During the recent ALB Shanghai 2016 In-House Legal Summit, four general counsel and legal directors working in different industries shared their experiences and insights into building a successful in-house team.
Catherine Wang, General Counsel At DSM (China) Limited; DANIEL LIU, head of legal at Standard Chartered Bank (China) Limited; Lu Yuping, head of legal at Toto (China) Company Limited; and Wang Junwei, Manager Of Legal Department, Shanghai Electric Group Co. Limited, talked about in-house team building with Li Shangjing, China journalist at Thomson Reuters Asian Legal Business. Discussions covered a broad range of topics including in-house team structures in their respective companies, ranks held by legal department heads and how should in-house teams cooperate with business teams.
Li Shangjing: All of you are general counsels or legal directors for leading companies in your fields. However, some in the audience may not be familiar with your companies and teams. So could you give us a brief introduction of your teams, such as team size and major achievements of your teams in the last year?
Catherine Wang, General Counsel at DSM (China) Limited: The legal department of DSM (China) has eight members, including seven lawyers and one assistant. Last year, DSM (China)’s in-house team won ALB’s Top 15 In-house Legal Teams Award. It successfully completed the full acquisition of Jiangshan Nutraceutical Co., Ltd. and the joint venture deal with NHU Co., Ltd., in addition to providing comprehensive legal support for the company’s routine operations.
Daniel Liu, Head of Legal at Standard Chartered Bank (China) Limited: The legal department at Standard Chartered Bank (China) has 30 members, and is divided into one legal division for financial institutions, one legal division for personal banking, an investigation division and a non-standard files processing division. Last year, our bank, as a company listed in both London and Hong Kong, experienced two events that were newsworthy on the capital market. First, it recorded a loss in 2015 for the first time in the past two decades; second, the group management was reshuffled, and a new chief executive officer was appointed. The legal department assisted the bank in completing group restructuring and achieving business strategy transformation. As such, the main theme of our work last year was to adapt ourselves to the latest changes in the financial market, requiring us to improve our legal services and supports for the bank’s business operations in line with such charges.
Lu Yuping, Head of Legal at TOTO (China) Company Limited: This year, our in-house team has four members and an intern, and we plan to recruit one new member by the end of the year. As the company’s business continues to grow, the team needs to invest more time and energy to deal with brand protection cases, lawsuits and employment disputes arising from the group’s factories. Last year, we focused internally on tightening up contract review and risk warnings for relevant departments, and engaged external lawyers to provide our managers and sales teams with anti-monopoly, anti-unfair competition and anti-commercial bribery training. Outside the company, we worked with investigation organizations to organize campaigns to crack down on counterfeits to protect our brand. We also won lawsuits through timely communication with external counsels, and were nominated for ALB Best Innovative In-house Team Award for two consecutive years.
Wang Junwei, Manager of Legal Department, Shanghai Electric Group Co., Limited: As one of the largest equipment manufacturing groups in China, Shanghai Electric currently has approximately 60,000 employees and 100 legal professionals. Our in-house team won the ALB Top 15 In-house Team Award in 2014 upon first-time participation. Furthermore, our Chief Legal Officer, Tong Liping, was selected the best lawyer of the year in China from 2011 to 2014, being the only in-house counsel among the winners. Shanghai Electric is currently making overall planning to achieve collective management and control at the group level. Therefore, an integrated operating model has been introduced to various functions including the legal department, and vertical management will be gradually applied to legal work.
Li Shangjing: “General Counsel” is not a title that can be found in all companies. There are different appellations at State-owned enterprises, private companies and foreign firms, and legal heads hold different ranks in different organizations. Some of them are called general counsel or legal director, and some others are called head of the legal department. Could you share with us the titles of heads of legal in your respective companies in relation to their responsibilities?
Daniel Liu, Head of Legal at Standard Chartered Bank (China) Limited: As far as the title of general counsel is concerned, my understanding is that there is no precise definition of it. At Standard Chartered, general counsel is used at the group level and the Greater China level, but the traditional title – “head of legal” – is still adopted at the national level including China, following established customs. I once asked common law practitioners who told me that “general counsel” was not substantively different from head of legal in jurisdictions outside China. I noticed that the Chinese Government has been encouraging the development of the general counsel system in recent years, and the China Banking Regulatory Commission has been drafting relevant regulations. In my opinion, relative to “head of legal”, “general counsel” has broader connotations. In particular, it involves making decisions and conducting management in compliance with the law in terms of corporate governance structure. Needless to say, effective implementation is the key. Every individual enterprise has its own management model and system. It takes concerted efforts by each and every legal practitioner to integrate the general counsel system into the existing decision-making and management framework of each enterprise. Otherwise, it would become an idealistic pursuit that does not work out in reality.
Wang Junwei, Manager of Legal Department, Shanghai Electric Group Co., Limited: We all know that all companies have C-level titles such as CEO, CFO and COO, but general counsels play an advisory role (as the title suggests in Chinese), making them “outsiders” more or less. So, at Shanghai Electric, we call our head of legal “chief legal officer” or CLO in compliance with the requirements of the State-owned Assets Supervision and Administration Commission, drawing on general practices in some foreign companies. The CLO oversees legal operations throughout the group, attends management meetings, meetings of the board of directors and the general meeting, and participates in making major business decisions at the company.
Lu Yuping, Head of Legal at TOTO (China) Company Limited: The title “general counsel” is not found in Japanese companies. In the organizational chart of a Japanese company, there are only the President (general manager), followed by directors (manager of multiple departments) and department heads (including head of the legal department). Work performed by the legal department is relevant to the entire company. The legal department reports on its work according to the needs of the general manager, and may, in some cases, report directly to directors who will report to the general manager. In addition to the functions assigned to it as a department, the legal department also needs to respond to emergencies under certain circumstances. We find jobs on our own initiative according to the latest changes in laws. For example, this March 15 (Consumer Protection Day in China), we worked with the leaders of external investigation companies to secure an administrative ban on copycats in Huai’an, Jiangsu. The crackdown was carried out concurrently at two other places including Chaozhou (in Guangdong) and Suqian (in Jiangsu). Our operations in Suqian were also reported by the local news. I think designation does not really matter as it is only a job. What really matters is whether you like what you do. You will not care about such external things if you really devote yourself to the job.
Li Shangjing: In your opinion, how should the in-house team get along with business departments?
Catherine Wang, General Counsel at DSM (China) Limited: In-house teams should see themselves as one of the departments “riding on the same boat”. Different departments should fulfill their own responsibilities and assume different risks, but have the common goal of safeguarding the smooth voyage of the boat. The legal department must be familiar with the company’s products, markets and competitors, align its operations to the business development of the company, and provide legal solutions that are of value and relevant to the company’s operations. In addition, in-house team members must not compromise the fundamental principles as legal professionals, and should act in the best interest of the company as the guiding principle.
Wang Junwei, Manager of Legal Department, Shanghai Electric Group Co., Limited: How to manage the relationship between the in-house team and business functions – it is an eternal topic. The issue can be approached at three levels. First, their different positions and roles. Legal professionals should fully understand that we belong to the company, and are lawyers “of the company” and legal advisors engaged by the “enterprise” who are responsible for providing legal support for the company, and rise and fall with the company as a collective undertaking. In-house teams and business departments are business partners to each other, and we apply – rather than rely on – our legal expertise. We should not act arrogantly just because we think we are experts, as it is detrimental to our work and cooperation (with others). At the same time, we need to make active efforts to enhance the legal awareness and legal skills of the business staff through legal training and relevant publicity events, thereby building the first line of defense for legal risk prevention in business activities.
Second, mutual knowledge and understanding. Legal professionals should proactively familiarize themselves with the company’s operations as well as the actual needs of business teams. We should understand that legal work is driven by objectives that are inherently different from those of business work. It is natural that different teams have different perspectives. We need to empathize with others and walk in others’ shoes. Meanwhile, we also need to let other teams understand our stance and what we do as legal practitioners, and gain mutual recognition through continuous communication. This way, we can lay a solid foundation for smooth cooperation in the future.
Third, dialogue and cooperation. Members of the in-house team must fully understand their responsibilities. We should reveal all the risks identified. Speak all we know and dare to say no to others. Then, we need to work with business departments to digest and communicate the risks found. In doing so, we need to pay particular attention to the method of communication, meaning that we should avoid using “legalese” wherever possible. Instead, we should use languages easy to understand by business staff to improve the efficiency of communications. Last but not least, we should collaborate with business teams to work out solutions to minimize risks. In the case of risks that cannot be prevented or mitigated, contingency plans should be developed through collaborative efforts. On the other hand, the rights and responsibilities of the in-house team and business departments should also be clearly divided. The legal department should cover other departments without overstepping its authority, turning negative internal friction into positive internal demand, thereby ensuring effective legal risk prevention by enhancing dialogue and cooperation. It is expressly stipulated in the Opinions on Implementing the Legal Consultant System, the Public Service Lawyer System and the In-house Counsel System recently issued by the General Office of the CPC Central Committee that “Legal compliance must be ensured before making any decision, and no decision may be made against the law”.
Daniel Liu, Head of Legal at Standard Chartered Bank (China) Limited: In terms of cooperation between legal and business departments, Standard Chartered has always empathized on win-win cooperation between the two functions. Some argue that excessively close connections between them would affect the independence of the legal department, but our experience shows that a healthy relationship helps in-house team members better understand the company’s strategies and development directions, allowing synergies across front, middle and back offices. Healthy interactions with business departments also help legal professionals broaden their horizon, and enable them to win the understanding and support from other teams for legal risk management activities. Therefore, we encourage close cooperation and healthy interactions between the legal team and business departments!
Lu Yuping, Head of Legal at TOTO (China) Company Limited: The in-house team actually works on an equal footing with other departments. The only difference between us is that we have different jobs to do. We are more professional in certain areas, and this is how we gain their respect. We also help business functions deal with situations beyond their expertise. After all, a company relies on sales revenue to survive, and back-office operations would be affected if the company cannot deliver satisfactory sales performance. In particular, in the event of market management disorder, bringing relevant operations back on track requires the assistance from the legal department. Only in this way can business departments improve sales performance. We step in when sales teams organize counterfeit crackdown campaigns. We can conduct the operations smoothly, protecting the interests of our teams without damaging others. We work diligently in communicating with business teams and distributors. For example, we secured an administrative ban with the local industrial and commercial administration in Xi’an last week, at the request of the sales department. Our lawyer and I visited the local administration to lodge a complaint in the morning, and with the support of the administration, we managed to ban infringing sales activities by unlicensed distributors in the afternoon. The confidence of our sales department was bolstered as a result. We adopt a hands-on approach in handling key cases. Through contacts with various departments, we find that the in-house team is on very good terms with business teams. All team members are reminded to pay attention to risk prevention in business events. Working in a company is like what happens in life. We need to know what we are supposed to do! To make life enjoyable, we need to keep good relations with other people and other teams at work. Work should not keep you from enjoying your life.
