Northern exposure – The Scots GC debate

Earlier this year, Legal Business ventured north of the border to highlight the community of commercial counsel flourishing in Scotland in an extended feature. To follow up, this autumn we teamed up with Addleshaw Goddard to gather a panel of senior general counsel (GCs) at Edinburgh’s Signet Library in Parliament Square to debate a range of related issues to an audience of over 60 in-house counsel. With Brexit on the agenda, a changing legal profession and Scotland’s economy striving to reinvent itself for an increasingly-globalised age, there was plenty to talk about.

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Alex Novarese, Legal Business: In recent years, the Scots economy has tracked a little behind the UK. How confident are people feeling now in a turbulent time for business?

Kenny Robertson, The Royal Bank of Scotland: It feels for us that the headwinds are still there, although they are far weaker than they used to be. We’ve come through seven or eight years of difficulty. Gradually some of the legacy issues have been removed and we’re looking at getting to a better place in the next couple of years. Optimism is pushing it, but we’re certainly not in the same place we were a few years ago.

Rushad Abadan, Standard Life Aberdeen: Scotland is a good place to do business. Historically, it’s trended just below the UK growth rates. A lot of it is going to depend on how the political landscape shakes out as well, because business policy and government policy will flow from there. If we have this conversation in a couple of years’ time, it would be interesting to see where things stand, particularly around Brexit scenarios.

Martin Cooke, Edrington: I am a businessman with a legal background more than I am a lawyer

Alex Novarese: Kenny, you’re involved with fintech and innovation at RBS – how does that work?

Kenny Robertson: I don’t think it’s that unusual for lawyers to be involved there. The team I head up traditionally looked after the bank’s big outsourcings. The last 18 months, we’ve had a significant shift to supporting a large part of the bank’s fintech agenda; so, artificial intelligence, blockchain and the use of robotics, augmented reality and so on. The spend is nothing like Accenture or HP, but the risk is significant.
That’s symptomatic of the shift in the bank, which has also been cultural. When I started ten years ago, it was: ‘We’re bloody RBS, masters of the universe.’ For us as a legal team, it’s been interesting and shifted us from a back-office shop that kept the show on the road to working in a growth area doing the sexy stuff. It’s really exciting.

David Kirchin, Addleshaw Goddard: Is a big organisation like RBS an easy place to see innovation happen?

Kenny Robertson: Does a big bank lend itself, with a strong risk culture, that’s had bombs going off in the past, that’s very heavily regulated, to becoming a place that fosters innovation? That’s the mindset we’re trying to introduce. The cultural piece is also relevant because, back in the day, we didn’t outsource very much. We were the biggest club in the world. That has shifted; we accept there’s lots of market players, they’re smarter than us, so let’s go and get them in.

Martin Nolan, Skyscanner: There’s a huge focus right now on turning Scotland into a fintech hub. A lot of countries have got that same idea, so there’s a race. I don’t know that’s necessarily been well organised yet at government level in how it can be supported. In Scotland at least, RBS is a huge player with the tech incubator at Gogarburn, but there are others popping up. As large, regulated entities, they’re not necessarily as nimble and used to dealing with things in the way that tech start-ups were doing as a one-man band – no governance, no idea how to deal with regulated entities or even understand how to talk to the legal team around these things.

Alex Novarese: How easy is it to get the calibre of lawyers that you all want in your teams?

Kenny Robertson: Not difficult is the honest answer. Working in-house in Scotland – and it’s the same in London – the attraction of working in-house has never been stronger. All of us worked in private practice at some stage, but there’s a reason that all of us work in-house now and there’s not been a charge to go back.

Greg Bargeton, William Grant & Sons: The level of talent we have in our team is outstanding. Although we got them from London, they are Scottish, so we’re bringing them back – those that escaped for a little while. We also have a lawyer who trained in Scotland, worked with us for five years and has recently gone to be GC in our US business, much to the horror of New York lawyers who feel that it’s their domain. I explained to them that they needed a problem-solver, somebody who’s going to figure stuff out, who will go to the expense of Wall Street firms if they need to but ultimately are going to get stuff done. There’s plenty of talent in Scotland and people who are ready to do that.

Greg Bargeton, William Grant: More needs to be done to train lawyers in soft skills and get them into project management

Rushad Abadan: There’s a deep talent pool. Where we struggle sometimes is in relation to certain niche skillsets, particularly in financial services – contentious regulatory lawyers have become fashionable for all the wrong reasons over the past few years. There’s a relatively shallow pool compared to what you would otherwise find in a place like London. I don’t think that’s a Scottish-specific issue.

Alex Novarese: When you’re going to the large Scots firms or the local arms of national law firms, how well-served do you feel?

Martin Nolan: Generally, we try and service as much as we can internally, but there are certain skills gaps we have as a team. Where we do use external firms, we feel quite well treated. But there could be a lot of similarity between the level of service that we receive between different firms, irrespective of what the charge-out rate happens to be, which does lead you to question why you’re paying so much more for certain pieces of advice, particularly where it doesn’t fall into the deeply-skilled niche basket.

‘We have shifted from a back-office shop to working in a growth area doing the sexy stuff.’
Kenny Robertson, RBS

Kenny Robertson: With one exception, we’ve only used the Edinburgh offices of national firms or Scottish legal firms and never had a problem with the quality at all. There are always exceptions – there’ll be a niche transaction that Latham, say, did with Barclays six months ago – so you’d be willing, if there’s a particular risk profile and a particular niche, to hold your nose and spend vast sums of money on it, but that’s absolutely the exception rather than the rule.

Alex Novarese: Are the major law firms in Scotland more commercially minded? Is the service evolving as clients want it?

Greg Bargeton: It’s a constant bugbear, isn’t it, of in-house lawyers, that they feel that they are very commercial and the advice they get from private practice is not? I’m sure everyone on the panel has had conversations with their law firms along the lines of: ‘We’re happy to receive quick and dirty advice. We’re not going to sue. What we need is support.’ Some firms are better at that than others.

Alex Novarese: There’s been a wave of Anglo-Scots mergers over the last ten years. Some of the big brands in the Scottish profession have been taken over. Has that been a happy experience for clients?

‘I don’t think people are mourning the loss of these big Scots law firms.’
Martin Nolan, Skyscanner

Martin Nolan: With each one, you get the impression that it’s going to change things, but I’m not sure that it has. Take Dundas & Wilson: held in high regard as an independent law firm. I’m sure there’s plenty of people that still refer to it as D&W. For a lot of clients, they’ve maintained the relationship they had with the lawyers at D&W and probably enjoy the benefits of being part of a wider firm. I don’t think people are sitting around mourning the loss of these big names.

Rushad Abadan: It depends on a couple of things. One is why the deal was done. Some of these deals were done to create a nearshore, lower-cost option for the larger firm, although it’s sold differently. When that has been the driver, then you’ve clearly seen a shift, particularly with the bigger clients of the larger Scottish firms, south of the border, and what has followed is a slight hollowing out of some teams up here.

The other is where the legacy Scottish partners have taken leading positions in the combined firm. That has been a very positive development for the firm and you can see the difference. There’s a bit of confidence locally as well as attraction of talent. It’s not difficult to distinguish between deals that have gone well and those that haven’t gone so well from a Scottish perspective.

Alex Novarese: It’s a cliché in London that many mid-level associates want to get out of law firms to go in-house. Is that replicated in Scotland?

Rushad Abadan: There is significant demand for an in-house role – there’s no question about that. The private-practice model is under considerable strain. The UK market is generally overloaded with too many firms, so there’s still going to be a lot of consolidation, particularly in the mid-market.
To the point earlier around not paying top dollar for commoditised legal work: that is happening increasingly, and so the traditional model where you had a pyramid structure and a degree of leverage is under considerable pressure, and that is going to continue. There is going to be that demand from the associates to look outside private-practice career progression.

Greg Bargeton: What’s often lacking are those softer skills – influencing skills, even things like project management, which is often the core of what we do. We take on responsibility for delivering a project within the business. There’s a lot of work that could be done around getting young lawyers to step into those roles and then add value beyond being able to interpret or apply the law.

Rushad Abadan, Standard Life: The trend of associates looking in-house to further their careers will continue

Kenny Robertson: Across the legal profession, the IQ has always been pretty high and the EQ, quite often, is not. When you get those two together, you get your good result and a happy client.

One thing we’re seeing a lot more of – and encourage to some extent – is lawyers moving out of the legal function into the business. If done well, they’re all flourishing. We’ve seen the rise of the legal operations teams and the COO-type roles in large in-house teams as well, which is interesting. Certainly in the US, that’s being seen more as a career in itself.

Alex Novarese: Any other lessons from the panel in terms of how to train and develop teams?

Rushad Abadan: When you have an organisation that’s shrinking, you have to be more innovative about the development options you offer. It’s about changing the nature of the conversation about what development is. Traditionally development is seen as vertical progression, not only in a private-practice context but also in-house.

Development is about much more than that. It’s not just about doing a piece of legal work or giving a piece of advice; it’s about advocacy, it’s about the intellectual curiosity of how the business works and becoming a sector expert rather than a legal expert. That gives you enormous confidence as a lawyer. That’s a question of leadership, in many ways. It’s encouraging team members to take a bit of risk.

Martin Cooke, Edrington: I was lucky enough, as a very young lawyer, to have a board member that said: ‘Martin, just keep grabbing stuff until somebody says “stop”.’ Unfortunately, no bugger’s ever said ‘stop’, so there’s a massive variety of work. I was doing a careers chat at work a couple of weeks ago and I said: ‘Very little of what I do is legal,’ and I realised that wasn’t quite right. So I would now describe myself not as a lawyer but as a businessman who happens to have a legal background.

It’s a bit unusual for a lawyer to be involved in innovation. That’s another challenge I’d put out there: not to allow us to be pigeonholed as lawyers. It’s absolutely self limiting. So, you started off with a law degree – a great skill that makes you a business person. You can do anything you want with those skills.

Greg Bargeton: There’s a disservice done by the profession to young lawyers that are told: ‘If you work incredibly hard at honing those technical skills, you will succeed.’ There comes a point quite early on – and earlier than most people think – where in the business, people say: ‘We’re taking the technical stuff for granted. What we’re expecting is somebody who can present the company well, who can advocate on behalf of the company.’ There’s a whole other set of skills that are largely ignored by the profession in the early stages of development.

Kenny Robertson, RBS: Across the profession we do well on IQ but not on the EQ that keeps clients happy

Martin Nolan: From a private-practice perspective, there’s probably a frustration also that they are being pigeonholed at a technical level and they want to get out there and use these other skills. A lot of them are seeing moves into in-house teams as that opportunity to segue into more commercial roles.

Stuart Clarke, Scottish Enterprise: I wonder whether you have seen experiences within your business of leadership skills being prioritised in terms of the development of colleagues around the legal side of things?

Martin Nolan: It’s something that Skyscanner’s got a huge focus on, which relates to the role of Carolyn [Jameson] as GC within the business, because that affords a lot of exposure of the rest of the team to the wider business. We tend to hone particular products and manage them through their life from a legal perspective and on commercial issues too. But the requirement is that you are able to project manage and lead, and that’s not necessarily in the repertoire of skills that lawyers come to the business with. So, we are looking at using external sources too, almost like executive coaching on that point.

‘Development is about the intellectual curiosity of how the business works and becoming a sector expert. That gives lawyers confidence.’
Rushad Abadan, Standard Life

Martin Cooke: I went on a leadership course in June and it was fantastic. At 56 I’m still learning stuff. If you’re still enthusiastic and energetic, and prepared to learn, then you will pick up those new skills, continue to develop them and then develop the team, because I’m going to shuffle off in a couple of years, and I’ve got half a dozen bright young lawyers and I hope at least one of them gets a really good promotion out of it.

Kenny Robertson: One thing that’s critical is role-modelling, and there’s a scarcity of role models in the law, both in-house and private practice, who you can say are genuinely strong leaders and managers.

‘There’s a disservice to young lawyers that are told: “If you work incredibly hard at honing those technical skills, you will succeed.”’
Greg Bargeton, William Grant

There are lots of things that can be done. Stuart’s been in talking to my team around what Scottish Enterprise is doing. There are lots of examples of building an ecosystem, but it feels to me there’s a lot more we could do.

There’s a lady called Herminia Ibarra, who’s a professor at Harvard. She wrote a book Act Like a Leader, Think Like a Leader and she used this phrase: ‘What got you to here won’t get you to there,’ which I bore my team with all the time. It’s very relevant for career progression. LB

alex.novarese@legalease.co.uk

For further insight into the Scottish GC community see Northern lights – The trials and treasures of Scotland’s leading GCs.