We talk again with Kenny Tung, long-time China-based General Counsel in the region at companies such as PepsiCo, Goodyear, Honeywell, and Kodak. A deeper dive into how the legal industry is changing and what young lawyers should consider when deciding to go in-house. Kenny recently published an excellent related article in Legal Business World - https://www.linkedin.com/pulse/going-in-house-changing-marketplace-kenneth-tung/
1:58 – How has the legal industry changed in the last few years?
8:38 – How “biglaw” came about and how it is hit now in a recession.
11:30 – Clients questioning what they’re paying for from firms and how firms will adapt?
15:56 – How is this affecting people’s decision to go in-house?
21:00 – Law firms integrating into clients and self-disciplining on fees and work scopes.
24:20 – How are in-house counsel expanding their roles within companies?
32:35 – Are in-house lawyers making themselves obsolete by automating process and increasing efficiencies?
40:50 – How people and cultural skills are more important than ever for lawyers especially in-house.
45:20 – How in-house lawyers can drive the decision-making process in a big company.
51:42 – A call to making change in your legal department and its role in the company.
Rising Demands on In-house in a Bad Economy
And suddenly the question to the in-house legal department becomes, why can't you do the work? Why do you need to hire outside counsel? And then the big law firms that get hit first by companies keeping work in house in a time of recession. So we're seeing that and I'm seeing that on the ground, you know as we speak.
That's one thing and I'll also introduce as you pointed out this phenomenon of biglaw and biglaw salaries is a relatively recent phenomenon at least historically. I think in the 80s as you mentioned when these firms started merging together and becoming big and starting to go global, they were doing large Wall Street transactions, right?
That's when the M&A mania and you know modern day robber barons, etc., you see from the Wall Street the movie with Gordon Gekko, etc. Lawyers I think were valued for that and could charge because the transactions were big and the deals were fast.
And I think that’s when they said, weprobably could get paid a little more no one would care, but now that's clearly not the case and if you're talking about big companies, it kind of doing general business not investment banks. Why do I need to pay all this amount of money and probably the advice I can get from a less expensive firm or the advice I can get just if I keep the work in-house should in a lot of cases may be good enough.
Reinventing the In-house Legal Department
In modern times, the legal expertise we have still resides in a logic spent extend outside the company in certain law firms, which requires a rethink and looking back to our reason for existence.
Well as an in-house lawyer, am I making myself somewhat redundant or obsolete or making less reason to have lawyers if we're using more technology and finding permanent fixes to process problems at the company. You're providing more value, you’re building more trust and you're being useful and useful people generally don't put themselves out of a job. They find their management and their partners find other things for them to be useful at and fix.
So this is all to say that fixing problems and finding long-term changes and fixes to problems is a good thing. And if you don't do it, if you don't reinvent yourself constantly, reinventing yourself as a legal department and becoming more strategic, and actually putting yourself in a very risky situation as a general counsel. You need to actually be proactive and this is also a part of what the expectations are of a legal department and that it's not just that lawyers should proactively go out and become more strategically minded and find ways for them to be able to provide more value to the business.
That's what they want. They want lawyers to speak their mind and tell them what the risks really are and tell them how to and be involved in transactions at an earlier stage right rather than being always reactionary.
On Being Proactive
Among people from your most lowly paid employee and your smaller suppliers to the biggest customer or a government agency who was coming after you because of your market share you have to deal with all these conflicts of relationships, and guess what? Lawyers have been doing this for thousands of years. We deal with relationship between people and yes, we know how to read and write the law. We know the law inside out we know how to spot issues.
We know how to hopefully marshal the facts but in today's age of big data and data driven world, I would argue that we need a lot of catchup work because we lawyers as a whole as a group are not in touch with data and the facts. We have to argue is really more for us to plug into the business organization to be part of the pipeline to the data source so that we can help our purpose to make these decisions. Otherwise we will always be at the proverbial bottom of the cliff dealing with the aftermath of issues and it's a very negative cycle.
We should arrest that and turn it into a more virtuous cycle when we deal with the issues. We would not be out of the job because there will always be problems and mistakes and I think its the notion that the ambulance is never going to be out of a job. But in addition to doing that we can make that life easier getting a lot of the issues up front and to the point of being a more appreciated part of the organization rather than just a cost center.