Leadership Insight | Autumn 2016
‘Becoming an in-house lawyer has not traditionally been a desirable career path for Asia’s top graduates,’ says Amy Ng, general counsel for the Asia-Pacific region at global real estate company CBRE. ‘But we are seeing a lot of change now in the number of people leaving private practice to work for a business.’
According to figures from the Singapore Corporate Counsel Association (SCCA), the 2,000 or so in-house lawyers employed now represent nearly a third of all practising lawyers in the city state. John Lee, GC for Asia at Macquarie Infrastructure and Real Assets, says he has seen a big shift in the mentality of Singapore’s legal graduates. ‘The in-house role is becoming a viable career path now, particularly for nationals who are Singapore-qualified. Companies tend to look after their lawyers here and there is a growing respect for corporate counsel. It’s more difficult for international counsel, because there are not many Singapore-based GC roles that cover the region, which places a lot of limitations on international counsel who want to move up the tree.’
This increase in supply is, in large part, responsible for the surge in the growth of in-house teams. But while the number of lawyers employed in-house may be rising across the region, it is from a low base. From a UK or US perspective, the baseline numbers are startlingly low.
In the early 1980s there were just a few hundred lawyers of any description practising in China. By 2011, there were around 200,000 licensed lawyers. The number working in-house, however, represents only a small fraction of the total. The new category of corporate lawyer was introduced by the Chinese regulators in 2003 when, following China’s 2001 accession to the World Trade Organization, it became clear that its companies would need to employ lawyers capable of advising on cross-border financing, IPOs and international litigation. Figures from the Chinese Ministry of Justice show that, as of 2009, China’s 250 largest companies employed around 1,200 ‘corporate lawyers’. There were also around 90,000 ‘enterprise legal advisers’, though only a third of these held formal legal qualifications.
Perspectives: Sabine Chalmers, Anheuser-Busch InBev
‘The leadership aspect of my role has definitely increased as the company has grown,’ notes Sabine Chalmers, Anheuser-Busch InBev’s chief legal and corporate affairs officer. Following AB InBev’s $104bn acquisition of SABMiller, this is putting it mildly. Mega-deals aside, the need for leadership skills has also come with the broadening of the legal function at large corporations. ‘When I first started I was just responsible for legal. Since then I have taken on corporate affairs, communications, regulation, sustainability and corporate and social responsibility. Handling all that puts a big focus on leadership.’
Early in her career, Chalmers was given an enduring piece of advice by a chief executive. ‘If you want to spot a leader look for three things: judgement, influence and drive.’ It is a benchmark she has continued to use in measuring both her own progress and the potential of her team to step into more senior roles. ‘As a GC you are expected to get the law right and advise appropriately, but the big differentiator is the judgement you apply to that. If you don’t have the influence or the drive to take your judgements through to conclusion there’s no point in having the job of general counsel.’
Those who best embody these qualities, says the US-based Chalmers, tend to be generalists. ‘The folks who rise to the top have a perspective on everything and are naturally curious. They are constantly aware of the bigger picture in terms of both the company and the world.’ Although AB InBev has a comprehensive internal management training programme at which Chalmers herself presents to various business functions, she says training alone cannot make a lawyer into a leader. ‘You either have it or you don’t. You can’t train someone to understand the impact of diversity or the brand choices of Millennials, it has to come from natural curiosity.’
For lawyers who want to develop their instincts for leadership, she counsels: ‘Put your hand up early in your career and say: “I am mobile.” I wouldn’t be in the job today if I hadn’t done that. Some of our most successful lawyers and leaders move out of legal altogether and go into investor relations, sales or M&A. When they move back into legal they are able to see the bigger picture and speak with much more credibility. Working in a different geography is also very helpful. It gives you that broader picture and puts advice into practice.’
The statistics on the in-house profession in Japan are even more surprising. Figures from the Japan In-House Lawyers Association show that the country had fewer than 200 in-house lawyers at the start of 2007. It now lists over 1,200 practising members – a significant increase, but tiny for a $4.9trn economy.
According to Mari Sako, professor of management studies at the University of Oxford’s Saïd Business School, this rise is the result of cultural differences that may surprise those outside Japan. ‘Traditionally, the head of the legal department of the top Nikkei-quoted companies is not a qualified lawyer. Of course they will be a graduate of a top legal school, but all their post-university legal experience has been acquired within the company.’
We are seeing a lot of change now in the number of people leaving private practice to work
for a business.
Amy Ng, CBRE
Sako, who is currently undertaking a major research project looking at the role of GCs in Japan, says the situation is now changing as a result of both supply-side and demand-side pressures. On the demand side, internationalisation and the need for tighter risk management mean that, as Sako puts it, ‘some corporations have realised it might be a good idea to have in-house lawyers rather than relying on external counsel’. On the supply side, Sako points to reforms in Japanese legal education that have led to an increase in the numbers admitted to the Bar. The rising number of graduates, says Sako, has led to ‘so-called excess supply, which is not excess supply at all from a UK or US perspective, but it is certainly perceived that way in Japan. As a result, the jobs legal graduates aspire to, which is typically to become a judge, are no longer a viable career path for everyone.’
Vive la difference
According to Macquarie’s Lee, who has worked in Asia for more than 20 years, the relatively small community of in-house lawyers in developed legal markets like Singapore and Hong Kong means there tends to be less of an emphasis on broader skills. ‘Leadership is really important at Macquarie, but there’s truthfully not as much focus on it in the GC community as you’d see elsewhere because it’s still a fairly close-knit group. That means younger lawyers who want to progress tend to care more about meeting the right people than about demonstrating they can take a step outside the law.’
Besides which, in a region where GCs are expected to deal with such a wide range of languages, cultures and laws, leading a legal function tends to mean something quite different. As Singapore-based Arijit Chakraborty, chief legal and compliance officer at insurer and financial services provider Manulife, observes: ‘At the core of being a successful GC in this region is learning that it takes time to understand how it works. You can’t be a leader if you rush the process because you’ll make mistakes, and mistakes can be costly. India, the Philippines, China, Singapore are all very different, and building up that cultural awareness takes time. It’s not something you can train for, which makes it slightly different from a more harmonised legal culture.’
Perspectives: Albert Wang, 3M
‘There are all sorts of platitudes about leadership,’ says Albert Wang, general counsel for Asia-Pacific at 3M. ‘You hear them all the time: walk the talk, lead from the front, lead with integrity, and be authentic. They’re platitudes, but that doesn’t mean they’re not true. When I think about the leaders that have inspired me, all of those qualities resonate.’
Another platitude GCs slip into when discussing leadership is ‘talking the language of business’. This strikes a chord with the Shanghai-based Wang. ‘We have a very engineering and science-focused culture, and engineers talk in data. We used to see PowerPoint presentations that ran to hundreds of slides with overflow of information. There is now a trend to strip that detail out and simplify it into pictures or ideas or to develop a dialogue rather than a one-way presentation. It’s not about being updated, it’s about identifying problems and working out how the business can solve them. That, in essence, is talking the language of business.’
Seeing some of the brightest engineers grapple with translating technical expertise into commercial advice has also convinced Wang that lawyers are not the only people who struggle to adapt to management roles. However, he says lawyers must make more of an effort to develop wider skills.
‘There are all sorts of HR tools to measure leadership and lawyers always tend to score poorly on the non-technical dimensions. We often operate just in our own lane, but our businesses are asking us to bring our whole selves to the problem, even if it’s not a legal problem.’
Another issue Wang believes holds lawyers back from senior roles is their lack of focus on personal development. ‘Lawyers tend to be very work-oriented. If I ask what they are working on in their individual development plans, the answer tends to be framed in terms of work goals, whether becoming a better M&A lawyer or working on a particular type of deal. It’s less common to hear lawyers talking about the type of development that requires introspection or soft skills.’
The situation, however, is changing. According to Wang, there are now a large number of ambitious young lawyers in the region attracted by the opportunity working in-house gives them to display their broader skills. But, as the appeal of a career in-house grows, so too does the pressure on the GC to learn new leadership skills.
‘Attracting and retaining talent is becoming a core skill for GCs. If you want to build a world-class legal department with a global view then you need the best people. Good talent can tell whether you’re authentic about being world class. You can’t attract the right people without being authentic.’
Lee agrees: ‘If you’re a lawyer in London then you can be quite technical because the laws you’re used to dealing with are more or less the same across the EU. But in Asia there are so many jurisdictions – and each one is completely different – that knowing what you don’t know is more important than knowing the detail of the underlying contract.’
Alex Wiseman, head of Asia at legal recruiter Taylor Root, says the need for tactics to cope with cultural diversity is one of the most essential skills of an Asia-based GC. ‘To succeed in the GC role in a large multinational based in Asia you need to travel a lot and put in a lot of face-to-face meetings. Cultural adaptability is more important than technical skills here. If you walk into a board meeting in Jakarta and treat people as you would in the UK then it won’t wash.’
This cultural diversity, says Wiseman, is one reason why legal teams in Asia have tended to remain small and rely on outsourcing to local counsel. However, the model is now changing and, with larger teams, a second essential skill GCs need to show is an eye for recruitment: ‘There is a growing pressure to grow legal teams in the region and finding the right people in each country is one of the core competencies of the senior legal role.’
Perspectives: Suzanne Wise, Network Rail
‘In the legal profession people don’t always let go quickly enough. That mentality can be destructive if it gets carried in-house,’ says Suzanne Wise, group general counsel and company secretary of Network Rail, the public body that owns and maintains the bulk of the UK’s railway infrastructure. For Wise, learning to let go is one of the distinguishing features of a successful GC.
‘You don’t get into the technical details of your function at a very senior level because discussions tend to be much more focused on the business as a whole, and the expectation is that you will take full part in those discussions. Communicating and influencing skills are very important if you want to move into a senior position in-house because an awful lot of what you find yourself doing is not legal work.’
Wise leads a diverse team at Network Rail, with 35 lawyers among the 110 staff based within the legal function. The remainder are a mix of support staff and a group of non-legal units that Wise oversees, including the central business change team. Taking on a managerial role that has little to do with being a lawyer is, she says, a development many other GCs are now experiencing. ‘I meet a lot of other GCs now with wider remits. The role is not seen as that of legal adviser anymore.’
Learning to thrive with such a broad remit is a challenge, but Wise says the in-house role typically provides ambitious lawyers with plenty of opportunities to hone non-legal skills. ‘I certainly didn’t learn how to do this at law school, but if you look back over your career there are lots of things you can do to prepare yourself for being a strong leader. Always put your hand up when people are looking for someone to take things on outside legal and take advantage of leadership programmes, especially those that will teach you about your own strengths and weaknesses.’
For lawyers with an eye on the GC role, Wise is an advocate of coaching and softer skills training. ‘You can’t be a strong leader unless you know yourself well. A lot of lawyers think they don’t need this stuff, but from my perspective it was invaluable. The more senior you become in an in-house role, the lonelier it becomes. Having a professional, executive-level coach is really helpful. You’ll almost certainly have issues communicating with the board or the chief executive as you rise to the top and you will need someone to help you work out how to respond.’
According to Albert Wang, GC for Asia-Pacific at 3M, the need for leadership skills in-house in Asia will change as businesses across the region rethink their relationship with legal. ‘Historically, our clients would gravitate towards reactive advice – “I’m in a crisis and I need some help” – but it’s slowly changing and my team has made a conscious shift to address the question: “What does it mean to be a great lawyer?” We need to be on top of the trends that are likely to affect the company in the region and to do that we need to stop thinking as lawyers and use metrics that reflect the business’s metrics. It’s a big change in the way legal advice is delivered in this region.’
Chakraborty agrees. ‘Leadership here is taking an informed legal stance on when you can or can’t take risk. That is relatively unusual for the “traditional” mindset one used to encounter here, but I can see that with each passing week it is becoming an expectation. We are not simply asked to tell the company what the law says but to lead it to a decision that is good for business. And if you ask me in 20 years’ time, I would probably no longer recognise the in-house team as a group of lawyers.’
Additional reporting by Alex Speirs.