Global Counsel Leader Scan
February 2012
This is the first of what will be a regular (every 4-8 weeks) compilation of articles
and excerpts from newsletters, magazines and presentations, compiled specifically
for Global Counsel Leaders Circle members. The first heading is a category for our
index—we will maintain a compilation of the pieces here for each category.
We will only include what we find potentially timely, useful and clearly written. We
do not intend to promote law firm or other providers’ publications that are included
here. None are clients of ELD International (unless noted).
If you have articles, briefs, presentations (written by you, your team, or that you’ve
found) or website resources that you find excellent, please forward to me for
possible inclusion as part of this communication.
– Leigh Dance, Editor
Table of Contents
Crisis Management
A Short Rule Book for Your Next Crisis
page 2
Law Dept Management
Study on General Counsel and Value
page 3
International Legal Developments
Fundamental Overhaul of EU Data Protection Regime
page 4
International Legal Developments
New ICC Rules on Arbitration and ADR
page 7
International Legal Developments
Managing in a Time of Economic Uncertainty
page 9
Worthwhile websites
Transparency International:
www.transparency.org
This useful site has the oft-quoted Corruption Perceptions Index and useful
data such as the Global Corruption Report.
International Mediation Institute
www.imimediation.org
Good, clearly presented resources for mediation, and a search tool for
mediators. Independent, not affiliated with one arbitration center.
February 2012
Global Counsel Leader Scan
Page 1
A Short Rule Book for Your Next Crisis
A General Counsel gave to me this advice on crisis response, explaining it had come
from a colleague, and had proved remarkably pertinent. To keep in your back pocket.

Don't panic - do something

Be prepared to demonstrate human concern for what has happened

Never underestimate genuine concerns of customers

Faced with disaster, consider the worst possible outcome

Communicate at all times at all levels

Beware the obsequiousness of advisers

Don't believe that writing the "procedures" will prevent it from
happening

Don't believe it can't happen because it hasn’t happened before
I’ll add another one to the list:
 Always make new mistakes
February 2012
Global Counsel Leader Scan
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Nabarro’s Report on General Counsel and Value
Nabarro law firm issued their second study on this topic in November 2011—I’d
rate it 7.5 on a scale of 1-10. It’s good data and the concepts are useful, though the
guidance on actions is not as specific as it might be. This chart is of interest, as
one way of looking at the corporate counsel value pyramid. Contact Leigh for a pdf
of the study.
Nabarro’s report identifies a number of barriers they believe that General
Counsels
have to overcome to move up the pyramid. For example:
•
Routine tasks at the bottom level of the pyramid still need to be
performed and
these need to be resourced efficiently.
•
expected of
Many lawyers are perceived to lack the behavioral characteristics
senior commercial executives.
•
various
board-level
Even if they have such characteristics, they need to win the trust of
stakeholders. For lawyers aspiring to the top of the pyramid,
influence is critical.
Source: Nabarro report, General Counsel: Vague About Value? A study and
discussion paper, November 2011
February 2012
Global Counsel Leader Scan
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From TAYLOR WESSING
Contacts
Fundamental overhaul of EU data protection
regime unveiled
A package of draft measures aimed at fundamentally overhauling and
harmonising the EU’s data protection regime has been published by the
European Commission. If passed in its current form, the new data protection
framework will introduce enhanced rights for individuals and tough penalties
for non-compliance.
Why do we need new data protection laws?
With the explosion of the internet, volumes of personal data held by
organisations have increased dramatically and data now flows much more
easily between organisations and jurisdictions. The EU believes that the
current regime is in need of updating and that harmonising the regimes
across Member States will bring greater security for individuals, greater clarity
and (arguably) lower compliance costs for organisations which process
personal data. To that end, it has published a draft framework of legislation
which will entirely replace current European data protection laws.
Who will have to comply with the new laws?
Data controllers and data processors with legal entities in the EU will have to
comply. In addition, organisations which process personal data of EU
individuals in relation to the offering of goods and services or monitoring of
behaviour irrespective of the location of the controller or processor, will also
be subject to the new laws.
> Vinod Bange
+44 (0)20 7300 4600
Email
> Sally Annereau
+44 (0)20 7300 4994
Email
> Chris Jeffery
+44 (0)20 7300 4230
Email
> Graham Hann
+44 (0)20 7300 4839
Email | LinkedIn | Twitter
> Glyn Morgan
+44 (0)20 7300 4652
Email
www.taylorwessing.com
What are the key changes?
The draft framework is lengthy and detailed. While the data protection
principles and some (but not all) of the defined terms remain largely
unchanged, there are a number of key changes proposed including:

Regulation by one Member State – all EU based data processing
activities of data controllers and data processors will be regulated by a
single Member State which will be determined by the location of the main
establishment of the relevant organisation or, if there is no EU
establishment, by the place where the bulk of the processing takes place.

Consent – consent is defined as “any freely given, specific, informed and
explicit indication” of the data subject’s wishes. It cannot be automatically
implied where there is a significant imbalance of power between the data
subject and the data controller, for example, in respect of the processing
of employee data. In some instances, consent may not be capable of
being obtained and other means of making the processing of personal
data lawful will have to be relied on.
February 2012
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
Data controllers and data processors – these roles have been re-defined
and for the first time, the data processor has a direct liability for
compliance as well as enhanced administrative obligations.

Right to be forgotten – the right to be forgotten and to have all personal
data removed from records under certain circumstances is provided for
under Article 17 of the draft Regulation. There are exceptions to this right
including where the personal data is necessary for exercising freedom of
expression or is held for historical, statistical and scientific research
purposes. This is a completely new right which is liable to prove one of
the most controversial elements of the draft package.

Right to data portability – where personal data is processed
electronically and in a commonly used, structured format, data subjects
will have the right to obtain a copy of their data in that format in order to
be able to transfer the data to another service provider.

Right not to be profiled – individuals have an enhanced right not to be
subject to any measures based on automated processes which use
personal data to analyse, evaluate or predict their performance at work,
economic situation, location, health, personal preferences, reliability or
behaviour.

Additional enforcement powers and sanctions – Data Protection
Authorities will have an increased set of duties as well as enhanced
enforcement powers. Penalties for intentional or negligent breaches of
data protection law will reach a maximum of 2% of annual global turnover
for "enterprises" or fines of up to 1 million Euros in other cases. The
definition of what constitutes an "enterprise" is likely to be looked at
closely prior to enactment.

Mandatory security breach notification – data protection authorities
must be informed of a data security breach by the data controller “without
undue delay and, where feasible, not later than 24 hours of becoming
aware of it”. Data subjects must then be informed “without undue delay”
of the breach unless the relevant data protection authority is satisfied that
the data was sufficiently protected from being accessed by an
unauthorised user, for example, by encryption.

Data transfers outside the EU – there is considerably more detail on how
to effect compliant data transfers outside the EU including a set of
Binding Corporate Rules and the acknowledgment that authorisation of a
non-standard data transfer contract by one Member State will validate it
across the EU.

New requirement to have a Data Protection Officer – data controllers
and data processors with over 250 employees will be required to have a
designated Data Protection Officer to help ensure the organisation’s
compliance with data protection law (subject to limited exceptions).

Additional administrative requirements – There are a number of new
administrative requirements which data controllers and, in most cases,
data processors will have to comply with (although the general obligation
February 2012
Global Counsel Leader Scan
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to notify has gone). These include the obligation to maintain a form of
compliance register and to conduct privacy impact assessments "where
processing operations present specific risks to the rights and freedoms of
data subjects" before data processing or data transfers are permitted.

SMEs - Organisations with fewer than 250 employees are exempt from
many of the administrative requirements.
When will the new laws come into force?
The published framework is in draft form and may change before it becomes
law. However, the EU intends that the framework will be enacted this year. The
bulk of the reforms are in the form of a Regulation. Unlike Directives, EU
Regulations have direct effect. This means they come into Member State Law
exactly as drafted without any room for manoeuvre (although the Regulation
does give Member States scope to introduce their own measures under limited
circumstances). The proposed Regulation will repeal the current Data
Protection Directive and is likely to come into force two years after enactment
so we are potentially looking at the end of 2014.
What happens next?
Essentially, a great deal of lobbying and wrangling as well as several rounds of
amendments while the legislation passes through the necessary hoops
towards enactment.
How can I learn more?
Over the coming weeks, we will be sending out more detailed information
about the proposals and regular updates will follow as the framework
progresses towards enactment.
Taylor Wessing will be launching a new monthly webinar series on key issues
around Data Protection. Our first webinar will be on 6 March and will look at the
new data protection framework. On 28 March, we will also be hosting a
seminar on the new framework at our London office. If you would like to receive
more information about our webinar series or the seminar, please register your
interest at events@taylorwessing.com.
If, in addition, you would like one of our data protection specialists to come and
talk to you or if you have specific questions or concerns, please send us an
email.
Taylor Wessing's international offices operate as one firm but are established as distinct legal entities. For further information about our
offices and the regulatory regimes that apply to them, please refer to http://www.taylorwessing.com/regulatory.html
This publication is intended for general public guidance and to highlight issues. It is not intended to apply to specific circumstances or to
constitute legal advice.
February 2012
Global Counsel Leader Scan
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New ICC Rules on Arbitration and ADR
The new provisions in the 2012 Rules and their emphasis on efficiency are in keeping with
similar trends in amendments to civil procedure rules and arbitration rules around the world.
FROM LINKLATERS: Introduction
On 1 January 2012 an updated version of the Rules of Arbitration of the International Chamber of
Commerce (“ICC”) come into force (the “New ICC Rules”). These replace the ICC Rules that have been
in force since 1 January 1998.
The changes made in the New ICC Rules are intended to reflect the institution’s experience in
administering arbitrations since then and to improve efficiency and to take into account, in particular, the
growing complexity of arbitration.
At the same time, the revision is not a radical overhaul. Many of the changes are cosmetic and the
distinguishing features and processes of ICC Arbitration remain in place, so practitioners with experience
of the institution’s workings will find much to be familiar.
When will the New ICC Rules apply?
The New ICC Rules come into force on 1 January 2012 and will, in general, apply to any ICC arbitration
commenced on or after that date.
Key Amendments
There are a number of changes contained in the New ICC Rules. Some key ones are:
Case Management/Efficiency
The New ICC Rules contain a number of provisions designed to streamline the progress of an ICC
arbitration. For example:
The arbitral tribunal and the parties are obliged to make every effort to conduct the arbitration in a
cost-effective manner (article 22(1)) (a matter which is to be taken into account by the arbitral
tribunal when making any costs award - article 37(5)).
The arbitral tribunal is obliged to convene a case management conference to consult the parties
on the procedure to be adopted during the arbitration and to establish a procedural timetable
(article 24). In order to ensure effective case management the tribunal may adopt such procedural
measures as it considers appropriate (article 22(2)).
Under the previous ICC Rules, decisions on jurisdictional objections are considered by the ICC
Court, a feature which has attracted criticism for causing potential delay. Under the New ICC
Rules, the default position is for such matters to be determined by the arbitral tribunal – unless the
Secretary General decides that it should be referred to the ICC Court (article 6(3)).
Where the ICC Court is to appoint an arbitrator there is provision, unlike the usual case under the
previous ICC Rules, for it to bypass the recommendation of a National Committee if that body fails
to make the same or the ICC Court considers it to be inappropriate (article 13(3)). This is intended
to deal with criticism that the use of National Committees has caused delay.
February 2012
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Emergency Arbitrator (article 29)
A party that requires urgent interim or conservatory relief before the tribunal has been or is able to
be constituted can apply for such measures from an “Emergency Arbitrator” under a new
procedure introduced into the New ICC Rules. Such an application can be made only prior to the
transmission of the file to the Arbitral Tribunal. The latter is not bound by the emergency
arbitrators order and may modify or terminate it.
The Emergency Arbitrator procedure will not apply in all cases. Most notably if the parties have
chosen to contract out of it or the arbitration agreement was concluded before the New ICC Rules
came into force (article 29(6)).
Complex Arbitrations
Articles 7-10 of the New ICC Rules are a suite of provisions intended to provide a framework for the
conduct of multi-party or multi-contract arbitrations. The areas which they cover are as follows:
Joinder (article 7) – these rules permit a party to submit a request to the Secretariat, before any
arbitrator has been confirmed or appointed, for an additional party to be joined to the arbitration
(assuming that an ICC arbitration agreement exists between it and the party making the joinder
request).
Claims between multiple parties (article 8) – these complement the rules on joinder by making
provision, in an arbitration with multiple parties, for any party to assert claims against any other.
Multiple contracts (article 9) – this rule clarifies that claims arising in connection with more than
one contract referring disputes to ICC Arbitration may be made in a single arbitration.
Consolidation (article 10) – provision is made for a party to be able to request that two or more
arbitrations conducted under the New ICC Rules are consolidated into one. These provisions can
only be activated where the parties have agreed to it (10(a)), all of the claims are made under the
same arbitration agreement (10(b)); or, if the claims are made under different arbitration
agreements, the arbitrations involve the same parties, the disputes are in connection with the
same legal relationship and the ICC Court finds the arbitration agreements to be compatible
(10(c)).
End
February 2012
Global Counsel Leader Scan
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Managing in a Time of Economic Uncertainty
It’s not business as usual
by E. Leigh Dance, for Legal Management magazine, March 2012 issue
note to GCLC members: this article is written for administrators and operational managers in
law departments and law firms, but the concepts apply broadly. It is taken partly from the panel
discussion held on Nov. 17 as part of the GCLC New York meeting.
For most of us, today’s business climate is less stable than it ever has been in our careers.
We’ve seen remarkable bouts of drama in the markets (and in governments) in recent months.
The only certain thing about the global economy this year, the pundits tell us, is that it will
remain very uncertain.
In the short term, things may get a bit better. And they could also get much worse. It is not all
bad; destabilization creates opportunity. And in some parts of the world, the economy is
growing at double or triple the rate of the U.S. and Europe.
In this uncertain environment, it’s important to re-think how you approach your management
responsibilities. Certain issues may require special attention. How can managers in a law firm
or law department of a company or institution best protect assets and add value today? How
can we all improve our resilience in what could be a fairly long period of instability?
Economic uncertainty comes in many shapes and sizes. It can be very general, or it can be
specific to an industry, to a country, or to a specific organization or firm. Because the general
uncertainty we see today is so amorphous, it tends to breed insecurity and fear in the
workplace and among customers.
Different types of uncertainty require different management responses, and so managers
should take a hard look at what is called for. Of utmost importance is to identify the potential
financial difficulties that could affect your organization.
This requires a fundamental
understanding of your firm’s business and operations, its suppliers and its clients.
You may want to adapt your leadership style and communications approaches to manage most
effectively in this environment.
Among the most important responsibilities for managing in an uncertain economy are:
1. Understand the risks and liabilities of your business partners, your suppliers, and
your clients that may run into financial difficulties.
2. Manage and allocate resources wisely, keeping in mind that instability not only
creates risks but also opportunities.
3. Communicate frequently and clearly to motivate employees to keep their focus on
meeting business objectives and rising to the challenges.
4. Be vigilant in monitoring for wrongdoing, since pressures to perform are particularly
high and may raise risks.
February 2012
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5. Stay positive while you prepare for a range of possible outcomes, and have
contingency plans ready.
This article addresses these five areas and suggests tips for managing in times like these.
1.
Understand the risks and liabilities of your business partners, your
suppliers, and your clients that may run into financial difficulty.
In companies, law departments often deal with financial distress. Since so many companies
are interconnected in the business world today, the impact of financial difficulties may affect
your organization more quickly or more profoundly than you might imagine. In-house counsel
will often have had the experience of a provider, a client or a partner going through financial
difficulty. In law firms, restructuring lawyers and litigators deal with financial distress most
often.
Your own organization may be very healthy, but financial distress among business partners
can raise serious risks. Some law firms learned with the fall of Enron, Bear Stearns, or
Lehman Brothers how a major client’s demise could seriously affect their overall financial
performance, due to loss of fee income. The risks may also be legal or operational (for
example, if a partner or supplier is unable to provide required services).
It’s important to perform diligence to clarify the clients, providers, business partners and
suppliers that you count on the most, and determine which have the highest potential to have
financial problems that could affect your organization. You can then better assess how you
might respond if a problem develops.
As you look at key suppliers, partners and clients, consider: if one of them becomes insolvent,
what would you do?
Distressed situations have three common denominators: (a) legal
complexities; (b) high legal risks; (c) time as a key factor.
Distressed situations particularly test organizations’ legal functions on often unfamiliar grounds.
However, the managers in a law firm or law department will be expected to play a key role.
You want to be ready to respond quickly and effectively.
2. Manage and allocate resources wisely, keeping in mind that instability not
only creates risks but also opportunities.
In uncertain times, it’s essential to keep your eyes and ears tuned not only to the present but
also to the future. In the present, some people will react by rejecting the possibility of change
and behaving in ‘business as usual’ mode, while others will seek out opportunities, and have
many ideas for new business ventures and new services to generate income. Every new
ventures or service will need resources to support it effectively, and due diligence is required.
If you proceed with a new venture, you’ll want to determine if resources are available internally
or need to be acquired or outsourced.
You can reallocate resources more nimbly if you are able to anticipate potential needs and
issues based on how your business is developing today. If you consider your organization’s
February 2012
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primary investments today, there may be critical elements to address in two years.
Conversely, you may have big demands today that will require far less attention down the road.
Learn to anticipate future risks, not only those that are already on your radar screen. Try to
understand how the business as it exists will change under stress. Business drivers can be an
important guide to understand where to cut and where to strengthen capabilities. Look at the
potential risks outlined in (1) above. Map them against a matrix of other key issues that may
affect operations and financial performance. In an uncertain economy it is critical to consider
the interrelationships of many factors and dynamics, and manage actively.
3. Communicate frequently and clearly to motivate employees to work towards
meeting business objectives and rising to the challenges.
Experts in crisis management will tell you that the single most important factor in a crisis is
leadership. From a management perspective, the economic instability we face is in many ways
similar to approaching a crisis. Communication is paramount.
People want someone to tell them what to do, to explain the situation and the decisions being
made. Without that communication, fear tends to take over and distraction rises, causing a
drop in productivity. Work quality may drop or go unfinished as employees lose their focus.
Valuable human assets will leave.
Teamwork is threatened when people spend so much time predicting possible outcomes and
worrying about losing their jobs. This behavior is contagious, and one way to cure it is regular
communication. In economic uncertainty, managers who are good leaders will inspire their
people to be resilient and rise to the challenge.
Leaders and managers must be far more communicative than they would normally be, and in
an earnest, transparent way. In times of uncertainty, both false promises and saying nothing
will make matters worse. Take it from Churchill: speaking directly to your people helps.
Hearing a manager’s confident, decisive voice will make a big difference.
You may hesitate to communicate frequently, since you can’t say what you don’t know, and
you can’t make it up. Divide challenges into short-term steps and report on progress. Use
humor to lighten the tension, and remember to say and repeat, “Stick with it, stay the course.
We know you are working hard, we are all working hard. We are going to get through this.”
4. Be vigilant in monitoring for wrongdoing, when pressures to perform are
particularly high and may raise risks.
Studies show that when income or sales goals are harder to meet and people are under a lot of
pressure and concerned about job security, there is a greater tendency to ‘fudge’ the
numbers or ‘cook’ the books. Auditors find problems in financial reporting more frequently
during downturns, or when a company is recovering from a bad year or a crisis.
For every organization, an increase in wrongdoing is a very real risk in an uncertain economy.
Nothing can create more distraction and stress for a company than regulatory inquiries or
investigations into suspected fraudulent financial reporting. Vigilance is critical.
February 2012
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The primary way to avoid these problems is to carefully monitor accounts and financial reports,
and investigate abnormalities. If a result seems too good to be true, it may well not be true.
Be careful of grey areas where financial results can be interpreted subjectively.
5. Stay positive while you prepare for a range of possible outcomes, and have
contingency plans ready.
Being positive should not be confused with putting your head in the sand. While everyone is
hoping and working for the best outcomes, it is a manager’s responsibility to contemplate
worst-case scenarios. What has happened to a number of law firms and businesses in the last
few years was likely unimaginable to its managers only months earlier. In the face of economic
instability, you must have the courage occasionally to think the unthinkable, and consider what
the response could be. It is better to know what lurking problems you may have, take time for
a self-evaluation, and take action if your assessment suggests it.
Preparing contingency plans is integral to managing in an uncertain economy. While the
problem that may actually arise will ofteny be different than the one for which your contingency
plan was designed, it still helps to map out necessary responses in an emergency. When
things go wrong with a supplier, a provider, a major client, or within your own organization, the
issue can move astonishingly quickly. Contingency plans will help you prepare for the
unexpected.
As the title says, it’s not business as usual. While I’ve focused on demanding and serious
aspects of managing in a time of economic uncertainty, you also must remember to sometimes
just lighten up. I’ll never forget a great cartoon of a front-page headline I saw in 2008: World
Ends: Worse to Come. To be a voice of calm in the storm means knowing how to get people
to laugh, take time to celebrate a win, or go for a walk around the block. We’ll all get through
this.
For the valuable insights they provided on this topic at a recent roundtable of
global corporate counsel, Dance thanks Peter Beshar, General Counsel, Marsh
& McLennan Companies; Bruno Cova, Partner, Paul Hastings; Tom Sabatino,
General Counsel, Walgreen; and John Suckow, Managing Director, Alvarez &
Marsal and acting President & COO, Lehman Brothers Holding.
February 2012
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