Slowly but surely, in-house lawyers at the UK’s largest companies are flexing their muscles – and the effect is being felt across government and in the country’s top law firms.



Less than two years after its launch, the GC100 group of general counsel at companies in the FTSE100 has grown its membership from an initial 51 to 73 (the lawyers stay in even if their companies drop out of the list).



According to its chairman, Barclays Bank’s group general counsel Mark Harding, this rapid expansion shows that the group’s formation was an idea whose time had come. There had been increasing recognition, he says, that listed companies had just as many issues in common in the legal arena as they do in, for example, tax and finance.



The prominence of in-house lawyers within these companies has also never been greater. ‘What has happened is that companies… have realised that it is just as important to manage legal risk as it is to manage other types of risk. The liability position for companies and directors has become more of an issue.’



But why – given the existence of the Law Society’s Commerce & Industry Group, the In-house Lawyers Association and other organisations – set up yet another in-house lawyers’ group?



‘[Our] focus is clearly on the interests of the FTSE 100,’ explains Mr Harding, who maintains that its exclusivity is what gives it clout. ‘Whilst there are other groups doing a great job, they obviously have a broad range of membership and rightly have to take into account the whole range of their interests.’



When the GC100 was launched, its founders identified two main objectives: to provide a forum for input into legislative and policy reform, and to share best practice in areas such as risk management and operations.



When it comes to policy, the focus has been on issues that have common currency within the membership. ‘We chose issues where we thought we could make a difference and where regulators might want to hear from us as we represent an important constituency,’ Mr Harding says.



The lobbying style is deliberately low key, intended to avoid raising the political temperature. That said, its most high-profile intervention to date has been in the controversial issue of extradition.



Mr Harding insists the GC100 is not advancing any individual causes, arguing that ‘it’s not our job to take up the cudgels for the NatWest Three or anybody else’. However, he acknowledges that each case gives rise to common issues and that the subject is a source of increasing anxiety for executives in multinationals.



The group has secured meetings with a Home Office minister and departmental officials to discuss its concerns. ‘What has become clear is that there are pretty fundamental questions about not just the way the existing extradition regime has worked… but how it has worked for years,’ Mr Harding says. ‘Because the US has been more active, it’s thrown a spotlight on this area. The chief effect [of the Extradition Act 2003, which incorporates the key elements of a treaty between the US and the UK] has been to speed up the process. In the past… people had time to put their case. Nowadays it goes through very quickly.’



There is a new understanding, he claims, that it is more possible than ever before to ‘wake up one day knowing nothing about a problem in the US and finding yourself subject to an extradition process’. He admits that is something of an exaggeration but points out that for all the US system’s similarities with the UK, there are significant differences in areas such as bail or plea bargaining.



Mr Harding acknowledges the government’s ‘understandable’ reluctance, post 11 September 2001, to back down from the treaty, and admits that the GC100 is ‘not going to get everything we looked for’. However, he insists its efforts have not been in vain, with the Home Office, which has traditionally had little dialogue with business, better informed. ‘We are in it for the long term,’ he adds.



The group has had more tangible success in other areas where it has sought influence, such as amendments to the Stock Exchange listing rules and the new Companies Act.



It has provided input into the review of the listing rules being carried out by the Financial Services Authority (FSA), and is now working on ‘substantial’ guidance for its membership. ‘Some of the difficulties with the listing rules are to do with issues such as timings of disclosures [to the market],’ says Mr Harding.



‘[The FSA] has maintained it is not moving the goalposts, but people have been looking at [the rules] with fresh eyes.’ Another key issue has been the question of how insiders and insiders’ lists are to be managed, often a major headache.



On the Companies Act 2006, the principal concerns during its passage through Parliament related to the proposed statement on directors’ duties and the increased potential for derivative actions by shareholders against directors. As part of its lobbying, the group secured a meeting with Department of Trade & Industry minister Margaret Hodge.



There are still important questions remaining as to how companies comply with the statement on directors’ duties, and the GC100 wants clear guidance from the department that backs up its claim that this is not intended to increase directors’ burden. Mr Harding thinks the final legislation on derivative actions was better than it was, but adds that it does not give ‘complete piece of mind’.



But these are not the only areas where the GC100 has become involved – others include input into possible changes to accounting standards relating to contingent liabilities, such as litigation.



Mr Harding says that people in government and regulatory agencies will only pay attention when they think the group has earned its stripes, although he considers that the GC100 has reached that stage much faster than he would have predicted. While limits exist to the number of issues it can tackle – for example, it is leaving the long-standing issue of privilege for in-house lawyers before the European Commission to other representative groups – the group could in future adopt a more proactive approach that promotes, rather than reacting to, potential changes in the law.



With so much policy work to be done, the group’s other main objective of promoting best practice has been less prominent. Sessions have been held on areas such as the management of records, while there has been limited benchmarking.



Though the formal workload on best practice has been relatively limited, the group’s regular networking is likely to have a significant impact on the structure of legal departments and relationships with external advisers.



The issue of diversity in the legal profession, for example, is one where momentum is building. Group members have been interested to hear about initiatives run by some GC100 companies, including Barclays, which recently won a Law Society race equality award for requiring law firms on its main panel to provide information on their policies and statistics on their staff.



Mr Harding says Barclays takes very seriously the issue of ensuring as far as it can that its staff are reflective of the communities in which it operates. The key to the legal team meeting that challenge is its external advisers, from where it recruits the majority of its lawyers.



‘We put on the agenda these issues as [something] that might affect whether or not we were going to instruct the firms or put them on our panel – they needed to see that there was real commercial impact,’ he explains. ‘I want them to understand that it matters to us.’ As GC100 members come up with different approaches to the issue, he says, experiences will be shared.



If diversity is one issue he thinks law firms must address, what does he make of their soaring profitability?

‘I think it’s great that firms are doing well,’ Mr Harding replies. ‘The legal community is a jewel in the crown for the UK. Obviously we would not want to see that at the expense of inappropriate billing or charging to clients. [But] we can look after ourselves.’



However, he adds: ‘We are not naïve enough [to believe] that if they continue to pay large amounts of money that it will not be passed on. What it will inevitably do is… make people think about cheaper suppliers. Firms can only premium bill for premium work.’



It is not just the government, regulators and law firms that have been on the GC100’s radar – the Law Society has also been ‘gently’ pressed on the issue of the practising certificate fee. ‘There’s a perception, rightly or wrongly, that the cost for in-house lawyers is excessive,’ Mr Harding says. He adds that this does not mean they do not support the Society, but he still believes there is a case for a reduction and that the Society needs to address the issue.



Mr Harding proclaims that the GC100’s success to date ‘shows how hungry we were’. With its members discovering their collective strength, policy makers and private practice lawyers will have to look out.