Business leaders turn to their in-house lawyers when it comes to solving problems or meeting challenges that involve risk and compliance.
So, to make your contribution to your organisation’s success meaningful, you need to provide legal advice, training and contracts appropriate to different audiences.
Providing the right service to the right people
Alice is a fictitious in-house lawyer for ABC Ltd, a consumer products manufacturer. ABC Ltd has set up a new business unit to roll out a new product. Senior managers in the unit have asked Alice to provide legal advice and training and prepare documents such as customer and supplier contracts. A big issue for Alice is pricing. She’s concerned the sales team may share competitor information.
When preparing to advise her colleagues. Alice will think about:
- The facts, the risks and the potential consequences of a breach. Using her understanding of what the business does and how it does it, Alice will identify the greatest risks and their consequences. She’ll also consider whether to:
- Bring in external counsel;
- Create an audit trail so that she can show a regulator or court that she advised the business and followed up her advice; and
- Discuss her advice orally before issuing it in writing. This would allow Alice to validate her assumptions and ensure her colleagues understand the implications of their decisions. This is important as very little legal advice given in a business setting is capable of attracting legal advice privilege. What Alice writes must be clear, concise and accurate.
- The audience. Ideally, Alice will make her advice on high-risk issues confidential to her audience. In this case, her audience is a small group of sophisticated senior managers (the "directing mind of the business") who require confidential and privileged advice to help them make management decisions.
Alice may feel she needs to provide further advice to a wider audience to be fully compliant. If so, training will be appropriate. At the very least, the wider audience should have an opportunity to ask questions and discuss her advice;
- What form the advice will take. How knowledgeable the audience is about legal issues will dictate the form, content and tone of Alice’s advice; and
- How specific her advice will be. Alice might include 'off the shelf' elements such as verbatim sections of the law in her advice if they’re specific to the situation. However she is always mindful of the fact that most business people only want to know what they can and cannot do not why nor what the underlying law is.
So often being concise, clear and "speaking" to them in words that they understand and setting the advice about what they can and cannot do specifically in the business context so that they can understand accept and apply the advice is more important than explaining in the underlying law.
Where legal content is essential, it should be presented crisply and simply and minimalistically. The idea is not to dazzle people with your brilliance but instead to help them understand what, for most of them, will be a "foreign language".
When setting out legal advice to colleagues, make it as clear and concise as possible. Present a summary of your conclusions first, then follow with your analysis.
Ask yourself if the audience would understand your summary and conclusion if they skimmed it on a mobile phone. You may need to explain some concepts in detail, but remember, people rarely read lengthy legal advice beyond the opening paragraphs.
Any external counsel will present their advice with you, the in-house lawyer, in mind. This means that, unless your external counsel understands you and your internal clients well, their advice is unlikely to be in a form that you can simply pass on to colleagues. You will either need to write a fresh summary in a language and format (e.g. PowerPoint) that they find easy to absorb or to add a commentary or summary to it before passing this advice on to your colleagues to ensure they'll understand it.
Back at ABC Ltd, Alice has decided to train the new product business unit on compliance with competition law.
She’ll now consider five key questions:
- What other measures are available? Training is costly, so Alice will look at all her options before committing resources. These could supplement or replace formal training. Sales commission, for example, could be structured to change bad sales behaviour, while ABC Ltd could publicly disclose its key policies to encourage transparent employee behaviour;
- Who should receive the training? Should Alice offer specific training to certain employees or general training to a wider audience? To answer this, she’ll consider compliance risks and possible consequences. If, for example, non-compliance would preclude ABC Ltd from carrying out its business activity, everyone whose roles touch compliance should receive training. This would make the training more general in nature, possibly making it inadequate for those who need specific guidance;
- Who should provide the training? Alice will weigh up the pros and cons of providing the training herself against bringing in an external provider. While the business will generally have an established rapport with Alice, an external provider could be better resourced to roll out training on a wider basis. The latter, of course, would be the more expensive option;
- What form should the training take? Factors affecting this decision will include who the audience are, where they are, their availability and any issues around time zones and languages. Of course, Alice’s budget is also a factor. The overriding objective, however, is to mitigate or resolve risk. Face-to-face training, tailored for a group, will have the greatest impact. Training wider audiences, including those overseas, may call for facilities such as video conferencing, interactive online learning, intranet guidance and other ad hoc tools. The less specific Alice’s training is, the less likely it is to make delegates fully compliant; and
- Should the training be recurring? Some training, such as anti-bribery compliance guidance, needs refreshing at appropriate intervals. Alice needs to tweak the content of recurring training to ensure it reflects evolving legislation, addresses risks and stays relevant.
Next, Alice turns her mind to drafting the contracts. As these are for a new business unit, her first decision is whether to use a precedent or draft a one-off contract.
Use precedents with care. Apart from standard terms and conditions, few precedents can be used straight off the shelf without tweaking and even standard terms and conditions might need updating to reflect current law.
When making changes to precedents, highlight them clearly and get them signed off by the relevant person. Payment terms, for example, need to be agreed with the finance team. So, agree a standardised, organisation-wide approach for managing deviations.
A good way to do this is to create a playbook or similar guide in which each business owner who is affected by each clause in the contract is identified; their needs of the clause are identified; a standard position agreed; and, ideally, agreed fall back positions and circumstances when they can be used, which each stakeholder then signs off on.
Include areas that are non-negotiable or need further approval if amended. This baseline approach could allow other business units to use and own contracts themselves under legal supervision and free up legal resource. Provide training for non-legal employees who use precedent contracts.
In most contracts, the only clauses wholly owned by the legal team are those pertaining to issues such as disputes, execution clauses, jurisdiction (often actually a matter for the tax team) and choice of contract law. So, your role in drafting the contract will include getting precedent amendments signed off by relevant stakeholders.
It is important to keep track of changes that are being made to the standards because:
- Each change means that someone in the business has to do/receive something different from normal and they need to know this;
- Regular change to standards may materially alter the company's risk and delivery capabilities - the default position that will have been assumed in defining the standards;
- Regularly changing a position suggests that the default starting position is not acceptable to customers/suppliers and so may be costing you time, orders, cost savings, customers etc. (i.e. the customers who will not negotiate and simply walk away); and
- Alice and all of the other people involved in dealing with the non-standard change request will be wasting a lot of time on following the change process for something which is a foregone conclusion rather than using that time on higher value added activity.
If Alice decides to draft a one-off contract, she’ll need to align each clause with baseline stakeholder requirements. Without precedent or framework guidance, this can be a lengthy drafting process. For this reason, it’s worth creating a precedent database with clear negotiation guidance, amendment parameters and stakeholder approval. Also, review precedents regularly to keep then up to date and, as the in-house lawyer, be the gatekeeper of any amendments.
As Alice is supporting a new product line similar to ABC Ltd’s existing range, she takes the company’s standard customer and supplier contracts as her starting point. However, she stays mindful of internal governance and any predefined governance approvals in the contract life cycle.
Finally, consider legal privilege. Ask yourself if your advice could disadvantage the business if it was disclosed in a court or to the other side. If so, try to get your advice privileged and protected from disclosure. Scope for privilege is much more limited for in-house lawyers than for external counsel, so take advice if you’re in any doubt and exercise caution when taking advice on competition laws.
Bear in mind, too, that advice given to wider audiences, such as in a training or precedent context, is rarely privileged. For this reason, avoid discussing legally sensitive issues in these forums.
Providing advice, training and contracts for the business are fundamental to your role as an in-house lawyer. To do this effectively, you’ll need a deep understanding of your organisation and its evolving areas of risks and compliance. This will help you provide the appropriate services to the right people in the most suitable format.
Please read Paul Barrett's commentary below:
Training is a critical element of any compliance programme and with the increased emphasis placed on robust compliance programmes by enforcement authorities, it is important that you get it right.
Comprehensive training will raise awareness and act as a preventative measure, if things do go wrong evidence of an appropriate compliance programme can reduce (and in some cases negate) a regulatory fine.
Given its importance, consider investing in an online solution. Whilst budget might be an issue, in the longer term the benefits of moving your training online will outweigh the initial outlay. At the very least, it will generate time savings in terms of legal resource allocated to face to face training (or paying an external firm to do it). Consider also if you can utilise an existing platform used elsewhere in your business, HR or L&D for example, to offset the cost.
An online solution will allow you to deliver a consistent message that reaches everyone that it needs to reach. You can incorporate testing to evidence understanding and this will provide data with which to bespoke any follow up training to address specific concerns. Ongoing administration will reduce significantly and should you ever need to provide evidence of the effectiveness of your programme, you will have an audit trail to allow you to do so easily.