IDEX Legal and Thomson Reuters launched their 4th General Counsel Benchmarking Report on 13th April 2018 at the Legal Counsel Congress hosted at St Regis, Mumbai. The report is one of the most comprehensive annual pieces of research into the evolving role of general counsel in India and this year again demonstrates their growing influence and value addition to the business.
About the Survey
The survey was a study to understand how leaders across the legal profession are responding to emerging opportunities and challenges arising from GCs being at the cross roads of legal, compliance, regulatory and business opportunities. 50 focussed questions around legal department management were asked with over 90 GC’s responding this year:
Some of the key findings of the 2018 report as compared to last year:
- 47% of GCs directly report to the CEO (up from 44%)
- 28% of GCs report to the regional or global GC
- 51% said that over half of their department’s time is being spent interacting with the business they work with (up from 36%)
- 75% stated that the company expects them to influence board level decisions
- 68% said that talent management and training was their top priority over the coming year (up from 36%)
- 58% plan to increase the size of their departments (up from 48%)
- 28% of GC said that their average 3 year rolling salary was in excess of 1cr (up from 13%)
The findings from the report can be broken down across the following core areas
- Roles and Responsibilities
- Legal Department Strategy & Management
- Legal Department Budget & Spend
- Working with External Counsel
- Contact Management
- People Management
- Technology & Automation
- Impact of Liberalisation
The previously held notion that the Corporate legal head (before the GC tag became common in India) was responsible for simply executing transactions, managing contracts and ensuring that businesses functioned in a legally compliant manner has now transitioned to the role where GCs are now business equals and contribute directly to its success. As trusted advisors, they interact with the board and senior functional heads on matters of regulation and advise on its impact on business; prepare responses to and take specific actions in accordance with new regulations and influence the development of corporate policy. As heads of department, no longer do GCs work in isolation as units independent of the business they serve. Instead, they align their department’s goals with the goals of the business and function as a unified entity, thus having a direct impact on the success of the business.
In this new world where the GC and their department have finally achieved what they have been striving for many years, autonomy, power and a seat at the table they are faced with increased accountability for managing their own budgets and strategy. And as the business environment becomes more complex with domestic and global regulatory changes on what seems an everyday basis in addition to changing business environment the responsibility of the budget management will only increase in pressure and complexity. Ultimately one of the key measures of the success of an in-house legal department is its ability to remain cost-efficient and within budget each year increasingly important as GCs by and large control budgets in the crores which keeps expanding as their departments and accountablilities grow.
Almost 50% of their budget goes towards external counsel expenditure. And as GCs are expected to have full working knowledge of their business constantly adding business relevant value to it they are under pressure to be self-sufficient and reduce reliance on external counsel. And thewy are doing this by increasing the quality of their internal teams and advice they serve to business and results show that with the increase in this internal quality the pressure is on the external counsel to demonstrate relevant experience and a reputation of handling similar issues in the past, and a clear understanding of what the business stands for.
But why the clamour from GC for liberalisation and where does that put their relationship with external counsel who are generally not as keen for the relaxation to happen anytime soon.
Some of the fundamental reasons we see behind the demand for liberalisation is not necessarily because of a desire to bring foreign law firms in but it’s what they bring to the table as experts in the form of enhanced ability, capacity, commercial acumen, processes and structure.
So, what does all this mean?
That not only have GCs managed to cut themselves away from the CFO and finance team and stand on their feet as a department, they are taken more seriously by the business to the point the business is demanding more and more of their guidance around tactical and strategical issues. And this influence is filtering down the chain within the department as half of the team’s time is now served interacting and understanding how the rest of the business functions, which means developing skills beyond legal expertise and becoming increasingly paramount.
The ‘IDEX General Counsel Benchmarking Report’ offers an interesting perspective of both sides of the coin. Whilst there are differences between companies and sectors the overall trend is that in-house departments are becoming a force to be reckoned with and that trend is not reversing anytime soon.
For more information regarding the report or to purchase a copy please contact the IDEX Legal team on +91 22 6171 3255 / 57 or email on email@example.com.
Nihit Chauhan is an Associate at Lawlex, and is pursuing his LL.M. from Maharashtra National Law University Mumbai.