Corporate Legal Strategies
7
Transcript of Corporate Legal Strategies
WhatisthePurposeofYourLegalFunc6on? In-houselegaldepartmentsareembarkingonamoderniza6onjourneythatisakinto: Thetransforma6onofaccountantsintoCFOs Salesprofessionalsembracingmarke6ngskills Othercorpora6onfunc6onsintegra6nginsightfromopera6onaldata
Embracingthismissionmeansrisingabovethereputa6on&mentalityofbeingacostcenterandbecomingastrategicassetforthecorpora6on Toanswerthe6tleques6on,youneedtoknowwhatyourcorporatelegalstrategyistodayandwhereyouwantittobetomorrow?
2
AFramework*forCorporateLegalStrategies
3
Avoidance
*Lawyersdefendcompanyfrom
problemsremedially
*Legalknowledgeisneeded,ifatall,to
circumventobstacles
Compliance
*Lawyerspolicemisconduct
*Lawisanunavoidableconstrainton
businessac6vi6es&acosttobeminimized
Preven1on
*Lawyerspartnerwithbusinessto
proac6velymanagerisks
*Legaladviceissoughttominimizeiden6fiedbusiness
risks
Value
*Lawyersarepartnersinbroaderdecisionmakingasthey&theirclientsbecomesavvyinmutualleverage
*Lawasan
opportunitytocreatevalue
Transforma1on
*Lawyersfacilitatetoplevelcorporate
strategy
*Legalstrategyisacompe66ve
advantage&fullyintegratedintothecompany’svalue
chain
*Basedonthear6cle“FindingtheRightCorporateLegalStrategy”byRobertC.BirdandDavidOrozco,MITSloanManagementReview,September16,2014
StrategiesinAc6on:ExamplesofEachApproach
4
Avoidance: MF Global attempted to exploit legal ambiguities arising from being regulated by several agencies and was able to sidestep regulatory intent. But this only hid many of the serious problems underlying its lax controls and flawed risk-management practices, ultimately leading to a massive liquidity crisis and a Chapter 11 bankruptcy filing.
Compliance: UPS pays millions of dollars annually for the parking fines that its delivery trucks incur in New York City rather than comply fully with local parking ordinances. That expense is considered an acceptable cost of doing business in order to maintain its leadership in shipping and logistics.
Prevention: IBM, for example, has routinely made technical software disclosures to protect its open-source server servicing business from the threat posed by Microsoft’s proprietary server operating system.
Value: Xerox in the 1990’s monetized its otherwise dormant patent portfolio through licensing, mostly to competitors.
Transformation: Qualcomm bet its future on developing a licensing business model based on CDMA rather than focusing on handset manufacturing. It contributed CDMA wireless technology patents to develop an industry standard, and encourage key stakeholders (e.g., wireless equipment vendors and network operators) to adopt that standard through tactful licensing terms & negotiations.
DeterminingtheSuitableStrategy
5
Noone-size-fits-allapproach Somesectorsorregionswithinacompanymaydevelopadifferentsub-strategydependingonthecircumstances
Cracingandimplemen6ngasuitablelegalstrategywillinvariably: Beanitera6veprocessthatrequireslearningandadapta6onover6me Involveboththeinternalorganiza6onandkeyexternalstakeholders
Sizeoforganiza6on Stageofdevelopmentofcompany Maturityofindustry
Degreeofregula6on Levelofcompe66on Corp.culture&valueoflaw&legalfunc6on
Considera6onsforchoosingastrategy:
Avoidance Compliance Preven6on Value Transforma6on
AscendingtotheNextLevel
6
Transi1on ChangesNeededtoExecutetheStrategy Capabili1esRequiredforLegalStrategy
Avoidance
Compliance
*Managementshouldstrengthenthecompliancefunc6onwithdirectlinestoCEOandboard *Thelegalfunc6onshouldberestructuredtoensuregreatertransparency&accountability *Thelegalfunc6onneedstodevelopcompetencyinbalancingcloserela6onshipwiththebusinesswhileremainingobjec6veandarms-lengthinofferingriskassessment
*Masterthechangingboundariesofcompliance&peercompaniesposi6ons*Policecorporateconduct*Managebudget(legalprocesses,outsidelegalspend,insidelegalspend)
Compliance
Preven1on
*Managementneedstomovebeyondtradi6onalassocia6onlegalengagement,e.g.,fire-figh6ng,andinvolvelegalfunc6onmorecloselywithbusinessopera6onsandplanning *Legalneedstodeepentheirunderstandingofbusinessissuesandrisksthatcanbemi6gatedthroughlegalstrategy *Legalmustseekoutrootcauseswhenaddressingcomplianceandlegalriskissues
*Proac6veembeddingintobusinessopera6ons*Spogng&solvingissuesupstream*Manageriskwithac6onabledata*Designingrobustopera6onalguardrailstogetherwithstakeholders,e.g.,furtherconnec6ngcontractswithopera6ons
Preven6on
Value
*Businessstakeholdersneedtodeveloplegalsavvy,asinthecaseforotherfunc6onslikeIT,andregardthelegalfunc6onasakeyenablerofvaluecrea6on *Managementshoulddevoteadequateresources&supportforconceptualizingandspearheadinglegalstrategiesthatgeneratebusinessopportuni6es,intheroleofachieflegalstrategist *Guidedbythechieflegalstrategist,developacross-func6onalstrategicteamcomposedoflawyersandnon-lawyerstohypothesizelegalstrategiesandtestforimpactonboiomlines
*Businesssavvy,e.g.,collabora6ontoimproveopera6ons,revenueand/orprofit*Lean&efficientdeliveryoflegalservices*Efficacyinmatchingresourcestobusinessneeds,applyingdata&quan6fiedrisks
Value
Transforma1on
*Seniorleadership,star6ngfromCEO,setsthetone&visionthroughouttheorganiza6onthatlegalfunc6onisconcernedwithmorethancostorrisk-managementissues,andisastrategicresourceaspartofanongoingprocessforasustainablestrategythatislinkeddirectlytothecompany’sfuturecompe66veness *Addi6onallegalteammembersshouldbeaddedtoembedwitheveryaspectofthecorporatestrategydecisionandexecu6onteams
*Strategicthinkingtolinklong-termcorporateopportuni6estolegaldevelopments&underlyingsocio-poli6calandeconomicforces*Aligninglegalstrategywithbusinessopera6ons*Designthinkingtointegratelegalservicevaluedeliveryintostrategyexecu6onandopera6ons
WhoWeAre
Kennyhasprac6cedlawinNewYorkandworkedasanassociateinChinabeforeleadingChinaandAsiain-houselegalfunc6onsforcompaniessuchasKodak,Honeywell,Goodyear,PepsiCoandGeely.Inaddi6ontoIn-GearLegaly6cs,KennyalsoactsasadhocGCtomul6na6onalcompaniesopera6nginAsia.BillisaUS-qualifiedlawyerwholi6gatedinNewYorkforShearman&SterlingandPaulHas6ngsandhasprovidedlegalmanagementadvisoryservicesacrosstheUSandCanadaforcompaniessuchasPepsiCo,TDBankGroup,S6kemanEllioiandGilbert’s.
KennyTung [email protected]+8613901689465
[email protected]+8618516125438
www.iglegaly6cs.com
7
