Forecasting the future for in-house lawyers

The Covid-19 pandemic, the climate emergency, geopolitical concerns and a move towards more flexible working conditions are just some of the topics shaping the work on an in-house lawyer’s radar as the 2020s begin. Lucy Trevelyan assesses what the future holds for in-house teams.

*this article was written in February 2020.

Political and geopolitical developments

Political and geopolitical developments have always been present and have always impacted businesses, says Marco Bollini, Chair of the IBA Corporate Counsel Forum and an in-house lawyer in Milan. ‘Sometimes it is a matter of operational issues on the ground – disturbances or civil wars – sometimes it is linked to a change of governments, which brings with it new regulations, sanctions and trade wars, and sometimes it is a mixture of the two.’

The result, he says, is always that the framework in which the business operates changes and companies need to implement what it is necessary to allow the continuation of their operations and activities in the changed environment.

‘Clearly, the impact of sanctions and custom duties is something that will need the deep involvement of the in-house legal department,’ says Bollini. But, he highlights, matters like force majeure, contractual breaches or, in the worst case scenario, protection of an investment will also require the legal department’s involvement.

Although not, or only partially, political or geopolitical, he adds, is the Covid-19 virus. The outbreak, which began in winter 2019, will have a material impact on the work of in-house legal departments, at least of those of companies trading internationally. 

The newly elected government in the UK, meanwhile, tells us that ‘Brexit is done’. Yet even if the sizable majority of Prime Minister Boris Johnson’s government has provided new clarity over its ability to enact legislation and policy, its declared willingness to decouple from European standards and regulation is creating great uncertainty, says Alison Hook, Chair of the IBA International Trade in Legal Services Committee and Co-Founder of Hook Tangaza consultancy firm. ‘Uncertainty translates into significant legal and business risks – which in-house legal teams will be expected to manage.’

‘Good old Brexit still remains an issue but we have to wait and see what financial deals are made when Britain formally exits the EU, says Abhijit Mukhopadhyay, Secretary of the IBA Corporate Counsel Forum and general counsel at London-headquartered Indian conglomerate the Hinduja Group. ‘We have to play the wait and see game as to how Britain can forge new trade alliances with rest of the world.’ He adds that the ‘unpredictable’ Trump administration in the United States presents administration and regulatory changes, which also need to be properly dealt with.

Although the UK has now left the EU, says Steph Woods, Senior Legal Counsel at TotallyMoney, many elements of the UK’s future relationship with Europe remain to be negotiated and legislative and regulatory changes are expected that will take effect once the transition period has ended. ‘It seems fair to assume that these changes will affect many areas that UK in-house teams regularly advise on, such as employment, international contracts, tax and data protection,’ says Woods.

In readiness for the end of the Brexit transition period, says Mariella Nigrelli, an associate in the employment team at CMS, in-house lawyers should encourage their businesses to carry out an audit of their workforces and consider where there may be staffing issues if they currently rely on European Economic Area nationals to work in the UK. ‘They should also prepare for the new immigration system – yet to be confirmed – that will be in place after the transition period. Finally, employers may need to obtain a sponsor licence to recruit the staff they need from abroad.’

Mukhopadhyay says his global business – which operates in 11 business verticals in the core sectors – is very sensitive to geopolitical developments around the world. In this respect, the present conflict in the Middle East, especially the tensions between Iran and the United States, are a major cause for concern. This has heightened since the US imposed tough international sanctions against Iran. ‘Compliance with such sanctions both in letter and spirit is critical especially for a group like ours which has a major business interest in the US.’ 

The US/China trade war also affects all businesses globally, he says, and the consequences of the present settlement between the first and second largest economies in the world needs to be properly understood by in-house lawyers. 

Environment

Several trends will affect in-house teams in the next few years, says Bollini. The role in-house legal departments can play in the shaping of a company’s approach to sustainability matters – such as in regard to licences to operate in a third country, climate change, diversity and inclusion, and the United Nations Sustainable Development Goals – will become increasingly important.

‘Any company, whatever is its core business, will have to address at least some of those matters and “sustainability” is not just a matter for the “sustainability department”,’ says Bollini. ‘Any action or activity in that area will need to be implemented in compliance with the applicable legal framework and possibly by developing new forms of contracts. The necessary contribution of the in-house legal department here is evident.’

Bollini says that his sector – energy – is likely to see more and more regulations that affect or limit the possibility of carrying out traditional energy businesses (ie, fossil fuels), for example. ‘In-house teams will need to work in cooperation with the other functions of a company to assess and manage the impact of those regulations.’

Hook also feels that 2020 will be a year in which legislative responses to environmental issues begin to achieve some momentum.

‘If this happens, it will inevitably result in a host of new hurdles for corporate entities, requiring in-house lawyers to adapt to new regulation focused around completely new and unexplored areas, such as corporate emissions,’ she says.

Privacy, data protection and technology

Privacy is likely to become an even more important issue for in-house teams over 2020 and in the longer term, says Woods. ‘Businesses need to be increasingly upfront and transparent about data use, to reassure customers that their data is secure and is being used appropriately. Customers are no longer prepared to take this on trust,’ says Woods. ‘The increasing willingness by regulators to take enforcement action and the potential for data protection-related class actions also means that ensuring ongoing data protection compliance is now central to managing legal risk.’

Leopoldo Pagotto is Co-Chair of the IBA Anti-Corruption Committee and a partner at Freitas Leite Advogados. In Brazil, the introduction of new data protection legislation – the Brazilian General Protection Law – in August 2020 is, he believes, certainly going to directly affect in-house teams for the next couple of years.

‘Data protection should already be being addressed by in-house counsel, since new legislation creates a legal framework on the use of personal data that is completely different from the existing environment,’ explains Pagotto, who notes that the current Brazilian regime is quite flexible in relation to the rights of data subjects. ‘Companies will have to adapt to a new culture of proper use of personal data soon and in-house counsel will have a major role in this process,’ he says.

The European Union’s General Data Protection Regulation (GDPR), which has applied since May 2018, is likely to continue to shape in-house lawyers’ work for the foreseeable future, says Melanie Lane, Co-Head of Employment at CMS.

‘A particular recent trend [involves] workers using data subject access requests (DSARs) tactically, to obtain early disclosure of documents or to push employers into making generous settlement offers, given the significant time and cost associated to responding to them,’ says Lane. ‘Having appropriate policies, procedures and technical means in place to respond to DSARs is now absolutely vital.’

As the volume and sophistication of cyber-attacks grows, with accusations abound that some such attacks are the work of national governments, data breaches are increasingly a risk to businesses globally, says Hook.

‘Whilst some preventative measures can be put in place from a security perspective, in-house legal teams must be fully prepared both to ensure that the internal protocols for handling data are compliant, but also to ensure that they are prepared to launch the necessary response, in the event that the worst happens and data security is compromised,’ she says.

We are already seeing a growth in interest across the globe in technology and the role that this can play in managing the legal function, she says. ‘This is translating into demands on law firms and, in some jurisdictions like the United Kingdom, into growing opportunities for challengers to the traditional law firms. The alternative legal service provider market looks likely to continue to grow in significance and this will be driven largely by the in-house community.’

Valeria Morosini, Co-Chair of the IBA Diversity and Equality Law Committee and a partner at Toffoletto De Luca Tamajo e Soci, Milan, concludes that in-house lawyers should work on strategy instead of on limiting liabilities. ‘Consult with outside counsel and share projects to maximise benefits and opportunities instead of managing issues once arisen. Be open to innovative (also technical) proposals to manage your legal matters and daily work. Finally, invest in training and enhancing company’s culture, which again means preventing issues instead of curing.’

Morosini believes technology is the most relevant factor affecting the legal profession.

‘The speed at which data grow – they say data doubles every 12 hours – is definitely affecting the way lawyers and legal teams work,’ she says. ‘“Predictive justice” seems to be becoming a reality, given the number and quality of data that are available, so this is changing the face of in-house legal teams. It becomes strategic to find the right balance between using technology effectively, to gain productivity, and getting the strategic view and advice that only humans’ experience can – so far – grant.’

The use of technology is one of the best ways in-house counsel can prepare for any new legislation or regulatory change, Pagotto says. ‘Technology can reduce time spent on bureaucratic tasks and ease the implementation of new procedures in the company. The legal department that learns how to use technology in your daily routine effectively is the one that is going to adapt better to all [the] relevant changes in the legal framework.’

The legal sector must also prepare for artificial intelligence (AI), says Mukhopadhyay. ‘The changing nature of the in-house legal team demands working closely with businesses to provide value added services. AI is fast becoming a major tool to achieve this goal. Understanding AI and its implementation in the legal department, considering its cost benefit, is something that the in-house legal team will have to deal with in the next few years.’

Employment matters

In the short term, says Colin Leckey, a partner at Lewis Silkin, legislators worldwide are expected to continue introducing protections from sexual harassment in the wake of the #MeToo movement. ‘New York has been leading the way here, but countries outside of Europe and North America are also adopting or considering measures to combat sexual harassment, from Peru to China.’

Litigation over employment status is also likely to continue, he says. ‘This is a particularly hot topic for platform workers, whose status continues to be under challenge in many jurisdictions. Governments are adopting various strategies for regulating or controlling different types of employment status, leading to a fragmented and complex picture for in-house employment lawyers.’

Over the longer term, Leckey says, ongoing improvements in flexible working and family leave rights are expected. He notes that a number of countries improved paternity or parental rights last year, including Austria, Hong Kong, the Netherlands, South Africa and South Korea). The new UK government says it intends to consult on making flexible working the default, unless there’s a good reason not to, and we’re seeing other governments look to strengthen flexible working rights.’

The new EU Whistleblower Protection Directive is going to put whistleblowing firmly on the agenda of in-house lawyers with responsibility across Europe, the Middle East and Africa (EMEA), he says. ‘It does not need to be implemented by EU Member States until 2021 but organisations should already be thinking ahead to its impact.’

Ensuring diversity and inclusion in the workforce is another trend keeping in-house teams awake at night, Morosini says. ‘A diverse and inclusive population is mostly a success factor in companies and is proven to lead to higher productivity. There is also a positive factor in terms of company reputation and public image.’

‘If a company’s culture lacks diversity and inclusiveness, this leads to a hostile working environment and potential claims on grounds of discrimination,’ Morosini explains. ‘Consequently, legal teams are getting more involved in working out projects to ensure diversity and inclusion in their teams and in the company.’ 

Another international trend that is presenting a challenge to in-house lawyers is the rise of the gig economy, she says. ‘Many jurisdictions still struggle in finding the way to define self employment and strike the balance between subordinate employees and contractors. This also creates uncertainties for legal teams and the need for a proper experienced assessment of risks.’

Recent legislation regarding limits to fixed term contracts is also still affecting the daily work of in-house lawyers, she says. An example is Italy’s Law Decree n. 87/2018, which, as of August 2018, introduced stronger limitations to fixed-term contracts and temporary agency work. ‘The limits imposed compared to the past and the material liabilities in case of breach [suggest the need for] cautious assessments.’

A new law in Italy on flexible work (Law no. 81/2017) also creates the possibility for legal teams to arrange safe and effective flexible work for all or part of the workforce, she adds.

Another trend, likely to be at the forefront of employers’ minds on a long-term basis, is the increasing focus on mental health and wellbeing in the workplace, says Lane.
‘We are now increasingly seeing businesses seeking to create a culture of openness and to remove the stigma around mental health’, she says. ‘Employees are increasingly being encouraged to talk openly about their mental health issues and employers are focusing more on wellbeing and resilience. We are also seeing a shift in the historical (mis)understanding that mental health should be approached in a similar way to physical health.’

There are many things in-house lawyers and Human Resources (HR) departments can do to improve employees’ mental wellbeing, and to protect the business against the risks associated with it, she says. This includes producing, implementing and communicating a mental health at work plan; educating teams around what mental illness is, how it might manifest itself and how best to deal with this in the workplace; providing seminars designed to encourage open conversations around mindfulness, the importance of having breaks and looking after personal wellbeing; and providing good working conditions, which reinforce the notion that a firm cares about their workforce.

Top tips for in-house lawyers

Bollini says a good first step for in-house lawyers wanting to prepare for any upcoming changes, regardless of their jurisdictions or sectors, is for them to ask their management to assess where they see the company standing in five, ten and 20 years time.

‘From there they need to think what will be needed from the legal standpoint for the company to reach those targets,’ he explains, and set up a plan in order to be reasonably sure that their in-house legal department will be able to meet those needs within the forecasted schedule.

‘To a single in-house lawyer I would say to ask your general counsel to allow him/her to work also on new legal matters that the company will have to address in the coming years,’ Bollini adds. ‘Keep in mind that those “new” legal matters will become “old” in five-ten years time and that you will have to start the process all over again.’

Mukhopadhyay advises in-house lawyers to strive to gain knowledge not only in law but also in economic activities and geopolitical developments. ‘Legal departments ought to develop a commercial attitude to assist businesses not only to sustain but also to prosper. Articulation and developing inter-personal skills are the two powerful crucial tools to make the presence of the legal department felt across business.’ He adds that ‘Legal functions should be cost-conscious and also should endeavour to save costs. They should also focus on value addition in whatever they do.’

In-house lawyers need to be aware that HR matters are increasingly becoming board-level issues, says Nigrelli. ‘They should ensure they are familiar with the upcoming changes in legislation and the impact that these will have on the business which they advise, taking into account the potential risks of non-compliance, and particularly reputational risk. Having the correct processes and documentation in place, and educating the business as necessary on the legal changes and developing trends, is absolutely key. They should also keep a close eye out for any post-Brexit developments.’