Michael Harrats, Senior Counsel, Legal & General Investment Management
What are the 3 biggest challenges for in-house teams in FS firms today?
A. Costs! Every non-revenue generating department is under cost pressure at the moment. Demonstrating value as a business partner is the cornerstone of the role of any in-house legal team.
B. Technology/disruption. These two go hand in hand and will be a major challenge for legal teams in FS firms for some time to come. They offer exciting opportunities, but their challenges shouldn’t be underestimated.
C. Brexit. Is always the elephant in the room. Adapting to the post Brexit environment will be the making or breaking of firms, and their legal teams will be key to assisting with Brexit compliant solutions under the new regime.
What key steps can legal teams take, to create a higher value proposition for the business and for customers?
In order to be effective at anything, you need to enjoy it and find it interesting. This certainly applies in the workplace. It might sound obvious, but lawyers need to be engaged and knowledgeable about their business and industry. Knowing the law is not nearly enough.
For me, this is all about taking the time and energy to learn about your business. What products do we sell? How are they perceived in the market? What do our competitors do better/worse than us? What are the key challenges and opportunities in our industry? Most of these won’t be legal related, but we still need to know about them in order to be effective partners to our businesses.
Once your team understand your business and your industry, their specialism (the law) can be applied to this effectively.
What hurdles do legal teams face, in terms of implementing and delivering value from new technology solutions? How can these be overcome?
Lack of knowledge within teams about technology solutions can cause a reluctance to engage with them. This is something we all need to guard against. I see no excuse for this. We are working in one of the most interesting times to be a lawyer. The scope of our roles and the range of tools we have to assist with them are changing at a rapid pace. It’s going to be challenging for us all, but we need to make sure we proactively own our technological development. I would like to see this formalised in the Law Society’s CPD rules, as it’s such a key aspect of our roles.
Pace of change is also a challenge. As soon as we get ourselves up to speed with a technological change, another one seems to appear (and I don’t just mean this year’s new smartphone). The key to mastering this is to take an active interest in technological developments. This won’t come easily to everyone but it’s something we need to work at.
How do you view the current level of interaction / collaboration between in-house teams across the FS industry, and how could this develop in the future?
We work well together. In the asset management industry a legal discussion group of in-house counsel across the main asset managers meets every couple of months to discuss legal, regulatory and market related issues we are all facing. I regularly attend and find the meetings useful. Earlier in the year, LGIM hosted one of these sessions and it was great to meet our peers and have an open discussion with them.
However, there is a danger that we can all become too specialised and only pay attention to our own segment of the market. We need to guard against this.
Which pain points for in-house teams most lend themselves to automation, and which pain points will be the most difficult for technology to fix?
In the short to medium term, I see automation as something which will be used to improve the accuracy of quite repetitive tasks which have previously been undertaken by paralegal/trainee/junior lawyers (e.g. data analysis, contract production and regulatory filings).
In the longer term, the sky really is the limit. I expect innovative solutions to develop which will transfer our way of working which will enable us to assist our businesses further. Some of the solutions we will use later in our careers have not been invented yet. That makes them difficult to anticipate, but offers exciting variation in our working lives.
However, I don’t think this means the ‘end of lawyers’ as often speculated in the press. Automation and AI will likely create increasingly capable solutions, but I’m sceptical whether we will see sentient (thinking) machines which render us surplus to requirements.
Why will you be speaking at Finance Edge’s Next Generation In-House Summit, and what do you hope to get out of the event?
We are operating in one of the most fluid times in the FS industry since the early 80’s. This presents us with many challenges, and it can be easy to become siloed in your own firm and miss the wood from the trees. I think it’s important to discuss ideas and approaches about the challenges our industry is facing with peers. This summit should prove a good opportunity to do so.