In-house counsel undertake responsibilities for corporate legal risk prevention and control. Nowadays, large and medium-sized companies have generally set up legal departments to institutionalise and standardise their daily operations, and provide legal support for their strategic decisions.
Dispute resolution lawyers are familiar with substantive law and procedural law, with rich experience in solving cases. Relying on their team-ship and backed by their law firms, lawyers have professional advantages that can gather collective wisdom and integrate resources from all parties to provide companies with professional legal services and social relationship support in all fields.
While dealing with corporate legal affairs, the goals of in-house counsel and lawyers are the same, serving the interests of the companies. However, the relationship between the two is changing. In the early years, there were few positions for in-house counsel. They normally undertook contract management and daily administrative tasks. When companies encounter disputes, they usually directly hire external lawyers to resolve them. In-house counsel were only responsible for daily communication.
In recent years, the scale of the legal department has continued to expand, and the professional level of counsel has continued to improve, especially after many judges and lawyers turned to work as in-house counsel in companies. Companies are now equipped to handle cases independently. Cases with clear facts and small value are handed over to the internal legal department, while complex cases are handed to external lawyers, which forms a “dual track” pattern.
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In the internet era, the social effects of business activities have become more and more prominent. In China, a simple commercial dispute may be affected by many factors such as traditional concepts, political ecology, policy guidance and public opinion. If handled improperly, it may trigger a chain reaction that seriously affects the goodwill of the company, and even business operations. In the future, the complexity of commercial disputes will become increasingly prominent.
Therefore, improving the corporate legal risk management system, perfecting corporate legal risk prevention mechanisms, and enhancing corporate dispute resolution capabilities are inseparable from the joint participation of in-house counsel and lawyers. They also need in-depth synergy and close co-operation with each other.
For in-house counsel, first, they should actively play a part of information processing. In-house counsel are not only the nexus for information exchange between companies and lawyers, but also an information processing centre that translates between business language and legal language. On the one hand, resolving disputes does not just come with a binary result – losing or winning – it also helps in-house counsel to know more about the company, and to be able to accurately convey the business goals and corporate interests to lawyers.
On the other hand, in-house counsel are familiar with the law, and can explicitly describe the lawyers’ legal opinions and work demands to the company, which increases the communication efficiency between the two parties. For example, when collecting evidence, lawyers often propose a general direction to obtain evidence, while in-house counsel should transform it into specific contents or requirement that are in accord with companies’ actual conditions.
In this way, the communication time between lawyers and companies’ legal departments can be reduced, and the legal service cost can be reduced, too. Meanwhile, based on the understanding of the internal process of the company, in-house counsel give clearer instructions that can be easily understood by the business department, thereby improving the work effectiveness.
Second, in-house counsel should leverage advantages of their experience in the industry. Commercial disputes in different industries show different characteristics. Resolution lawyers’ main focus is the general rules of litigation and arbitration activities, while the specific types of disputes and industry characteristics are the external carriers of these internal rules.
The correct expression of internal rules is inseparable from the accurate identification of external carriers. The in-house counsel’s industry experience can provide strong support for lawyers to accurately judge facts and specify the application of law, especially in fields with strong expertise, which require two parties to co-operate and complement each other.
Third, in-house counsel should choose a lawyer reasonably, and also trust the lawyer enough. Nowadays, as legal systems become more complex, a lawyer usually can only be proficient in a few areas, and it’s difficult for him/her to be proficient in everything. Therefore, when hiring a lawyer, in-house counsel should make reasonable choices based on the characteristics of the case and the corporate’s demand.
Once the lawyers are selected, in-house counsel should fully trust their lawyers’ professional judgement. A complex dispute always has multiple controversaries, and multiple coping strategies. Different strategies have different thinking paths and work priorities. When there are different understandings, lawyers should strive for legal recognition through their own professional qualities, while in-house counsel should trust the lawyers’ professional judgement and form a consensus to reduce communication costs and improve work efficiency.
Lawyers should fully understand the value of in-house counsel and abandon their sense of professional superiority. Instead, they should regard counsel as partners and make full use of their comparative advantages. Meanwhile, lawyers should also face the challenges brought by in-house counsel. Lawyers should enhance vertical professional capabilities, improve horizontal industry awareness, and give full play to the functions of the lawyer team, integrate the superior resources of all parties, and fully demonstrate their own value in the case.
In-house counsel are more familiar with the industry, and can provide lawyers with micro-level legal application guidance, which is a bridge for effective communication between lawyers and companies. Lawyers are better at handling complex disputes and can provide in-house counsel with macro-level dispute resolution guidance.
The progress made by in-house counsel has promoted the improvement of lawyers, and the improvement of lawyers has propelled the development of in-house counsel. The two parties are interdependent, and have formed a positive and interactive feedback relationship. As a legal professional community in general, lawyers and in-house counsel should be truth-oriented, take the law as the original, the wisdom as the companion, and “hand must warrant hand” to truly realise the complementarity and synergy between the two parties.
Li Tao is a partner at Dentons. She can be contacted on +86 10 5813 7799 or by email at tao.li@dentons.cn
