Case notes | Summer 2019
‘What do we mean by business partnering in the legal department?’ Royal Dutch Shell legal director Donny Ching asks. Few general counsel can long resist reminding observers that the in-house legal function needs to be a strong business partner. But far fewer can explain what it means.
At Shell, the legal team worked with the company’s internal learning group and an external consultant to try just that. The result has seen nearly half of its function’s more than 1,000 staff go through a business partnering training programme consisting of two formal courses, called Skills in Business Partnering and Mastery in Business Partnering, alongside online training resources. The training also extends to the wider business.
Ching says it is about bringing fresh clarity to Shell’s expectations of its lawyers. ‘You need to make people much more aware of the different roles they play as a business partner: whether as a pure specialist adviser, or a functional broker where they connect different functions to provide advice, or as a gatekeeper for ethics and compliance. People are then much more aware of how they’re doing in each of these roles, where the gaps are and where they can improve.’
In practice, this means encouraging lawyers to visit refineries and liquified natural gas plants, but also to take on jobs in areas of the company they traditionally would not have encountered. The overarching notion is that, to be a business partner, lawyers need coal-face understanding of the company, as well as the trust of their colleagues.
‘A lot of it is instinct,’ Ching comments. ‘As a Shell lawyer you can’t just sit in your office and wait for your business to come to you, you’ve got to get out there. Your job is to constantly improve what you do.’
Shell’s partnering initiative is part of a broader Future Legal 2 programme the company launched three years ago, not long after Ching took the company’s top legal job in 2014. Of his 1,000-plus staff, about 70% are lawyers: the other 30% is where the most growth has come, broadening expertise in project management, pricing and IT. This has seen more work brought in-house – now about 60% of its matters – its global legal panel cut down to just six law firms, and appropriate fee arrangements used in 77% of external instructions, with a target of 85%.
The function has also placed a strong emphasis on cultural change as part of the programme, which was expected to take three to five years to implement. Ching says it is about changing how lawyers think, difficult when most are still recruited from external law firms, and tougher still when Shell’s legal function is spread across 47 countries.
To do that, the function has focused on five foundational behaviours: safety, ethics and compliance; business partnering; co-ownership; networked performance; and ‘improving the work is the work’.
Co-ownership refers to feeling co-responsible for the business result, understanding and assessing legal risks and intervening, and taking personal accountability while not working in a silo. Work the legal function has offshored to Shell Business Operations centres in Kuala Lumpur and Krakow, which have grown to more than 80 staff in two years is an example of this, with lawyers encouraged to work with those centres directly.
Networked performance arose as part of the business training programme, when the function realised that it generated a huge amount of knowledge and experience every year. The result has been an internally-built directory: if lawyers are working on a new gas and liquids deal, for instance, they can search for the relevant people, documents and guidance on similar transactions.
‘The external consultant asked me, “Donny, you have 1,000 people in Shell legal, are you 1,000 years wiser every year? Are you 500? Are you 100?” I didn’t know what the answer was, but what it triggered was the need to harness this knowledge machine we have.’
Ching’s focus for the next few years is on establishing what a ‘digital’ in-house team looks like. He foresees a need for data engineers and analysts and recruiting lawyers and non-lawyers who are ‘digitally savvy’.
The data analysts could, for example, look for litigation trends in years of M&A deals such as how often certain warranties or indemnities are disputed, which in turn allows Shell to finesse its negotiating strategy.
Digital literacy has become a competency for Shell’s lawyers, too. The company has a training organisation which has upskilled lawyers in areas such as blockchain. One lawyer came in, saw that Shell was managing its thousands of patents on spreadsheets, and came back with a digital version.
‘Would I call her a digital person? No, but she was that way inclined,’ Ching says. ‘We don’t know what a digital function will look like yet. We know it will change, but will it change in two years or five years? We’re trying to get a little ahead of the curve and ask what we need to do now to position ourselves for that.’