The right advice at the right time

Aberdeen Asset Management started life as an Aberdeen-based asset manager, managing a single investment fund in 1983. Nowadays, with nearly 1,900 employees in 25 offices around the world, it is a significant and truly global investment management group, having grown rapidly in the intervening years. It currently manages and advises on £176.9 billion of institutional and retail clients’ investments, in all the major asset classes. Impact Magazine talked to Aberdeen’s Global Head of Legal, Gordon Brough, about the relationship between in-house lawyers and their external advisers.

Let’s get straight to the point, Gordon. Why shouldn’t a company simply recruit all the legal help it needs, or, on the other hand, recruit none and appoint law firms whenever necessary?

"Well, the short answer is that however many lawyers an in-house team has, it will never have all the experience, skills and specialist knowledge required to advise or act for a large global business, particularly one like ours, operating in over 30 jurisdictions. On the other hand, an external firm often won’t have the intimate knowledge of the company and its business that’s needed to provide a commercial recommendation. Our role as an in-house team is not to do all the legal work, but to help the business get what it needs. Business people want a yes or no answer. So we act as the interface, interpreting all the external legal advice, often into a one-page recommendation. The ideal, in effect, is a balance between in-house and external lawyers."

So, what is the balance in your company?

"Including the Company Secretarial department, I have just over 50 people in my team. They are principally based in London, Edinburgh and Aberdeen, and our Singapore and Philadelphia hubs. We work with almost 100 external law firms. With some of these firms we have close strategic relationships, where they have a structure which matches our business – for example where our European affairs require a law firm with European offices. One day maybe we will have a global relationship with a global law firm, but the legal sector hasn’t consolidated to that extent just yet. I have been here three years, but prior to that I was in private practice for 20 years, so you could say I try to balance the two roles, also."

What do you look for in a law firm?

"Clearly they need to have strengths in the right areas for our business. We have made more than 40 acquisitions over the years, so have needed firms who are strong in financial services and corporate law. Litigation is another area where it pays to have external expertise. Even an experienced in-house litigator won’t have all the skills we need. Besides, in litigation you must have an objective view, and separate the emotion from the law, which is easier to do from an external perspective – the most valuable piece of advice a litigator can give you is when NOT to go to court. There’s a technical element to choosing external litigation experts also, as it’s much harder to claim legal ‘privilege’ for internal correspondence.

But back to the question, one of the most important aspects to which firms you choose is the strength of the personal relationship. Rosenblatts is a good example. It’s a growing relationship that started with a small piece of work, and now they are working on a couple of significant cases, for example pursuing action to recover money lost as a result of a fraud in India."

Is that how an initial relationship starts, trying a firm on a small piece of work?

"Well actually, the best way to find good lawyers is when you’re working against them. I first met Ian Rosenblatt in that capacity about 20 years ago. I thought, next time, I’d like him on my side!"

How does the relationship between in-house and the external firm work in any given situation?

"It’s a bit like a classic outsourcing situation. Within law there is an awful lot of paperwork, much of which can be done by junior lawyers. Rather than have them in-house, when for much of the time they won’t be needed, you are, in effect, buying in temporary manpower. But the real value of the relationship is that you are also buying in the wisdom and experience of a good leading partner. Most legal situations boil down to one or two key points where the advice is absolutely critical, and that’s when you need to be sure you have the right adviser."

When should a growing company think about investing in an in-house legal presence?

"Involvement in corporate activity or litigation is very intensive and time-consuming. When the key business people find they can’t devote the time that their external lawyers require, then that is probably the time to recruit a lawyer to the team. A business needs to focus on its major commercial issues, and rely on support for the underlying documentation."

Finally, the best law firms to work with?

"Above all else, those that are enthusiastic, who will grasp a problem positively. There’s a tremendous amount you can get done in just a few days when someone can throw themselves into helping you solve a problem. Of course they also need a clear understanding of your commercial objectives, and that doesn’t happen overnight. It comes from a good working relationship."

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