In late May, ELM Solutions partnered with the 5th annual International In-house Counsel Journal (IICJ) Nordic Roundtable Conference in Stockholm, Sweden. This event brings together General Counsel and other senior leaders from the corporate legal departments of top Nordic-based companies for brief presentations and roundtable discussions on a broad base of topics impacting Nordic legal professionals.
Key Themes: Compliance and Staffing
There are two main themes that emerged from the roundtable participants, which are applicable in other parts of the world to varying degrees: regulatory compliance and staffing.
Regulatory compliance is a top-of-mind concern for legal leadership across the Nordic region, as evidenced by the frequency with which the topic was raised during the discussions at this event. While this is true throughout various industries, it is of course a particularly important area of focus for those working in Financial Services and other highly regulated businesses. Often, regulations require these companies to have separate legal and compliance teams, as well as internal audit. But for many industries in the Nordic region, as in the rest of the world, there is lively debate about whether compliance is best achieved via the GC’s reporting structure or through establishment of an entirely separate function dedicated exclusively to compliance efforts.
Staffing matters and claims properly is a central aspect of legal management for any corporation in any part of the world. But the approach in the Nordic nations is distinct from companies we’ve worked with in other European nations and reflects the region’s culture and history. From a UK perspective, it was fascinating to hear Nordic GCs talk about the importance of relevant expertise for in-house staff. The goal is to have internal stakeholders turn to the corporate lawyers for advice, rather than calling a law firm, which keeps legal spend under control. Whilst legal department leaders in many other parts of the world are content to hire expert outside counsel on a project basis, those in the Nordic region prefer to develop the knowledge in-house and strive to achieve clear career paths for their team members. It was noted as a point of pride by Anne Leppälä-Nilsson, General Counsel of Finland-based Kesko, that her legal department has hired some of the finest competition lawyers in the country onto their staff.
Technology Helps Drive Performance
This year’s event featured topics that ranged from broad discussions of legal management in general to specific case studies of individual companies. The session we presented was on a topic that can be applied to any enterprise, regardless of industry or location: How can legal departments leverage technology to improve performance? This portion of the event included discussion about the real-world challenges that participants face in assessing and improving performance within their own departments. Concerns vary by industry, of course, but all agreed that legal staff should focus as much of their time as possible on actual legal work. Tools that can help minimise time spent on ancillary tasks, such as data gathering and reporting, are welcome.
Information was shared about how financial and legal results can be improved by establishing a well-defined legal management model and then deploying carefully selected technology solutions for each aspect of that model. The slide below provides a brief description of each of the recommended core disciplines of the model along with the key processes and goals that make up each piece.
Other Interesting Roundtable Topics
Presenters of the conference’s other sessions talked about a range of interesting subjects that generated a great deal of useful discussion amongst participants.
Transforming Danske Bank's Legal Departments After the Financial Crisis – Flemming Pristed, Group General Counsel for Danske Bank, discussed the process of updating the legal departments of a major financial institution’s business units after the global financial crisis by properly measuring performance, prioritising improvements, and understanding which issues are must-win battles.
Establishing the right balance of in-house lawyers to support the business units was key. Pristed described staff members as falling into three categories, based on, of all things, the Muppets! Statlers and Waldorfs are critics who simply watch others act and shout complaints. Miss Piggies are stars who perform well, but crave the limelight. And finally Kermits “take care of business” and get the work done quietly and effectively. The ideal mix is to avoid Statlers and Waldorfs altogether, employ just a few Miss Piggies, and hire as many Kermits as you can!
The Nordic Corporate Governance Model – Per Lekvall, working with Sweden’s Centre for Business and Policy Studies (SNS) and colleagues throughout the Nordic region, was the editor of a study whose goal was to define a common model of Nordic corporate governance. Lekvall shared results that showed a Nordic model clearly different to the dominant governance model in the United Kingdom and United States.
Corporations in the UK and US typically have shareholders that act mainly as investors, with an ownership stake of less than 10% each. In the Nordic nations, however, the trend is toward concentrated ownership, with shareholders taking control of and responsibility for the companies they invest in, along with strong minority investor protection. This model has proven successful in the region, with owners having “the competence, resources, and incentives necessary to engage in and take long-term responsibility for their companies to the benefit of shareholders.”
Is the Compliance Function Advisory or Policing? – Christian Kledal, Group GC for Denmark’s A.P. Møller - Mærsk, discussed the role of compliance within modern companies. After presenting on the importance of compliance, and of avoiding even the appearance of non-compliance, Kledal concluded that there is no single answer to the question of whether a company’s compliance function should advise or police its operations – it depends heavily on the needs of the company and the regulatory requirements of the industry.
There are good arguments to be made on both sides of the debate about whether the compliance and legal functions should be combined within the corporate structure. Wherever possible, Kledal recommends a pragmatic approach where the company may choose to address allegations within a group or business unit on an ad-hoc basis.
Managing the In-house Legal Function – The final session of the day was a panel discussion that focused largely on deciding which work should be outsourced and which should be kept internal – an interesting discussion for a region that leans towards keeping specialism in-house. Panel member William McKechnie, of IF P&C Insurance in Sweden, noted that as the internal compliance function has grown, it has allowed legal to move closer to a company’s business goals and focus more on very high-value work. With this dynamic in place it makes sense to move some of the bulk work to outside firms.
Similarly, numerous participants agreed that it can be wise to appoint outside counsel in cases where a compliance investigation is necessary. This provides an additional legal perspective and a valuable defence with regulators. Conference chair Andreas Gustafsson, of Nasdaq, concluded the session with a comment that in-house expertise is a good thing, of course, but it can be difficult to find and hire the right candidates. As a result, outside firms sometimes become an absolute necessity.
A Fascinating Region
Legal technology has never been a one-size-fits-all solution. When considering technology options, legal department leaders naturally seek an understanding of what various providers offer. However, it is just as important – perhaps more so – for technology providers to understand the subtleties of various business cultures around the world and what those cultures imply about a global corporation’s needs. Michael Bond, Editor of IICJ and organizer of the conference, commented, “It was a pleasure to meet the General Counsel from around the Nordic region and benefit from the networking discussions during the conference, which revealed some very interesting ideas on how to effectively manage the legal and compliance function.” We couldn't agree more, and look forward to consulting further with legal management professionals in this remarkable part of the world.
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