How are in-house legal departments coping with the new economic reality in the corporate world? As the president of one of the elite networks of leading law firms, this past year has been a real eye-opener.
Following the recent US general election, regardless of whether you are celebrating or commiserating the outcome, the world is bracing for another four years of economic gloom. The complexity and intricacy of the problems besetting the economy are of such magnitude that people are beginning to wonder whether any one person, President or otherwise, can put 23 million Americans back to work, repay 1.7 trillion dollars of deficit, save a few million additional homes from falling into foreclosure as well as a barrage of other domestic issues… and that is just in one country.
Far from using the USA as a single barometer, the other world economies are faring no better. Europe is facing its worst crisis since the framers of the Treaty of Rome gave birth to the European miracle some sixty years ago. With one massive austerity plan after another, the governments of Ireland, Portugal, Spain and Greece have tested the single currency to - according to the Eurosceptics - its proverbial breaking point. And the Asian tiger economies that only a few years ago (pre-Lehman Brothers collapse) had witnessed consistent double-digit growth, except for a few industry pockets in the so-called emerging markets, are seeing nominal growth or are already in recession.
Due to the bleak economic outlook, it seems most multinational companies are being forced to play musical chairs by exiting traditional markets, where doing business is less profitable, for greener pastures. No sooner are these companies migrating to the BRIC economies than they find themselves having to venture into riskier emerging markets where the promise of possible greater margins justifies their respective boards to take steps. However, with these corporate choices come greater corporate governance risks, which legal departments are compelled to address. Data protection, corruption, regulatory and other compliance concerns are just a few of the important issues weighing heavy on the minds of general counsel and in-house legal teams of companies across the board.
While engaging the larger firms to carry out these tasks and continue to render legal services cross-border remains good business, in the current global economic climate legal departments are scouting for viable alternatives. As the leading local law firms quickly close the gap in terms of quality, efficiency, and internal linguistic capabilities, the value offering they make available to in-house counsel is more compelling when the fees for their assistance are in many cases significantly less than their established mega-competitors.
After three years of ranking networks, it seems the industry experts have come to realise the intrinsic value that a mature network can provide to the in-house legal teams in all industries. Networks have identified, vetted, trained and harnessed the leading law firms in most jurisdictions where clients are conducting business today, including the emerging markets. A network with a proven track record to act as a ready-made, plug-and-play assistant to the corporate counsel can prove to be an invaluable asset at any time, but certainly during the current global recession. I remain confident you will find this to be the case.