The GFC was kinder to in-house lawyers than their private practice cousins, but the Australian Corporate Lawyers Association is not ready to declare a win just yet. Angela Priestley speaks to new national president David Patience and vice president Suzanne Hillier
The past 18 months has been a tumultuous time for the legal profession. The first half of 2009 saw firm-wide salary freezes hitting the top tier, as well as hundreds of redundancies throughout the upper echelons of private practice.
But for the in-house component of the legal profession things were a little different. Sure, some departments had their cutbacks, but for the most part the in-house legal community got a chance to shine - not only as leaders within their own organisations, but also in terms of receiving more favourable treatment from their clients. Facing an increasingly competitive legal services market, law firms were forced to rethink their service delivery.
That has, according to some reports (including reports by this publication), put in-house lawyers on the front foot. Once banished to dealing with their clients in the way their client would dictate, in-house lawyers have started to enjoy a changed outlook from law firms.
The shift in thinking also reflects a shift in the profession generally. In-house lawyers are quickly moving from being a minority in the Australian legal profession, to being the fastest-growing segment. According to a Law Society of NSW report, in-house lawyers in NSW already account for 30 per cent of the total NSW legal profession.
From isolation to collegiality
For the association at the heart of the in-house legal segment - the Australian Corporate Lawyers Association (ACLA) - the rise of in-house lawyers as a dominating force in the legal profession is good news.
According to David Patience, the new president of ACLA, it's a matter of in-house lawyers now stepping up to the opportunities the shift in thinking actually presents.
Patience, general counsel and company secretary for Asset Co Management, points to Allen & Overy's recent announcement that it would soon open two offices in Australia to further back his belief that competition in the legal services market is only increasing. "It's such a small market [in Australia], so it's interesting to see an international player come in and wholeheartedly want to do these things," he says.
With such increased competition, Patience is adamant in his belief that the personalities of external lawyers matter, as do connections. "If you need someone in a certain area that you don't know, then you will go to a recommendation," he says. "The people that drive the work - the rainmakers - are the key people that will keep clients in my mind. I move from job to job, but for many matters I will quite often stay with the same law firm."
It comes down to the fact that, more often than not, in-house lawyers can find themselves in an isolating role. "Quite often you're the only lawyer in the whole group and even though that's exhilarating in some circumstances, it's still hard to walk around the corner and ask somebody in the office next door, 'Hey what do you think about this'?"
The return to client service
According to ACLA vice president Suzanne Hillier, who is the senior legal adviser at the Western Australian Department of Health, the GFC has sparked an emerging interest in client services from law firms: services that she believes had taken somewhat of a hiatus when the market was booming. "There's an extension of trying to look after you in a broader way, rather than just taking care of the advice you require at that point," she says. "There's more continuity in keeping in contact and following up."
Meanwhile, Patience points to the add-on services being offered by law firms to assist their clients - such as Blake Dawson's SALT platform - as further proof of such an extension. While he sees the merit from a law firm's behalf - especially that it can extend the contact time with their clients and prove their innovation abilities - he believes such add-ons are still just an additional cost that will be difficult for an in-house lawyer to justify.
"They [add-ons] are not usually used as part of an integrated service delivery [by law firms], so making the case for them in the first instance and then justifying them makes it a bit more difficult," says Patience. "The reality is that in-house goes external when it really needs specific advice and the key issue you're looking for is someone who has some real experience or ability in an area who will find a way through and give you what you need."
The rise of the regulators
The fallout from the GFC may push some better conditions for in-house lawyers, but it also looks set to further increase the attention corporations are receiving from regulators such as the ACCC and ASIC. This doesn't have to be seen as a negative consequence, says Patience, as such increased attention could provide yet more opportunity for in-house lawyers, and the law firms that service them.
"Each company does it their own way but I've noticed in some companies the idea of dealing with the regulator is to keep well away from them - of course in some industries that simply is not possible," says Patience. "But my feeling is that in-house lawyers - if you know you're going to be dealing with the regulator regularly - then the relationship that the in-house team has with the regulator really can assist when matters need to be investigated."
So how can law firms help? "Well apart from offering advice on the black letter law - which is important in terms of how the regulator deals with things - they [the law firms] can assist in fostering that relationship. It's getting advice on when to approach the regulator and when not to," says Patience.
In turn, in-house lawyers can then find themselves in the confident position of becoming a value-add for their own organisations. With the right advice, they can better manage the relationship with the regulators, as well as the risk management strategies related to regulation. "This is the value-add in-house lawyers can give," says Patience. "If they are able to build a dialogue with the regulators in good times in saying 'These are the things we're doing, we're promoting risk management frameworks and compliance', then the regulator gets a better feeling for how things are being run and more confidence so that when they are required to look into something they have a little more background on how things are working."
According to Hillier, it's also a matter of proving the value of risk management, and getting involved. "It means that at the end of the day you're potentially saving the employer money by being involved in the risk management strategy earlier on. It's a selling point for in-house. If they can and have time to be involved in these things, then it's important to do so."
Step in ACLA
Patience and Hillier will serve for two years. While both admit they have probably surpassed the more interesting times that have faced the profession in recent years, they do note a particular ambition for their tenure: "Our key focus will be membership and marketing," says Hillier. "How to attract more members, better the services that we have and how to market ourselves in terms of the programs that we offer"
That may simply mean re-communicating just what ACLA can offer, says Hillier. And when you look at the opportunities that are available to in-house lawyers for becoming better known in their organisations, it's communication that's worth having. Given the isolation that in-house lawyers can often experience, it may simply be a matter of presenting the collegiality an association can bring, even simply by structuring social events that will help in-house lawyers maintain links to the legal profession, and therefore learn more about how they can improve their own daily practice.
So far, ACLA stands at about 3000 members - or 25 per cent of the in-house profession, according to Patience. The numbers are good, but Patience sees much room for improvement. "We should be getting close to 50 per cent," he says.
There is a breadth of skills required to successfully practice as an in-house lawyer that simply cannot be learned in private practice. "Things like how to brief counsel, how to brief external lawyers" says Patience. While ACLA is working to ensure educational programs can offer advice on such skills - such as the recently launched Graduate Diploma, In-house Legal Practice - he questions whether such knowledge needs to extend further down the chain, potentially, in the future, to law students. "I think there will be a shift, arguably at one point in time, where a lot of the law schools will look at how the the profession is divided between in-house and private practice [and respond]."
In the meantime, in-house lawyers - and, consequently, ACLA - will continue to have more say on just what the future of the Australian legal profession will look like, and law firms would be wise to take note.