Live Law spoke to Mysore Rangacharya Prasanna, former Group General Counsel of the Aditya Birla Group. After being an independent Counsel for about 7 years Prasanna worked as Head of the Legal function for over 28 years with different organizations like Alfa Laval, Brooke Bond India Limited (now part of Hindustan Unilever). Prasanna was the Chief Legal Officer of Larsen & Toubro Limited, Mumbai for seven years. For about 12 years, Prasanna was the General Counsel of the Aditya Birla Group, spearheading mergers and acquisitions. Since May 2010, Prasanna has relocated to Bangalore as an Independent Consultant primarily for corporates. He sits as an Arbitrator in SIAC arbitrations.
Live Law: Is there true globalization of the Indian Corporate Counsel?
Mysore Prasanna: Globalization of business has also led to globalization of the legal profession as a whole. The legal community which hitherto operated in silos is finding itself acquiring a seamless proportion. Barring certain jurisdictional peculiarities and matters of enforcement, there is a universal language that is spoken and understood in the international business context.
The in-house counsel community has been the direct beneficiary of this globalization. With the ever changing interface with the external business world, the Corporate Counsel or CC has had a never before opportunity to broaden his vistas and exude greater confidence.
This globalization has brought a high visibility to the in-house counsel community in India. Unique opportunities have presented themselves and the Indian in-house counsel has demonstrated the ability to seize them and meet the associated challenges. Globalization has also led to greater awareness of business complexities, commercial realities, compliance, compliance audits and corporate governance.
The CC who perceived himself in the classical mould of a back room boy found himself in a front office role, leading contract negotiations with his counterparts from sophisticated jurisdictions. He realized that he is no longer a cost to the organization but a value.
Globalization, as a phenomenon, should be understood in its true perspective. At one level, it can be perceived as opportunities afforded to CCs to be exposed to working on cross border transactions in different jurisdictions. At another level, globalization would refer to the evolving international image and perception of CCs.
In my view, handling cross border transactions in multiple jurisdictions would be the first step towards globalization of the Indian CC. True globalization occurs when the Indian CC benchmarks himself to his counterpart in sophisticated jurisdictions and raises the bar for himself. The best practices followed by international corporate counsels, the systems and procedures that they establish and the reliability of legal service delivery to business would form the basis for benchmarking the Indian CC with international CC.
Given these dimensions that determine globalization, I believe that to a large extent, the Indian CCs have crossed the first hurdle namely transacting in different jurisdictions. But, I do not believe they have yet approached the second hurdle namely benchmarking themselves to the international corporate counsel both in terms of competence and stature.
The CC community as a whole is yet to experience globalization. There are pockets of this community where there has been a transformation of CCs into business lawyers of international caliber. Having said this, I am very optimistic that a large scale globalization will occur in the not too distant future.
Live Law: Has the Indian Corporate Counsel evolved into a Business Lawyer?
Mysore Prasanna: Mercifully, the expectations of the private sector from CCs are manifest in the stated need for a legal department and the budget allocated. Business expects from the in-house legal department more than just value for money. For business, this value is not simply a function of cost that is saved by greater reliance on the in-house capabilities and decreased dependency on external counsel. It represents the advantage of having someone who has a good understanding of not just the business but also of the value it is supposed to unlock for the stakeholders.
The in-house counsel can therefore hope to make the role value additive to business by demonstrating his or her ability to meet the ever increasing expectations of the business and its need to have something done.
It would be contextually relevant to look at what has been the traditional role of the in-house counsel:
The opening up of the Indian economy in 1991 marked globalization not only of the business but also the legal profession. There were many opportunities for the in-house counsel to interface with global business and global law firms in multiple jurisdictions. Many in-house counsels seized the opportunity to redefine their roles and began their journey as transaction lawyers. Interesting thing about a transaction is that it is visualized by the business and when accomplished, it is seen as creating value to the enterprise. Consequently, an in-house counsel who contributed significantly to the closure of the transaction came to be seen as part of that value creation exercise.
The involvement of in-house counsel became more strategic and proactive. It developed a greater business orientation. He evinced keen interest and participated actively in structuring transaction to make them both cost and tax effective. He participated in negotiations and seized the opportunity to show case his negotiation skills. He was beginning to be seen by the business as an enabler. The evolution had begun.
However, the proximity or closeness of association with business had an emotive challenge. By becoming too friendly or popular with business, the CC often found himself a bit tongue tied to express his opinions candidly and more so when it was unpalatable. There is thus a delicate balance that needs to be struck between being a friend of the business and being an advisor to the business.
But does the in-house community as a whole recognize the need to evolve? Is there a conscious effort on the part of the in-house counsel to evolve or does he or she simply blame the employer for all the inertia that the job acquires? Regardless of the employer for whom the in-house counsel works, evolution is an inescapable process. Evolution has a dichotomy. At one level, the in-house counsel evolves within the job to be able to handle more and also to multi task. At another level, evolution helps and prepares the in-house counsel to pursue external growth opportunities both in terms of content and compensation.
What then constitutes this evolution? Is it putting in number of years of experience and be called a senior legal professional or is it about being involved in intense activity however routine it might be or is it more than these?
In the final analysis, the evolution of the corporate counsel is near complete when business recognizes the legal function as part of the business process and adding value to business both in terms of its creation and its preservation. I do not believe that in the past decade this evolution is palpable in the Indian context but increasingly the in-house counsel community is beginning to accept that in order to be relevant to the organization, they need to evolve and keep evolving to be relevant. There has been a paradigm shift in the way the Indian CC functions. No longer does the CC ‘Advise and be Content’. His role is now to ‘Devise and Implement’.
Live Law: Do Corporate Counsels really measure their performance? If yes, then how?
Mysore Prasanna: This is by far the toughest question for which there are no easy answers.
The general perception of performance is that it should be tangible. For example, if the CC is instrumental in securing a judgment or award in favor of his organization, the monetary benefit would then become a measure of his performance. Whilst a monetary benefit can be an indication of performance, it does not constitute the only measure of performance.
Performance must be evaluated and measured at two levels. The first relates to the performance of the in-house legal function as a whole. The second relates to performance of each CC within that legal function. The level of performance of the legal function determines its relevance and importance to the organization as a whole. The level of performance by the individual determines the relevance and importance of that individual to the legal function.
One way of ensuring evaluation of performance of both the legal function and the individual is to encourage formation of a Service Level Agreement (SLA) for each assignment, setting out the various components of legal service delivery.
This concept can be demonstrated by a simple example. Let us assume that in the context of a merger transaction, there is a SLA entered into by and between the given business and the legal function. The SLA which primarily concerns legal service delivery will have various other components such as the scope of work, estimated time for completion, the budgeted cost, the number of CCs required for the deal, the scope of work of external counsel and the skill sets required to deliver results.
Measurement is clearly dependent on a whole lot of internal and external factors. It is not just about filling up the appraisal form mechanically at the end of the year. As a GC for over 3 decades, I have seen performance appraisal evolving from a 5 minute discussion to a 50 minute deliberation.
It is extremely important for legal departments to identify the tools for measuring performance. The best way to start is to identify performance inhibitors. This requires courage and conviction. CCs within the legal function must be encouraged to identify the factors that inhibit their performance (which sometimes reflect on the style of functioning of the GC). As a separate exercise, the legal department as a whole has to identify the factors inhibiting the performance of the function itself in the larger context of the organization.
Similar exercise can be undertaken to identify performance facilitators and performance enhancers. For example, integrating technology in the working of the legal department can significantly enhance quality and timeliness of legal service. A robust document management system would facilitate easy access to past precedents. If we assume that a legal function is well organized and there are no significant performance inhibitors, we can then identify the tools for measuring both the individual performance and functional performance.
Most effective tool is “customer feedback”. At the end of each transaction or an assignment, the legal function should prepare a questionnaire designed to elicit candid response of the user business division as to how the legal function performed in the transaction/assignment. Each question must have the basis for response rating. I am quite content with the following set of ratings:
If a department or an individual CC got a mix of exceeded expectation and met expectation, it would indicate a higher level of performance. If the rating was a mix of all three or a mix of met expectation and below expectation, then there is a serious need to introspect and to re-engineer the functioning of the department. There are many other tools which can be deployed but that will require a very detailed discussion.May be some other time.
Live Law: Are today's Corporate Counsels making an effort to be relevant and stay on the learning curve?
Mysore Prasanna: Relevancy is not about doing what you are doing and being useful to the current employer. It is about ambition and aspiration. If one asked to oneself a question “where do I want to be in 5 years from now?” the answer could be anything. But this question leads to another question - “what makes you think you will be relevant to the job you want to be in, in the next 5 years?”
Relevancy is a dynamic concept. It takes color from the organization and the position in which the incumbent works or would like to work. Competency should not be mixed up relevancy. Competency is all about having certain knowledge and skill set to perform a job. But however, when you perform a job, what kind of understanding you have of that business and how good are you in devising and implementing. The demonstration of these qualities determine relevancy.
Competency is somewhat a subjective assessment; whereas relevancy is all about an objective assessment of how relevant has been a competent person to the organization.
Employers have a set of expectations from the in-house counsel. The question one needs to ask is whether the in-house counsel must meet these expectations or must he or she far exceed these expectations.
There is a popular notion (or is it a misconception) that there is not much scope for creativity and freedom of action for in-house counsel working for Governments and PSUs. I see the problem differently. The problem is not with the employer; the problem is not the dearth of opportunities; the problem is not lack of freedom of action. The problem is all about getting into a comfort zone. The problem is one of inertia. The problem is also often the fear of insubordination and the fear of loss of office.
In-house counsel who perceives these problems must begin to identify himself as a problem to the employer that they serve. They need to unshackle themselves and explore opportunities to prove themselves as worldly lawyers of the corporation. If indeed, the red-tapism, the organizational rules, regulations and the work environment tend to suffocate creativity, the in-house counsel must have the courage to move on to greener pastures – greener not meaning just more green backs but green field opportunities to put to use their existing skill sets and to launch themselves on a new learning curve that would be as enchanting as a rainbow with a pot of gold on the other side – the pot of gold here symbolizing the exalted chair of the GC.
It is equally important to overcome the reluctance of business to engage the legal department at the right time. This reluctance is actually a reflection of the importance given to the legal function as a key player in business transactions. This is all the more the reason why legal departments must align their strategy with the strategy of a given business. The individuals should develop the skills and competencies to get up to speed and meet the business expectations. One has to constantly upgrade the skills and the knowledge base and above all develop a keen sense of business when delivering legal service. One has to avoid going to the external counsel without a strong justification. Frequent recourse to external counsel not only gives you the “post office” tag but will also bring down your esteem even with the external counsel. One has to clearly identify the in-house turf and guard it zealously. The external counsel is always looking to ‘encroach’ upon the in-house turf with a view to expanding his own involvement.
Structuring legal fees and managing legal costs and controlling them in difficult times would fetch a lot of goodwill. Case management based on a robust cost control mechanism would surely show the in-house counsel in very good light.
In the final analysis, the relevancy should be such that the in-house counsel is seen not just as a resource but as part of the business process. Just as Finance, HR and IT are considered part of the business process. So it is very clear that the in-house counsel, to stay relevant, has to constantly evolve and be able to deliver timely and cost effective legal services and upgrade the knowledge base required to deal with the requirements of each vertical. If this transformation does not happen then it is a matter of time before the CC perishes and becomes an inconsequential file pusher.