In-house teams’ roles today are becoming increasingly complex – caused by shrinking resources, regulatory complications and growing demands from the business – and for those in Hong Kong, there is no exception. However, despite these challenges, the best ones are not cowed, and instead find innovative ways to not just survive, but also thrive. The ALB Hong Kong Top In-house Teams 2019 list celebrates the city’s crème de la crème.
As the legal industry grows increasingly and adapts to constant change and new market disruption, so are expectations placed on in-house counsel. But rather than sit back passively, teams are redefining their positions, and changing how they approach work. Those in Hong Kong have long been saying this approach is essential to get the best out of the unique market.
Hong Kong is a tough market. Not only does plenty of cross-jurisdictional work take in and around the city, but the newly released Greater Bay Area plan hints at further complexity on the horizon as the benefits of working across Macau, Hong Kong and mainland China is increasingly promoted to international businesses. Doubtlessly, in-house counsels have their work cut out for them. But while Hong Kong has a challenging future ahead, its reputation for excellence in legal talent is one of the reasons it remains a cut above other would-be competitor.
TIME OF CHANGE
Today’s in-house counsel are not siloed away, waiting to clean up an inevitable mess. Instead, they are regularly at the forefront, driving the business onward and steering it with smart decision-making and the ability to weigh risk and gauge challenges before they appear. Although the role has grown more demanding, the position, for many is more empowering than it has ever been. Being nimble, thinking strategically and providing advice and support for the direction of the businesses, talented in-house counsels have never been more valuable.
Han Wai Khor, managing director and general counsel at ICBC International, explains that as financial institutions and the regulatory demands of such institutions grow more sophisticated, legal resources are simultaneously highly valued, and under pressure. But in their line of work, Khor says, there is an acknowledgement that the whole business must manage risk together.
“In an environment where financial institutions are facing increasing regulatory scrutiny worldwide, coupled with an increased emphasis on accountability, we have observed that the tendency for business units to simply look to in-house teams to address legal risk appears to be waning - such matters are increasingly the collective responsibility of all individuals of the firm and not solely for the legal team to address,” Khor explains.
But, while this approach becomes more unified across the legal department, the responsibilities and scope of work expected to be undertaken by internal legal counsel has continued to grow “as internal divisional boundaries between legal risk management and the management of regulatory/compliance, reputational and operational risk are increasingly blurring,” Khor says.
Although some of these specifics may appear somewhat unique to the finance industry, there are also general attitude shifts that the whole industry is adopting – namely, the changing role of in-house counsel and the reliance upon them for leadership.
Khor says that as in-house teams are “increasingly expected to take a more holistic view of risk management within institutions” and the scope of areas where their advice is sought grows, the team’s perspective and advice is also “frequently sought on issues that are not of a strictly legal nature”.
As in-house counsels slowly shed their reputation as “no” people, and instead are being viewed as experts who can explain how to smartly approach new markets and pre-empt challenges, the position, skills and expectations placed on the in-house legal team have also drastically changed.
MATURING POSITION
Valda Chan, group general counsel at diversified collective of companies, Emperor Group, agrees that as the position has matured, as has the pressure placed on teams. Chan notes that while in-house counsels have in the past played a reactive role “dutifully following instructions and protecting companies from risks,” they have grown to possess a “prominent presence in the company over time”.
Understanding the value of in-house legal resources, and the team’s demonstration as a strong contributor to the business, has led to an attitude shift towards in-house counsel more generally, and greater prominence being placed on the position, Chan says, noting “The legal department is being recognized as an important function of the company.”
“The business units turn to in-house counsels not only to review/prepare documentation for business plans, but also for advice on directional strategies, structuring of cooperate deals and negotiating for key terms with business partners,” Chan explains, adding that this has led to greater appreciation for the legal department, and a better understanding of how legal resources can help to “drive business to reduce cost hence increase profit”.
Jodie Coutts, the chief legal officer of Nord Anglia Education, a Hong Kong headquartered provider of international schools, has also seen the role transition to incorporate important advisory elements.
“The role of in-house counsel has moved beyond simply performing the function of advising on legal and compliance matters and has now become a ‘trusted advisor’ to the organization, participating in formulating strategy, decision-making and devising solutions for cross-functional issues,” Coutts says.
But, she explains, the “real value” is added when the in-house team deeply understands “the business, its objectives and risk appetite,” and then, with this in mind are able to provide tailored advice, while also being able to “weigh in on important strategic matters and organisational decision-making, particularly when ‘bet the farm’ or reputational matters are at stake.”
MORE EFFICIENT, MORE EFFECTIVE
But not all change has been simply down to business expectations. Internally, in-house counsel are also driving the need to innovate and function more efficiently and more effectively.
For Coutts’ team, this has been a winning mindset. “As the business — and the environment it operates in — evolves, the organization’s legal department must also seek to anticipate change and adjust accordingly,” she says.
“We are in a fast-growing, high-performing business; to perform our role properly we need to anticipate the changing needs of the business and its objectives and adjust our role accordingly. This is done ideally by identifying and measuring ourselves against objectives that can demonstrate the value that we add. It also means continual professional development and change is a given,” she says.
While many in-house teams, despite their obvious value, are shrinking as many firms prune their businesses for the sake of cost, in Chan’s experience, her team’s ability to prove its worth has also led to the business investing more heavily in its legal resources. As in-house counsel grow more involved in businesses operation, “the company is willing to invest more in development of the legal team,” Chan explains. “Take Emperor Group as an example, we are now a department of 60 staff coving both legal and company secretarial functions,” she adds.
With greater resource support, the team’s ability to deliver has also expanded. To get the best out of these resources, the legal team has been divided into two levels, Chan explains. This has led to a “group level and business unit level”; the group level legal team provides legal support and supervision while the business level teams primary focus on legal matters that arise from day-to-day operation of the respective business units.
“Accordingly, the legal department is able to develop a more inclusive understanding of the dynamics and needs of the business units and foster better communication and trust- that helps in-house counsel get buy-in from the rest of the business because we are not simply reacting, but rather be involved in the conversation,” Chan says of the team’s structure
She adds: “In-house legal department now functions like an internal law firm supporting the company with an unparalleled understanding of the company’s culture and business strategies, the business reality and key issues faced by the business units.”
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