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In-house lawyers 'lack power in China'

Posted by: Laurence Simons 15/11/13

The narrative for general counsel in the western world has been one of increasing power and influence over the last decade or so, with firms negotiating choppy regulatory waters and keen to have legal experts at the helm.

However, operating conditions are rather different in Chinese firms, according to new research from Baker & McKenzie and the China University of Political Science and Law (CUPL).

Fewer than half of in-house lawyers at major Chinese companies have voting power in board meetings, reports the Lawyer magazine.

While three-quarters of companies had established and centralised in-house legal teams, only 52 per cent of their general counsel held these as specialised roles - in other words, people in those positions also worked as vice-presidents, operating officers and so on.

One wouldn't wish to suggest that some firms in China may be more concerned with high outputs than regulatory conformity, so we'll just move on swiftly to consider the rest of the report.

The majority of general counsel are responsible purely for internal legal affairs, with a third also overseeing compliance, risk control and intellectual property disputes.

Some 35 per cent are also asked to deal with various management disputes and HR issues, the study revealed.

Ye Xiaozhong, the director of CUPL's research centre on corporate legal affairs management, said: "This reflects on the low position of some companies' general counsel in the management structure, which means they are not able to get involved in key decision making and not able to prevent major legal risks from the early stages."

It also suggests many Chinese firms are insufficiently engaged with risk management, he added. (It's OK for him to say it).

However, Mr Xiaozhong struck a positive note going forward, pointing out that the concept of general counsel is still relatively amorphous and new in China, and will likely develop more influence over the coming years.

As the Asian superpower continues to expand, it will need to connect with regulations around the globe, and in-house lawyers can be at the heart of that.