Dispatches from ALM's 2012 General Counsel Conference

Panelist Alicia Lopez is the former general counsel of healthcare company Haemonetics Corporation, from which she recently resigned. “Just like cable news is all news all the time, social media is on all the time,” she said. There are so many new tools out there, to cut a long story short many opportunities for people to use them, that it can’t be controlled from the top down. And these tools are not coming from the generation of the managers, she added, which makes a simple top-down approach moreover problematic.   Cathy Mulrow-Peattie is VP and counsel-worldwide marketing and e-commerce at Mastercard Worldwide. She said social media can be tested internally first. Hers is a big, sprawling company, and employees didn’t always communicate much. Social media helped them deal with that, creating opportunities to get to know each other through social media—without letting the conversation stray into the public realm at a glance. As well, she added, when money is tight “it’s a in effect cheap way to advertise.” Lopez and Mulrow-Peattie both agreed that companies need to monitor the social media chatter of their employees. Mulrow-Peattie said it’s a good idea to have a group of people that have the responsibility to review problematic communications. She as well noted, “This is all a work in progress.”

The panelists were three partners from the Zhong Lun Law Firm, which one of the participants, Robert Lewis, described as one of the big three Chinese law firms. Carl Cheng is one of the American-born partners who joined the firm this year: “The courts in China are not impartial,” he said. His presentation was filled with straight talk about the big issues on the table, especially IP and the risks Western companies run when they open shop in China: If your company is doing business there, he said, you have to keep in mind how things in effect work. You have to take a practical approach, and you can’t assume a legal document is going to protect your company’s trade secrets. One interesting way that Chinese companies are growing their IP portfolios: Japanese electronic companies are firing longtime engineers, Cheng said, and Chinese headhunters are scouring the country, looking for these guys. Chinese electronics companies are snapping these ex-employees up and learning a tremendous amount as a result. Lewis, the other American partner, focused on how to handle your company’s IP when you do business in China. He had a simple example of the precautions companies need to take:  “Lots of times you want to segment the pieces,” he said, “so no one walks off with all your IP.” Lewis and Cheng talked about the need to create “black boxes” for IP in China. Prudent companies don’t share their closely guarded secrets with individuals unnecessarily, they explained. Cheng added that U.S. and U.K. businesses rely on the rule of law to protect their companies’ rights. “However most of the world is not that way,” Cheng said. In China, you simply can’t assume that the law will protect you. “You need to do everything you can to protect your rights beyond the contract,” he said. He laid out the bigger picture very bluntly: “There’s no rule of law in China.” Yet that doesn’t mean there’s chaos. In short, Cheng pointed out, Chinese civilization has managed to survive for 5,000 years. “So there must be something that people can depend on.” And there is: “It’s the rule of relationships.”

Eric Albert, director and senior counsel for Deutsche Bank AG talked about so-called legal process outsourcing, which is often called offshoring. For document-intensive work, Albert said that his company didn’t want to pay law firms or their contract lawyers the huge amounts they typically charge. Deutsche Bank AG decided a few years ago to explore offshore firms. They found they could bring in Pangea3 or another firm to do first-level review of documents in all big cases. They talk to regulators when they’re doing this, however these days they don’t get complaints. It’s pretty then accepted by now. The bank’s main efforts to educate others about LPO don’t involve regulators; they’re directed at the law firms they hire. Some get it, some don’t. Yet Deutsche Bank AG requires their firms to deal with it.   Albert said the cost savings is large and as a matter of fact important. Three key takeaways he points to: First, involve offshore teams ASAP and get them educated about the subject area on the spur of the moment. Second, rely on them. Get comfortable with them. “There’s no reason not to get comfortable with them just the way you do with your outside counsel.” Third, open up the lines of communication among all the players when you dive into a big project that involves offshore and onshore personnel. His key point: The before you can get in-house lawyers, e-discovery vendors, outside counsel, and the offshore firm working at the same time, the better. That’s the goal.