This column has previously discussed issues concerning corporate counsel, namely, lawyers who work in the legal department of companies as in-house counsel instead of as external counsel in law firms (see China Business Law Journal, volume 10, issue 3: Corporate counsel). Along with the increase in the number of corporate counsel and the size of in-house legal departments, there has been an increase in the range of work that corporate counsel undertake, and the skills that corporate counsel need to develop, to perform their role effectively.
In many jurisdictions in which corporate counsel are regulated, they are required to receive training – often referred to as continuing professional development (CPD) – in a similar way to external counsel. In Hong Kong, for example, in-house counsel who holds a practising certificate is subject to the CPD rules. These rules require the in-house counsel to accumulate a certain number of CPD accreditation points each year.
As noted in the previous “Corporate counsel” column, rules governing both public lawyers and corporate lawyers in mainland China were issued by the Ministry of Justice and came into effect on 1 January 2019: the Administrative Measures for Public Lawyers and the Administrative Measures for Corporate Counsel.
In accordance with these measures and the PRC Lawyer’s Law, the Shanghai Bureau of Justice issued the Implementation Measures for the Administration of Public Lawyers and Corporate Lawyers in Shanghai in November 2022. Article 2 of these measures defines “public lawyers” and “company lawyers” as follows:
“The term ‘public lawyer’ as mentioned in these measures refers to a public official who works in a party or government agency or a people’s organisation, has obtained a public lawyer certificate issued by the municipal judicial administrative agency in accordance with the law, and engages in legal affairs work in the unit.
“The term ‘company lawyer’ as used in these measures refers to an employee who has signed a labour contract with a state-owned enterprise, has obtained a company lawyer certificate issued by the municipal judicial administrative authority in accordance with the law, and engages in legal affairs work in the enterprise.”
Article 26 of the measures is relevant for this column as it deals with “business training” for public lawyers and company lawyers, including “legal practice skills training”, as follows:
“The units where public lawyers and corporate lawyers work, judicial administrative organs, and the Shanghai Lawyers Association should establish a business training system for public lawyers and corporate lawyers, formulate training plans, and organise policy theory training and legal practice skills training.”
Similar to external counsel, corporate counsel should receive training in areas of substantive law, such as contract law, employment law and company law. In this regard, training courses that are delivered to external counsel will be equally relevant to corporate counsel. It is in the area of skills training, however, that training often needs to be tailored to the needs of corporate counsel as a result of their distinctive role and the challenges that they face in performing that role.
As compared with skills training for external counsel, the design and delivery of skills training for corporate counsel is relatively underdeveloped. To assist in the development of skills training for corporate counsel, this column sets out below a list of issues that should be considered for this purpose.
Training on roles, duties
The previous “Corporate counsel” column noted that corporate counsel perform a wide range of roles, which can vary depending on both the company at which they are employed and the type of work that they are required to do for the company. In some cases, corporate counsel perform the traditional role of providing legal and compliance advice in response to specific instructions from their business colleagues.
In other cases, they are involved in business strategy and structuring, and are part of the decision making process. In the latter situation, the role of corporate counsel extends beyond their traditional role as a legal adviser to the role of a trusted adviser who is intimately and influentially involved in company decisions.
Importantly, corporate counsel often wear “multiple hats” within the company. In many cases, they are employees who owe duties to the company under the labour laws and their labour contracts. In jurisdictions where corporate counsel are regulated and required to hold a practising certificate, they also owe duties as registered lawyers, often subject to the same professional duties as external counsel.
In common law jurisdictions, for example, registered lawyers owe a paramount duty to the court and are required to maintain their professional independence (for a discussion about the difference between duties and obligations, see CBLJ, volume 3, issue 1: Duty or obligation). Furthermore, they must protect confidentiality and avoid conflicts of interest (for relevant columns, see CBLJ, volume 1, issue 4: Cases, matters and conflicts of interest; and CBLJ, volume 9, issue 4: Confidentiality).
In addition, corporate counsel may have other roles within the company, such as company secretary or director of a subsidiary of the company. Accordingly, the following issues should be included in skills training for corporate counsel.
How to manage and avoid conflicts of interest.
A critical issue in this regard is identifying the entity that is the corporate counsel’s “client” (for a related discussion, see CBLJ, volume 5, issue 8: Who is the client?). In most cases, the client will be the company that employs the corporate counsel.
Potential conflicts can arise, however, when the corporate counsel provides legal advice and services to the corporate group, including subsidiaries and affiliates. Conflicts can also arise when other employees approach corporate counsel for advice relating to their personal circumstances.
How to maintain confidentiality.
As an employee and a “corporate insider”, a corporate counsel needs to take care with any confidential information provided by the company and ensure that it is not disclosed inappropriately.
How to preserve legal professional privilege.
Related to confidentiality is the need for corporate counsel to understand and maintain the distinction between legal advice, which is subject to legal professional privilege in common law jurisdictions (for a related discussion, see CBLJ, volume 4, issue 9: Privilege), and business advice, which is not subject to privilege and may be subject to the “discovery” process in litigation (see CBLJ, volume 9, issue 6: Discovery).
How to communicate with other parties.
In some jurisdictions, registered lawyers are prohibited by the professional rules from talking directly to third parties in the absence of their own lawyers. Corporate counsel, therefore, need to take care when they assist the company in dealing with third parties in the context of corporate transactions and dispute resolution proceedings.
How to maintain professional independence.
In jurisdictions where corporate counsel are regulated and required to hold a practising certificate, they are likely to be subject to a requirement to act independently in the discharge of their responsibilities, including when dealing with corporate wrongdoing or misconduct.
As noted in the previous “Corporate counsel” column, the professional rules in jurisdictions such as Canada impose a reporting-up duty on corporate counsel in circumstances where the company “has acted, is acting, or intends to act dishonestly, fraudulently, criminally or illegally”. The rules provide that if a company ignores the advice of corporate counsel, the corporate counsel must withdraw from acting in the matter. And in some circumstances, the corporate counsel may need to resign.
How to respond to crises and manage risk.
Increasingly, corporate counsel are taking a lead role in responding to crises and managing risk in areas such as cybersecurity, anti-money laundering, sanctions and regulatory investigations. This role requires a broad range of skills beyond the purely legal.
Practical skills training
In addition to the above-mentioned areas relating to roles and duties, corporate counsel should receive practical skills training in a broad range of areas, including the areas listed below.
How to draft documents.
Although drafting skills in the area of commercial contracts and advice are the same as those developed by external counsel, corporate counsel need to be aware of the different context in which they are expected to apply these skills, and the unique challenges that arise by virtue of their status as employees and “corporate insiders”.
For example, unlike external counsel, corporate counsel are usually not able to limit their advice to the client’s instructions and the information that the client has given to them. Instead, they are usually expected to assume a proactive role in managing risk within an organisation and in seeking all relevant information for the purpose of giving their advice.
In addition, corporate counsel need to ensure that their advice is communicated in a way that is easily understood by their non-lawyer colleagues, who will be making the commercial decisions. For this purpose, they need to anticipate the questions that their colleagues may have more extensively than external lawyers, and to actively follow up and discuss the advice with them.
How to structure and manage the in-house legal team.
Corporate counsel need to be aware of the way in which the in-house legal team is structured and the role of management, such as the general counsel.
In some companies, corporate counsel form part of a central in-house legal team and are structured by reference to the areas on which they are expected to advise, such as corporate governance, compliance, employment, intellectual property and contract administration.
In other companies, corporate counsel sit within individual business units and are required to provide broad legal support to the business unit, except for certain areas handled by the central team.
How to engage and instruct external counsel.
Corporate counsel need to be familiar with the terms on which external law firms are engaged (many large companies have their own engagement terms for matters undertaken by external law firms that are appointed to the panel).
They also need experience in briefing or instructing external counsel and identifying the scope of work that should be undertaken by external counsel. Importantly, corporate counsel are expected to manage the relationship with external law firms within the legal budget and to ensure that legal costs are appropriately approved and monitored.
The above-mentioned list of skills training for corporate counsel is not intended to be comprehensive or exhaustive. It is hoped, however, that it will assist in the design and delivery of training courses for corporate counsel.
The author is currently assisting the Singapore Academy of Law with the design of training courses for corporate counsel.
Andrew Godwin previously practised as a foreign lawyer in Shanghai (1996 – 2006) before returning to his alma mater, Melbourne Law School in Australia, to teach and research law. Andrew is currently Joint Associate Director of the Corporate Law and Financial Regulation Research Programme at the Melbourne Centre for Commercial Law and Honorary Associate Director (Commercial law) of the Asian Law Centre. Andrew has acted as a consultant to a broad range of organisations, regulators and governments in Australia and abroad. He served as Special Counsel and Acting General Counsel of the Australian Law Reform Commission between 2020 and 2024.
