“You mean like a ‘virtual CFO’? But for General Counsel?” Asked my accountant.
“Yep, but not strictly virtual – an outsourced general counsel can work a mix of on-site or remotely, depending client needs,” I explained.
“Well I have bunch of clients who’d be up for that!” She exclaimed.
This conversation took place shortly after we’d met Paul Napier. As the former GC of an ASX listed company and Minter Ellison lawyer before that, Paul had seen an opportunity to provide outsourced general counsel services to high-growth and established businesses that didn’t yet have (or necessarily want) a permanent GC or in-house lawyer.
Coming up to two years on, we caught up with Paul to see how he’s tracking and how his outsourced GC offering is being received by clients.
Takeaways:
Paul spotted the opportunity while working as GC at ALS dealing with counter-parties whose CFOs who were acting as their own “bush lawyers”.
Paul takes time to understand the strategic objectives of the business, what legal services they're looking for and what their existing legal infrastructure might be before designing a program that's suitable to the particular needs of that business.
A critical success factor is cultural fit. Paul spends a significant amount of time to both assess and be assessed for his cultural alignment with a business before committing to a role.
A successful outsourced GC must be able to relate to the senior executives and all other departments within the business at a commercial level. This takes experience – ideally six to eight years as a minimum.
Paul works both within teams and remotely, offering either retainer based fees, fixed fees or hourly rates depending on the requirements of the client.
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Hello and welcome to the first InCounsel interview for 2020. I hope you've had a restful holiday season and a fantastic start to the new year. Today we've got the pleasure of having Paul Napier with us. Paul is a senior corporate lawyer who previously worked at top tier law firm, Minter Ellison, before becoming Group General Counsel and Assistant Company Secretary for ASX listed ALS Group.
ALS Group is a leading international testing and certification company with over 13,000 staff operating in 55 countries across six continents. As their general counsel, Paul advised on an extensive range of commercial and corporate matters, in particular cross-border, private M&A, having led a significant programme of acquisitions and divestments, ranging in value from about $1 million to $550 million.
Paul and I first met a couple of years ago, shortly after he branched out on his own to set up L&B, which is an independent legal consulting firm specialising in commercial transactions, corporate advisory and importantly for today's discussion, outsourced general counsel services. Paul, good to have you here.
Paul Napier: Great to be here and great to be in sunny Sydney.
Absolutely. Thanks so much for travelling down to Sydney. I suspect this is not the only reason why you came here?
I always look forward to an opportunity to come down to Sydney. It's great to come down here and spend some time with friends, family and some clients as well.
Just to get into a bit of your background, it's a fairly diverse background that you do have, what do you feel is your sweet spot in terms of expertise and industry?
From a strict legal background, I'd say I'm probably more of a commercial and M&A lawyer these days. If you take a broader look at what I do and where I think I add value to clients, it's [being] a strategic thinker, a commercial advisor, and just general problem solver.
Anyone who's ever worked in-house, you sometimes find that whenever there's a problem within an organisation and they want something fixed, they just go: "Well who do we give this to? Oh, the lawyers, they can look after it. That's what they do." And so again, a lot of the time you don't necessarily say: "Well here's the pure legal solution." It's: "Here's a solution that has a legal component to it." And work the clients through that.
Brilliant, and you've been in your own practise now for two or three years?
Coming up two years, and to be honest, it's certainly evolved from what I first thought it was going to be when I left ALS. I think that's been part of the fun and the excitement of taking this journey. When I left, it would have been easy to jump straight into perhaps another pure corporate role or going back into a firm, but I wanted to try something new and different and learn some new skills and have to push myself a bit.
And since we've known each other and we were talking a bit earlier, you've certainly got a few runs on the board now. What would've would have been some of your favourite engagements?
“From a technical point of view, it has tested me more than what I perhaps was tested when I was working for a much larger company.”
[There have] been quite a few, to be honest, it's been a variety of different roles I've had. Certainly one that's taken up a fair bit of time is being with a small-cap Med Tech company and they've had a full evolution in their business over the last two years. From a technical point of view, it has tested me more than what I perhaps was tested when I was working for a much larger company. I've really enjoyed it. It has a business across different jurisdictions, which I'm used to, but again it's a different background – Med Tech versus mining services.
So it's a whole new group of people, a new sector, and so I was actually learning quite a lot. I've also done some work with companies in the food industry, which again is different. Different type of people, but it's been great to meet these different types of people and understand what drives them and their businesses.
And are you acting in that more traditional law firm-client relationship or are you, with your benefit of being a general counsel, in effect their outsourced general counsel?
With some of the clients I do take on the traditional law firm model, and others it's more that virtual general counsel and to be honest, it really comes down to the client and what they're looking for.
When I first meet with a client, I sit down with them, understand what their strategic objectives are, what they're looking for, what their existing legal infrastructure might be, what their existing legal sophistication might be, and try and design a programme that's suitable to that.
I have one client that is a Canadian mining services business. They already have in-house counsel over in Canada, but they're entering the Australian market and so they need some assistance. So, for them, it's more of a traditional legal model engagement. Whereas others that don't have that existing in-house function, I've gone in, help them set that up and that has evolved into me staying on for a longer period of time. Where the businesses have grown, they would go and get the more permanent resource.
Is that a case of them wanting to test the water a little bit with having someone a bit more dedicated as a GC but not quite willing to do the permanent thing?
“I think sometimes as a business, unless you’ve had an in-house counsel before, you don’t quite know what it is an in-house lawyer does and the kind of framework that you need.”
It is, because I think sometimes as a business, unless you've had an in-house counsel before, you don't quite know what it is an in-house lawyer does and the kind of framework that you need. I've previously, when I started at ALS, they were a company that had been around for 150 years, never had an in-house lawyer before. And they engaged me obviously, but I think had they thought about it a bit more, they might have approached that structure a bit differently. They were a large company. To be honest, they probably needed more than just me when I first started and I built the team up a bit and I think that's with what I do now. I'm engaging with clients, try to understand their business, what problems they have, what legal resources they need and then design something that is bespoke for them.
When you went out and did your own thing, you've got a bit of a blank slate in terms of deciding what service model you'd like to come up with. Was that outsourced general counsel something that you had recognised would be a solution or was it a bit more driven by clients?
Yeah, it was probably a combination of both. When I started I had a view in mind of what I wanted to be doing and when I spoke to people and what traction I was getting with certain clients and when they will talk to me based on my expertise, it kind of went down that path.
I had thought about it while I was at ALS. We were doing some transactions with some smaller companies and some startups, and in the process of those transactions, the people I deal on the other side, I thought, wow, I could just see that these guys would really benefit from having an in-house counsel because a lot of the time you had, and this is no offence to the CFOs out there, some of these companies had very commercially astute CFOs playing that CFO role plus that 'bush lawyer' role. And yeah, they were doing a great job.
But you could see that they were CFOs (which is a full time role) and so I could just see that there was perhaps a bit of a need there. And I started a little bit of research as well and looked at what was happening overseas and there were a few markets in the U.S., Canada, Europe, and even the Middle East where this type of service was being offered. And so it just made sense.
Well, you talk about the CFOs, I mean a virtual CFO is something that's been around and quite established for some time. There's a virtual CFO association that supports that type of service offering. So it's only natural that a similar model should open up for virtual or outsourced general counsels. So I can see how it could be appealing [to CFOs] and that they might be able to recognise a similar service offering on the legal side.
And it also lined up for me personally in terms of where I want to be going, what I want to be doing. It allows me to work with a variety of different clients and companies. Unlike a traditional law firm, I get to spend a lot more time with these companies, get to know their businesses a lot better because of my clients are either here in Australia or they're based overseas. There is some flexibility that comes with that in terms of, if I might have to do a call towards the end of the afternoon or in the evening, it means maybe I've got a few hours in the morning that perhaps I can spend some more time with family or do some other things. Yeah. So I think for me it needed to be worked both ways, from a career perspective, but also a personal perspective.
What does the model look like? Is it a retainer type model? Are you there part-time, a few days a week, or is it a certain number of hours allocated per month? What's the typical model for an outsource general counsel?
Again, it can be a bit of a variety and it depends on the client themselves. I have some clients I work with where it just it comes down to the culture of the business itself. They might want me for a few hours per week in the office to work with their teams, and that's because they're based in Queensland where I am. There are others where it's just a retainer where it's: “We need you to do this amount of work over the month. We don't care how and when you do it.” And then there's others which is on a per hour basis.
“We need you to do this amount of work over the month. We don’t care how and when you do it.”
Those particular clients, they're the ones I've probably been working with the longest. And that's just comes down to we've got a good relationship. There is a degree of trust and it also comes down to, in many ways perhaps where the legal profession is going – it is about outcomes. They are looking to me for an outcome, not to go, "Well we only want you to spend three hours on this." So again, it comes down to the particular client, what they're looking for and what's best for their business needs.
What type of company do you think would benefit the most, whether it's a type of company or what stage they might be at, from the outsourced general counsel model?
I think the ones that benefit the most are companies that are in a growth stage because generally when you're growing, there's quite a few different things happening. You've got your normal business operations, which depending on your history might require some legal input. If they're submitting tenders, contracting for their various projects. If they're looking to acquire businesses, there I can either assist with the complete transaction, depending on the size and the complexity of it, or it could be just again having someone who's sitting in-house working with their external counsel who becomes a bit of a legal project manager and that just means you're not taking people within the business away from their day to day jobs.
For example, CFOs will come out and manage that project and then their own things get put to the side. And so when you are growing and whether you're doing an acquisition or a new 'greenfield' operation, there is that integration phase as well, and there is quite a fair bit of legal work there. It could be around employment law or it could be again around your customer contracts. So yeah, that's where I think particular clients see the most value.
I also do quite a bit of work with large established companies and where they see the value is, they have a high volume of work and from time to time, they have people who go off on long service leave, parental leave or they see a particular spike in work that they weren't expecting and they just need someone to come in, work with them and get those projects done.
What should business owners, CFOs, company executives etc look for when considering getting someone on as an outsourced general counsel?
The first thing is the person needs to be aligned to the culture of the business and what the business is trying to achieve, because you need that person to be willing to, while they're not part of the company, see themselves as being part of the company and wanting the success to come. And I know for me that's quite important for me to align with my clients to make sure that I can do 120%.
And how do you get to that point?
To be honest, it's the way I approach it. It's sitting down, having coffee with the people that you're going to be reporting to, but also trying to meet and connect with the other people within the organisation who are going to play a role in the work that I'm doing. It's the finance team, the HR team, Health & Safety, Tax – getting to know these people, getting to understand how the business operates, the way they do things, what their risk appetite is, and in a way, becoming an employee without becoming an actual employee.
So it sounds like there's a fair bit of that face to face interaction, onboarding or rapport building with the business to begin with.
And to be honest it doesn't need to be in person. You know, when I worked at ALS, I was based in Brisbane, but we had operations all around the world and there were people I spoke to every day. I knew their families, I knew what was going on their lives. Never ever met them. But virtually, we're actually quite close and there's a few that I actually still talk to from time to time. So this is, in my view, a modern way of working.
“You need that person to be willing to, while they’re not part of the company, see themselves as being part of the company and wanting the success to come”
So developing that close relationship with the business and really understanding the business. And from a skills perspective, what would someone be ideally looking for, from a skills perspective and also level of experience?
I think ideally you need to be kind of a general commercial lawyer. That's not to say that Tax expertise wouldn't work as well. I know some of the people I work for, for example, some have a tax background or a HR or an IR (Industrial Relations) background I think would do quite well, because a lot of companies obviously have HR and IR matters. As a general commercial lawyer, I know where there's a problem and then I know when to go and speak to an IR lawyer. So I think there could be some room for those types of expertise.
And so when you say generalist, is that typically going to be drawn from the senior in-house or general counsel ranks?
I think so, yeah. Someone who's got some good technical knowledge but also some good commercial experience. Who knows when to say to an executive, "You might be right from a legal perspective, but from a commercial perspective it doesn't make sense. Don't do it. Or I would advise against that.” Or someone who can say – because sometimes it happens that things become personal – and so sometimes as lawyers we have to be able to say, "Well let's just stop, take a step back. What is our commercial objective? How do we achieve that?" And so you need to be able to do that.
And I think it does take a few years of experience. I know what I was like at three years post-admission experience versus six to eight years post-admission experience, to now I can't remember how many post-admission years experience I have. So yeah, I think you do need to have that bit of experience. I'd say typically six to eight years at a minimum is what I think would add value.
From a mindset perspective, is it someone who's is probably more attracted to the in-house counsel delivery model. You've got the private practice, then moved in-house into a general counsel role, but then you've come back into private practice. But with a work mode that seems to be a bit more like an in-house service.
Yeah, absolutely. I mean it's not something that's going to be for everyone. I think what I enjoy about it is, I never thought when I started my career that I was a traditional lawyer. I kind of took a bit of an odd path in my career. I started PwC initially in their tax team and went over to tax at Minter Ellison, converted a bit more to a commercial law area and then went in-house. I always really enjoyed getting involved with the business. This is what I'm doing from a legal perspective but how does that then have implications for other parts of business and trying to make sure that it worked with them and wasn't in isolation.
“I’d say typically six to eight years at a minimum is what I think would add value.”
I have some friends who, in my mind, are smarter than me from a legal perspective and they love the law and we've worked together a few times and they love the legal aspect but they don't necessarily like the more pure commercial side of things. They just didn't feel comfortable with that. So it's not for everyone, but I think we all have a role to play.
In terms of your direct experience, do you have an outsourced general counsel example where the experience has made a big difference to your client and what was the outcome?
Yeah, for example, the Med Tech guys I was talking about, they had a lot of change happen in a short period of time. They were dealing with quite a few different stakeholders and other parties. And I think the value I brought was some of the technical aspects were new and novel. But some of the relationship side of things I'd dealt with before. I was quite lucky when I was working at ALS that I was able to work on some big transactions. I was able to be the person on the phone negotiating with the other side, whether it was another lawyer, a CFO or a CEO. How I spoke to these types of people, how I dealt with them, how I was able to handle disputes with them.
And so that kind of experience I was able to use here with the Med Tech guys when they were divesting a business, dealing with a regulator, dealing with a supplier who had terminated arrangements. So I think that certainly added value versus perhaps someone who may have been a traditional black letter lawyer who would just say, "Well here's the contractual [interpretation]."
Just to clarify, was it just yourself doing all that work for them or was it in conjunction with other external firms?
In certain parts it was in conjunction of other external firms. And again, I think this is what the great thing about what I do, I don't replace traditional law firms. One of the things I like about working in-house is you get to work with other law firms as an extension, whether it is legal project managing them and being that conduit between them and the business, making sure that the business is asking the right questions, the lawyers are doing the right scope. We certainly work with them. I've actually brought law firms onto projects where required. And that's again, as an in-house lawyer, that's what you do. You assess the project, you scope it and then go, well what kind of resources do we need? All right, we need a tax person, we need a HR person, and bring those people together.
Back to you personally, what have you found to be the main benefits of branching out on your own and how do you feel that those benefits are passed on to your clients?
I think for me it's the flexibility that it brings. One of things that I like and what I tried to bring when I was again, working in-house with my team was trying to create a good culture because I think as lawyers, if we're happy that will project onto the work we're doing. It's the flexibility and it's not necessarily that I only work two days a week, I don't.
You work a lot harder than that.
I work a lot harder than that. But you know, one of the things, it sounds quite simple, I like to do in the mornings between say 10am and 11am, I'll take my laptop, I'll leave my office and I'll go sit in the coffee shop across the road, order a cup of coffee, and just get through a whole heap of work. Sometimes when you work for a larger company or a large organisation, that kind of thing isn't necessarily...
It's hard to do. Yeah, you're going to a remote coffee shop where nobody else is going to see if you do that!
It's some days I know that I'm not having any meetings and so I'm wearing jeans and a tee shirt, I'm comfy and I'll get through 12 hours of work, and some weeks it might be that I know Tuesday, Wednesday, Thursday, Friday are going to be big days. I can get that all done. I'm going to have Monday off. So, for me it's that flexibility and for me that comes to happiness and it keeps my mind clear and able and I think to produce a better outcome for my clients.
“It’s that flexibility and for me that comes to happiness and it keeps my mind clear and able and I think to produce a better outcome for my clients.”
Paul, final question. From your experience of going out on your own, do you have any tips or can you highlight any traps perhaps for other legal professionals considering this mode of work?
Yeah, one thing I think I did correctly when I left was be open to meeting people. Never say no to a coffee. You'll be buzzing for the first six months from having so many cups of coffee, but you never know who you're going to meet and where that's going to lead. Yourself, I met with you once and then that kind of opened up a few opportunities which have been fantastic and created some long lasting work relationships. Yes, just meet new people. I'd certainly say that there will always be a few knock-backs. You'll try a few things that don't work. Don't let them turn you away. Just rethink it. What went wrong, what can I try new and then approach that.
A really great closing tip for the listeners there – we do need to wrap up and I think you'd probably agree that the outsourced general counsel model can be, in certain circumstances a viable, and in some cases alternative or supplement to external firms; or for growth companies that are not quite ready to pull the trigger on a permanent general counsel, this can be a really good option for you.
There are several great examples of lawyers on the InCounsel panel that are providing this exact solution, doing this new mode work for growth companies. So if you are interested in exploring this option for your own legal requirements or interested as a lawyer perhaps in coming onto the panel to provide this sort of service, we'd love to talk to you.
But that's it for now. Thanks for tuning in and we'll be back with more next week.
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