Legal Department v. Sales Department: Round 1!

In my post, The Essential Tool-Kit for the In-house Lawyer, one of the contributors of an idea for an item to include in the kit mentioned the essential requirement of "an effigy of a sales manager to stick pins in".

Justified?

In each in-house legal position I've held there has been, without fail, a friction between the Legal team and the Sales & Marketing team.  The reason?  Our teams respective purposes within the company are diametrically opposed.

The job of Sales & Marketing:- to sell the company's products and services to as many customers as possible. This more often that not entails a burning desire on the part of the Sales & Marketing team to raise the expectations of the customer, consequently making the customer believe that the product or service is a whole lot more than it likely is, and at a great price to boot.

And the job of the Legal team:- to manage expectations, to manage risk.  To ensure that the customer knows exactly what they're buying, and at exactly what price too.

It's a battlefield at the best of times; and I pity any fresh-faced law graduate starting from the top of the ivory tower, when placed in front of an aggressive and experienced Sales Director at month-end intent on reaching his target.  However,  in my experience I've learned that there's no reason that the friction can't be a healthy friction.

The Defence?

The best Sales Director I've worked alongside was at a previous role I held in the package travel industry.  A highly-competitive industry, low margins, a pile 'em high sell 'em cheap mentality, and heaving with regulation particularly advertising regulation.  I say "worked alongside" this Sales Director because that's Rule 1 of working in-house: no matter which department of the company you're in, you're all on the same team.

This Sales Director knew his product and his target market inside out, but he also knew the law inside out too.  Which meant he tested me.  Every product, every promotion, every advertisement was pushed to the limits of what was legally acceptable.  It became apparent to me very quickly that it wasn't enough to simply say "you can't say that in the ad, its against such and such regulation": he knew the regulations word for word, he knew what the regulations did and didn't say, he knew every code of conduct on the subject, every discussion which led to the code of conduct being formulated, and every case bought to the attention of the ASA.  This guy knew his stuff! Which meant that I needed to know it better and more thoroughly than he did to stand my ground when it mattered most.  It was a great lesson in law and, more importantly, its practical application.

Opposing counsel?

They're not all like that and most dis-regard the law, or alternatively make up their own version of it.  But keep in mind Rule 1, and your battleground will become a more workable place to be.

Play the advantage

Working in the digital media industry I see first-hand every day the benefits to individuals and businesses from taking advantage of the newest technology, social media and web 2.0.  An industry was born of it, trailblazers lead it, those who participate in it are cutting-edge, engaged with their customers and reap the rewards.  They also have a bit of fun with it.

Hold on a minute….what was that you said?  What’s web 2.0?  Ah yes, social media it’s a risk isn’t it, you need rules to prevent your employees recklessly libelling their boss on Facebook. I don't give staff access to social media sites, its counter-productive.  I can’t Twitter, it would be a breach of confidentiality. Anyway, my firm has a website.

Sorry. I forgot. You’re a lawyer. Risk-averse.  You hear "social media". You think "policy". Go on, admit it.

So, I was delighted to read about this excellent symposium being organised by lawyers for lawyers.  It’s a fresh and quirky look at how technology is affecting the practice of law. Sessions include: “Up in the Air and the Cloud”,  ”Would Lincoln get Linked In? Or would he Tweet?” and, my personal favourite, “What’s your Avatar? How social media is changing the way we work and how to take advantage of it”.

If you're lucky enough to be attending this symposium, you just know you’re going to be able to listen to people excited about their subject and come away feeling inspired to get your personal lawyer brand online, out there and competing with the best of them.

Contrast those sessions with an in-house lawyer forum I’ve been invited to recently by a regional law firm. How could I not want to find out: “How to control social media in the workplace”, “How to prevent online defamation” and “How to control your risk online”. 

Yawn.

It gets worse.  An entirely separate conference I was invited to bears the ominous title “The Internet: What can go wrong and how to avoid it”.  It includes sessions entitled “An Online Survival Guide”, “Avoiding Problems” and “How to Perform a Legal Operation”. 

No, I don’t get the relevance of the last session either. But it’s a conference about the internet so….err…I guess it needs some scary sounding items that lawyers can warn their clients about.  Maybe the organiser got a byte from a mouse when he was younger. 

Anyway, I know which conference, I mean, symposium I’d rather be at.  Go on law firms, I dare you, when it comes to social media and web 2.0, be a trailblazer and get your profession excited about the possibilities new technology and media offer us; don’t blow the referee’s whistle, play the advantage. 

5 Steps to Legal Risk Management

Not so long ago I was invited to participate in a Legal Risk Management conference for in-house counsel. Despite being an in-house lawyer for many years, I’ve never actually owned a file labelled “Legal Risk Management” which I could use as a reference for arranging my thoughts on this obviously very important topic ahead of the event, and so it was with some trepidation that I arrived at the conference not really being quite sure what I could contribute.

However, what transpired was a very productive and animated discussion between in-house counsel on their experiences of what legal risk management means to them and their businesses, and I was pleased to be able to contribute based on my experience also as most of the best practice steps will be second-nature to seasoned in-house professionals.

There isn't one specific definition of legal risk management. For the purposes of this post, I understand the term to simply mean “the risk to a business of an event occurring which brings about a legal consequence impacting the business”.

Here are my 5 steps to legal risk management:

1. Conduct a Legal Audit
To be effective, legal risk management must be based on a thorough understanding of the business’ key activities, stakeholders and objectives and this can only be achieved by conducting regular legal audits and working with the business’ management team to analyse the risks, prioritise their management and anticipate the legal requirements of the business.

The audit will also facilitate the management of the “corporate memory”, essential for future due diligence exercises and the storage of key corporate data and documents, and it can lay the foundations for an ongoing compliance and risk management strategy.

2. Communicate, Educate, Co-operate
In-house counsel cannot manage legal risk single-handedly. It’s imperative that the legal risks are communicated to the wider business to ensure they are supported and, vice versa, that the wider business objectives and demands are facilitated in the legal risk management strategy.

One way to achieve that communication is through legal risk awareness training sessions tailored to the audience within the business which is either most exposed to or best placed to handle the risk being communicated. Training sessions are a perfect opportunity for in-house counsel to demonstrate that they are working with the business (not against it), and are also a good pre-cursor to introducing new business guidelines to assist colleagues with the practical day-to-day management of the legal risks which have been identified.

Although some legal risks are stand-alone, don’t forget that many legal risks dovetail with financial, reputational, operational, political, regulatory and tax risks; so, legal risk management is just one part of a more broad risk management strategy within a business. It’s a challenge for those new to the role of in-house counsel to balance their risk-averse nature against both these other risks and the essential quality of risk-acceptance in any successful entrepreneurial business; but, once mastered, this skill will make the commercially aware in-house lawyer stand out in the crowd from those lawyers sitting in their ivory towers.

3. Compliance and Governance Policies
Underpinning any legal risk management strategy is the requirement for a comprehensive set of compliance and governance policies. Policy making is a key tool which in-house counsel have within their remit to positively influence the way in which business is conducted and to set the standard for expected behaviour. It is essential that all such policies have the buy-in and support of the management team, and that the legal department has a defined role in implementing and ensuring compliance with the policies.

4. Operations
The daily operations of a business always prove to be the most fertile ground for legal input. An abundance of legal consequences can be found in supply, manufacturing and distribution chains, protection of intellectual property rights, brand protection (online and offline), pending and threatened litigation, product liability, sales and marketing practice, insurance, property matters, employment and HR practice, industry regulation as well as company secretarial, board and shareholder matters.

Good working relationships with colleagues operating in each of these areas are essential for in-house counsel to play an effective and valued role within the business; the challenge is for the lawyer to be seen as part of the team, and not as an obstacle, to achieving operational outputs and objectives.

5. Legal Resource
The individual character of each business will determine its exposure to legal risk and the management tools required to best handle that risk. Inherent to that is the balance of matching and managing internal and external legal resource, and indeed other professional suppliers to the business. The tough economic conditions are resulting in more businesses expecting their legal teams to reduce head-count and manage costs more tightly, but arguably against a back-drop of increased legal risk. A core skill of the in-house lawyer in today’s world is their ability to manage the risks in this more intense climate by better clarifying the role of the legal function within the business, demonstrating value-add and selecting, managing and getting the most out of their internal and external legal resource.

Every business will have legal risks peculiar to it, but taking the above steps will help manage the risks which are core to most. Please comment and share your experiences of legal risk management.