As an in-house lawyer for a commercial organisation, you’ll work predominantly with the sales, marketing and advertising, procurement and product development functions.
You may also, from time to time, be involved in mergers and acquisitions. Here, we look at the type of legal support these functions need.
Supporting your customer and supplier facing colleagues
If you work for a commercial business, you’ll be heavily involved in documenting its commitments to third parties and advising on the commitments they, in turn, make to your business.
Identifying who is making or receiving the commitment on behalf of the organisation will enable you to put the necessary resources, permissions and costs in place in each case. This is particularly important for non-standard transactions as it minimises legal risk and provides a clear understanding of where key responsibilities lie.
As an in-house lawyer in a commercial organisation most of your work is likely to be in support of five main business functions.
Sales
The support you provide your sales department will fall into one of two areas:
Standard. This relates to creating contracts in line with the needs of each of the business owners of the business activities described in each clause of the contract and then, maintaining, updating and keeping records of use and copies of those commonly used contracts such as:
- Non-disclosure agreements (NDAs);
- Terms and conditions;
- Service level agreements (SLAs); and
- Other agency, reseller and distribution agreements and related company policies and the laws that underpin them.
It also covers tasks such as:
- Reviewing order forms;
- Advising on contract amendments, terminations and disputes; and
- Providing guidelines on drawing up your products and service advertising and marketing compliantly and then helping others to/monitor your organisation’s advertising and marketing to ensure its promises match what can be delivered; and
- Generally keeping up to date with changes in the law that affect your organisation’s sales activity.
Non-standard. This applies to less frequent sales activity, such as pitching for abnormally high value work, bidding for public procurement contracts or international sales.
In these cases, it's important to know who the organisation's decision makers are and what they can and cannot commit to. Pre-prepared negotiation playbooks covering opening positions, acceptable ranges of negotiating positions on key points and the sign-off required can help protect the organisation (not to mention the negotiators!).
Be ready to engage in some "contract life cycle management" (i.e. helping the business to understand the contract and to ensure that it delivers to the customer the things that have been contractually committed to) when supporting the sales function. You may need to work with other departments to identify who owns different elements of the contract process and to decide how to record and communicate non-standard items.
Check too, to ensure that:
- Sales commission policies are reinforcing the right behaviours;
- You’re compliant with all anti-trust laws that apply to your organisation’s sales activities;
- You’re equipped to deal with any anti-competition actions by others that affect your organisation; and
- You’ve addressed any supply chain risks in sales contracts. For example, where the organisation is buying goods or services to resell or to incorporate into its own offering, are your subcontractors willing, able and committed to deliver?
Your colleagues will take for granted that you and your team are up to date on current law and the organisation’s policies. They’ll assume that you will proactively update templates, negotiation playbooks and non-standard agreements and that you are aware of and make changes to these things to reflect changes in internal management and group structure.
Marketing and advertising
Rules governing advertising and marketing are increasingly strict, with some sectors, such as financial services and pharmaceuticals, subject to more regulation than others.
As an in-house lawyer, expect to be called upon to:
- Clear copy in advertising materials, including websites, to ensure compliance. You’ll need to provide clear guidance and standards for defined owners to follow - and update it regularly. That way, you’ll then only need to deal with new issues and exceptions;
- Deal with customer issues by agreeing policy approaches with teams such as customer services, complaints and finance in the same way as you would for defective product issues and product recalls. Again, you’ll then only have to deal with exceptions to the policy and new issues;
- Deal with advertising standards, trading standards and regulatory bodies in certain circumstances;
- Review distance and online selling policies and procedures and related changes in data privacy law. Almost all marketing and much targeted advertising are subject to this law;
- Understand the legal aspects of branding. Brand concepts, logos and typefaces are complex, expensive and high-risk areas for organisations with strong public identities. There are many sector-specific practices and much is at stake for your company if things aren’t right. Imagine, for example, paying an agency to create a brand for your organisation only to discover you don’t have outright ownership of it or full authority over how, or where, it’s used.
Procurement
When buying products and services and selecting suppliers, your organisation will look to your department to protect its legal interests. This means you’ll be involved in some or all of these areas:
- Drafting NDAs, purchasing terms and conditions, purchase order forms and requests for proposals (RFPs);
- Understanding the impact of mandatory legislation on purchasing such as Brexit induced changes to tariffs, import and export procedures, cross border product and services standards, Modern Slavery, Anti Bribery and Money laundering compliance, etc;
- Understanding where your contractual commitments to suppliers and/or regulatory undertakings force non-negotiable obligations back up your supply chain to enable/ensure your own compliance;
- Preparing contract playbooks and training procurement staff with the same sort of considerations that you have when doing the sales contracts;
- Preparing appropriate terms and conditions for exceptional procurement projects;
- Advising on public procurement requirements when appropriate;
- Reviewing supplier bid responses and negotiating with suppliers;
- Advising on contract amendments, terminations and disputes with suppliers;
- Ensuring that you know when and how you and/or the supplier can exit or change the contract based on legislative, regulatory, supply or other economic change. For example, discovery of modern slavery issues in their supply chain;
- Understanding back-to-back risk where supplier performance or termination affects your ability to deliver on your sales contracts to price, time or specification – or even at all;
- Dealing with end of life, exit arrangements and transition to new suppliers; and
- Supplier insolvency.
You’ll also advise on finance, tax and risk issues. You may need to provide guidance on the TUPE (Transfer of Undertakings (Protection of Employment)) regulations if a procurement deal involves any of your employees transferring from your organisation to a new employer, or vice versa.
Another key consideration in procurement is your organisation’s values and ethics. For example, as well as conducting supplier due diligence, you’ll need to ensure your suppliers comply with your policy approach to various areas. These may include IT, security, health and safety, expenses and legislation such as the Modern Slavery Act, where your company's policies may be of a higher standard than is required by law or is simply a different standard from that which a supplier in a different jurisdiction may be lined up to comply with.
Product and/or service development
You have a key role to play in product and/or service development. If you can, get involved at the early stages. This will give you an opportunity to review initial plans and ensure there are no obvious legal impediments to producing and marketing the new product or service. Indeed, sometimes your advice may help improve the offering - even if only to make it legal to sell!
Other important contributions you can make include:
- Protecting sensitive information by way of NDAs;
- Negotiating R&D and consultancy agreements, joint ventures and other third party collaborations;
- Securing intellectual property rights from research or development undertaken by third parties;
- Ensuring non-standard software is correctly owned and licensed and that data processing flows are understood, documented and compliant with data privacy law;
- Advising on regulatory requirements, consumer law and product safety issues;
- Considering consumer law and advising on product recall policies;
- Making your organisation’s insurers aware of the new product plans;
- Protecting intellectual property and engaging patent or trademark agents;
- Advising on supply chain and manufacturing agreements;
- Updating your advertising, marketing, sales contracts, SLAs and playbooks for the new product and/or service; and
- Assessing any competition law in relation to the new products and the markets they’ll be sold in.
Mergers and acquisitions
Mergers and acquisitions are complex projects for all major functions in an organisation, and the legal team is no exception. If your organisation merges with, or acquires, another enterprise, your role will include:
- Executing NDAs, reviewing terms sheets and any interim restrictions;
- Developing a transaction management plan;
- Developing a post-transaction (dis)integration plan and a related legal resource and spend budget. Make this part of the transaction cost budget rather than a part of your business-as-usual budget;
- Managing confidentiality within your organisation;
- Where your organisation and/or the other party is listed, managing an insider list and communications (planned and emergency responses) to the stock market authorities involved;
- Budgeting for external counsel in the transaction costs;
- Reviewing advisors’ engagement letters;
- Assessing transaction structure;
- Managing the data room or due diligence;
- Project-managing the transaction;
- Preparing or reviewing documentation and managing the negotiation process - including pre-agreed negotiation positions, the business stakeholders who can make or authorise decisions and, critically, what the walk-away positions are;
- Helping management avoid problems that may reduce the value of the deal. For example, lock-in arrangements for acquired management that prevent the integration of sales practices, systems and staff;
- Assessing requirements for warranties and, if you are the vendor, coordinating the disclosures;
- Assessing whether any competition clearances or regulatory notifications are necessary. If so, managing the notification and clearance process and ensuring that the transaction is not implemented before approval;
- Working with HR in respect of staffing, pensions, redundancies and TUPE;
- Assessing obligations to the stock exchange and regulators; and
- Liaising with the corporate communications team and board regarding media announcements and your organisation’s response to market speculation.
Conclusion
If you work in a commercial organisation, you'll be at the heart of its activity. To be effective, you must understand your organisation - what it does, how it does it and how it makes decisions. You’ll have a key role to play and not just in relation to providing good and timely legal advice. You’ll need to develop processes that help colleagues understand and manage legal risks and process non-standard activity. You’ll need to create policies and documentation that protect the organisation’s interests with regard to contracts, communication policies and external reporting. You’ll also need a good network of external advisors that can react to business need.
A successful legal team is collaborative and consistent. It has smart processes that allow for quick responses and a common approach, whether for business as usual or non-standard activity.
To read the next article titled 'Learning and development for in-house legal teams' click here.
The following commentary was provided by Paul Barrett:
Whilst the breadth of legal work highlighted in the article is one of the reasons people choose to pursue a career in-house. That breadth and the associated demands on your time can become daunting.
Most in-house legal teams do not have specialist lawyers for data protection, intellectual property, regulatory compliance etc. and you may well be the “go to” person in your organisation for many, if not all, of these areas!
So, as the article suggests, you need to look for ways of developing processes that will allow you/your team to focus resource on the key risks facing your organisation.
Commercial contracting is an area where developing processes can yield positive results. Drafting/amending and negotiating contracts can eat up huge amounts of legal resource that may be better utilised elsewhere. How do you make that happen?
If you haven’t already, think about creating a corporate policy that puts clear parameters around the contracting process; at what materiality level is a formal agreement required (this will depend on organisational risk profile/appetite but ask yourself, is a formal agreement always needed?), when should your business use procurement and/or legal. I was responsible for the introduction of such a policy, the rationale for which was that too much time was being spent dealing with low value/low risk contracts. By providing the procurement team with the necessary tools to deal with this work (purchase order terms, letters of agreement/standard form agreements, negotiation playbooks, training etc.), we were able to significantly reduce a big drain on legal resource, allowing more focus on key business priorities.
In addition Bruce Macmillan has written the following:
It is very important to remember that the risk inherent in the contracted supply (i.e. (likelihood of something going wrong x how big it will be if it does go wrong) / ability effectively to mitigate that risk) is as important as the legal terms enforce-ability risk in the contract and the financial value of the contract in making calculations about what you review. You should also look at how your contracting processes control and check what is put down in service descriptions, service standard/credit documents and on order forms to ensure that the good work done in the main contract terms is not undone by accident or mischief elsewhere.