In an age characterised by transformative technology and economic challenges, general counsel are required to achieve greater results with limited resources. Corporate legal leaders share with ALB their strategies for maintaining attention to intricate budgetary details while ensuring they continue to contribute value to the organisation.
How do you approach managing and controlling the legal spend of your department in a way that balances cost efficiency while ensuring your team has the resources needed to effectively support the business?
YI WONG, general counsel and company secretary, Lum Chang Holdings: First and foremost, it is about getting the right support and resources. For vendor management, for example, if it is a simple debt recovery case, we will look for the most cost-efficient solution, as we do not want to throw good money after the bad.
That said, it is not necessarily the cheapest option of simply writing off as a bad debt, because I will propose to management the need to balance setting a correct market precedent together with not throwing good money after the bad. So, my considerations in the foregoing example are a balance of both the practical and the larger picture.
Secondly, we also go for the low-hanging fruit like simple legal technology and process improvements and sharing costs with other departments that predominantly stand to benefit from such legal technology. For example, my company owns properties for which we operate as a landlord. For the standard tenancy agreements that fall under the ambit of the legal department's purview, we generate and populate the agreements to benefit primarily the property department.
Third, it is the empowerment of business units. For this, I justify the costs of using pre-approved templates as a way of empowerment for simple tasks such as non-disclosure agreements that business units can use, without having to consult the legal team each time. This cost is justified by the much greater savings of time and overall efficiency, which sufficiently meets the business needs and requirements too.
Last but not least, budgeting and forecasting are always a forward-looking exercise, but one must temper this with a degree of retrospection, too. For example, in the construction industry, projects can stretch for years and even a decade. Due to COVID disruptions, difficult changes in circumstances and where extensions of time and liquidated damages come into frequent play, even if there are no live lawsuits, I will always buffer for and set aside a reasonable budget for a claim defence, should it ever arise.
SAMUEL HUEN, global head of legal and regulatory compliance, Bank of Singapore: A well-thought-out legal structure and game plan addresses the goals of providing quality advice, proactively influencing corporate strategy, and managing risks. It also helps to drive cost-effectiveness.
The largest cost of any legal department tends to be the salaries. Hence, it is crucial to get the size and balance (e.g. experience, seniority) of the team correct. The team size depends on factors such as the industry, business model, regulatory environment, stage of growth of the company, and corporate strategy. Highly regulated industries including banking, would typically require more lawyers.
Efficient management of the budget is key. One should evaluate the strengths of each team member and align expertise with the issues to drive business value. Certain issues require highly specialised legal expertise, and one needs to consider if it would be more cost-effective to leverage external counsel or make a permanent hire. For smaller organisations, the legal counsel’s role may also include compliance or data protection responsibilities. There are free resources online and training that lawyers can tap on to support their work and professional growth.
At the Bank of Singapore, we exercise cost discipline by relooking how we can support growth responsibly. We are in the process of implementing self-service platforms to support general legal queries and free up our lawyers’ time to focus on higher-risk and more complex matters. In addition, we also work with a select panel of external law firms to achieve better rates and services.
EDWARD TUNG, head of legal and compliance, ORI Capital: We work closely with the executive team to clearly define the company's strategic priorities and key legal needs. As a fund manager, it's clear to us that our primary business objective is to maximise financial gain from our investments.
Secondly, we focus on optimising the engagement of external counsel. This includes carefully selecting law firms based on their industry expertise and cost structure.
We focus on biotech-related transactions. Given the niche nature of our work, a great deal of our legal focus is on areas that firstly maximise financial gain, like optimising transactional structures, and secondly minimise financial loss, such as conducting thorough due diligence and customising transactional milestones. Both of these aspects require a deep understanding of our specific business objectives and are mostly handled in-house, minimising the need for external legal costs.
Additionally, we leverage technology and process improvements to drive cost savings without compromising the quality of legal support. This includes automating simple tasks to enhance resource allocation.
With all these approaches, we ensure that the legal budget is allocated to support key business objectives.
