In-house counsel in the Asia-Pacific region face a constant tug of war between the regional demands of their businesses and the specific legal requirements of individual markets, especially at a time when budgets to engage outside counsel are dropping.

“Gone are the days when you had a big budget. In most companies, including mine, you have to maximise your limited resources,” says Siong Koon Sim, general counsel for Asia Pacific at Electrolux, the global home appliances company.

In-house counsel at regional and multinational companies have to deal with an increasingly diverse bouquet of issues.

Increases in cross-border trade, more complex logistics and a trend by companies to produce goods in multiple markets and distribute them internationally means in-house lawyers have to be both experts in individual markets and regional generalists. They have to know, in broad strokes, how labour laws in one country differ from those in another or how trade rules will impact their business. Labour regulations in some countries are in flux. Indonesia, for example, is moving towards implementing requirements that labour contracts be done in two languages, including the local Bahasa Indonesia.

Countries are stepping up their enforcement efforts in a range of areas. Data privacy is a concern, to varying degrees, in countries across the region.

These are just samplings of the multiple issues company lawyers have to deal with.

“The most pressing regional issue we have is related to pending regulations affecting the mobile phone industry, especially in Indonesia and India,” says Steven Howard, director and general counsel for Asia Pacific at Sony Mobile Communications. The knowledge requirements go deeper than that. Both these countries are considering imposing levels of local content on local production, which could force changes in supply chains and distribution.

Keeping tabs on the changing landscape is a key requirement for effective in-house counsel. At the same time, they have to use this knowledge to lay the groundwork for their companies to adapt to changing conditions.

And in the Asia-Pacific region, much is in flux. Evolution and change is very much the norm.

Countries are quickly signing trade deals, and they are changing their own laws to protect labour or protect business or attract more investment. They are also coming up with new approaches to deal with disputes, as Singapore is trying to do with the creation of the Singapore International Commercial Court. And, perhaps most significantly, they are coming together in regional groupings that will lead to the emergence of new rules and regulations – even as the ultimate aim is to eliminate complexity.

A case in point will be the official creation later this year of the ASEAN Economic Community (AEC), which aims to further tighten links between the ten members of the Association of Southeast Asian Nations (ASEAN) while creating a single, large and globally relevant economic block.

“One long-term hope for the AEC is that there will be freer flow of goods and services across borders, so products made in one AEC member country can enter another and not be subject to any such local content or production requirements,” says Howard. “We are realistic in knowing it will be a while until such a situation exists.”

“We are still waiting to see what the AEC will be,” says Sim. “I think the motivation for forming the AEC was, ironically, China and the US. Although ASEAN was success¬ful, we need to be more attractive in order to compete with the major economies of the China and US markets.’ And things are moving dynamically.”

NATIONAL CONCERNS, REGIONAL ISSUES

These dramatic moves demand that in-house lawyers have a good understanding of the law and the practice in a number of areas and in multiple geographies. In-house company lawyers with regional or multinational companies have to keep abreast of a lot of legal trends and developments.

A sampling, on a recent day, includes the emergence of Singapore’s International Commercial Court, labour relations in Malaysia and Indonesia, Chinese import and export rules and more.

Singapore’s efforts to develop a more significant international profile could lead to the creation of a legal hub in which companies might be able to sort out disputes. From a strictly legal perspective, the SICC is generally seen as a Singapore court.

“I believe that the ASEAN community might be more willing to do this,” says Sim. “Singapore by far… has been very pragmatic finding solutions  within reason to achieve a common objective such as promoting good neighbouring relations etc.”

Singapore is certainly working to make itself more relevant to the international community, and the SICC, which has commence with a set of well known legal jurists, is a good example.

“How do you enforce agreements? How do you enforce judgments? How do you show that it is a neutral ground to resolve disputes? Is arbitration or mediation the way forward?” asks Sim. “I think that the success of the  Singapore story is its ability to improve and innovate its past successes to demonstrate its value to the  international arena.”

There are a lot of good questions around the SICC with issues that need to be resolved or clarified e.g. question of national sovereignty, how to enforce SICC judgements, need for bilateral or multi-lateral treaties etc.

“It is a very good experiment but how far will it go? I don’t know,” says Sim.

The Singapore proposal could create another avenue for dispute resolution within the region, possibly creating one more thing that in-house lawyers need to know about and master.

OUTSIDE HELP

Help can be found in the form of outside counsel, who can provide both industry and specific expertise. The challenge is often finding the right outside counsel and to do so with the contradictory factors of increasingly limited budgets and expanding portfolios.

“In my company we are using law firms more for the simple reason that we don’t have enough internal resources and need for specialised assistance,” says Sim.

For Electrolux, the balance between in-house and outside counsel is based on the size of the business in a particular country.

“As the business expands in a particular country, it will makemore sense  to have an in-house counsel,” says Sim.

“We are engaging more external lawyers but ask me this question in three years’ time and then I will say we should be using less,” Sim says.

Law firms are also increasingly being forced to compete for business. Once upon a time, firms would have put several lawyers to work on a particular issue, and bill for that. Tightening budgets mean that this is no longer an option except in very unusual circumstances. Firms might now put one senior and one junior lawyer to work on an issue.

Competition also means that external law firms are more willing – often eager – to learn more about the companies they work with and become true partners.

The need for external counsel depends on the country and the issue in question.

In Singapore, for example, Electrolux has in-house lawyers but it will seek outside help in specific cases such as intellectual property, arbitration or other specialised areas of the law.

“Let’s say we go to the Philippines. I don’t have an in-house lawyer there and though there are some similarities in the law, there are some differences,” Sim says. “It would be wise on my part to seek an external lawyer.”

Over time, the need for outside counsel changes drops, unless there are changes in the law.

One challenge that in-house lawyers like Sim face constantly is finding firms that will address their needs and the needs of the customer.

“I can get a standard textbook answer from good law firms, but that is not what I need. I don’t want to be paying good money for something I don’t need. I’m looking for a specific answer to a specific question delivered in an expedient way. It is not easy to find  that kind of lawyer.”

Big companies tend to work with multiple firms. Some companies, like Sony, use more outside lawyers than others for domestic issues.

“We definitely use outside counsel, because you are talking to my whole team,” jokes Howard during a phone conversation. “I need help on specific local matters.”

For some issues, like employment, Howard covers four separate markets including Malaysia, Singapore, Indonesia and Australia but the company distributes products across the region.

“I cover everything from South Korea to New Zealand and out to India, except for China and Japan,” Howard says, pointing out the Sony is using more outside counsel over time.

“You don’t have to look at litigation or dispute resolution; just on the regulatory side to ensure compliance, we are definitely using more. Countries are getting more into enforcement and we really want to stay one step ahead of that.”

This means finding outside partners that in-house lawyers can trust and rely on. This is not always easy.

With labour matters such as termination or cases that are dealt with at local courts or tribunals, it often makes more sense to work with local firms, both in terms of local understanding and the final bill.

“There are times when you find that the service is not what you expected or what you would like,” Howard says. “We had one firm that, throughout its written advice, got the name of the product wrong. It made me realise that they did not know our business and I did not use them again. They did not care enough to learn about our business.”

And there are times when law firms provide answers, feedback, advice or support that might not be what the company wanted.

“In those cases, the good firms will give us a discount or reduce things. I have had many firms that have been much more understanding than (the ones that) say ‘no, this is it, this is what you paid for.’”

“Overall, the services that we have gotten and the advice have been very good but, of course, you learn which firms are good in what areas,” says Howard. “I would not usually do a one-stop shop for any one country because there may be certain firms that are more suited for one type of matter than others.”