A new perspective on search
Are you ready for a General Counsel?
Ehsan Haque has spent nearly 20 years working as an in-house counsel for a variety of financial institutions. He has spent the last ten years in leadership and senior leadership roles. After a career in advertising, Ehsan trained at Slaughter and May before working as a global markets/equities sales and trading lawyer for Deutsche Bank, RBS Global Banking and Markets and Nomura, where he was part of the senior management team of the EMEA Legal department. More recently, Ehsan was the first General Counsel at FinTechs Lendingblock and Alphaswap. He is currently Group General Counsel at Hamilton Capital Holding, a global private equity firm with $12bn AUM. Ehsan also acts as an advisor to a leading fintech accelerator and is active in mentoring junior BAME professionals in the legal and finance sectors.
After a tumultuous 2020, the asset management industry has emerged somewhat victorious in 2021. The Covid-19 pandemic continues to present itself as the largest test of resilience to financial institutions since 2009 and yet global assets under management crossed the $100 trillion mark by the end of 2020, an 11% rise from the previous year. By 2025, PwC predicts a further jump to $145 trillion. When speaking to those working within asset management, most will tell you this year has brought pre-2009 levels of work. As some institutions ascend in the market, those within the legal sector are consequently seeing an increase in workload particularly in transactional practice areas such as Corporate M&A, Funds, Banking & Finance and Capital Markets.
When discussing the legal impact of having such a mammoth global AUM, Haque highlights that “when you get scale, you’re going to get a lot more risk and you’re going to get a lot more reward”. More than ever, legal teams are playing a crucial part in asset management growth as they help businesses navigate risky deals and regulations. “You’re going to need really good lawyers to come in and help where there’s lots of money involved, especially investor cash”, Haque says.
As business picks-up post-2020, we wanted to highlight why it might be the right time to hire your first in-house counsel and what one could achieve for your company.
Reducing Cost
It is a C-suite dream to hear the words ‘more cost efficient’. One of the most fundamental reasons for hiring an in-house lawyer would be to reduce the overall spend on external counsel. As more work is outsourced to law firms, charges can easily rack up, especially considering some Partners are charging north of £1,000/hr. In the early stages of launching a fund, there’s likely little need for a permanent in-house counsel. However, once business picks up and new strategies or products are launched, a full-time in-house lawyer can dramatically reduce costs, acting as a one-stop legal shop covering anything from fund structuring to financial regulation and commercial contracts. Many top-tier lawyers in private practice have the long-term goal of moving in-house, meaning buy-side firms have the chance to hire exceptional talent without the need or cost of outsourcing to one of these firms.
Another Strategic Mind
Haque asserts there is much more a General Counsel can do than reducing the external spend, “in terms of cost saving, yes, if you go from using external counsel to having your own in-house lawyer, you’ll save some costs, but actually, there’s a lot more to it than that”. The first crucial task this hire will be able to look at is setting the risk appetite of the business. “In most cases a business won’t have given this topic full consideration, in part due to a reliance on external counsel – they’ll often be given advice on a specific circumstance without the wider context. They will also then need to implement that advice, needing someone able to execute it – something you can only really do that internally” and an in-house counsel would be the best person to oversee this.
It is also important to factor in growth plans when considering making a legal hire. A lawyer with only one client will know them inside out and the most successful in-house legal teams are the ones that are fully aligned and integrated with the business. Having a diverse range of backgrounds contributing to commercial decision making has already been proven to drive more profitability and innovation. Businesses can be made more successful by embedding legal into the business and using their expertise to make better commercial decisions as opposed to simply relying on legal once issues occur. Your business might be anticipating an upcoming acquisition, an IPO or international expansion, all of which will have large legal considerations. Haque suggests that an in-house counsel is able to consider the regulatory strategy, clients’ jurisdictions and how this might affect the way you do business, or even licensing requirements. Building on experience from his current role, he mentions in-house lawyers are there to think about questions such as “should we be doing this? Why are we doing this? What are the risks of doing it this way versus the risk of doing it an alternative way? External counsel can provide that to an extent, but they’re not going to be able to actually advise you on what to do every step of the way”.
Free Up C-Suite Time
Whilst an in-house counsel reduces the need for law firms, there may still be times where you need additional support. Having a dedicated in-house lawyer will mean you have a specific resource to lead the management of external counsel, also providing a swift point of contact between the law firm and the business, ultimately freeing up the time of senior management. An in-house lawyer is also there to condense complex legal jargon (whether from their own advice or from external counsel) into digestible content for the business, to help them better understand their legal positioning. Law firms can easily slip into the habit of sending convoluted legal analysis, whereas in-house counsel must all have the skill of contextualising that into clear and concise language, further saving C-suite time consuming that information.
Build Your Brand and Stay One Step Ahead
There are plenty of practical benefits of having an in-house lawyer, such as reducing cost and mitigating risk. With the world of financial regulation ever-changing, an in-house lawyer can stay one step ahead of how this might impact your business. At the same time, a dedicated legal function reassures the market that your business is responsible and credible. As well as staying on top of the regulatory landscape, Haque suggests that having a reputable legal team can elevate the wider firm’s brand in the market. “When I started here, I wanted the best team internally and externally. So when people talk about the team, they know the team, they know me, my reputation.” Hiring a General Counsel with a credible reputation in the market also helps attract and retain other top-tier legal talent. “It’s you selling the firm, so that’s important. On that basis, you can attract people and you can retain good people, then you can start to build and grow something”.
ESG
Environmental, Social and Governance (ESG) has become one of the hottest topics in 2021 across all sectors, but notably within asset management. Earlier this year, Bloomberg reported predictions that ESG AUM would reach $40 trillion by 2025, accounting for a third of global AUM. Regulation in this area means that most lawyers in financial services are now upskilling on ESG and its related requirements and disclosure standards. As companies commit to more sustainable practices, so have in-house legal teams. An in-house counsel can not only help businesses navigate the world of ESG but also encourage proactivity in the area. General Counsels are increasingly involved in setting the strategic direction of ESG as well as embedding sustainability within company operations. They are also able to horizon-scan and update the business on risks and rewards with sustainable investments. As General Counsels often have direct access to senior management and the board, they can ensure that relevant policies and strategies are incorporated from the top down. Haque supports the idea that General Counsels can facilitate the strategic direction of ESG but senior management must be willing to allow them a seat at the table.
In addition to ESG, there are plenty of other initiatives and projects that in-house lawyers are able to get involved with that senior management might not even realise. “There is a lot, because eventually, senior management might initially assume that you’re a legal guardian and then as time goes on, you can show and demonstrate value-add in a number of different things”, Haque says. In addition to the day-to-day legal and contractual work, in-house legal can support with regulatory, commercial and strategic work.
As a final note, Haque encourages anyone considering making their first legal hire to have realistic expectations, “you are not going to be able to get someone who has done a broad array of everything, you might find some people that have done a lot of one thing, but not enough of another”. He continues, “unless you are looking at very experienced lawyers who have a broad skillset, sometimes business expectations are a bit unrealistic. If you’re looking at a 4PQE, you may not find someone who has done everything you want them to do”. Instead, he recommends “trying to work out what their skills and aptitudes are. Are they commercial? Are they going to be able to help the business and adequately manage risk?”. A particular skill to look out for when hiring in-house lawyers is someone that is comfortable turning their hand to new areas and projects and pick things up easily. A General Counsel might have a background in Corporate M&A but at some point be expected to pick up an employment issue or advise on a new financial regulation. Just because a profile does not have experience across all three practice areas, it does not mean they would make an unsuccessful General Counsel.
In summary, in-house lawyers and particularly General Counsels, can bring so much more to the table than just advising on day-to-day legal and contractual work. If a business finds the right talent, a commercially focused lawyer is able to help them achieve their strategic goals and stay ahead of the curve. Whilst it may take some time to find the right person, the long-terms benefits of building an in-house legal team will soon become apparent.
Caiti Simpson is a Consultant in the Legal Search Practice. She works globally and regularly assists clients in their strategic hiring needs, across both private practice and in-house. She has experience working with top-tier law firms, leading financial institutions and global corporates.
Prior to joining Wilton & Bain in 2021, she spent over three years at a leading legal recruitment agency, placing lawyers with leading banks and asset managers.
