Sailing the wind of change: leading the in-house legal function into a world of acceleration

Until 2003, when the Geneva-based sailing syndicate established by Ernesto Bertarelli won the America’s Cup, landlocked Switzerland and the Swiss had not been considered part of the leading seafaring nations. The very fact that the sail-boat Alinghi has won the Auld Mug twice is a great example of how things can change, and that new players from non-traditional backgrounds can enter and re-define any given playing field.

Looking at the technical innovations around the America’s Cup, we realise that today’s change is becoming ever faster and is driven by the concept of acceleration. Acceleration describes the exponential increase in technological change throughout history, suggesting that change will be faster and potentially more profound in the future than in the past. Acceleration in technology can be exemplified by the exponential growth in computer power, more recently by new technologies and the resulting surfacing of new business models such as Uber or Airbnb – innovations which have laid waste to entire industries seemingly overnight. Even more recently, such seismic shifts are evident, perhaps the most penetrative at present by so-called ‘augmented reality’ technology, like that seen in the Pokémon GO games, or more tangibly by innovation in sailboat technology used for the America’s Cup. But technological change and innovation may not necessarily be accompanied by the same pace of social and cultural change, leading to the potential for social unrest as a consequence of large-scale job losses, loss of privacy, and other consequences that stand to primarily impact upon the middle class.

Continuous change and acceleration provide chances and challenges not only to entire industries and companies, but similarly to in-house legal departments and their GCs. They will be faced with quickly evolving and increasingly challenging rule-making and compliance requirements. New rules will emerge at faster pace, usually responding short-term to events and their perceived regulatory shortfalls rather than being the result of long-term strategic planning. As a result, event-driven rules may be motivated by perceptions rather than realities – a process which may not necessarily even try to take account of all relevant facts and potential collateral effects, which, as a consequence, may see regulatory time-to-market receive preference over due legislative process.

Also, as rules will run behind events, companies’ compliance efforts will run behind the rules. Companies that focus on compliance with such rules will be driven in reactive mode and always remain after-the-fact; on the other side, companies that focus on values and ethical behavior, ie on ‘doing the right thing’ irrespective of the detailed nature of the rules, will remain in the driver seat of proactively shaping their business models. An example of this new model of accelerating regulation is the financial industry; here, regulation has responded to perceived needs following the Global Financial Crisis. The result has been the creation of numberless and not always well-devised new requirements, legislation which may fail to demonstrate the value-add of such rules, which are being rushed into force by regulators and legislators who are in a race to be the first ones to take action. The race today is not to the bottom, but to fast regulatory reaction.

As change becomes the sole continuum, in-house counsels not only need to adapt to changing business models, but they also need to re-think their own working style as well as their competencies. Taking the analogy of a sailing boat or any other vehicle as a proxy for a company, the GC and their legal team traditionally need to display a number of competencies:

• Functional knowledge is the starting point and includes the mastering of the legal function’s area of core expertise. Effective legal risk management includes the handling of litigation, contract negotiations, project and transactions support, and many other forms of legal advice. In the sailing boat analogy, functional knowledge is to master the function’s specific skills, such as hoisting the sails. Functional knowledge is the starting point and a prerequisite for the job, but generally does not differentiate good from outstanding lawyers.

• Market and business knowledge is a clear addition to functional knowledge and allows the lawyers to understand and know the waters that the boat is navigating.

• Leading the team and developing the organisation is the next step in building up effectiveness, and to foster a spirit where individuals become a team and together get the boat moving. Mastering this leadership competency allows a top-notch specialist lawyer to leverage his expertise and to multiply his effectiveness through his more junior team members.

• Driving results is the ability to define and achieve measurable outcomes, in a sustainable manner that yields the optimal result. It requires the in-house counsel to move from the back row to the driver seat.

• Counselling is about collaboration, influencing, and impact. It creates alignment with other drivers and passengers as to the direction of the boat. It is crucial, however, that the course of the ship is determined after a thorough analysis of all relevant facts and factors, not based on perceptions, but on realities.

• Strategic and change leadership includes a long-term conceptual understanding and view beyond silos and across the entire organisation, together with the ability to motivate the organisation for transformational change. This is the skipper’s role – to define and steer the course, based on a strategic assessment of the purpose, the goal and the direction – and to get the crew energised to sail the course.

While the first two competencies (functional knowledge and market/business knowledge) make an outstanding specialist lawyer, the competencies of team leadership/organisation development/driving results transform a lawyer into a functional leader. To become an effective GC, the last two competencies (counselling and strategic/change leadership) are required. Yet, the above traditional view on competencies will have to be complemented by qualities and competencies required to cope with acceleration and continuous change. The new skill-set may be a paradigm shift for some or only a refocusing for others – in essence it raises the following demands on in-house counsel:

• Focus on values more than on rules.

• Embrace jobs and tasks you never learned – prepare for issues you have never dealt with.

• Learn, learn, learn – and then start learning anew.

• Take the time to listen, the leisure to think, and the freedom to ask better questions – if big data provides answers through computers, then the future is to ask better questions. This requires a totally different skill-set from today’s world, where managers give answers, and only exceptional leaders ask meaningful questions.

• Collaboration and connectivity is key – solutions are increasingly found and implemented through 360° communication, partnering with open knowledge communities, and collaboration in virtual teams rather than through fixed organisational charts.

• Master a multipolar world, and partner transparently with regulators and stakeholders throughout the world – companies’ constituencies are increasingly diverse, multipolar, able to communicate at the speed of light, and ready to forge alliances with other stakeholders if it serves their interest. Only by engaging with stakeholders in a transparent and open-minded manner can the company and its in-house counsel anticipate issues and influence outcomes.

• Engage in a culture of values, collaboration, transparency, speaking-up, pride for success and for furthering the company’s cause – with acceleration and the resulting impact on jobs, the qualities and mindsets of employees are of increasing relevance. Employees will have to act in more fluid environments and will want to work for organisations that are in sync with their values. Companies therefore have to define, communicate and evidence what values they stand for and what their cause is. It is no longer the ‘tone from the top’, but more importantly the tone at the top and the tone throughout the entire organisation.

Apart from finding and cultivating the right talent, the GC also needs to create an organisation that can swiftly respond to the needs of an accelerating environment. With fluid and ever-changing set-ups of the external markets and the internal clients, the in-house legal department needs to be organised in a flexible manner, with the agility to set focal points where growth projects require fast and meaningful support, to globally allocate resources according to demand, and to define centres of excellence and practice teams to ensure promotion of best practices and alignment of the company’s approaches irrespective of time zone, language and local culture.

By embracing acceleration and change as catalysts to drive the team’s performance, the GC is able to not only contribute to the success of the company, but equally to help the in-house legal team get on course to successfully sail the wind of change.

Andreas Bohrer is group general counsel and company secretary at Lonza, a Swiss multinational chemicals and biotechnology company. A graduate of the NYU School of Law, Bohrer has had a storied legal career spanning close to two decades, working both in private practice and in-house, including prominent roles as general counsel EMEA for UBS and general counsel of Novartis Animal Health.