For some time now powerful Chinese companies have been looking to build an in-house legal team as part of their leadership function. In this article our consultant Roland Gu discusses the challenges Chinese businesses face when growing their legal team and how lawyers can make a move to these teams a success.
Building a new function within a business is always challenging; legal teams are no exception. Both sides, lawyers and businesses, try hard to bring harmony to the relationship but this is often difficult. A good start doesn’t always guarantee a happy life together.
What are the disconnects between businesses and their legal teams?
1. Good attorneys are always expensive and trying to encourage them to move is hard. Most lawyers are risk averse and often tough to deal with. Significant uplifts in compensation might not always be enough to attract them.
2. Attorneys are always ready to impose themselves between the business leader and a commercial idea if necessary. Internally they are often seen as a block but arguably this is what they are hired to do; challenge and consider ideas from another angle.
3. Businesses always have the impression that if they hire an in-house team, legal work doesn’t need to be outsourced any more. The reality is that cross-border transactions can be so complicated and highly regulated by multiple authorities and therefore quality legal support externally is still necessary.
4. Business expansion is always the first priority in PRC companies and risk control often comes second and always after the company has gained a certain level of business scale.
What should PRC companies think about when growing their legal team?
1. Have a strategic and thorough plan for the whole team and its future. Does the current or future business justify a full time job for an attorney? Should you bring in a team or a sole counsel? By determining how much work there is, a business can then consider what size team is required.
2. Are the business leaders ready for a new function or upgraded legal team? If not, what kind of support is the company able to provide to facilitate the job? In-house lawyers cannot survive without the positive attitude of a CEO and buy in from senior management.
3. Trying to replace external attorneys by hiring in-house attorneys might make sense but it doesn’t eliminate the need for external support completely. Lawyers as part of an in-house team should not be expected to be expert in all areas of law and be able to deal with everything that might come their way.
4. Lawyers are lawyers because they practise law and understandably they know where the lines are; business leaders should not expect their legal team to be prepared to cross the line just because it might make more commercial sense.
Tips and questions for consideration for lawyers looking to join PRC businesses
1. Are you ready for a very different environment? If a logical and mature working environment is important to you, you need to consider if the move is right for you because Chinese businesses are very different.
2. Relationships are very important so you should make sure you have the ability to gain trust from the owner and senior managers. Show your muscles from day one to prove your value.
3. You will need to be proactive. If you do this then people across the business will start to come to you. You will need to be hands on, know the law and show you can do the work. PRC business owners tend to want their in-house lawyers to really know and understand legislation and be more than just a people manager.
There is no doubt that a move to an in-house role at a PRC business can be challenging, however, it can also be very rewarding.