Geoff Culbert is the general counsel for GE Capital (Asia-Pacific) and explains to ALB why building a legacy is vitally important for in-house lawyers
It is a function of the modern in-house role. Lawyers are so consumed with the day-to-day demands of providing quick, thorough and comprehensive legal advice to their company’s executives, and so used to ‘transaction hopping’, that legacy is forgotten – in fact, viewed as incompatible with their commercial aims.
But the two aren’t as mutually exclusive as one may think. As GE Capital’s Asia Pacific general counsel Geoff Culbert tells it, they are inextricably linked. Tending to legacy – establishing efficient operating structures and building expertise within corporate legal departments – may actually assist in achieving the sometimes elusive ‘closeness to businesses’ now becoming a non-negotiable aspect of employment.
Operating rhythm
There’s no denying that Culbert is a busy man. In addition to managing a 60-strong team of lawyers in ten jurisdictions across Asia, and handling the wide swathe of legal and corporate matters generated by one of the world’s most active commercial and consumer finance companies, he is also acutely aware of the need to build for the future.
However, where many in-house lawyers see issues like legacy as falling beyond their job description, Culbert sees this as an intrinsic part of his position as GE Capital's Asia-Pacific general counsel. “In addition to my day-to-day work, I really consider my role as one that helps to build a stronger legal function that will create a legacy, so that if there is a time when I move onto another role in the company, there will hopefully be a more efficient and effective legal team in place,” he says. “This is something we all strive to do at GE – building for the future.”
This is a legacy that Culbert says is achieved by sticking to what he calls an operating rhythm. “I start off the year by sitting down with each country’s general counsels and discussing how we can build the infrastructure of our legal function in the year ahead, and how we can monitor the progress of what we have achieved,” he says.
The result is one of the most well-developed knowledge management and operational systems databases of any in-house team in the region. Encompassing everything from document management systems and advice precedent databases, to performance metrics tools, outside legal spend analyses as well as pro-bono programs and government relations initiatives. The resemblance that these measures bear to the business development side of top-tier firms is clear. “We have come a long way over the last two and half years in these areas and to some extent we are trying to model ourselves like a law firm,” he says.
But implementing such a program hasn’t come without its hurdles – time is cited as the number one impediment. “Sometimes lawyers are so consumed by transactions that they simply can’t find the time to focus on building a legacy, but it is just as important an aspect of working in-house as the actual legal function.”
Important because it straddles so many of the most relevant tasks that fall under the purview of an in-house legal department. “The value-for-money proposition of an in-house team increases if you can integrate it into the broader corporate structure,” Culbert says. “Legal advice becomes timely and understanding of the business naturally deepens – all of which makes our jobs easier.”
The benefits for individual lawyers are equally as manifold. “You can build your career beyond being a lawyer … as a GE lawyer you not only get to work in different work streams in different jurisdictions, but are able to enter management training programs and become involved in broader areas of the business like finance, management and leadership. What’s also important to me is that my team continues to be motivated by the work they do, as much as I do,” says Culbert with a smile.
Self-sufficiency and external relations
Culbert admits that his recruitment policy is a little different from most in-house legal teams in Asia. Where most will target lawyers at senior associate level, he looks to fill his team with partner-level banking & finance lawyers— something he chalks up to the nature of GE Capital’s business.
“We are one of the largest commercial and consumer finance companies in the region, with over 7000 employees across Asia. We have written in excess of US$12 bn in new business volume through the first three quarters of 2009,” he says. “The work we do is extremely wide-ranging – and this means we need a legal team staffed with senior banking & finance lawyers who will add value to the business.”
On the consumer side Culbert notes the company is involved in everything from credit cards to personal and automobile loans. On the corporate side GE Capital has worked on large-scale structured finance deals and LBOs, and acted as a sponsor and arranger in addition to aircraft financing. There is also small-ticket lending and a PE business that makes strategic investments in emerging markets like India and China.
If the recruitment of senior-level lawyers is a function of the work that GE Capital is involved in, it is too a consequence of prevailing economic conditions and again, a legacy. “Our legal team has grown over the past couple of years and we’ve looked to bring lawyers on board who are capable of making strategic decisions in-house,” he says. “Our budget for external counsel has of course been reduced [as a result of the financial crisis], but too much reliance on them is not sustainable in the long-run … we are aiming to be as self-sufficient as possible.”
Self-sufficiency notwithstanding, Culbert says that external counsels still have a large role to play in making life easier, although it’s perhaps only to perform some “heavy-lifting” in M&A and large-scale corporate finance deals and specialist areas like labour law.
Here, Culbert stresses the importance of a ‘relationship-based’ approach. “We don’t maintain a formal legal panel but have relationships with preferred providers; leading international firms who have regional coverage, and domestic top-tier and specialist law firms who are cost-effective across the region,” he said.
With these firms – and others – who are looking to pick up a piece of GE Capital’s advisory work, the general counsel says the recipe for success is simple. “It is a very basic equation: if you provide good service you will get more work.”
What is his definition of ‘good service’? Culbert says it begins and ends with a two-way communication flow. “We put the onus on our external law firms to create an open dialogue with us,” he explains. “We want them to be proactive, open about costs, and come to us if problems arise. This is the basis of a strong, long-lasting relationship.”
Emerging markets and global financial crisis
Culbert believes that as far as Asia is concerned, the worst of the financial crisis may be over, citing the work volume of his in-house team as evidence. “I think the worst is very likely to be behind us,” he said. “The uncertainty in the markets seems to have cleared and liquidity issues have also improved. I believe we have swift government action to thank for that. We are very much open for business in Asia-Pacific, and are seeing a healthy pipeline of new business volumes. Companies are making the transition and looking to invest in capital expansion.”
He mentions Australia, New Zealand and South Korea as core markets that have outperformed throughout the global recession, while emerging markets in South-East Asia, India and China are active and looking very promising. GE Capital’s PE business is actively pursuing China- and India-related strategic investments, which are aligned to the company’s well-established industrial base.
Despite this promise, investments in such sectors and jurisdictions don’t come without their own risks that practitioners need to ensure are adequately covered off. “Emerging market investments are a different proposition [to established markets],” he says. “There is, of course, a need to do due diligence carefully and understand the legal regime and be able to identify future risks. You need to ensure that your ordinary expectations from a transaction are met … to the extent you aren’t comfortable, don’t invest.”
The key is striking a balance. “GE won’t invest without fully understanding the risks involved,” Culbert says, noting that the company has come through the financial crisis with a clean bill of health. “A strong risk and compliance culture is needed in any organisation and these are critical to help make sound and stable investments.” ALB
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