number of respondents indicating that they had no experience using these types of firms.

External assistance

Third-party litigation funding is either a weapon or a tool for GCs. On the risk side, funding is one of the important drivers of increasing numbers of large-scale claims against corporates. Conversely, the ability to hedge litigation risk and bring in cash to fund a claim is attractive to some companies as they can pursue claims that might otherwise be left alone.

That said, one of the more interesting findings as part of this research, was learning just how divisive the issue of third-party litigation funding is amongst general counsel. Only 27% of general counsel supported the concept of third-party funding, with 34% against it and 39% unsure.

In the past decade, third-party litigation funding has become a more prevalent and sophisticated concept in the UK. No longer solely the domain of specialist funders, law firms, investment banks and insurance companies alike have entered the market and offered products relating to the financing of litigation.

‘It is good to have it as an option when there are other cash demands on the business and where it can be an effective way of funding the immediate costs off the P&L,’ says Morgan.

‘In certain circumstances it could be a significant benefit to a business, effectively taking away the negative financial impact of an adverse result and allowing a claim to be included as a business asset, freeing up investment in business opportunities and growth rather than legal costs,’ adds Tom Marke, general counsel for Europe at Multiplex Group.

‘On the flip side, funders require a strict budget/recovery ratio and good prospects of success. Why would you go to funding if you have good prospects and have to split recoveries with another party?’

Do you support the concept of third-party litigation funding as a benefit to your business?

While the issue of third-party litigation funding was divisive – particularly amongst those who said they had used it before – what stood out was the overall lack of experience most respondents had with using it.

While there were benefits apparent for mitigating risk for substantial disputes, a number of general counsel were apprehensive about ceding any control over litigation by bringing in a third party. While funders are prohibited from taking over litigation and exerting undue influence or control on proceedings, the loss of any autonomy when handling legal proceedings was prohibitive for a number of those who participated in our research.

‘I don’t think it would be considered by our board as appropriate, as it would wish to retain control at all times,’ says one general counsel from the healthcare industry.

‘Third-party funding introduces unnecessary complexity and control issues. It’s much better to bear the cost, keeping things simple and fully understood, while retaining control of the proceedings,’ adds one general counsel from the food and beverage sector.

Freeths Comment

‘We have certainly seen an uptick in the use of third-party funding to launch claims that would otherwise have died. There is still a lot of capital out there, coupled with increasing proactivity by funders who are spotting big-ticket claim opportunities.’ – James Hartley

‘We’re also seeing quite a lot of activity by US law firms and funders, who can see opportunities in the UK to transfer their successful models over here, particularly in class action litigation against corporates.’ – Philippa Dempster

‘The GCs we work with who view litigation as a financial investment decision tend to be better placed to make decisions on whether funding will be of any benefit to their business. That approach usually answers the question of whether the cost of funding is worthwhile.’ – Philippa Dempster

‘There are usually six key factors that we discuss with GCs to guide them on whether funding would be a good option for their business – it normally becomes self-evident once we have the initial discussions.’ – James Hartley

A number of general counsel noted that solutions such as third-party funding were adding further complexity to the prospect of litigation, with the options available becoming difficult to distinguish and navigate. One general counsel from a major multinational however had the opposite opinion, saying:

‘Certainly things are getting more complex, but I don’t necessarily think that is a bad thing. I think it is up to in-house counsel to understand the options at their disposal and provide effective advice on how to proceed, based on what’s available and what will produce the best outcome for the business.’

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Women in law: Switzerland

Thousands of women took to the streets on 14 June 2019, to protest against Switzerland’s slow progress towards gender equality. The ‘Frauenstreik’, as the protest was called, saw women from major cities including Bern, Geneva and Zurich unite in an effort to campaign against unequal pay and general cultural sexism. The strike comes twenty eight years after the country’s first nationwide walkout, when over half a million women across Switzerland rallied in protest for equal rights.

Despite being one of the richest countries in the world, frustrations around equal pay, accessible childcare facilities and the under-representation of women in management positions, have continued to come to the fore.

The legal profession, like many industries, has been historically male-led. However, with more women attending law school than ever before, GC magazine investigates the reasons precluding women in Switzerland from achieving true gender equality. We sought out the perspectives of prominent in-house counsel who share their thoughts on the legal and cultural barriers preventing gender diversity – not only within the legal profession – but throughout broader society.

A slow start

Switzerland’s economic and political stability has made it one of the most progressive and developed countries in the world. Yet, surprisingly, Switzerland has been slow to address barriers inhibiting gender equality.

For example, women across Switzerland were granted the right to vote and run for office in federal elections in 1971, lagging far behind many European countries, and it wasn’t until a decade later that the Constitution was officially amended to recognise equal rights for men and women. Up until 1985, women required permission from their husbands to work or open up a bank account. In addition, the legislative provisions granting maternity leave were introduced as late as 2005.

As we travel further up the corporate ladder, the representation of women within executive positions significantly decreases.

‘Just over 36% of all management jobs are held by women in Switzerland. This is particularly striking since, internationally, the number of female law students outnumbers males by a significant amount,’ says Raphaël Sergi, group finance counsel at MSC Mediterranean Shipping Company.

Also observing this trend is Christian Müller, general counsel of Mövenpick Holding AG:

‘From a purely economic point of view, the State must be very interested to make women’s careers possible and not lose so many talented and well-trained people on the way up after investing in their education.’

Despite Switzerland’s deep-rooted conservative heritage, Müller believes it is important to strive towards gender equality by acknowledging administrative and cultural shortfalls.

���It is a really good question to ask, why do we lose so many women on the way up? There are different answers to that one – but I believe one of the main answers is the systems in place in Switzerland,’ says Müller.

Unfortunately, it is unsurprising then that a profession in the spotlight around the world for a lack of diversity in the upper ranks should face similar problems in Switzerland.

‘We lose talent because most companies here still do not offer women the possibility to stay at home or to drop down to part-time after giving birth. Politically and legally the State should implement better support systems.

‘But things like that need time in Switzerland because our system, in general although it works very well, is slow-moving and changes take quite some time to become effective,’ says Müller.

A balancing act

The legal framework supporting working mothers within Switzerland has not only been slow to develop but, in some instances, remains non-existent. Herminie Simonetta, senior vice president and general counsel of professional beauty and Europe for luxury goods and beauty products powerhouse, Coty, also happens to be a mother of two. She believes that the infrastructure in place to support working mothers is simply not there in Switzerland.

‘The structures are not here to enable women to work. When I had kids, it was very difficult to find appropriate daycare. There was just no room in the few choices that were available, and I was forced to hire a nanny. But not everybody has the means to do that,’ she says.

‘Being a working mother in Switzerland, you are already in the minority. I am originally from Paris and I am always amazed by the amount of people here in Switzerland who ask, “Don’t you feel guilty working?” Part of my success is being very organised. I recognise that Switzerland is not a country where women are pushed to work, although I can see there are some changes happening.’

These sentiments are echoed by Marcella Bruelhart, legal director at Japan Tobacco International, speaking to her personal opinion:

‘Switzerland is a country where women were given the right to vote rather late in comparison to other European countries. Yet Switzerland is a country with a certain amount of wealth. Therefore, in comparison to other European countries, such fact in principle allows one person in the family that is working,’ she says.

‘In many cases it is probably less expensive to stay at home and take care of the kids. Childcare can be incredibly expensive and, in some smaller villages, childcare facilities are not even available. So, there is still need to improve the childcare infrastructure on a public and private level.’

The lack of affordable childcare infrastructure has also forced women to re-evaluate their professional careers. Although there are no legislative provisions driving part-time employment, a number of companies have provided the 80% work week as an option for working mothers. This means that employees can drop the number of hours they work a week by 20%, in most cases turning a five-day working week into a four-day working week.

One person proving that you can both successfully lead a team while working part time is Renate Wey, general counsel wealth management at Mirabaud Group.

The lack of affordable childcare has forced women to re-evaluate their professional careers.

‘You have to show whilst on the job that you have the competencies. I think that having kids should not be an argument for not advancing your career,’ she says.

‘If you prove you can do the job well, I think most companies would prefer to keep you, even though you are only working on an 80% basis. But perhaps I am lucky, because the companies I worked and do work for have always been in favour of the 80% work week. So for me, it is feasible, even though it can get difficult at times.’

Choosing to remain anonymous, an in-house counsel currently working part time in the banking sector says that Switzerland’s conservative traditions means the onus of reducing workloads usually falls on mothers.

‘Switzerland is really conservative. Most couples, when they have their first child, assume that the mother will reduce her working hours.’

‘Somehow it is not socially acceptable for men to reduce their working hours. This is perhaps going to change – especially within bigger firms. Nevertheless, it would not be looked at in a very positive way. Men would have the sigma of “father”.’

The onus of taking care of newborns traditionally falls on women, acknowledges Miral Hamani, director of M&A, corporate transactions and international governance at Hewlett Packard Enterprise. Hamani says it is common for employers to consider whether a new mother will be willing, or able to return to work:

‘Working mothers need to be dealt with on a case-by-case basis. Depending on your needs, there should not be any prejudgment on your capacity to get your work done. As long as you work hard – there should be no questions around the fact that you are a woman, and certainly not around the fact that you are having children.’

Equal pay, for equal work

Of the many concerns surrounding gender diversity in the legal profession is the gender pay gap, which ranks particularly highly in Switzerland. According to the Federal Statistical Office of Switzerland, women were paid 18% less than their male colleagues in 2016. This figure rises to almost 20& for women working in the private sector.

These figures are reflective of a much wider global trend, says Sergi: ‘Globally, it is being reported that women are generally being paid less than men, even when male and female lawyers have similar qualifications and experiences.’

Hamani admits that women during the course of their careers do not know if they are being paid less.

‘The truth is a women would not know, or necessarily realise – and that is the trick – if they are being paid less than a man. That is why it is important to work on statistics and get facts.’

To combat the pay gap, Simonetta suggests that Switzerland looks towards the UK, where equitability of salaries is important. In the UK, the Equality Act was introduced in 2010 in an effort to develop a legal framework aimed at closing the gender pay gap. The legislation gives employees a legal right to equal pay for equal work irrespective of gender.

Supporting him supports her

Overcoming gender representation barriers within the legal profession begins with regulatory reform. For instance,Nordic countries have addressed the parenting divide by introducing legislation aimed at sharing parenting responsibilities. Norway for instance, increased the amount of fathers-only parental leave from ten to 15 weeks in July 2018.

The implementation of these polices is also aimed at changing cultural norms in countries where women are typically considered the primary carers. Following these principles, Switzerland has made some progress towards improving paternity leave regulations.

‘Where we still have some homework to do as a society in Switzerland is in regards to childcare – it’s an area where I believe we are far behind when compared to other countries in the region,’ explains Daniel Schoenberger, head of legal in Switzerland and Austria at Google.

‘It is expensive and not subsidised. By law, maternity leave in Switzerland is only 14 weeks, and for fathers it is only one day.’

However, on 27 September 2019, the Swiss parliament passed a new law which will increase the amount of paid paternity leave from one day to two weeks. These changes, which are set to come into effect in 2020, signal a small cultural shift within Swiss society, though skepticism remains and there is an awareness that there remains a long way to go.

‘I think this change has been good and will bring a certain amount of relief. Though I don’t honestly know how much relief,’ says Bruelhart.

‘This being said, while the compensation levels vary, the length of paternity already exceeds two weeks in numerous countries such as Austria (four), Bulgaria (three), Spain (five) and Finland (nine). Switzerland is following a trend rather than innovating in this area. More generally, this by itself will not change the picture on female diversity – there’s still more to do,’ adds Sergi.

Greener pastures

Although changes to paternity legislation are unlikely to directly shift female diversity numbers, plans to introduce gender quotas on boards of large companies have proven to be effective in other Nordic countries.

‘Lately, there has been some consideration on a political level around company law in Switzerland and the introduction of placing quotas to increase the number of women who sit on boards,’ says Bruelhart.

Women during the course of their careers do not know if they are being paid less.

‘These legislative revisions are not happening tomorrow, rather, they are part of a wider company law reform package currently being discussed in Switzerland. I think this will be a very good initiative, as new laws will raise awareness and trigger structural changes that will allow women to be more present in business life. However, enabling more women to take up leadership positions at the board level and within the management ranks will take time.’

Yet discussions around the introduction of quotas have been indecisive.

‘Usually women who get to a certain level within their career do not want you to actually acknowledge that they arrived there because they are a woman. They want to be acknowledged for working hard and for being deserving of the position they have obtained,’ says Hamani.

Müller echoes this perspective, believing that women want to be recognised for their talents rather than their gender.

‘In my opinion, it is super important to have gender representation. But, at the end of the day, I believe that quotas don’t really help women. This is because women don’t want to be there because they are a woman. Women want to be there because they bring skills and value.’

Initially resistant to the idea of gender quotas, Coty’s Simonetta admits that the evidence supporting meaningful change brought on by gender quotas cannot be ignored.

‘I have mixed feelings about quotas – like everyone – because women who get promoted and get a seat on the board do not want to be there because they filled a quota,’ she says.

‘However, it has been proven that it is one of the best ways to make change. Nordic countries are a great example of this system working. I was against quotas for a long time. But there is evidence that the system is working, therefore it makes sense to consider implementing quotas.’

Glass ceilings are made to break

Switzerland remains one of the wealthiest countries in the world, however its conservative roots have made it slow to rectify gender-based disparities. If recent protests are any indication, more needs to be done to promote gender diversity across not only the legal profession, but across the board.

The lack of affordable childcare facilities supporting working women, coupled with the negative financial incentive for mothers to return to their careers after having kids, has limited choices for women in Switzerland. Yet, despite these barriers, women across business and the legal profession have managed to persevere.

‘When given the opportunity, I think it is important not to prejudge women – I usually ironically say that there is only one kind of man, but there are multiple kinds of women,’ Hamani says.

‘You have women who want to leave their careers because they want to take care of their kids. You have women who have kids and still want to evolve their careers. You have women who don’t want kids and they want to choose whatever suits them. There is no judgement to make, each of these women are right – so long as they have a choice.’

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From start-up to established: Du-ing it the right way

Of the two telecommunications operators in the United Arab Emirates, du (officially Emirates Integrated Telecommunications Company) is the youngest. A publicly listed company, du has a market capitalisation of US$7.5bn, revenues of US$3.4bn, over 2,000 employees and a customer base of nine million. In addition to the usual telecoms fare – both B2B and B2C communications services and broadcasting – it also offers a suite of peripheral services and technologies that encompass blockchain, internet of things, AI and the broad array of digital services required to meet the UAE’s smart city ambitions.

Anneliese Reinhold is general counsel and senior vice president of legal and regulatory affairs at du and, having been with the company since the beginning, has seen it grow – and had a hand in growing it – into the giant it is today.

‘I’ve been here since the beginning and set up the legal department from nothing,’ she says. ‘I basically had a blank sheet of paper and a desk when I started. I built the team up, and we built our profile as one of the leading teams in the region.’

Today, the legal department numbers 12, and a diverse 12 at that: it is comprised of nine different nationalities and over ten languages, 85% female (compared to the company average of 38%), and one disabled employee. But it wasn’t always so well developed, and the journey from the establishment of the company into the effective powerhouse it is now is an interesting one, and one that Reinhold has seen – from the driver’s seat – in its entirety.

Legal Leaders

The team’s status as an in-house leader in the region has long been cemented, having been recognised and awarded by multiple outlets, including the GC Powerlist. Consisting of 10 lawyers and two support staff, the team provides legal support to the entire business, and is responsible for a diverse portfolio and a high volume of work. In 2018, the team was instructed on 1580 new matters and projects, including 900 contracts, by a total of 327 internal business customers across 31 separate business units.

Serving a company as dynamic as du means that the team’s work goes from the purely legal through to any number of the business’s broader commercial projects, and anything in between.

For example, in 2018, as a part of the company’s ‘Customer First’ customer experience transformation programme, du became the first and only telco in the region to receive the Crystal Mark certification, a standard awarded for clarity and simplicity in the terms and conditions offered by du to its customers. The conditions themselves were written by legal, with the push towards applying for the Crystal Mark certification also driven by legal. Reinhold sees this as a clear demonstration of how a customer-focused in-house team can deliver direct benefits to its business’s customers.

‘I’ve been here since the beginning and set up the legal department from nothing.’

‘If you can do things that hopefully alter the customer perception by validating that something that meets (or exceeds) international best practice, that’s important in this market,’ she explains. ‘Customers come from all over the place, bringing with them a wide variety of expectations, so you often anecdotally read in social media that the level of customer experience in the country generally (not just in telecoms) is not as good as it should be. The UAE Government is committed to changing these types of perceptions, and this is something du is keen to support.’

There are also a number of digital initiatives, which flow down from company-level priorities of efficiency and digitalisation. These range from process automation to replace manual data entry and methodologies, through to the implementation of a contract self-service tool for generating standard NDAs and the trial use of AI tools to capture contract metadata.

‘In common with many other legal departments around the world, the difficulty can be getting yourself onto the priority list to have access to these tools. There are so many other processes in the company that directly impact customers where the bang for the time spent by the robotic process automation team might be much bigger,’ she says.

‘But what I managed to convince our internal team about was that while we’re only a small team of 10 people, if we can save half a person’s time a month, that’s a massive benefit for us that can then benefit our 327 other internal customers.’

The Value Proposition

Legal’s approach to NDAs – often an unnecessary burden on resource-strapped teams around the world – is a good illustration of how a legal-backed initiative has been spun into – and demonstrated as – a valuable asset for the business.

Targeted at standard NDAs, Reinhold implemented a self-service tool for the business that would allow internal customers to have end-to-end control over the process for entering into standard NDAs. Last year, the tool generated 260 NDAs, each of which represents one item of work off the desk of the legal team and completed at a faster rate than would have otherwise been achievable.

For the more non-standard NDAs, Reinhold accepts these as an inevitability. But what she has done is outsource these to one of du’s panel law firms – something that, while admittedly requiring an initial leap of faith, she says has been worth doing.

‘It’s a bit scary, but we outsourced it to somebody who had been here on secondment, so we were comfortable that he understood what was required,’ she says.

‘We put parameters around it in terms of time spent, because we need to keep an eye on it budget-wise, as well as giving us the ability to assess whether a law firm is the right provider, or if we may wish to use alternative legal service providers going forward.’

Being able to streamline and automate a necessary but time-intensive task has had numerous knock-on benefits for the company. For one, the quicker turnaround for standard NDAs has encouraged the group’s commercial personnel to see that it is worth convincing clients to sign up to the standard terms, something that Reinhold has seen borne out in the split between standard and non-standard NDAs since the overhaul.

It’s also freed up time on the legal team itself. Whereas these would occupy between 30% and 40% of one team member’s time, they are now largely off the plate of the legal function, freeing members up to focus on more strategic projects for the team and wider business.

One project currently underway is the development of a new contract life cycle management system. While this is a company-wide project, it’s Reinhold who is the executive sponsor. Currently still in development, it is hoped that the project will result in a roll-out of an enhanced and comprehensive contract governance framework, with integrated analytics and reporting capabilities.

‘It will be end to end, from “I have an idea and I need a contract”, to the contract signing, to managing the contract in-life, to the end of the contract. The company will be able, for the first time, to look into that life cycle and see where something has gotten stuck,’ she says.

‘We’ve bought something which was basically out of the box, but needed to be customised, as every company has different workflows and processes. We are almost at the development stage now. The next stage after that is starting to do conference room trials where we actually start to see it in action.’

External Validation

Starting a legal team from a blank slate – especially in a business as simultaneously eclectic and regulated as du’s – was a challenge for Reinhold: one which required a concerted effort towards validation to ensure they stayed on the right track. More than just paying lip service, the legal team at du took a number of practical steps to that end.

‘At that stage, there was no in-house community, so it was important, I felt, to get some kind of external validation for how I set up the department,’ says Reinhold.

‘We organised ourselves and, since 2014, we have been accredited by the Law Society of England and Wales with their Lexcel legal practice management accreditation.’

The accreditation sets out rules and guidelines to help legal providers to raise their standards of service. Under Reinhold, du’s legal team became the first non-UK legal department to gain the accreditation.

‘It gives you a framework and a structure to manage the department. It’s really important, I think, for everyone to have clarity and consistency in the way things are done,’ she says.

As well as the Lexcel accreditation, Reinhold has been determined to keep her team’s mission front of mind for all of the 12 members. In her Dubai office hangs a poster setting out the team’s strategy map, vision, mission and values.

‘The company uses the Harvard Balanced Scorecard strategic planning methodology, and I thought, “Let’s try this for ourselves and give our department focus”,’ she explains.

‘That, plus the Lexcel accreditation, has really helped us, and everything positive that we have achieved in terms of awards and recognition came after we made those changes. I’m a great believer in applying formal strategic planning methodology to the in-house legal team.’

In addition to helping maintain focus when developing the legal team into what it is today, Reinhold says that these formal initiatives have had positive ripple effects throughout the department and business.

‘I’m a great believer in applying formal strategic planning methodology to the in-house legal team.’

‘It really helps with engagement and has assisted massively with internal customer satisfaction as well. It’s had a lot of positive ripple effects, in particular the performance of the team and morale, because people need to understand why we are here and what we are trying to achieve. Also the strategy process: the whole point of it is to force us to rationalise strategic projects during the year,’ she explains.

‘Otherwise, you are going to find, as our company did, that you are running around chasing all these things and you’re not actually able to be satisfied that you’ve got any of them finished – or, if you have got them finished, that they were finished in a quality way.’

The retention point is one that Reinhold reiterates can be a struggle, as it can in any in-house team. This is even more of a pressing issue given that, despite du’s size and national importance, it is operating in a market with a typically transient workforce, isn’t a multinational corporation and it has a flat organisational structure, which means it can be a struggle to offer employees places to go – be that geographically on a secondment or organisationally by way of advancement. Addressing that, Reinhold sees it as vitally important that the entire legal team is involved in these higher-level, strategic corporate projects, beyond the day-to-day legal work.

‘I hope that the strategic initiatives that the team members do under our strategic planning process give people on the team something more meaty than the routine operational work, so that they are still able to feel a sense of career development and growth,’ she explains.

As one of two telecommunications companies in Dubai, du falls under the ambit of the Telecommunications Regulatory Authority (TRA). The Authority’s stated vision is to ensure that the UAE is an international leader in ICT, with its regulatory activities undertaken in line with that vision and strategic, organisational goals that flow down from it – goals like enhancing the competitiveness and effective sustainability of the sector, developing the quality of ICT services provided in the UAE to ensure that the country remains a global leader in the space, and taking a leadership role in the promotion of smart technological infrastructure in the UAE.

The state of telecommunications in the UAE is already positive, with one of the highest rates of telecoms penetration in the world: fibre fixed networks reach more than 94% of UAE households, mobile penetration is at more than 200% and 4G LTE mobile indoor coverage reaches 95% of the population. Earlier this year the UAE became only the fourth country in the world to launch 5G mobile services, while the du mobile network itself ranks in the top 20 in the world according to benchmarking done by P3, an internationally-recognised network tester and certifier.

In-house in Dubai

Being with du from the beginning has also meant that Reinhold has seen the in-house community in the UAE grow from small beginnings to what is now a thriving community. With Reinhold also serving as Chairman of the global board of directors of the Association of Corporate Counsel (ACC), her perspective on the development of the UAE’s in-house community holds weight in a global context.

‘When I arrived in the region, there was a more “traditional” view of in-house lawyers, and there weren’t very many of them,’ she says.

‘Now, there are very many more, and I think the mindset has moved from this traditional modus operandi to what I would call more progressive and in-line with international best practice.’

‘You really need to be more on the front foot in order to demonstrate your value.’

A manifestation – and precursor – of this is ACC’s ‘Seat at the Table’ initiative, which aims to encourage business leaders to ensure that they are involving their general counsel at the executive decision-making level, to get the benefit of their independent and diverse views, particularly regarding legal cornerstones such as corporate ethics and culture, risk management, compliance and governance.

‘It’s very relevant to this region, because the in-house function is still developing here, so it’s really important that things like the ACC’s ‘Seat’ campaigns get traction here, as well as globally. I’m a strong supporter of the Seat at the Table initiative, because I think that lawyers have to ensure that they don’t get sidelined. Good corporate governance requires genuine diversity of thought at the highest levels of organisations. A key component of this is ensuring genuine diversity in functional representation. Emerging agendas like the Business Roundtable’s recently announced shift to a ‘stakeholder value’ focus make securing this genuine diversity of thought even more critical – it’s a way of ensuring that these new approaches actually deliver tangible results.’

Reinhold circles this discussion around the in-house team not getting sidelined back to her own team’s work at du, a big focus of which is on showing value to its internal stakeholders.

‘You really need to be more on the front foot in order to demonstrate your value. That’s why doing things like the Crystal Mark certification is important, because you have to be able to show that you can do things to move the needle for customers and the business directly.’

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GC to C-Suite

For many lawyers, part of the draw to move in-house is the opportunity to play a more direct role in the business, as opposed to offering purely advisory services from the outside looking in. It’s also the chance to develop their commercial acumen beyond the level a career in private practice would allow.

That allure is as potent as it’s ever been, as the profile of the in-house team continues to grow beyond the realm of traditional legal advisory, pulled ever closer to the commercial heart of the organisation. The skillset that this is cultivating within the in-house team is undoubtedly making the general counsel a better adviser, and it has the happy side-effect of preparing lawyers for top-level, purely business roles – and, as a result, the ceiling offered to lawyers looking to move in-house is as high as it has ever been.

Barclays’ Amol Prabhu is an exciting example of this rising ceiling. Belonging to an exclusive but slowly growing class of business people who transitioned from in-house counsel to the C-suite, Prabhu has spent 15 years at Barclays, working in Dubai, Hong Kong, London and now Johannesburg. He was most recently the head of emerging markets legal for EMEA, before accepting the opportunity to serve as Barclays’ co-head: Africa and the chief representative officer: South Africa.

Chief Representative Officer

Trading one eclectic job description for an even broader one, Prabhu assumed the role of chief representative officer and continent head for Africa in 2018.

While there are legal elements to his current purview – for example, there is a regulatory component together with the same legal considerations with which all senior business people have to grapple – it is primarily a commercial position, one that Prabhu explains has three core components:

‘The first part relates to front-line origination. We have a developed investment banking business that has advised South African and African clients for more than a decade. The corporate finance products we offer are focused on: international M&A, equity and debt capital markets, and leveraged finance. The goal is to continue to develop and grow that business, providing African clients with global solutions and global clients access to the African continent.���

‘The second part is more of a chief operating officer role: establishing the office here in South Africa from scratch – which should be completed by the end of the year – and ensuring that office is fully operational and regulatory compliant.’

‘To see a legal professional step out of the legal team and right into a commercial role is not as common.’

‘The third part is management and oversight across all of our Barclays businesses on the continent. While our investment banking franchise is well known, we provide Corporate Banking offshore solutions to clients, as well as an offshore Private Banking proposition. These businesses while related, are hugely different in the products they offer, their operating models and, most importantly, the clients they support: the spectrum is broad, from advising a sovereign at one end through the relevant corporate and financial institutions, all the way to individuals. With that breadth brings a whole range of complex commercial, legal, compliance and reputational issues that you have to manage.’

It’s this last component that largely precipitated Prabhu’s physical relocation to South Africa. It’s Prabhu’s name on the regulators’ ledger, which means he is the first point of contact for all things Barclays in South Africa and, if anything goes wrong, it is Prabhu that the regulators go to first – making someone with the requisite legal knowhow and confidence an ideal candidate to take a role that traditionally may not have been taken up by a lawyer.

Selling Down to Scale Up

The role was born from necessity, following a period of change in the structure of Barclays’ presence in Africa. In 2016, Barclays sold down its 62.3% stake in Absa (it still retains 14.9%), a local bank and Barclays’ defacto Africa entity for regulatory reasons. The sale required an examination of Barclays’ offering in the region and an assessment of what was required of Barclays in order to make the post-Absa era work, something that Prabhu involved himself in from his seat in London as head of emerging markets legal.

‘While I didn’t work on the actual separation between the two banks, I focused on the go-forward model. My initial work considered: “What does it mean for Barclays in Africa with respect to investment banking?” – because that is where I sat – but it rapidly transpired into asking similar questions of Corporate Banking and Private Banking,’ explains Prabhu.


Amol Prabhu, Co-head: Africa and chief representative officer: South Africa, Barclays

‘When you’re speaking with senior management, they want a composite view of what we’re doing for the African franchise across all businesses and how they interrelated, and so I found very quickly that I was working with all the senior executives across the different businesses in order to be able to work through and determine what that would look like. In parallel, I was leading the regulatory dialogue in South Africa and also with the UK FCA and PRA to say, “This is what we are thinking, we want to proactively be supporting our clients when it comes to Africa, what do you think, does that work?”’

‘With South Africa, it became very clear that we needed to establish a representative office, with an “on the ground” team if we were going to continue to do business there going forward.’

Prabhu’s whole career being focused on emerging markets, his coverage of Africa for over a decade and his deep knowledge of the numerous Barclays’ businesses made him the ideal candidate to represent Barclays in South Africa. In fact, Prabhu was so integral to the whole process he ended up writing the role profile for the job that he would eventually end up taking himself.

‘I wrote the role profile, not with the intention of taking the job myself,’ he explains. ‘I’d like to say I was the natural choice, but the reason my name came up was because the role was so expansive: it wasn’t just a siloed role of “We want you to do X,” it was the requirement of having management and oversight across all of the different businesses across multiple countries, dealing with whatever came through the door and also having that legal/regulatory expertise to be able to interface with the regulators.’

Preparation

A sample of the most senior executives in business will show that there is no one true path toward progressing to the top. To the extent that generalisations can be made, it is often financial or purely commercial professionals filling the C-suite. To see a legal professional step out of the legal team and right into a commercial role is not as common. Given the diverse (and increasingly commercially driven) portfolio given to in-house counsel and the skills already required of that role, this should not be surprising.

According to Prabhu, a life in law at Barclays prepared him to move upwards and outwards from the legal role, in very specific ways.

‘One is the ability to absorb and critically analyse large amounts of information, from numerous viewpoints, weigh it up and make a decision. That’s essential. Also, being comfortable with uncertainty – it’s not like you always have all the facts to hand. But you have to use your judgement and be prepared to take a decision which you are accountable for,” he says.

‘Inherent to that is an appropriate risk radar. I think, particularly since the financial crisis, the value that is attributed to individuals – particularly in the C-suite – that have a good sense of risk, control and governance, as well as being good business leaders, has increased significantly.’

View From the Top

Going from the adviser to the advised is another source of value for Prabhu, giving him the advantage of yet another lens through which to view legal advice.

‘It has really brought into sharp focus what quality legal advice actually looks like, and what a quality offering from law firms is. To my mind, there are simply three things:

‘Number one is knowledge. Technical ability is a given – if you don’t have the technical ability, you’re not even at the table. What I mean by knowledge is: do you really know your client? Do you know how they work, do you know their structure, and equally importantly, how much effort have you taken to understand the ultimate client (the actual client of Barclays) and the jurisdictions that they operate in? Their sector? Their position? The real law firm quality differentiator are the firms that have taken that extra step, so they can give you advice with the context of the ultimate client in mind. Speaking bluntly, there are around 20 international law firms in London that claim they are very Africa focused. Some of them need to realise that creating an internal Africa group and a nice glossy brochure doesn’t get you there and you get found out very quickly, because clients are smart.’

‘Number two is commercial. Yes, you’re looking for legal interpretation, but you’re also very much looking for guidance. In emerging markets, often the law is unclear and, sometimes there is no law on a particular issue, so you need lawyers who can handle that and provide you with coherent, pragmatic advice balancing not just the legal but also the regulatory, reputational and other issues. There’s not necessarily a right decision, but there’s a better decision that you can make.’

‘Technical ability is a given – if you don’t have the technical ability, you’re not even at the table.’

‘Number three is likeability. We spend hours and hours working on transactions; days and days on the road. Do you actually like the people that you’re working with? Irrespective of how good the lawyer is, if you don’t want to spend a lot of time with them or want to put them in front of your client, you’re not going to hire them.’

‘I’ll give you an anecdote. I call it the Euro Disney Test. We were in Morocco, had pitched for a deal and three of us were flying back to London the next day. The 2010 ash cloud diverted us to Paris. We landed at Charles De Gaulle, and I contacted my PA who said that the only way back was a Eurostar leaving at 11pm from Euro Disney which she had booked us on. So what do we do – we spend the whole day at Euro Disney. So my question when I think of using a law firm partner is: would you be up for the Magic Mountain rollercoaster or wouldn’t you? Because people who enjoy working together work better together. When you hit tough situations in a transaction, which you inevitably will, there is more of an impetus to get a better resolution. So it does have a meaningful impact, not just on the quality and experience of doing the deal, but the quality of the outcome.’

Laying the Path

Having run the gamut of vantage points within business, from the purely legal to the purely commercial, Prabhu has a range of experience rarely seen, even on the top rungs of the ladder. As such, he has a lot to say to lawyers at the beginning of their careers.

‘First of all, take time – take real time – to understand yourself. What kind of lawyer are you? Are you more of a private practice lawyer? Do you like that environment or are you more suited to in-house? You’ve got to understand yourself, understand what you like, what drives you – do you like variety or do you like to specialise? Do you like the commercial aspects or do you not? It just depends on who you are as a particular individual. I don’t think young lawyers take enough time to think about this. And it changes during your career, so these are questions that you have to ask yourself periodically and give yourself time to think about. And you have to be honest with yourself: what makes you happy?’ he says.

‘Second is work hard – there are no shortcuts here – but, importantly, you’ve got also to work smart. You’ve got to think to yourself when you’re working – what am I learning from this? How is it improving me as a person? What new skills am I deriving? How is it getting me to move forward in relation to the goal that I’m trying to achieve? That’s why the first point is important. You have to know yourself in order to know what goal you want to achieve going forward, and then you need to go on that journey to prepare yourself.’

‘The third, which rightly is getting increasing airtime now, is mental and physical health. Make no mistake – this job is tough. You have to work out what keeps you mentally strong and physically fit. Mentally, for me, it’s spending time with the family. When I get home my two-year-old son is there to greet me and all he wants to do is play. I find it really allows me to switch off, and makes me better at my job when I switch back on. Physically it’s the gym – I find it a great stress buster. For a junior (and senior!) lawyer, you really have to think what works for you, what helps you, and make sure you do it. Irrespective of how busy your life gets – and it will get very busy – make sure you make the time.’

The last piece of advice is something that Prabhu insists upon – securing quality mentors: ‘Seek out, work with, and learn from, excellent people who will guide you. You cannot make this journey alone,’ he says. ‘There are many people who have been/are instrumental in my career: two in particular are Simon Croxford, current GC at UBS who was my first supervisor at Linklaters and then at Barclays for nearly a decade, and one of my current bosses, Karen Frank, the CEO of Barclays Private Bank.

Things to Come

Does Prabhu see career progressions like his own becoming more common among in-house lawyers? Not necessarily. To him, it all comes down to two things: the individual and the organisation.

‘I think it is a very individual question. Throughout my career, I’ve very much enjoyed the commercial side of the business. So for me, making that progression, it was one I had thought about very carefully, but it wasn’t a hard decision for me. Again, it’s all about knowing and being honest with yourself. It is also important to make this transition in an organisation that supports you and knows the value you bring to the organisation.

‘The question i would ask general counsel is, “how legal really is your role?”’

Some individuals enjoy legal and the general counsel role, and don’t want to move across to a commercial role,’ he says. ‘But the question I would ask general counsel is, “How legal really is your role?” I know some GCs who have more non-lawyers reporting to them than lawyers. When they are in the boardroom, is the culture within that business that they only comment on legal issues, or are they a stakeholder at the table that inputs on all issues and has (and is expected to have) a view on business and commercial issues? I wouldn’t get hung up on title – I would dig a bit deeper. Yes, there is a place for advising on legal legal issues, but you always have to advise with understanding of the wider context. And I think when you get to that level as a general counsel, you have to view yourself – and hopefully the business views you – as a wider culture carrier and senior leader, as opposed to just the general counsel.’

A recurring theme in Prabhu’s career has been both his curiosity – a willingness to ask how things work, or why things are the way they are – and his confidence to get involved in things other lawyers would have shied away from.

It is this curiosity and confidence that guided Prabhu up the ladder at Barclays, and positioned him as the lead candidate for his current role. Now the question remains: where will that curiosity and confidence take him next?

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The importance of supportive leadership

In an exclusive extract from her new book You Didn’t Mention The Piranhas, Nelson Smith writes candidly about how it feels to be in the middle of a PR crisis:

In the second week of the crisis, the snow came. It had toyed with us for several days, threatening a festive dusting, but then changed tack and engulfed the country in a thick white blanket, mocking the valiant efforts to get trucks loaded and onto the roads by rendering many of them impassable. I needed to get to Rugby, but living at the bottom of a hill on a country lane with a rear-wheel drive car, I had no hope.

Wrapped up at home in comfy casuals, cut off from the world, for twenty-four hours I joined meetings and discussions with the team ensconced in Rugby by phone and by Skype. Conference calls served as a passable Plan B, but with many more people – external consultants and advisors and DHL and QSL employees – joining the calls than I’d met, attributing comments to people and parties was near impossible. A message came through from a colleague: if I could get to an open road, a four-wheel-drive taxi would be making its way towards me to take me up to Rugby.

The distribution centre had developed a reputation akin to the Hotel California: people arriving there for a meeting would find themselves stuffed into safety shoes and heavyweight jackets hurriedly scrambled from the Screwfix hardware store across the road, re-basing themselves in Rugby for days or weeks while they supported the recovery efforts in every which way they could. I was heading back up there for a meeting, but, with the added complication of the snow falling thick and fast, I anticipated I mightn’t be back too soon. Grabbing a bag, I filled it with clothes that would win me no awards for style or fashion, but would be entirely practical for several days snowed into a distribution depot in Rugby. If setting off on foot through a blizzard felt like madness, crawling along in the cocoon of the car at 20mph on the motorway felt even more ill-judged. But the car journey felt like a refuge from what would undoubtedly await. Closer to Rugby, the blizzard abated; the snow thinned. With the sun out, the memory of the Narnian winter in Surrey felt like a lie.

The key questions being assessed were: what was the root cause of the distribution failure? Could it be fixed, so that the service that the KFC system had been promised could be realised? And if so, how? And where should the mounting losses lie? It had been important to ensure from the outset that the KFC parent company in the US was kept well aware of the situation in the UK. A difficult conversation to initiate, perhaps, but it would have been far worse if their first awareness of the crisis had been via a comment on Twitter or in a newspaper article, of which there were many. It might not be the case with all multinational organisations, but, with Yum!, it felt very much like a pool of protective older siblings across the pond, ready to jump in and do whatever they could to support, guide and encourage. Messages arrived from the global leadership team: ‘We’re all thinking of you and cheering you on’, and ‘Let me know if there’s anything at all that we can do for you and the team. Even a friendly voice or ear to listen – anything at all we’ll do. Take care. You’ve got this!’ As we poured yet another coffee at midnight to eke out the second wind from hours ago just that little bit further, the messages truly helped. And our daily emails and calls back to the global leadership team ensured that there were no sudden leaps in knowledge, with the press or social media leading the charge and leaving them lagging behind. Despite our best efforts, though, a call or an email could only go so far to convey the slightly hysterical #ChickenCrisis fever that had enthralled much of the UK, and that had occupied every waking moment of the KFC teams.

And so they came. Organically, each person took the decision to come to support the team in Rugby and to be on hand to see the issues with their own eyes, and to discuss, eyeballing one another across the table, and battle through the issues and the solutions.

The airspace above London thrummed with the incoming flights bearing reinforcements: a tenured supply chain and distribution expert from within the Australian KFC business, the global CEO, CFO and general counsel of the brand, and further leaders from the global KFC and Yum! boards arriving from Louisville Kentucky, Australia and Europe, contributing their own commercial and legal savvy and negotiation skills. As the immediate operational and commercial challenges and the longer term picture were being scrutinised by us all, with each new arrival the freshly assembled Swat Team felt more complete (although the ‘Special Weapons And Tactics’ deployed were less munitions and military plans, and more Excel spreadsheets, diplomatic negotiations and legal, commercial and operational analysis).

Surfacing for air

After existing in a central London hotel with the core negotiating team for four days and nights, I realised that (i) I had not seen daylight without the protective barrier of a window pane for some time, and (ii) I had run out of clean clothes. It was 8.15pm. As some of the team headed down to the hotel restaurant for dinner and an escape from the now too familiar four walls of the board room, I decided instead to make a break for it, and go shopping. The very idea that I could simply walk out of the hotel and do something as ridiculously ordinary as going shopping took hold, and the excitement I felt as I ran (yes, ran) through the front door and into a waiting taxi is hard to put into words. A few minutes later, I was walking down Oxford Street, breathing in the clear, dark night and relishing the almost forgotten experience of being cold. Most of the shops were closing for the night, but the bright store front of M&S beckoned me in with a whispered promise of fresh underwear and some neutral basics.

I had lent my last clean top to our external lawyer, so both she and I were now in need of supplies. Plucking a basket from a stack by the entrance, I chose underwear and toiletries for both of us, and tried hard to select tops that were in the right sizes and which suited both the fifth-day-in-a-row-in a-board-room-with-the-same-colleagues and the about-to hold-a-conference-with-over-thirty-franchisees occasions. I struggled. I was sleep-deprived and found it hard to switch from a contract negotiation and drafting mind-set to an outfit selection one. As 9pm approached, the lights began to snap off, with the clear threat that the shop had every intention of closing as soon as the last few stragglers had left. A loudspeaker abruptly reinforced this warning. I raced to the tills.

‘Where, ordinarily, a theoretical idea could be discussed, here, the need for certainty and action was immediate.’

Hauling my basket onto the counter and tipping the contents out in a heap, I realised that I had forgotten to find a new deodorant for our external lawyer, as requested, so I jogged back to the cosmetics section while the cluster of M&S employees at the counter began to ring up my selection. ‘Sorry!’ I gasped once I’d made it back with a floral-scented roll-on. ‘I’ve been panic-shopping!’

The lady on the till laughed, and asked how on earth a person could find themselves panic-buying underwear, tops and floral-scented deodorant on a Thursday night. Goodness, how much detail to go into? I’d been in a meeting, I told her, which lasted four days longer than planned, and now I had run out of clothes. By now, she and her colleagues were finding the situation pretty hilarious. Who did I work for to have meetings like this? I was alone on my side of the counter by now, acres of darkened shop floor behind me, and five curious faces opposite, partly wondering what I was talking about, and partly just wanting me to get a move on so that they could close up and go home. KFC, I told them.

Well! The level of detail that this group knew about KFC’s current predicament was astonishing. While I’d been hidden away in the stagnating air of a meeting room, allowing the distribution issues to occupy my every conscious (and the occasional unconscious) thought, the world outside had been busy absorbing all of the emerging details and forming their own opinions on the situation. Discussions and negotiations that had once been sensitive and confidential were now fair game.

‘Oh, I bet you wish you’d stayed with Bidvest now!’ she told me, while two more M&S employees debated the wisdom in using a sole distribution centre in the ‘logistics golden triangle’ rather than using several spread across the country. With their wishes of luck and strength, and pleas for the KFC in Addiscombe to reopen soon, I gathered up my bag and stepped back out into Oxford Street. This was the new normal, and the only way was onwards.

As the last day of week two of the crisis merged into the first day of week three, the Swat Team had decamped to the board room of the London hotel. With all of the key decisionmakers for KFC in the room, we were intent upon getting a complete solution nailed down within a few short days. The mood was collaborative and positive, but desperately intense. Every contribution was listened to and evaluated, but there was no time for meandering debate. Where, ordinarily, a theoretical idea could be discussed and then explored in more detail offline, with a conclusion settled upon in due course, here, the need for certainty and action was immediate.

I sat at the long board table, and my mind wandered from the meeting to the crazy two weeks that had just passed. The urgent decision-making, the conferences spent standing in front of dozens of concerned and occasionally angry franchisees as they shot questions at me about what was happening to their businesses, and all that journeying back and forth to Rugby… Looking around the room at faces, once so familiar to me, each suddenly seemed distorted and somehow wrong. And their voices: once clear and definite, now blurred into indeterminable sound. I felt utterly confused. I could see mouths moving, heads nodding, but could make no sense of the words floating like helium balloons around the room.

Chris, sitting beside me, nudged my elbow, looking at me quizzically. ‘You okay?’ His face was obscured with pricks of bright light, and I couldn’t draw out the words needed to reply to him, to say that I wasn’t sure that I was okay after all. I felt scared. I was entirely out of my depth. How could I possibly be of any use to the team if I didn’t understand anything that they were saying? What if they realised that I was now a dead weight, and asked me politely just to go? Aware that I hadn’t been able to utter a word for some minutes, I shifted in my chair uncomfortably, lost my balance, and reached out to the table edge for support. My fingers, gripping it, were numb. So too, I realised, was my nose, which tingled as though I had walked into a hot room after spending too long outside on a frosty night. The voices in the room continued. Confused, I realised that some were directed at me, but I had no idea at all what they were saying as one word flowed continuously into the next and the next and the next, leaving me no time to decipher what each one meant. I felt like I was drowning, my grasp on the present now entirely released as I fell deeper and deeper.

‘Had anyone else ever done this? more to the point, had anyone done this and survived, their career intact?’

My boss stood at the other end of the table, brow deeply furrowed as he looked at me, his mouth moving and his words merging with the others in the room. In a few short paces he was standing next to my chair, pulling me into a hug, as I burst into tears. I have no recollection of what he said, but I can still feel the enormous relief of finally being thrown a lifeline: You’re not okay, and I can see that, and I can help.

‘Sarah needs to sleep! Is she checked in?’ said an American voice.

‘No: she came straight here. Where’s her bag?’

‘Here! I’ve checked in already. Take my room key. Someone needs to help her upstairs.’

Someone comforting, and help to my feet. More words. More movement. And I was out in the corridor, Paula’s arm around me as I walked blindly, crying silently. A lift. A room. A bed. Paula kindly ordering me to lie down as she fetched a juice and some water from the minibar. And then I was alone, and the room was dark and quiet. And then nothing.

You might think that, after a certain number of things feel completely surreal, you’d simply accept that reality has shifted and everything experienced is, in fact, entirely normal. Lying in the global CEO’s bed, recalling being led, crying, out of a room full of some of the company’s most senior leaders, is a sobering experience. I had no point of reference on which to anchor this. No similar situation that I could draw upon to remind myself that this was all par for the course, and many before me had done just the same.

Had anyone else ever done this? More to the point, had anyone done this and survived, their career intact? And what next?

To buy a copy of the book visit: gcm.ag/piranhas

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Editor’s Letter

It’s been nearly three years since GC magazine last examined the state of diversity and inclusion within the legal sector of the US. And since
that time, it’s fair to say that a lot has happened!

In the wake of the #MeToo movement, which in late 2017 mushroomed from a social media hashtag into a global phenomenon – one which has irrevocably transformed the film industry and the treatment of its staff – corporate America has found itself on the back foot as a renewed spirit of protest has captured the hearts and minds of the wider population.

In the current political climate, that in and of itself may not be surprising. But the prominence of the underlying diversity and inclusion issues has proved powerful. Google employees across the globe walked out in protest at what they characterized as the company’s culture of ‘sexual harassment discrimination and systemic racism’, utilizing the power of social media to spread their message and tell their stories.

Another company that bore the brunt of social media-fueled outrage was Starbucks, after two African American men were arrested in one of its Philadelphia stores, seemingly for just being there. The powerful eyewitness footage, which went viral online, prompted a public apology from the company’s CEO and a complete rethink of just how Starbucks trains its staff members to be more inclusive and recognize diversity – something we discuss with general counsel Rachel Gonzalez inside this issue.

Perhaps most importantly, such incidents highlight the fact that no matter how diverse a community or a company might be, there remains a compelling need and opportunity for corporations to help make both public spaces and workplaces not just diverse, but welcoming and inclusive for all.

But while it would be all too easy to focus on the negatives, once again GC has found that the legal arm of many corporations, fed and supported by the broader legal profession, is an enthusiastic participant in that collective project.

Consider Michael Wasser, assistant corporation counsel at the New York City Law Department. He shared with us his story of how his own battle with muscular dystrophy and the need for him to advocate for himself from early on in his life not only drove him to become a lawyer, but one willing to champion the cause for inclusiveness within the legal profession for other attorneys with a disability – visible or otherwise.

Or there’s the story of Kimberley Harris, general counsel of NBCUniversal, who has taken up the mantle of improving diversity – a real challenge during a period when the microscope is truly on anyone involved within the entertainment industry.

In the pages that follow, it’s abundantly evident that while diversity and inclusion will continue to be an ongoing issue – both for the legal sector and corporate Americas as a whole – the progress being made, and the increasing awareness underpinning that progress, gives rise to the belief that change is not just possible, but achievable. And if the examples featured throughout this report are anything to go by, lawyers – whether in-house, private practice or otherwise – are in a prime position to continue to be agents of agent.

Finally, I would be remiss to not thank our partners on this project, Weil, Gotshal & Manges LLP. Their input throughout the lengthy process of identifying the thought leaders, diversity and inclusion champions, as well as providing a private practice perspective on the issues discussed has been invaluable – and without that, none of this would have been possible.

alex speirs

Editor-in-Chief – GC magazine
[email protected]

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Foreword

In my 35 years of practice at Weil, I have seen the significant evolution of diversity and inclusion within the legal marketplace. Commitment to the recruitment, retention and advancement of diverse talent has been a pillar of Weil’s culture since our inception. In fact, Weil senior partner Ira Millstein chaired the New York City Bar committee that first looked closely at diversity in the profession and steered Weil toward the adoption of its first diversity policy, which then served as a model for the City Bar. This was game-changing for its time. And, in my tenure at the firm, there have been myriad other examples of how we all, as lawyers, have evolved to better think about and appreciate the vital importance of diversity and inclusion, and how we have formalized our efforts to effect lasting change.

That said, I know more than ever how much ground the legal industry still has to cover in becoming sufficiently diverse and inclusive as a profession. Like all our peers in the industry, we have been disappointed at both the pace of change and the continued lack of diversity in the legal profession, especially within the partnership ranks in private practice and across the highest levels of management and decision-making.

All of you in the in-house community have been great role models for those of us within law firms to follow. As a result of your many great examples, we at Weil have instituted a host of consciousness-raising initiatives, mentorship and sponsorship programs, and accountability measures to move from simply talking change to creating change. I have personally been involved for many years in an important one at Weil – the mentoring circles that we have organized for both our female lawyers and our lawyers of color. It has been indescribably powerful to hear first-hand the personal experiences of these lawyers and realize the many challenges they still face day-to-day in the workplace. As leaders, we need to be directly involved in these efforts for them to be successful. The more and varied the sponsorship at the senior management level the better.

To create greater accountability surrounding diversity and inclusion, we have also begun the process of giving our partners who are management committee members, practice or office leaders report cards related to how diverse their teams are. In talking with these leaders, I can say that creating awareness and measurable goals around these efforts has been invaluable.

In reading through the wonderful array of in-house profiles in this issue, I can say that you all – our peers colleagues and clients – face the same difficult questions that we do. I am inspired to hear about the ways that your companies are looking to the future and making your workplaces more diverse and inclusive. We look to a continued partnership in these efforts.

Barry Wolf

Executive Partner

Weil, Gotshal & Manges LLP

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Shining a Light

In the two years since GC last turned the spotlight on diversity and inclusion in the US, both the structure of the narrative – and, perhaps more importantly, the prominence afforded to it in the mainstream – has undergone a significant shift.

The impact of storytelling from high-profile individuals, together with similarly prominent incidents involving household-name companies, has shone a bright light on a host of diversity and inclusion issues, forcing companies and their counsel to take a hard look at their own policies.

As companies look inwards to pinpoint and understand their own locus on the spectrum of inclusion, one key problem emerges, according to Caren Ulrich Stacy, founder and CEO of Diversity Lab, an organization that promotes diversity and inclusion in the law.

‘“Inclusion” sounds very vague and amorphic. It’s like the word “culture” – no one truly knows what it is, unless you define usually a really bad culture or a really good culture. Inclusion seems to be on a similar scale.’

Verna Myers, vice president of inclusion strategy at Netflix, is often quoted as saying: ‘Diversity is being invited to the party, and inclusion is actually being asked to dance.’

In other words, the recruitment of diverse individuals is only one step towards true equality of potential, because without an unobstructed pathway to quality work and opportunities for development, enduring diversity is an illusion – and retention won’t happen.

Or to put it another way: ‘I think that when we talk about the war for talent, companies and law firms need to take care of their existing talent,’ says Christine Castellano, former general counsel of Ingredion Inc.

Hugh Welsh, general counsel of DSM North America, had an epiphany in his understanding of the need for inclusion after feeling like an outsider during business trips to company headquarters in the Netherlands.

‘It finally dawned on me that, for the first time in my career, I wasn’t part of the majority culture in these environments, and it altered my behavior. It made me hesitant, it made me less likely to speak up, it made me much more aware and in tune with all the little gestures and words that were made in the room – and that was exhausting,’ he explains.

the recruitment of diverse individuals is only one step towards true equality of potential.

‘After a few of those trips, I said to myself, if I feel like this when I go there, how do my female employees, my racial minority employees, how do they feel working in an environment that’s predominantly American white male?’

A blueprint for inclusion?

Developing a truly inclusive workplace – and an understanding of where flexibility or an openness to new approaches might be impactful – is a work in progress for most corporations, of course, and one that needs to be backed up by data. But are legal departments measuring the right things?

‘There are two different things in terms of inclusion that are very important. One is perception and one is reality. Perception is measured by whether or not everyone feels included: do they feel like they belong, do they feel like they are getting equal access to career-enhancing work and career-enhancing people?’ says Ulrich Stacy.

‘But the other half of that is the reality: are people included, are they getting equal access to work with different types of people who are influential in and outside of the organization? Are they getting equal access to the work that we know will help advance them? And that’s the piece that’s hard – and that’s the piece that has to get measured. I think for years we’ve measured the perception, and we’re really just getting to a point where we’re starting to measure the reality, and then fixing it.’

Ulrich Stacy argues that law firms and legal departments tend to work backwards – making assumptions about inclusion gaps in their teams, and then devising initiatives, such as mentoring schemes, to fill them, without any data or baseline against which to benchmark. In response, Diversity Lab and Chiefs in IP [ChIPS], a non-profit connecting women in technology, law and policy, have collaborated to design an ‘inclusion blueprint’ survey, intended to isolate and survey areas – for example, compensation, promotion, tracking access to career-enhancing work – that lead to inclusion and, eventually, a more diverse workforce. The hope is that the survey will allow teams to better understand their own efforts, benchmark themselves against other teams and, as data accumulates, understand specifically and statistically what inclusion activities correlate to higher diversity.

‘I think the only way we’re going to solve this challenge of the legal industry needing to be more inclusive and diverse, is we’re going to have to do this in collaboration, not against each other, or in competition with each other, shaking our fingers at each other. There is definitely a concerted effort for law firms and legal departments to work together in collaboration to solve these challenges. And if working in silos or in isolation as an organization is no longer working, then we have to try to collaborate,’ says Ulrich Stacy.

Some of the general counsel we interviewed were taking a more collaborative approach to supplier diversity, shouldering some responsibility for external provider achievements in D&I and emphasizing the importance of supporting law firms to achieve diversity – rather than penalizing them.

Wesley Bizzell, senior assistant general counsel at Altria Client Services Inc, trained as a social worker alongside his legal qualifications.

‘One of the foundations of social work is that you don’t start from where you want the client to be, or from where you think they should be, but you start from where they are,’ he explains.

‘The same is true when dealing with D&I within organizations. Corporations and law firms are made of people who may be in vastly different places in their D&I journey, so sometimes the work is slower than you’d like it to be – sometimes it takes more time to get the individual on board, sometimes it takes a little bit of effort to get leaders to talk about D&I issues because they were not brought up in a corporate culture where that was encouraged or expected. But I’m a firm believer that there are ways to reach almost everyone.’

The hope is that the survey will allow teams to better understand their own efforts.

At Peabody Energy, chief legal officer Verona Dorch’s legal team meets with affinity groups and law firm associates to discuss how the legal team can help achieve inclusion goals and, as a result, has implemented a system of writing letters to law firm committees handling promotions, highlighting any excellent work done by associates. ‘We’re here to influence, not criticize,’ she says.

Accountability

Yet many believe that a crucial piece of the puzzle – that of true accountability – is still missing from many D&I efforts.

‘Most law firms and legal departments don’t have diversity and inclusion goals, at least not ones they say out loud and are held accountable for – which is so different from every other business thing that matters,’ says Ulrich Stacy.

‘A legal department of a Fortune 500 company is expected to report their earnings on a quarterly basis, they have to be transparent and they have to be accountable to the shareholders, to the board, and to the public to some degree. So if diversity matters as a business imperative, why aren’t we transparent, why aren’t we accountable, and why aren’t we reporting where we are and what we’ve done to our shareholders or to our board or to the public?’

Many of the general counsel we spoke to are asking themselves the same question, and coming up with novel approaches to increasing transparency and accountability. Starbucks, for example, published its civil rights assessment report online, alongside unconscious bias training and certain diversity stats, on its website.

A topic of controversy is whether inclusion and diversity performance should be connected in some way to compensation measures, and some GCs support such a measure.

‘We haven’t done it yet, but that is a big one, that’s an important one, that could be a very effective tool,’ says Carrie Hightman, CLO of NiSource, Inc.

Adds Dorch: ‘We don’t yet tie metrics to people’s goals, and that is where I think it would be most effective. The companies where I’ve seen it take hold are the ones that start to tie it to individual goals and commitments, which then moves the company’s commitment.’

Doing things differently often means accepting an element of risk into the process, and perhaps an awareness that too much rigidity in criteria, whether in hiring or promotion, can mean overlooking diverse individuals for the sake of missing skills traditionally perceived as essential – effectively missing the wood for the trees.

Private Practice Perspective: Working Together for a Better Future

Achieving diversity has long been a struggle for law firms. Over the last several years, however, corporations have catalyzed change through carrots and sticks – promising and withholding work depending on whether diversity objectives are met. More can be done.

As the readers of this publication well know, corporations have pushed firms to attract, retain and promote diverse lawyers by demanding that firms demonstrate their diversity before they are awarded – or are even considered for – work. Among other things, companies grade firms on the diversity of their associate, partner, and leadership ranks, as well as the staffing of their matters, and dole out or deny assignments depending on the scores achieved.

This system of carrots and sticks effectively focuses firms on making meaningful progress on diversity. At Weil, we have adopted the score-card model to apply it to our own attorneys, grading our most senior leaders based on their success in meeting a variety of diversity objectives, including their own personal involvement in the firm’s diversity efforts.

More can be accomplished if companies take a more active role in developing diverse firm lawyers to meet their legal needs. As I know from personal experience, mentoring is critical to a diverse attorney’s prospects for advancement. Mentoring by senior law firm partners not only helps diverse attorneys improve their technical lawyering skills, it also provides a vehicle to introduce diverse lawyers to influential firm leaders, the business aspects of firm management, important firm clients, and business development initiatives. In short, mentoring helps diverse attorneys learn all of the non-technical skills that are equally important to climbing the ranks of a major corporate law firm.

Who better to mentor many of these aspects of lawyering than the in-house lawyers whom diverse attorneys hope to serve? In-house lawyers are uniquely situated to mentor young, diverse firm attorneys in the most critical aspects of client relations and development. Through taking the time to teach diverse firm lawyers about their businesses and the legal issues that are unique to their companies, what matters to them as clients, how they can be best served, and introducing them to other influential potential clients within their organizations, in-house lawyers can set diverse lawyers up for a meaningful long-term relationship with their companies, which will critically impact the attorney’s prospects for success at the law firm by enhancing the ‘business case’ for their retention and promotion.

But in-house lawyers can achieve even more through mentoring. By introducing diverse firm attorneys to in-house lawyers at other companies in their industry, in-house lawyers can provide diverse firm attorneys opportunities to make potential client contacts and develop business that would otherwise not be available to them. In turn, these diverse attorneys would be able to use all of the skills learned from their mentors to make the most of those opportunities. All of this would meaningfully support the diverse attorney’s prospects for retention and advancement.

And what do the clients get out of all of this mentoring? They get outside attorneys who are better able to serve them because they know their organizations and their industries better. They also get the satisfaction of having made a meaningful difference in a diverse attorney’s prospects for success and in creating more diverse law firms.

At Weil, we believe so strongly in this hypothesis that we have initiated a pilot program with a handful of our clients through which senior in-house lawyers serve as mentors to our diverse associates. We are extremely grateful to our client-partners for their participation in this program. It is too early to say what level of success this pilot program will achieve, but it is hard to see how it will not be successful.

Chris Garcia

Partner and co-chair of Diversity Committee

Weil, Gotshal & Manges LLP

‘When trying to get women on the board, you can’t insist that people have a CEO background, because you’re going to find maybe five women who fit that. You have to be willingly flexible on the requirements,’ explains Dorch.

Kimberley Harris, general counsel of NBCUniversal, adds: ‘We need to think about relevant experience in a much broader way – identifying skills that we need that might be expressed in a less familiar way … I had the benefit of that broader, more flexible thinking – I had no experience in the entertainment industry when I was hired as general counsel of NBCUniversal, but the CEO took a risk on hiring somebody with a different background. That broader thinking gave me an opportunity I wouldn’t otherwise have had, and, in turn, I added a different perspective to the executive ranks at NBCUniversal.’

Storytelling

On top of a thorough, metric-based understanding of challenges and a clear system of accountability, is the power of storytelling – the qualitative aspect that adds flesh to the bones of data. Much understanding and awareness in the inclusion and diversity context can be built through the telling of personal stories, and what campaigns like #MeToo have illustrated is the power of shared experience to build empathy and momentum.

The legal profession, often risk averse and traditional, can especially benefit from testimony and its potential to remove taboos – particularly in the field of mental health. Castellano talks candidly of her own struggle with burnout, and the importance of storytelling:

‘The biggest piece is really to remove the stigma around the topic of mental health and bring it into the light of day. The next generation of lawyers needs to know that they are not alone’.

An even more powerful tool in the arsenal of inclusion is that of role-modelling. Michael Wasser, assistant corporation counsel at New York City Law Department, has muscular dystrophy and, astonishingly, has never encountered a similarly diverse attorney as an adversary. He is keenly aware of the impact his professional presence can have, for both diverse and non-diverse colleagues:

‘Just me being in a room at a closing or in court, sitting across a table from an adversary or discussing things with clients – the importance of that is immeasurable. The best way to learn is by observing, and the best way for that is to have people with disabilities more visible in every facet of life,’ he explains.

‘Frequently I’m the first person that non-disabled people have a professional experience with, and that takeaway is enormous, because these people go back to their firms, go back to their lives in business, and maybe there’s a conversation at the dinner table, or maybe their kids hear something about it.’

Doing things differently often means accepting an element of risk into the process.

The New York City Law Department frequently makes introductions between attorneys with disabilities, and Wasser places great emphasis on the importance of providing support and ‘a friendly ear’ to others, as well as hosting department tours for high school and college students with disabilities, to remind them that a legal career can and should be on their radar.

In addition, he believes that more community outreach would be of enormous benefit to overcome attitudinal barriers and broaden the horizons of people with disability.

‘Engage the community: invite schools over and have open house – like our disability mentoring day, or “bring your children to work day”. Things like that are really important, because you want to teach people from a young age that there are options and choices – that inclusion works.’

Bizzell also tells of how storytelling can boost representation, even when role models are not obviously available:

‘At MOSAIC, our LGBTQ employee resource group at Altria, we have utilized storytelling to create empathy and understanding within our employee base and create instances where people who may not think they have met an LGBTQ individual, or who may not have LGBTQ individuals in their group of friends or family, get it.’

Through the collective effort of sharing experiences – in-writing or in-person – individuals can bypass stereotypes and understand what true diversity looks like. But that involves both candid disclosure, and the buy-in of leaders and team members to confront issues. It means that challenging concepts must be continually addressed, and assumptions disrupted.

As we continue the journey towards a more inclusive and diverse profession, the future looks bright, however, as those assuming leadership roles demonstrate higher and higher expectations of inclusion and diversity, and are increasingly willing to vocalize them.

We hope that this report has provided some potential methodologies to explore, and perhaps sparked some ideas for growth in your own legal department.

‘It’s important to have conversations that are difficult, and that require us to lean into that discomfort. The typical workplace attitude, certainly from the 80s, 90s and early 2000s, was that “It creates too many issues, it’s disruptive, it’s not helpful”, but I think we have reached a point where we realize that those conversations are necessary for us to truly develop that inclusive environment, culture and ecosystem,’ says Bizzell.

Striking a Balance

We asked some of the participants in our report for their sense of how the recent avalanche of stories and related activism has impacted corporate and legal life.

more community outreach would be of enormous benefit to overcome attitudinal barriers.

‘Taking the #MeToo movement as an example, there’s not enough data yet to say exactly what the impact has been but, anecdotally, it’s been both positive and negative. It’s been positive because more folks who have experienced sexual harassment feel comfortable coming forward, and law firms and legal departments have done a better job of making sure that they have structure and formal policies and procedures in place to manage complaints and to manage investigations,’ says Ulrich Stacy.

‘The downside – and there are statistics to prove this – is that in a lot of instances men are reading about this and fearing being wrongly accused, or fearing being perceived as bad, and they are pulling back from mentoring and from going on work trips with women that will take them somewhere overnight.’

That’s an issue – with the current makeup of many corporates, pressing ahead with diversity needs people in positions of power to work with people coming through the ranks. But Welsh is clear that senior executives – legal or otherwise – need to search for solutions instead of excuses.

‘I think the Time’s Up and #MeToo movements have catalyzed a whole cottage industry of sexual harassment compliance programs, and provided an excuse for a whole generation of middle-aged white men like me to say “Oh wow, I’m no longer going to take one-on-one meetings with women in my office or have business dinners with female employees, because it’s just too risky,”’ he says.

‘It sets back the concept of inclusion a great deal, because we know that the next generation of leaders are developed and promoted not just from an annual review or the results on a project and the financial results of the business, but as a consequence of sponsorship, which happens informally in these one-on-one meetings and dinners while travelling together.’

For lawyers, in particular, the informal nature of #MeToo and the timescale of allegations causes a specific problem of process. Castellano articulates the difficult position of in-house lawyers in balancing a culture of listening with fairness when dealing with allegations:

‘I think it’s important, with any type of investigation, that it is a real investigation. This is difficult with allegations that date back a decade or more, particularly when they cannot be proven – there’s no way to factually investigate them,’ she says.

‘I think in the workplace, when a #MeToo allegation comes forward, it needs to be investigated with the same rigor as any other allegation, and I think it’s particularly important that you enforce confidentiality around the investigation, because we are in a time period where people feel that their entire career could be destroyed based on an allegation alone. But having said that, we need to continue to encourage people to speak up and to make use of the compliance communication channels within their corporation. If the channels aren’t being used, we need to take a look at what we could do better, how we could make it easier for employees to speak up.’

In the pages that follow, we see a striking variety of approaches to inclusion and diversity on display in the leading corporates and organizations that feature in our updated report. But many common threads were also identifiable – culture, individuals and iteration being uppermost in the minds of those legal professionals driven to foster inclusive teams and corporations in the US and beyond.