In-house counsel in Asia - A Strengthening Position
01 March 2007
Once upon a time young overworked under-paid lawyers everywhere saw the in-house counsel role as a quality of life alternative that would solve all their woes and enable them to earn a good living without leaving the law altogether.
Jane Niven, General Counsel, Asia Pacific, Jones Lang LaSalle, Singapore
However, having gained in terms of work life balance, a private practice lawyer moving in-house found – especially in Asia – that they had lost much in the way of prestige and respect. There was, undoubtedly a perception that one moved in-house because one couldn’t ‘hack it’ in the cut and thrust of private practice.
While their colleagues in the US and Europe have enjoyed an increasingly elevated status for some time, in-house counsel in Asia have until very recently continued to suffer the burden of being regarded at best as second class and at worst burnt out, incompetent lawyers seeking a safe haven.
Today as we move in an increasingly globalised environment, this perception is waning.
The role of the in-house counsel has changed dramatically in the past two decades. Where once that role consisted primarily of company secretarial functions and the management of external legal providers, today, thanks to Sarbanes Oxley, SEC regulations and their equivalent legislation across the globe, the obligations and duties of a general counsel have expanded considerably. Today the average general counsel, especially in a multi-national or listed company finds him or herself acting as legal adviser expert in tax, insurance and compliance; managing external lawyers – business counsellor in the widest sense and much, much more. One would have to be very naïve indeed if one thought that moving in-house would ensure a quiet life of nine to five, five days a week.
The enormous influx of US- and European-based companies into the Asian market has led to a significant increase in the number and size of in-house legal teams being established across the region. This, coupled with the growing recognition in many Asian countries of the need for strong rules relating to governance and transparency, has lead to a slow recognition that in-house counsel are significant players in the legal world.
In Asia, however there are other factors that impact on the role of in-house counsel, how they are perceived and how they are expected to contribute, both to the profession and to the corporate world. Hierarchy, filial piety and the concept of ‘face’ play an enormous role in the way business is executed in Asia. These cultural issues are so ingrained in some countries in the region that they present a very real conflict between counsel’s role as an enforcer of the rules and regulations of corporate governance and his or her obligations as a servant of the company and in particular senior executives.
Often recent graduates are recruited to the role of in-counsel purely on the basis that a company considers that this will save money, as the use of external lawyers will be minimised. Because of age and lack of experience the in-house may find it extremely difficult, if not impossible, to tell senior executives that they are contravening rules or regulations. While this could be equally true in Europe or the US, the problem is magnified by cultural constraints. A young unmarried male Asian lawyer may be accused of insolence if he were to advise that a proposal or contract term contravened corporate policy or local rules. In order to make himself heard he would have to find a champion, willing to act in effect as ventriloquist’s dummy. Counsel’s age and status would render his opinion of very little value. The situation for young women is even more difficult. It is highly unusual to find women in general counsel roles in India though, surprisingly, this is not the case in China.
Family companies are everywhere in Asia and the size of many of them warrant the appointment of in-house counsel. Yet the role of internal lawyer could not be more difficult. Such businesses are run on a personal basis with scant regard for the rules of governance or transparency. The boards of directors consist of siblings and other relatives of the owners. The financial director may be an in-law, the chairman, a parent and through this maelstrom of nepotism, sibling rivalry and most important private, personal ownership the in-house counsel must set standards and often use the dreaded “no” word. A non- Asian may survive this encounter but local junior in-house counsel will find themselves torn between doing the right thing by the law and fulfilling their culturally determined duty as a loyal servant of the owners. It takes many years of experience and a certain degree of cynicism to be able to get the job done.
These difficulties notwithstanding, there are clear indications that the role of in-house counsel in Asia is beginning to gain respect both in the corporate and legal worlds. Many countries in the region have established corporate counsel associations and in some countries law societies grant in-house counsel the status of ‘real lawyers’ by issuing practising certificates. Currently this privilege is available in New Zealand and Australia, but it can only be a matter of time before Singapore and Hong Kong follow suit.
In Singapore, the Singapore Corporate Counsel Association is now regularly canvassed by both the law society and the Attorney General’s office on matters affecting the profession. The Hong Kong Corporate Counsel Association has a standing committee advising government on issue of corporate governance.
Another and purely practical indicator of this change in status is salary. Where once in-house counsel in Asia could command little more than a middle manager’s salary, today’s general counsel can demand, and get, six-figure salaries with a significant bonus and other benefits. Companies have been known to go to great lengths to retain counsel.
The struggle to gain recognition in Asia is far from over, but great advances have been made. A continued commitment to the profession irrespective of the area of practice will always gain respect and we can but hope that one day in the not too distant future, our private practice colleagues and the profession in general will finally give us the recognition we deserve.