Many in-house counsel who participated in Canadian Lawyer magazine’s “2018 Corporate Counsel Survey” cited risk management as the top issue facing legal departments in the past year, though concerns over the billable-hour model and the best ways to develop and maintain relationships with outside counsel were also top-of-mind for corporate legal teams.
Risk Management, cited as a top concern by a number of survey participants, presents a pressing issue but also an opportunity, says Tony Linardi, general counsel and corporate secretary at Golder Associates Ltd., a Canadian employee-owned, global engineering firm with clients in oil and gas, mining, power, infrastructure, and manufacturing.
Corporations want all their departments to add to the bottom line, and risk management is a chance for the legal team to add value to the company, Linardi says. “Over time, where the company’s either losing money or not being as profitable as they can because of risk issues, that’s one thing that the legal team can actually come in and show value and add real value,” he adds.
“At the end of the day, the company wants every department to contribute to its bottom line.”
Gary Goodwin, executive corporate secretary and counsel at Ducks Unlimited Canada, says that, depending on the risk profile of the client, the risk may be something to embrace. In-house counsel don’t want anything to happen on their watch, but it is also their job to help facilitate transactions, he says. “I think lawyers are too focused on trying to get rid of the risk when it’s really determined by the risk profile of the client itself as to whether or not it’s a risk they can, certainly, take on,” Goodwin says.
You can read the full article in the February issue of Canadian Lawyer: In-House magazine here.
Managing risk also requires the legal department be engaged with the rest of the company because legal is the quarterback for risk management, whether it happens in human resources, finance or it involves an insurance provider, bank or the media, says Golder’s Linardi.
“So, it’s pretty important to make sure that there’s someone that [gets] involved quickly and knows how the company handles risk,” he says.
Compliance — commonly paired in many lawyers’ minds with Risk Management — was a close second-choice of concern for respondents to the survey. Indeed, with several companies in the mining industry facing steep fines and some executives jailed for fraud and corruption, Linardi says Golder is hyper-conscious and vigilant about compliance.
“From our perspective, in the engineering and construction industry, compliance has become huge,” he says. “More and more, the C-suite wants to make sure that the company’s being compliant in all regards, whether it’s domestic applications or foreign applications.”
As far as respondents identifying concerns over the best ways to establish beneficial relationships with outside counsel, many cited cost and transparency as key to building legal-department-to-outside-firm relationships. For four straight years of the survey, respondents said the most important thing outside law firms can do to improve the working relationship with the company was being more concerned about costs.
For Harpreet K. Sidhu, general counsel and privacy officer at Pethealth Inc., the legal department and outside firm need to be on the same page about requirements, priorities, and expectations for the matter to keep costs in line. Without that communication, a legal department budget can be drained of hundreds of thousands of dollars in unanticipated costs, something Sidhu experienced on a recent deal, when she was working with one lawyer and didn’t realize there were 10 lawyers working on the back-end of the matter.
“I think it’s absolutely crucial to let your external firm know exactly where your expectations are,” she says.