When Stephen Sibold was named Bennett Jones LLP’s general counsel in July, he became only the third in-house general counsel in a Canadian law firm. That’s not much of a trend, but it’s nonetheless a sign of the growing appeal of GCs at a time when firms are putting more resources into risk management.
“I think risk management has become a matter of concern for all businesses,” says Sibold, who has been tasked with developing a risk-management strategy for Bennett Jones. “As law firms adopt a corporate model in structure and they get larger, the operation of a law firm is like a significant-sized business.”
Law firms that have adopted a corporate model and reached a certain size face many potential legal risks. Law firm GC now play a role in identifying and managing them.
Malcolm Mercer, who became McCarthy Tétrault’s first general counsel in February 2007, concurs. The law firm GC’s primary responsibility is to manage the legal risks of the firm, and report on those risks to the board of directors, he says; a second priority is ensuring the legal affairs of the firm are being carried out.
The areas that fall under those responsibilities include compliance with professional standards; professional liability and directors’ and officers’ insurance; claims against the firm; working with the practice groups to ensure good integration of risk management into professional activities (e.g., processes of opinion, audit responses); and dealing with firm policies (the instructional and educational component).
In addition, if there are unhappy clients, the job of dealing with them can be also be part of the general counsel’s role, says Mercer.
Heightened concern over conflicts
A large component of risk management is devoted to the conflicts that can bedevil firms of all sizes. In fact, the increasing complexity of conflict-of-interest law has a lot to do with the growth of general counsel in Canada, Mercer believes.
Glenn Leslie, who was appointed the first general counsel for Blake, Cassels & Graydon LLP in January 2007, says such conflicts can take two forms: one in which the firm has confidential information about a client that would be of interest to another (meaning the firm would not be able to perform a related transaction for the second client without permission of the first); and one in which a firm would be acting opposite a current client in any matter (which the Supreme Court of Canada has ruled against).
“If you have lawyers who don’t say no, they can expose you to risk,” says Leslie, citing securities fraud and other conflict-of-interest cases that have come back to bite law firms. “It’s trying to identify potential risks of that kind that preoccupies general counsel.”
The law firm GC can be the point person for such conflicts, allowing the firm to handle them more efficiently by developing, among other measures, intake procedures to reduce the risk.
High-profile cases have also taught law firms to be vigilant about conflicts, a challenge they share with other professional firms, Mercer says. The dangers have been dramatically illustrated in cases south of the border, such as the collapse of Enron – and, in its wake, the Arthur Andersen accounting firm.
GC expertise shared
As a troubleshooter, an important advantage the in-house general counsel brings is an intimate knowledge of the firm. Leslie, Mercer and Sibold all did their articles with their respective firms; Leslie and Mercer continued their careers with the same firms, while Sibold has spent his entire private-practice career with Bennett Jones.
“Familiarity with the firm is very important,” Sibold notes. “To be effective, you have to understand the business of the organization for which you’re the counsel. Law firms have very distinctive cultures, [and] in order to be effective, you have to know your client, and your client has to know you as well.”
General counsel have a home in the Canadian Association of Law Firm Risk Management, founded by Fraser Milner Casgrain LLP’s Jamie Dunbar, a litigator who became the first general counsel in Canada (though his firm has since eliminated, at least for now, that position). “One of the benefits has been to talk to each other and share expertise,” says Mercer. “It’s not uncommon now, when an issue arises, to talk to general counsel at other firms.”
All three lawyers find their positions rewarding. Leslie appreciates that most problems can be resolved in the course of a day or week. “I enjoy solving problems, and this job allows you to do that,” he says. As well, “it keeps me in touch with my partners.”
“It’s an interesting legal role,” says Mercer. “The legal issues that get thrown up by a law firm are often intellectually quite interesting. I have long been involved in the affairs of a firm, and enjoy working with various practices and offices, dealing with education and issues as they arise.” He adds that he typically provides counsel on three or four issues each day to staff across the firm, which has offices in Canada and in the U.K.
Still adapting to his new position, Sibold calls it the best job he’s ever had. “It combines legal work and business work. ... You’re close to the law firm, but providing services, too.”
“There are so few general counsel in Canada – I’m delighted to be doing this.”
Elizabeth Raymer is a freelance writer in Toronto.