Clifford Chance was the first UK law firm to appoint its own general counsel. But as Derek Bedlow discovers, more may soon be following suit

Clifford Chance’s Chris Perrin is a man with a considerable weight on his shoulders. As general counsel and executive partner of the world’s largest law firm, which has more than 3,000 lawyers in 29 offices and a turnover in excess of £1 billion, he has final and sole responsibility for a wide range of business-critical issues that at most firms would be divided between a number of senior partners and senior management.


Among others, these issues include responsibility for risk management, dealing with complaints and legal claims against the firm, developing and monitoring the practice’s conflicts policy, dealing with professional indemnity and other insurance issues, negotiating the terms of mergers and lateral hires, dealing with regulators, appointing external counsel, and drawing up the terms of business with clients.


The difference is that Mr Perrin is the first, and currently only, general counsel to a major UK law firm – a title he was formally given in 2004. The genesis of his role, however, dates back to 2000, the year that Clifford Chance concluded its mergers with Rogers & Wells in New York and Germany’s Pünder Volhard Weber & Axster.


Mr Perrin, who until this point was the firm’s head of litigation, was given the job of centrally managing the newly-enlarged firm’s conflicts policy – a role previously dealt with at practice area level – to which the following year was added responsibility for handling the firm’s insurance matters and claims. As the benefits of centralising these roles became evident, risk management was added to Mr Perrin’s job description and by 2004, he says, ‘I was effectively acting as a lawyer to the firm, so we thought it was best to formally recognise that and say that the role did not have limits’.


‘It is better to have these functions centralised to provide some continuity and also to prevent important matters falling between two stools,’ Mr Perrin adds. ‘Everyone knows who to call if they have an issue and it also allows us to look more strategically at some of these issues.’


The only direct equivalent of Mr Perrin’s role was found at Linklaters, where partner Raymond Cohen held the title of general counsel until his role was recently rebranded as director of risk. Otherwise, although responsibility for risk management, conflicts policy and professional indemnity is increasingly being placed into a single role, few other UK firms have yet entirely followed suit by giving a single partner the same range of responsibilities as those enjoyed and endured by Mr Perrin.


Freshfields Bruckhaus Deringer, for example, combines risk management and conflicts policy into a single role but leaves the appointment of external counsel on firm matters to the dispute resolution department, while Herbert Smith also divides these roles between a number of different partners.


It is a different story in the US, where, according to a recent survey by management consultants Altman Weil, 85 of the leading 100 law firms have a designated general counsel in place. Many of these appointments are recent. Altman Weil began the survey in 2004 as a response to a surge in the number of law firms requesting feasibility studies on creating general counsel roles; in 2004, 63 of the top 100 had them. The catalysts for the rise were the Enron scandal and subsequent collapse of Andersen, combined with the rapid growth in size and complexity of many law firms in the US.


‘Many firms were big businesses with a lot of exposure to risk beyond just professional indemnity issues, and they came to the conclusion that they couldn’t just rely on individual partners to do the right thing,’ says Altman Weil’s Ward Bower.


The extent of these general counsel roles varies and, despite their job title, not all have a sufficiently wide brief to fully fit the description of general counsel as it would be understood in the corporate world. While almost all of those surveyed are responsible for professional responsibility (such as conflicts and client privilege issues) and liability issues, and 96% and 93% respectively are involved with engaging outside counsel and representing the firm in disputes, 85% have responsibility for wider liability issues, and only 73% deal with partnership and firm structure issues. A smaller proportion still – around 70% – get involved with internal employment matters.


Meanwhile, fewer than half are charged with dealing with insurance or employee benefit issues, and fewer than 25% of those surveyed are asked to deal with their firm’s own real estate matters.


That said, the proportion of law firm general counsel being given responsibility for these areas has grown strongly during the life of the Altman Weil survey and an increasing number are devoted to the role full-time – 35% in 2006 against 26% in 2004. ‘It’s looking more and more like the role of a traditional in-house counsel at a commercial company,’ Mr Bower says.


Kimball Anderson, general counsel of Chicago-headquartered Winston & Strawn, whose remit extends across the full gamut of traditional in-house lawyer functions from negotiating mergers to defending the firm in litigation, agrees. ‘The job now involves anything that has to do with the law of lawyering,’ he says. ‘It is becoming an increasingly full-time role.’


Any law firm general counsel hoping to use the new role as a stepping stone to the top executive jobs of managing partner or chairman may be disappointed, however. Another finding of the Altman Weil survey is that the number of US law firm general counsel who sit on the governing committees boards of their firms has diminished rapidly, from 40% in 2004 to 28% in 2006. Firms are becoming more concerned that the advice given to management will not be protected by professional privilege if their general counsel is a member of the management board.


Instead, it seems that the role of law firm general counsel may become a career in its own right as the numbers grow and demand increases. There may also some opportunities to transfer the skills to a corporate setting in future, although the consensus is that there may not be much scope for traditional in-house counsel to move the other way. All of the general counsel currently working at the leading 100 US firms have been recruited from within (80% from the litigation practice). By consensus, one of the key attributes of law firm general counsel is an in-depth knowledge of the particular firm and the ability to gain the trust of the partnership.


Back on this side of the Atlantic, despite the slow take-up of the concept, the opportunities for partners to move into law firm general counsel roles are only likely to increase as firms continue to expand. ‘The need for a general counsel is a function of a law firm’s size and they will spread down the profession as firms get bigger,’ predicts management consultant Alan Hodgart.


One leading City firm that is already actively considering creating a general counsel role is Ashurst. ‘As the business gets larger and more complex, we are increasingly concerned that things could fall through the cracks,’ says senior partner Geoffrey Green.


The days of responsibility for professional ethics, risk management and professional indemnity issues being devolved to separate partners seem to be numbered. In future, it would appear, the world is likely to be too complicated a place to leave vital functions to the managing partner and a collection of gentleman amateurs, combining key risk and other management roles with their day jobs.


‘Conflict rules and regulation are getting more complicated,’ says Tony Williams of Jomati management consultants and a former managing partner of Clifford Chance. ‘Managing partners will still need to have an understanding of what is going on, but they need someone to look after the nuts and bolts.’


Derek Bedlow is a freelance journalist