Comment | Summer 2016
Two books of note have just been published by veteran lawyers – The Inside Counsel Revolution: Resolving the Partner-Guardian Tension by former GE legal head Ben Heineman and The Future of the In-House Lawyer: The General Counsel Revolution, a collection of essays edited by Carillion’s Richard Tapp. The common ground is obvious in charting the wresting of power and resource over the last 25 years from law firm to corporate legal teams.
While much play is made of change in the profession – judged against the mid-1990s, the law firm model and the wider profession have not evolved to anything like the degree often claimed. You can easily trace precedents for non-law firm providers and contract lawyers back to the 1970s and 1990s while technology use has just tracked wider changes in society. But the steady rise of in-house counsel is a genuine shift in the profession’s tectonic plates. Strictly speaking, since its origins date back as far as the late 1970s in the US, it has been more evolution but its significance is nevertheless profound, in part because the process shows no sign of stopping.
Heineman and Tapp, of course, note the rise of regulation and risk in handing influence to in-house legal teams. This, married with cost arbitrage thanks to the global arms race in law firm profitability, has provided fertile ground for in-house counsel to seize power.
Tapp’s book makes one interesting and less cited point, noting the pan-industry trend of shifting risk from customers to suppliers, a development that has placed contracts at the heart of risk management and further strengthened the hand of GCs.
The UK is not yet at the point where GCs have influence comparable to CFOs but it is conceivable they will in ten years.
The UK is not yet at the point where GCs have influence comparable to CFOs but it is conceivable we will be there in ten years. That would be a material change in the way that lawyers are viewed in public life in this country. There will certainly be further support to reach that milestone from the global trends of tougher enforcement and the extension of liability for senior company officers.
These are systemic changes for the profession that in general leave major law firms confounded as to a strategic response.
But a word of warning alongside the love letter. The GC revolution has occurred with little corresponding debate, support, regulatory oversight, transparency or even substantive debate on what the role of a GC should be. If you were to look at the in-house profession compared to ten years ago, you would struggle to find major developments on these fronts or much in the way of evolving theories or benchmarks that recognise the working realities of the modern GC. Instead we default to broad platitudes such as ‘be commercial’ or ‘trusted adviser’ and move on.
In our own small contribution to this discussion, IHL’s cover feature for the summer edition puts forward eight practical ideas to improve the in-house profession. Some readers will disagree with our ideas but hopefully they at least represent some grounded proposals to move the debate on.
GCs work with enormous demands but often in an ambiguous framework. At times they have resisted greater transparency and defaulted to the attitude: ‘Trust me, I’m a professional,’ as a catch-all response.
Understandable, but it has held back the profession’s development and encouraged the continual reinvention of the operational wheel. In a period in which perhaps a third of the commercial work in England & Wales is handled by in-house counsel, it is time to start thinking seriously: what comes next?
Heineman’s book is at least a rare attempt at a detailed playbook for corporate legal teams. Delivering the closing speech at Legalease’s Enterprise GC forum in April, Heineman was explicit in addressing the harder realities [facing] in-house counsel in striving to be the ‘GC as lawyer-statesmen’. He concluded: ‘Once in the role, you must be prepared to resign and lose [money].’
Who else is picking up that baton? You can read more of Heineman’s thoughts here.