Who are the most active cross-border lawyers around? Which group of lawyers advises on more cross-border transactions than any other group?
My bet is, it’s in-house lawyers.
I say this because I worked on more cross-border transactions in my two years as General Counsel than my previous 12 years as a corporate lawyer in Australia and London. With in-house legal teams growing and reducing the amount of work that’s briefed out (in Asia, the UK and US), that’s likely to be a good bet too.
There are also good reasons why an in-house model is likely to be better on cross-border transactions.
Legal support on cross-border deals
To understand why, let’s first look at the legal support required for a cross-border transaction.
Cross-border transactions range from multi-billion-dollar transnational mergers to international licensing or franchising roll-outs to everyday exporting of goods or services. They range in value, complexity and ubiquity.
Laws of at least two jurisdictions are involved
One aspect all cross-border transactions have in common is this – the laws of at least two jurisdictions are likely to be relevant to the transaction.
Laws relevant are likely to include:
- the ‘governing law’ (or governing laws) for the transaction agreements,
- the laws of the country or countries in which activities will be carried out by the parties in performing their obligations, and
- the laws of the country or countries where relevant property is situated.
Input from more than one specialty area
In addition, in complex cross-border transactions I’ve been involved in, input from more than one specialty legal area may be required.
For example, specialist intellectual property input may be required because intellectual property registration requirements differ in one country from another.
The in-house advantage
In short, it is unlikely that one lawyer will have all the legal expertise required to support a cross-border transaction well.
In this situation, an in-house model has at least two advantages over other models on cross-border deals.
‘First principles’ lawyers
Firstly, in-house lawyers are more likely to be ‘first principles’ lawyers. ‘First principles’ lawyers are better at cross-border transactions because they are better at dealing with laws which they don’t know in precise detail.
‘First principles’ lawyers may not know precisely what the legal position is on an issue, but they have a good intuition or ‘gut feel’ for what it could be based on an understanding of the first principles of equivalent laws. If your lawyer is well-read and well-travelled, their intuition or ‘gut feel’ is likely to be even more accurate.
In-house lawyers have this advantage because they have to be ‘first principles’ lawyers every day.
Most in-house lawyers have to look at a broader array of business legal issues than specialist lawyers. As a result, even if they’re not experts in a particular area of business law, in-house lawyers are comfortable giving a gut feel, reading further into the topic, asking questions, or engaging another lawyer or law firm with expertise in it.
In-house lawyers become ‘first principles’ lawyers through practice, even if they weren’t one before. This means in-house lawyers are better at dealing with uncertainty, spotting potential issues and framing the right question for a specialist where the issue is material.
Getting to material issues faster
Secondly, in-house lawyers are likely to be better at identifying issues material for the business. This is important in cross-border transactions because there are likely to be numerous differences in the legal position between the jurisdictions and not enough time or resources explore all of them fully. Your lawyer needs to be able to whittle down to the material issues quickly.
In-house lawyers are better at getting to the material issues because they’ve been working more closely with the business and the rest of the in-house commercial team outside of the cross-border transaction.
In addition, by engaging on a wider variety of issues the business faces on a day-to-day basis, in-house lawyers are a better judge of when an issue is material to the business.
Having a strong working history with the business also means in-house lawyers can better ‘read between the lines’ in communicating with the rest of the transaction team and more quickly understand and resolve different agendas on the same side.
A better conductor of the orchestra?
With a cross-border transaction, it is unlikely you’ll find all the expertise you need in one lawyer. Yet, like all transactions, it is important to have one person leading and coordinating the transaction, especially with complex transactions.
Complex transactions require considered input from various teams in the business as well as specialist input from advisers on selected issues. If the transaction is moving fast, it becomes particularly important to have a skilled conductor ensuring everyone’s playing to the same tune.
In-house lawyers are in a better position to lead the cross-border project, or at least the legal side of it, because:
- they are better at dealing with legal issues they are not experts on, and
- they are better at focusing on the issues that are material to the business.
A better soloist?
Are in-house lawyers also good at advocating the business’ position in negotiations?
The answer probably comes down to that lawyer’s deal expertise and personal traits.
Lawyers with deal expertise better understand the rhythm, rhyme and reason underlying the deal. This is important in:
- Deciding what positions to stick to or give in on,
- Timing when to push positions and when to compromise, and
- Winning the other side over to the preferred position.
Specialist lawyers may be more likely to have deal expertise because they may concentrate their practice on that particular type of transaction. However, they are unlikely to have superior expertise on the whole transaction since it necessarily involves laws in more than one jurisdiction. The value of their expertise is reduced.
Why does this matter for businesses?
Businesses planning on expanding through or engaging in cross-border dealings should take note. In a competitive global marketplace, it pays to ensure that you have the better team to win your cross-border deal because your competitors are doing the same.
It is especially important in Singapore – both for Singapore-grown companies and multi-national companies with a regional base in Singapore. Most legal work in Singapore will continue to be cross-border in nature.
This is why we are pioneering a retainer counsel solution through our base in Singapore. We keep our vision, service, costs and structure closer to that of in-house lawyers with our retainer solution. We plug a gap for those without an in-house legal team. We also back-up established in-house legal teams looking for a solution during ‘peak’ periods or for specific deal expertise.
We want to be working with the most active cross-border lawyers around.
We are a boutique law firm based in Singapore providing quality business law solutions for clients in the Asia Pacific region.
Get in touch – faith.sing@fslaw-asia.com.