There are certainly many challenges that come with trying to manage a global legal department, but there are also a lot of benefits. Usually, these benefits far outweigh the complexities – if in-house lawyers know how to best take advantage of what a future-ready dispersed legal team can offer to the department and to the company. Below, we discuss five of the most important benefits of a global legal department.
Why It Matters…
For decades most legal departments sat in one location, with lawyers concentrated at the company’s headquarters – even when such companies had operations scattered throughout the world. Over time, smart general counsel and business leaders saw the benefits of having company lawyers dispersed across geographies, i.e., wherever the company has significant operations. Not only does this strategy make common sense, but there are also demonstratively real benefits that arise when the company’s lawyers are not concentrated in one location or time zone.
1. Understanding of Local Laws and Regulations
Many in-house lawyers struggle when faced with interpreting (or even identifying) foreign laws that apply to their company’s business. They typically do the best they can with whatever tools they have available, usually the internet. This means the legal analysis is often shallow and lacking in nuance if not simply a wild guess. The alternative has been spending money on outside counsel to advise the company about specific laws and regulations in a foreign location. Besides the expense, obtaining such advice can be cumbersome, and often fraught with language barriers and/or lack of experience with customs in a foreign jurisdiction that simply do not translate well to lawyers in the home country. All of this causes unintended problems, leaving both the in-house lawyers and the business unsatisfied with the advice. Having legal department lawyers located in different countries means having access to a team with deep knowledge of local laws, regulations, and legal systems. This can make getting advice easier, faster, and more relatable to business leaders who need it. All of which reduce the risk of non-compliance and help the company navigate local legal complexities more comprehensively and efficiently.
Similarly, in-house lawyers who are based in a particular country or region are more likely to have (or can develop) relationships with local government bodies, regulatory agencies, and other authorities. These relationships are beneficial when dealing with complex regulatory issues or legal disputes involving the company – giving it less of an “outsider” presence and a – even if slight – home-field advantage, i.e., regulators see the company as “local” and not foreign.
2. Real-Time Legal Support
The number one complaint from business leaders in foreign locations is the lack of real-time legal support. This arises when the legal department is centralized in one country and everyone else must wait hours for the legal department to respond due to time zone differences (let alone the lack of familiarity with local laws and regulations noted above). This is also difficult on the legal team because when the sun never sets on the business, it – by definition – never sets on the legal department, meaning in-house lawyers are bombarded 24-7 with legal issues and questions. By spreading legal department lawyers across different time zones, the department can provide real-time legal support to local business leaders. And those local lawyers can handle requests on the ground sparing the lawyers in the home country the around-the-clock grind that arises when there is a mismatch between business locations and the location of the company’s lawyers. Additionally, in the right circumstances, a global legal team can handle work outside of normal business hours by handing off projects and using time-zone differences to its advantage, i.e., handing off work at the end of the day to someone just starting their day or having lawyers available around the clock for emergencies, all giving the company greatly expanded access to legal support.
3. Effective Communication and New Perspectives
Legal professionals based in the same geographical location as the company’s operations can help ensure better communication with business leaders, local authorities, partners, vendors, and customers. They may be fluent in the local language and understand the cultural nuances, which can be a significant advantage. A common problem in all businesses (and legal departments) is “group think,” i.e., where everyone thinks the same about a question or issue because culturally – or systemically – they have been trained to think in similar ways and see things from a similar viewpoint. A globally dispersed legal department can offer a variety of perspectives and viewpoints, leading to more comprehensive and balanced legal strategies – especially if all of the lawyers adopt a global perspective when trying to solve company legal issues. This same diversity in the legal team can drive innovation and creativity in how legal issues are solved.
4. Cost Savings/Revenue Generation
The most expensive lawyers in the world tend to be located in the United States or large cities around the globe. This is true for in-house lawyers as well. Hiring in-house lawyers in low-cost locations around the globe can result in significant cost savings for the legal department (and the company) with no loss in quality. Also, in many cases, having lawyers on the ground in countries where the legal department is frequently engaging outside counsel can result in large cost savings as well. That is, the cost of hiring an in-house lawyer is far less than the cost of constantly outsourcing legal tasks to local firms. In a similar vein, in-house lawyers on the ground in foreign locations are more likely to get revenue-generating contracts done more quickly as their familiarity with local laws and customs means the steep learning curve faced by in-house lawyers based in the US is avoided. One additional six-figure contract a year for the company will typically more than pay for the local in-house lawyer who helped get it signed.
5. Improved Risk Management
While in-house lawyers based at the company’s headquarters like to believe they are all-seeing and all-knowing, they are not. Understanding and identifying risk when working for a global company is simply too large of a task for a group of centrally located lawyers. However, a legal department with lawyers placed around the globe and at key locations can being real-time risk management to bear. Lawyers located in foreign jurisdictions can marry legal skills with a deep knowledge of the company’s business operations and the local culture to help ensure compliance with local laws and sidestep pitfalls the company may otherwise not avoid if its watchdogs sit thousands of miles away. Working together, the lawyers at headquarters and on the ground can quickly identify potential risks and provide guidance on how to mitigate them – or raise them to the right levels of management if things are going in a bad direction.
While managing a legal team that is dispersed across the globe can be painful at times, the benefits are tangible and far outweigh the downsides. Leaders of the legal department should proactively look for ways to spread the reach of the legal team to all places where the company operates. If they have access to Practical Law, there are numerous tools available to make managing a far-flung team easier and more efficient.