6th May 2022
Following a well-earned break over Easter, we’ve had time to reflect on what we learned at the GC & Compliance Forum. Lots of you spoke to us about the challenges you face. For many of you, that’s workload. For an equal number, it’s the ever-expanding GC role. For many of you, it’s both.
We thought we would share with you what we heard – and we’d love to hear back about whether it resonates. Any tips you might feedback on how you manage your full and varied workloads would be interesting to hear.
Many of you told us about projects to devise and put in place compliance regimes with supply chain/ vendors. Or about identifying where to use ‘legal tech’. Or about getting to grips with the impact of sanctions regimes. This is consistent with conversations we’ve had with our clients over the past couple of years.
These are all interesting – and big – issues in their own right. What struck us, though, was that you’re dealing with all these issues. This represents an evolution in the GC role. For a long time, the Company Secretarial role formed part of the GC role; even as the activity
and reporting requirements of the Company Secretary grew with the changing structure of the business they represented. Now, though, many of you see the GC role expanding into areas where you need in-depth knowledge of regulatory regimes and government
policy. You’re becoming designated as compliance officers and/or ESG implementation executives.
Governance risk, ethics and reputation management have always been key considerations. But these are no longer issues for consideration; they are designated responsibilities.
Organisations look for in-house lawyers with “specialist” experience from their industry.
Infrastructure companies have typically targeted energy, infrastructure and construction lawyers.
Technology businesses target intellectual property, data and commercial lawyers. When looking for roles in-house, identifying where your particular skills are needed (and valued) is often the first part of the job search.
Yet having a comprehensive knowledge of complex regulatory compliance regimes is not the sole domain of the in-house lawyer. Compliance understanding and awareness must be embedded from the Board down.
As an example, the administrative and costs burden of data protection compliance has grown over the years. Most in-house lawyers have been front and centre of compliance delivery. You’ve talked your executive teams through the requirements. You’ve
explained why it’s essential they champion GDPR compliance, implementing suitable policies and contractual arrangements.
Similarly, many of you will have been involved in implementing the requirements set by the Modern Slavery Act throughout your supply chain. You’ll have delivered training on it and engaged with a myriad of stakeholders. As your businesses find new channels
to market, understanding the scope of the payment services directive and how it might need your business to acquire authorisations or permissions is something that will be new to many of you.
Your businesses are of course looking to exploit disruptive technologies, new channels to market and non-traditional supply chain structures. This means that the regulatory landscape that they – you – have to navigate constantly changes. This increases the burden on the in-house lawyer to field questions that are “out of the comfort zone”.
You don’t have the private practice luxury of being able to draw upon the expertise of different colleagues sitting in specialist regulatory, employment or tech teams. It’s understandable, therefore, why this pace of change can be a significant challenge for the in-house lawyer.
What are the key areas of regulatory risk that the business will face over the next 12 months? Create a risk review register and identify the key issues within each field. Being able to “issue spot” is the biggest expectation of the successful in-house GC. It facilitates decisions on the prioritisation of further work.
Make the most of the know-how tools provided by legal subscription services, regulatory
authorities and private practice sources. Make sure you receive regular horizon-scanning updates. They might not give you the full in-depth analysis but they will aid “issue spotting”.
Have the right mix of options when it comes to outsourcing support on specialist regulatory requirements. Mix up your panels (whether formal or informal). Ask providers to be flexible in the way they offer support (e.g. retainers on specific subjects or monthly “surgeries” during the course of long term projects). Identify the support that is right for you and demand creativity from your providers in the way they work with you.
When we asked you about the focus for your executive team, many of you came back with the same response. “Risk and ESG”. ESG is a great example of the changing policy
landscape and your evolving role within it. Thinking about ESG when making strategic decisions (and in day to day trading activity) is something all businesses and their stakeholders are grappling with – and, let’s face it, struggling with articulating what you need to make “ESG compliant decisions”.
This does raise a question. Why is ESG’s governance and adoption being given to the lawyers? Probably because in many businesses there is no natural home for it and it’s underpinned by the law in many areas. Employment, health and safety, planning, energy and real estate, for example, are all factors.
Is anyone getting this right? We see these tools making difference:
Ensure tenders require supply chain partners to document their own ESG credentials and providing weighting to this in the decision making process. Consider expanding “continuous improvement” clauses in contracts into more comprehensive obligations.
Make it a requirement for suppliers to show their commitment to pre-defined ESG goals (or promises made in tenders).
Get feedback from function leaders and then set ESG goals as part of an internal governance programme. Chair quarterly meetings to assess what decisions/actions have
been taken to deliver the goals. Document steps taken and allocate responsibility for delivering change.
We often hear in-house lawyers complain that their role and remit makes it difficult to have a voice. That they want to be seen as an enabler, not a blocker. This is particularly so outside of businesses operating in heavily regulated environments, or large businesses
with sophisticated structures. You gave us a similar message at the Forum.
However, as the role expands – as risk management moves front and centre of the Board agenda – this is changing. In-house teams now have the opportunity to demonstrate their skill set as effective decision makers. People who can support the business in strategic
ventures and add value to the bottom line.
So, yes, the role is changing. The burden is becoming bigger. But with the right toolkit and support, there are exciting opportunities for the new generation of GCs and their in-house legal teams.