Matching the pieces

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How to identify and collaborate well with external counsel that best fit the company’s needs is a persistent puzzle for in-house counsel. Nancy Wei, legal director at Tupperware (China), and formerly placed at Mayer Brown and Stephenson Harwood, shares valuable insights from her experience on both sides

WITH ECONOMIC GROWTH at full tilt, constant improvement of the rule of law, and business expansion across all sectors, corporate counsel, being a relatively emerging group of legal practitioners in China, continue to grow and mature. In-house counsel groups and alliances are spontaneously formed for the purpose of mutual learning and exchanges among peers.

As in-house counsel are positioned within the companies, they are inevitably malleated by their respective industry and corporate culture. However, their work is still connected by easily identifiable common ground.

Comprehensive nature of risk control. From contract management, advertisement review, intellectual property risk control, dispute prevention and resolution to labour and employment compliance, data compliance and competition law compliance, the handprint of in-house counsel in a company’s risk prevention and control is ubiquitous.

Bridging internal communication and external risk management. To ensure the operation of the company under a lawful and compliant framework, corporate counsel are tasked to carry out internal lecturing and training on regulations and perform routine in-house counsel reviews, while additionally playing a pivotal leading role in preventing and resolving external risks. It is imperative that they grasp the key points of both duties and achieve balance.

TYPES OF EXTERNAL COUNSEL

Matching the pieces, Nancy Wei
Nancy Wei

Based on the author’s understanding and observation of China’s legal profession, law firms in China can be largely classified as follows:

(1) “Red circle” firms, the top eight law firms in the Chinese legal market in terms of annual revenue that handle a great number of major, difficult, complex and well-known cases and projects. They have relatively sound internal procedures, cover a wide range of businesses, are comprised of lawyers known for high professionalism and expertise, and also have relatively high billing rates.

(2) General practice firms usually have a number of offices across the country (mainly concentrated in provincial capitals and coastal areas). They have internal committees dedicated to different legal practice areas, have relatively sound internal procedures, cover a wide range of business, comprise lawyers known for high professionalism and expertise, and have above-standard billing rates but allow certain flexibility in fee negotiation.

(3) Boutique firms mainly focus on one or several professional fields, such as intellectual property, labour and employment, construction or medical disputes. They are more or less influenced and driven by the legal service background of their founders or those in charge and have more direct interaction with the relevant industry activities and personnel – such as law firms mainly engaged in construction-related legal affairs interacting with government construction authorities and construction industry associations – including participating in the formulation of standards and rules, comprise lawyers highly specialised in their relevant fields, and have above-standard billing rates but allow certain flexibility in fee negotiation.

(4) Representative offices of foreign law firms with an assortment of backgrounds mainly serve foreign-invested enterprises and foreign clients intending to engage in investments and projects in China. They mostly handle non-litigation matters, have relatively sound internal management, are quite familiar with the cultures, operations and communication methods of foreign-invested enterprises and foreign clients, and have billing rates essentially on par with leading domestic firms.

(5) Other domestic law firms with a scope of practice mainly covering their local regions and surrounding areas. They come in various shapes and sizes with different specialised practice areas, are familiar with the law enforcement and judicial environment, and practices in their local regions and surrounding areas, comprise lawyers whose professional level and quality heavily depend on personal styles, and have substantial room for manoeuvre in fee negotiation.

MAKING THE SMART CHOICE

The best option is one that fulfils the needs. As we can see, each type of law firm has its own pros and cons in terms of positioning, expertise and fee competitiveness. When selecting the law firm and lawyers most suitable for the company, in-house counsel may take note of the following aspects.

Matching the pieces Quote

A team of lawyers with rich industry experience. Lawyers’ knowledge of the industry in which the company operates is of tremendous value for effective communication between in-house and external counsel, and thus for finding valid solutions. Particularly for certain legal matters with relatively high requirements in specialisation and proficiency – such as stock listings, construction projects and medical disputes – external counsel would preferably have accumulated considerable experience in dealing with relevant regulators, law enforcers and industry authorities so as to achieve effective communication and co-operation, and ultimately resolve issues and control risks.

Establish and accumulate a pool of lawyers, with regular follow-up and review. As corporate counsel are required to prevent, control and resolve risks faced by the company across all operations while taking into consideration the budgetary limits for legal affairs, the establishment and day-to-day accumulation of a pool of lawyers reasonably classified by level of demand, professional expertise and billing rates can work wonders towards identifying a most suitable legal team as and when needed. The pool of lawyers can be assembled from many sources, including peer recommendations, legal media and rating agencies, as well as publicly available information about cases handled by the lawyers.

Locating the point where a law firm’s background and qualifications meet the company’s needs for legal services. While the type and background of law firms are undeniably important, in practice, as all cases and legal matters require communication and touching base with the handling associate or partner, in-house counsel should place greater emphasis on inspecting lawyers’ practice experience, expertise, service quality and communication approach. It is not advisable to place too much store on the brand name of a law firm, nor to automatically pursue the lowest price. Rather, effort should be expended in finding the legal team that most ideally fits with the company’s actual needs for legal services.

COMMUNICATION AND COLLABORATION

Given their shared legal backgrounds, how in-house and external counsel can better communicate and collaborate when facing the same legal issue or dispute is an open-ended question that invites various opinions. Here is some food for thought.

Mutual trust is the basis of everything. Implementation of law can be a complex and fickle matter, and legal services are inherently intangible, which creates barriers to trust and communication with external counsel. As mentioned above, corporate counsel should first take the time to pick out the most suitable legal team. Once the selection is complete, it is imperative for in-house counsel to co-operate with complete trust and good faith. This includes leveraging the expertise and support of external counsel in the process of collaboration, and timely settling fees in accordance with the service contract, so as to avoid any unnecessary obstruction between in-house counsel and the legal team due to misunderstandings or any momentary dissatisfaction, thus hindering the ultimate resolution of the issue and achievement of the desired result.

Clear division of labour, with each party bringing to bear its own strengths. When facing a legal matter or dispute together, in-house and external counsel, as a team, should establish an internal division of duty and collaborate organically, each bringing its strengths to the table and jointly striving to achieve the objective. For example, in the evidence gathering process of a litigation, if much of the evidence is to be obtained by sifting through the company’s past information, contracts or records, in-house counsel should focus on the company’s internal communication and co-ordination. But if evidence is to come from external investigation, then in-house and external counsel should co-ordinate the time, costs and objectives of investigation, and work together to carry it out.

Working together to overcome obstacles. When collaborating, whether or not litigation or dispute resolution is involved, in-house and external counsel are bound to encounter a variety of difficulties, legal or otherwise. At such times, both parties must dive into the issue and jointly seek an effective solution. For example, in-house counsel can exchange possible solutions to similar issues with their peers, while external counsel can communicate with the competent authorities, or research their track records with other clients, in order for both to put forward proposals and recommendations conducive to resolving the issue at hand.