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In House Market Seminar 27 Jul10 Improvements To In House Practice Since The Gfc Slides

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In House Market Seminar 27 Jul10 Improvements To In House Practice Since The Gfc Slides

With the in-house legal recruitment market improving Naiman Clarke recently held a seminar addressing the Improvements to In-house Practice since the GFC. This seminar addressed a variety of matters; CLE and career development, what qualities and attributes create a suitable in-house counsel, changes in legislation and regulation and their impact, lessons learnt from working with reduced capital and head count.

With the in-house legal recruitment market improving Naiman Clarke recently held a seminar addressing the Improvements to In-house Practice since the GFC. This seminar addressed a variety of matters; CLE and career development, what qualities and attributes create a suitable in-house counsel, changes in legislation and regulation and their impact, lessons learnt from working with reduced capital and head count.


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In House Market Seminar 27 Jul10 Improvements To In House Practice Since The Gfc Slides

  1. 1. Improvements to In-house Practice since the Global Financial Crisis In-house Market Seminar July 27, 2010
  2. 2. In-house Market Seminar One Improvements to In-house Practice since the Global Financial Crisis (GFC)
  3. 3. 2009 – 2010 Naiman Clarke In-house Survey For the 2009/2010 survey participants from 17 core industry sectors were surveyed: •Advertising/Marketing/Media •Automotive •Construction/Property/Engineering •Commodities •Education •Financial Services/Insurance •FMCG •Government •Information Technology •Manufacturing •Mining/Resources •Professional Services •Property •Retail •Telecommunications •Transport/Logistics •Wholesale/Distribution
  4. 4. 2009 – 2010 Naiman Clarke In-house Survey Some of our Market Report Partners were; • Deloitte • Carnival Australia • NICTA • DHL • Telstra • Thales Group • PBL • Oil Search • Ten Network • Macquarie University • George Western • CSR Limited Foods • Savills • Inchcape Australia • GrainCorp
  5. 5. Survey Objectives • To gain an understanding of the challenges faced by in house legal practitioners during the GFC. • To explore any changes to the practices mix of in house legal counsel brought about as the result of the Global Financial Crisis. • To explore whether the GFC has had any effect on the outsourcing practices of in house legal departments, and if so in what way. • To investigate the human resource management practices of in house legal departments including hiring intentions, retention strategies and remuneration practices. • To explore the views of in-house counsel on the economic outlook for Australia in general and their industry sector in particular.
  6. 6. Summary of Key Findings • Overwhelming Optimism (albeit cautious optimism) • Resource Constraints • Challenges • Increased scrutiny/accountability • Changes in Practice Mix • Changes to Outsourcing Practices See refer to In-house Market Report 2009/2010
  7. 7. Our Presenters • Leslie Moore - Deloitte’s General Counsel • Chris Bertuch - CSR Limited’s Group General Counsel and Company Secretary • Simon Brookes - Telstra’s Deputy Group General Counsel and General Counsel Broadband & Media • John Knox - Advent Lawyers’ Managing Director • Michael Bradley - Marque Lawyers’ Founder and Managing Partner
  8. 8. Leslie Moore General Counsel • Leslie and her team of 15 lawyers and other professionals provide legal advice on a broad range of issues for Deloitte’s businesses, which include assurance and advisory, tax, consulting, risk services, Forensic and Deloitte Online. • Leslie began her career as an English professor at Yale University. After attending Yale Law School, Leslie joined the New York office of the US firm of Gibson Dunn & Crutcher, where she worked as a litigator and trial lawyer. • Leslie chairs Deloitte’s Social Media Steering Committee and is a director of the board of The Deloitte Foundation.
  9. 9. Improvements to in-house practice since the GFC . Leslie Moore, General Counsel Deloitte Touche Tohmatsu Tuesday, 27 July 2010
  10. 10. What I said to Naiman Clarke back in October 2009
  11. 11. The number of vacancies in 2012 exceeding the number of qualified employees 150,000
  12. 12. Percentage of Australian employers who see a shortage in skills as high or extreme risk by 2015 47.5%
  13. 13. The average tenure for employees in a company (compared to 15 years in the 1950s) 4 years
  14. 14. The number of jobs today’s university graduates will likely have held by age 38 10-14
  15. 15. Percentage of employees surveyed who are looking or who plan to look for work in the next 12 months 49%
  16. 16. So what do we do now?
  17. 17. The new face of our most talented employees will be Women-led More Asian More diverse in sexual orientation Cross-generational
  18. 18. What are the barriers to good in-house practice and to the retention and engagement of our best in-house lawyers? Tight budgets Greater demand for than supply of in-house lawyers Lack of career development Lack of appropriate (and continual) training Work can get stale Work can be repetitive Clients can be unappreciative
  19. 19. How do we as GCs overcome these barriers? Formal career planning and development Training in the law Training in the so-called “soft skills” Training in leadership Practice development Practice management Quality of life
  20. 20. General information only This presentation is provided as general information only and does not consider your specific objectives, situation or needs. You should not rely on the information in this presentation or disclose it or refer to it in any document. We accept no duty of care or liability to you or anyone else regarding this presentation and we are not responsible to you or anyone else for any loss suffered in connection with the use of this presentation or any of its content. About Deloitte About Deloitte Australia Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients In Australia, Deloitte has 12 offices and over 4,500 people and provides audit, tax, consulting, and spanning multiple industries. With a globally connected network of member firms in more than 140 financial advisory services to public and private clients across the country. Known as an employer countries, Deloitte brings world class capabilities and deep local expertise to help clients succeed of choice for innovative human resources programs, we are committed to helping our clients and wherever they operate. Deloitte‘s approximately 169,000 professionals are committed to becoming our people excel. Deloitte's professionals are dedicated to strengthening corporate responsibility, the standard of excellence. building public trust, and making a positive impact in their communities. For more information, Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value please visit Deloitte’s web site at www.deloitte.com.au. to markets and clients, commitment to each other, and strength from diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Confidential This document and the information contained in it is confidential and should not be Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, used or disclosed in any way without our prior consent. and making a positive impact in their communities. Liability limited by a scheme approved under Professional Standards Legislation. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see © 2010 Deloitte Touche Tohmatsu. All rights reserved. www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.
  21. 21. Chris Bertuch Group General Counsel & Company Secretary • Chris joined CSR in 1993 and has overseen the management of CSR’s asbestos liabilities, major Australian and US insurance litigation and the demerger of Rinker Group Limited. • Since the Global Financial Crisis Chris has been integral to CSR’s two major capital raisings - one in response to the GFC and the other to facilitate the separation of CSR’s Sugar and Renewable Energy business, Sucrogen. In early July 2010 CSR announced the sale of Sucrogen for $1.75 billion. • Before joining CSR Chris was a partner of Gadens Lawyers. He holds a Master of Laws, Bachelor of Economics and has completed the Advanced Management Program at Harvard Business School.
  24. 24. CSR LEGAL - STRATEGY CSR’s in-house lawyers draw on their expertise and knowledge of CSR’s businesses to deliver accurate, practical, cost-effective and timely legal advice. We do this by working closely with our businesses and external advisors, carefully managing costs and providing ongoing education. 25
  26. 26. THE GFC – EFFECTS  No lending for new housing, business development, etc  Housing starts at historical lows  Commodity prices plunge  Earnings downgrades  Retrenchments & morale issues  Banking covenants threatened  Capital raisings for “balance sheet repair”  Equity markets unwelcoming  Increasing default & uncertainty 27
  27. 27. THE GFC – EFFECTS Business confidence slumps Source: NAB business confidence index 28
  28. 28. THE GFC – EFFECTS Building Approvals down 29
  29. 29. THE GFC – EFFECTS Aluminium price down 4,500 Aluminium 3 month (A$/t) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Apr 05 Apr 06 Apr 07 Apr 08 Apr 09 Aluminium 3M (A$/t) 30
  30. 30. THE GFC – IMPACT ON CSR  Late 2008 –demerger ready but put on hold due to equity and debt markets  17 November 2008 – CSR announces $480M capital raising to strengthen capital position and reduce refinancing risk  18 February 2009 CSR announces further earnings downgrade, Building Products down 20% and Aluminium down 19% on prior year  Closure of operations and reduction in size of CSR workforce  17 June 2009 - CSR progressing toward demerger 31
  31. 31. PRACTICAL LEGAL ISSUES  Supplier and customer default  “What does the agreement say”  HR and morale issues  Trade Practices – harder business environment  OH&S – reduced resources and corner cutting  Risk management and disclosure issues  Default and litigation 32 risk
  32. 32. LEGAL ISSUES - EXAMPLES  Class actions for inadequate disclosure • Centro maturing debt 2007-08 • OZ Minerals maturing debt due Nov 2008 • NAB “toxic debt” and share plunge 2008 • Gunns’ profit (and share price) plunge 2010  Regulatory action • ASIC/Liquidator investigations Allco and Babcock • Legislative intervention 33
  33. 33. WHAT DOES IT MEAN FOR IN-HOUSE?  Greater scrutiny and dependence on advice  Pressure on internal and external legal resources  Commercial advice needed, NOW! (but please give me the answer I need…)  New checks and balances – eg risk management and authority limits  New legislation & legal developments  Knowledge and document retention tested 34
  34. 34. AN OPPORTUNITY FOR IN-HOUSE  Interdependence on business culture and competencies  Increased understanding by in-house of the broader business drivers and goals  Non-legal (eg financial) competencies of in- house team  Opportunity for closer relationships with business and goals  Realign relationship with external lawyers 35
  36. 36. CONCLUSIONS  For CSR, a time of significant change  GFC as an opportunity for all in-house lawyers  More effective relationships with our customers and external providers  Challenge is to make lasting change 37
  37. 37. Simon Brookes Deputy Group General Counsel and General Counsel Broadband & Media • Simon Brookes is Telstra's Deputy Group General Counsel and Telstra's General Counsel Chief Marketing Office. • In these dual roles Simon deputises for Telstra's Group General Counsel (Will Irving), manages the "support functions" associated with Telstra's • in-house teams. • This includes staff, operations, finance/budget and knowledgment management. • Simon also provides legal support for Telstra's product, pricing and marketing business unit.
  39. 39. 1. Telstra Legal Services - STRATEGY AND STRUCTURE Aim to earn Telstra the highest corporate reputation, customer satisfaction and competitive advantage (through superb legal service). Legal group structured to deliver client needs Legal teams are aligned with company’s business units – e.g. customer facing units, products, operations, corporate centre units Also centres of expertise in Dispute Resolution and Intellectual Property Each legal team headed by General Counsel (reporting to GGC) – they are also members of business unit senior management teams Structure ensures a close working relationship, a thorough understanding of that business unit and focussed advice Also enables early detection of legal issues and greater acceptance of advice Deputy Group General Counsel role Dedicated Finance manger, Precedents and also Operations SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC 40
  40. 40. 2. INCREASING PRESSURES ON IN-HOUSE LAWYERS Budget/Resources • Get control of the budget • Fight for new budget • Meet existing budget • Get/keep Headcount • Market the legal function Role of Legal • In decision making forums Delivery of Legal Outcomes • Deep knowledge of the Systems & Processes business • Avoiding legal problems • Seen as “Trusted Advisers” • Signing deals/winning cases • Fee management whilst also maintaining • Legal Risks at acceptable • Matter management independence levels • Status reports • Not seen as “internal • Good compliance processes • Keeping the business cops/road-blocks” • “Keep the boss out of gaol!” updated • Respected • Compliance/Training • Legal environment monitor • Avoid non legal work • Adding genuine value Law Firms • Quality and Timeliness • Value for money • Strategic resource availability • Knowledge of the business 41
  41. 41. 3. IMPACT OF CHANGES IN REGULATION AND COMPLIANCE TO TELSTRA Telstra subject to high degree of regulation and regulatory scrutiny Australian Consumer Law – New civil pecuniary penalties – Substantiation notices – Infringement notices – Non-party redress – Consumer guarantees – And lots more Voluntary Section 87B Undertaking entered into by Telstra, Optus and Vodafone- Hutchison. Intended to improve marketing practices in telco industry 42
  42. 42. 4. WHAT CHANGES IN BUSINESS? Increased focus on customer experience and retention. Legal’s role in improving customer experience  Advertising  Ride ons  Contracts  Customer complaints and interaction  Consumer guarantees  Front of house processes Backed up by lawyer’s job accountabilities and client survey metrics SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC 43
  43. 43. 5. CHANGES IN LEGAL A. CHALLENGES AND OPPORTUNITIES Mix of external and internal spend, and reduced budget  Over time we have increased the number of internal lawyers  Competitive tension  Alternative fee arrangements – “all you can eat” deal with Gilbert + Tobin, fixed fee agreements at team level with other firms  Ensure team handles strategic/higher value work internally when possible (lower value work is minimised) Increasingly experienced team and more limited promotion opportunities  Largely autonomous roles in line with experience, mix of work, chance to do new things  Formal and day to day reward and recognition  Various initiatives to improve Telstra Legal as an employer SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC 44
  44. 44. B. ATTRACTING, DEVELOPING & ENGAGING PEOPLE What’s important in attracting and retaining our people  Respected Leadership  Quality of work  Close to business decisions  Flexible working arrangements  Control and autonomy over work  Benchmarked remuneration  Diversity and collegiate team What sets us apart – e.g.  Cutting edge, challenging and engaging work  More than ½ of Legal’s senior management team and 2/3 of staff are female  Around 20% of employees work part-time SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC 45
  45. 45. ATTRACTING, DEVELOPING & ENGAGING – CONT. Developing and engaging with our people  Rotations (permanent or secondments) to other legal teams – lawyers and support staff  Leadership and management training for people managers and non-managing lawyers  Secondments/moves outside Legal  Participation in cross BU business projects and cross BU groups  Co-ordination or contributing to extra-ordinary projects  Giving team members exposure to senior management  Giving team members opportunity to do new types of work to broaden skills and to become subject matter experts if they choose  Giving senior people informal people manager responsibilities  Scholarships  Building industry profile and representing Telstra at external forums SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC 46
  46. 46. D. Measuring success Annual client survey – including a separate survey of senior executives on our General Counsel Law Firm survey (our lawyers comment on our major law firms) Company wide employee engagement survey Other surveys we’ve run – attraction & retention survey, people management survey, anonymous feedback for people managers SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC 47
  47. 47. 6. NBN Co. On 20 June 2010 Telstra signed non-binding Financial Heads of Agreement with NBN Co and participate in rollout In addition to shareholder approval, Heads has a range of conditions including passing necessary legislation and ACCC approval. Also definitive agreements. Emphasises need to move to a customer centric organisation Legal team resourcing SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC 48
  48. 48. John Knox Managing Director • John is the Founder and Managing Director of Advent Lawyers. • He is an experienced legal industry professional having spent over ten years working in major international law firms in Australia, Asia • and the U.S. • Prior to returning to Australia in June 2008, John was the Head of Marketing & Business Development at Allen & Overy for Asia, based in Hong Kong, and then the U.S., based in New York. • John has spent a lot of time researching and reporting on the changing nature of legal services delivery and will talk about Advent and what makes it different and an attractive to in- house counsel.
  49. 49. “Improvements to in-house practice since the GFC” Tuesday 27 July 2010
  50. 50. Some interesting statistics.. The majority of users of top 10 law firms in Australia feel that the specific firm that they use regularly is less than excellent on cost consciousness 78% (67% in 2007) of in-house lawyers agree that reducing total legal expenditure is becoming increasingly important in their organisation 80% (71% in 2007) of in-house lawyers agree that the percentage of legal work they conduct in-house is increasing Source – Legal Beacon 2009 and ACLA in-house law report
  51. 51. There are new alternatives
  52. 52. The Advent model and value proposition Senior and experienced lawyers available to work in- house, on a flexible basis and at a reduced fixed cost.
  53. 53. A proven business model overseas • Have been going for about 9 years • Now have over 300 lawyers • Offices in New York, San Francisco, Boston, Washington, LA, Chicago, London & Hong Kong • Recently ranked #73 in America’s fastest growing private companies by Inc. magazine’s 500 fastest growing companies • Clients include American Express, Bank of America, Cisco, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Hilton Hotels, JP Morgan, Johnson & Johnson, Mastercard, Merrill Lynch, NBC Universal, Nokia, Reuters, Sun Microsystems, UBS, Virgin and Yahoo
  54. 54. How can the model be used? • Executing or project managing transactions • Managing large scale tenders or contracts • Litigation or dispute resolution • Implementing regulatory change • Compliance projects • Managing integration issues following a merger or acquisition • Short and longer term “infill” – e.g. replacement for someone on holiday, maternity leave or assigned to a major project
  55. 55. The core foundations of the model Senior & experienced lawyers Work in-house Flexible basis Reduced fixed cost
  56. 56. Senior and experienced lawyers • Senior and experienced lawyers - at least 8-10 years + PQE • Private practice and in-house experience • Access to the whole Advent team • Best person for the job • Roll up the sleeves mentality and do what it takes to get the job done
  57. 57. Work in-house • Become part of the client’s team – legal or commercial • Dedicated resource focused on the project or matter at hand – greater efficiency • Direct and immediate access • Awareness of commercial drivers and broader organisation objectives • They are available again when needed
  58. 58. Flexibility For clients • Short or longer term engagements • Can respond very quickly • Able to extend or send back early • Extra or different skills can be added as needed For lawyers • Variety and flexibility
  59. 59. Reduced fixed cost • Reduced overheads means savings are passed through to clients • Fixed fees to ensure objectives are aligned • Transparency and clear communication
  60. 60. Some examples and case studies Assisting a large Advising an investee Providing a senior privately owned company on their lawyer to support the company run and acquisition sales and trading desks negotiate a M&A by a large private of a large global transaction equity owned group investment bank Providing senior Assisting a large Working as part of a project team lawyers to support the investment bank to in the review of a major business units of a large develop and implement a contract as part of a ASX listed FMCG business process to deal with claims competitive bid and one of the world’s arising in their equipment largest IT companies leasing business Providing a deputy general Assisting a large counsel to a company to Providing a part time general privately owned assist in management of counsel as a company company to structure key projects and provide determines the need to hire a and implement coverage in the absence of the permanent resource a new fund general counsel
  61. 61. Partial client list
  62. 62. Michael Bradley Founder and Managing Partner • Marque was established in 2008 with the modest ambition of completely changing the way law is practised. • Marque Lawyers as a firm have traded timesheets for more useful measures of success such as its 4pm Friday Pens Down Rule and the monthly competition to see who’s scored the most hits on the website. • It’s still law, just done differently.
  63. 63. Thank You