With the in-house legal recruitment market improving Naiman Clarke recently held a seminar addressing the Improvements to In-house Practice since the GFC. This seminar addressed a variety of matters; CLE and career development, what qualities and attributes create a suitable in-house counsel, changes in legislation and regulation and their impact, lessons learnt from working with reduced capital and head count.

1. Improvements to
In-house Practice since the
Global Financial Crisis
In-house Market Seminar
July 27, 2010

2. In-house Market Seminar One
Improvements to
In-house Practice since the
Global Financial Crisis (GFC)

3. 2009 – 2010 Naiman Clarke In-house Survey
For the 2009/2010 survey participants from 17 core industry sectors were
surveyed:
•Advertising/Marketing/Media
•Automotive
•Construction/Property/Engineering
•Commodities
•Education
•Financial Services/Insurance
•FMCG
•Government
•Information Technology
•Manufacturing
•Mining/Resources
•Professional Services
•Property
•Retail
•Telecommunications
•Transport/Logistics
•Wholesale/Distribution

4. 2009 – 2010 Naiman Clarke In-house Survey
Some of our Market Report Partners were;
• Deloitte • Carnival Australia
• NICTA • DHL
• Telstra • Thales Group
• PBL • Oil Search
• Ten Network • Macquarie University
• George Western • CSR Limited
Foods • Savills
• Inchcape Australia • GrainCorp

5. Survey Objectives
• To gain an understanding of the challenges faced by in house legal
practitioners during the GFC.
• To explore any changes to the practices mix of in house legal
counsel brought about as the result of the Global Financial Crisis.
• To explore whether the GFC has had any effect on the outsourcing
practices of in house legal departments, and if so in what way.
• To investigate the human resource management practices of in
house legal departments including hiring intentions, retention
strategies and remuneration practices.
• To explore the views of in-house counsel on the economic outlook
for Australia in general and their industry sector in particular.

6. Summary of Key Findings
• Overwhelming Optimism (albeit cautious optimism)
• Resource Constraints
• Challenges
• Increased scrutiny/accountability
• Changes in Practice Mix
• Changes to Outsourcing Practices
See refer to In-house Market Report 2009/2010

7. Our Presenters
• Leslie Moore - Deloitte’s General Counsel
• Chris Bertuch - CSR Limited’s Group General Counsel and Company
Secretary
• Simon Brookes - Telstra’s Deputy Group General Counsel and General
Counsel Broadband & Media
• John Knox - Advent Lawyers’ Managing Director
• Michael Bradley - Marque Lawyers’ Founder and Managing Partner

8. Leslie Moore
General Counsel
• Leslie and her team of 15 lawyers and other
professionals provide legal advice on a broad
range of issues for Deloitte’s businesses, which
include assurance and advisory, tax, consulting,
risk services, Forensic and Deloitte Online.
• Leslie began her career as an English
professor at Yale University. After attending
Yale Law School, Leslie joined the New York
office of the US firm of Gibson Dunn &
Crutcher, where she worked as a litigator and
trial lawyer.
• Leslie chairs Deloitte’s Social Media Steering
Committee and is a director of the board of The
Deloitte Foundation.

9. Improvements to in-house
practice since the GFC .
Leslie Moore, General Counsel
Deloitte Touche Tohmatsu
Tuesday, 27 July 2010

10. What I said to Naiman
Clarke back in
October 2009

11. The number of vacancies in 2012
exceeding the number of qualified
employees
150,000

12. Percentage of Australian employers
who see a shortage in skills as high or
extreme risk by 2015
47.5%

13. The average tenure for employees in
a company (compared to 15 years in
the 1950s)
4 years

14. The number of jobs today’s
university graduates will likely have
held by age 38
10-14

15. Percentage of employees surveyed
who are looking or who plan to look
for work in the next 12 months
49%

16. So what do we do now?

17. The new face of our most talented employees will be
Women-led
More Asian
More diverse in sexual orientation
Cross-generational

19. What are the barriers to good in-house practice and to the
retention and engagement of our best in-house lawyers?
Tight budgets
Greater demand for than supply of in-house lawyers
Lack of career development
Lack of appropriate (and continual) training
Work can get stale
Work can be repetitive
Clients can be unappreciative

20. How do we as GCs overcome these barriers?
Formal career planning and development
Training in the law
Training in the so-called “soft skills”
Training in leadership
Practice development
Practice management
Quality of life

21. General information only
This presentation is provided as general information only and does not consider your specific objectives, situation or needs. You should not rely on the information in this presentation or disclose it or refer to it in
any document. We accept no duty of care or liability to you or anyone else regarding this presentation and we are not responsible to you or anyone else for any loss suffered in connection with the use of this
presentation or any of its content.
About Deloitte About Deloitte Australia
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spanning multiple industries. With a globally connected network of member firms in more than 140 financial advisory services to public and private clients across the country. Known as an employer
countries, Deloitte brings world class capabilities and deep local expertise to help clients succeed of choice for innovative human resources programs, we are committed to helping our clients and
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www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche
Tohmatsu and its member firms.

22. Chris Bertuch
Group General Counsel & Company Secretary
• Chris joined CSR in 1993 and has overseen the
management of CSR’s asbestos liabilities,
major Australian and US insurance litigation
and the demerger of Rinker Group Limited.
• Since the Global Financial Crisis Chris has
been integral to CSR’s two major capital
raisings - one in response to the GFC and the
other to facilitate the separation of CSR’s Sugar
and Renewable Energy business, Sucrogen. In
early July 2010 CSR announced the sale of
Sucrogen for $1.75 billion.
• Before joining CSR Chris was a partner of
Gadens Lawyers. He holds a Master of Laws,
Bachelor of Economics and has completed the
Advanced Management Program at Harvard
Business School.

23. IMPROVEMENTS IN IN-
HOUSE
PRACTICE SINCE THE
GLOBAL FINANCIAL CRISIS
CHRIS BERTUCH
GROUP GENERAL COUNSEL – CSR LIMITED

24. NEVER WASTE A CRISIS
24

25. CSR LEGAL - STRATEGY
CSR’s in-house lawyers draw on their
expertise and knowledge of CSR’s
businesses to deliver accurate,
practical, cost-effective and timely
legal advice. We do this by working
closely with our businesses and
external advisors, carefully managing
costs and providing ongoing
education.
25

26. CSR LEGAL PRE-GFC
CSR CORPORATE
GENERAL COUNSEL & CO SEC
LEGAL DEPARTMENT
SUGAR &
BUILDING
ALUMINIUM RENEWABLE PROPERTY
PRODUCTS
S
26

27. THE GFC – EFFECTS
 No lending for new housing, business development,
etc
 Housing starts at historical lows
 Commodity prices plunge
 Earnings downgrades
 Retrenchments & morale issues
 Banking covenants threatened
 Capital raisings for “balance sheet repair”
 Equity markets unwelcoming
 Increasing default & uncertainty
27

28. THE GFC – EFFECTS
Business confidence slumps
Source: NAB business confidence index
28

29. THE GFC – EFFECTS
Building Approvals down
29

30. THE GFC – EFFECTS
Aluminium price down
4,500
Aluminium 3 month (A$/t) 4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Apr 05 Apr 06 Apr 07 Apr 08 Apr 09
Aluminium 3M (A$/t)
30

31. THE GFC – IMPACT ON CSR
 Late 2008 –demerger ready but put on hold due to
equity and debt markets
 17 November 2008 – CSR announces $480M capital
raising to strengthen capital position and reduce
refinancing risk
 18 February 2009 CSR announces further earnings
downgrade, Building Products down 20% and
Aluminium down 19% on prior year
 Closure of operations and reduction in size of CSR
workforce
 17 June 2009 - CSR progressing toward demerger
31

32. PRACTICAL LEGAL ISSUES
 Supplier and customer default
 “What does the agreement say”
 HR and morale issues
 Trade Practices – harder business
environment
 OH&S – reduced resources and corner
cutting
 Risk management and disclosure issues
 Default and litigation 32
risk

33. LEGAL ISSUES - EXAMPLES
 Class actions for inadequate disclosure
• Centro maturing debt 2007-08
• OZ Minerals maturing debt due Nov 2008
• NAB “toxic debt” and share plunge 2008
• Gunns’ profit (and share price) plunge 2010
 Regulatory action
• ASIC/Liquidator investigations Allco and Babcock
• Legislative intervention
33

34. WHAT DOES IT MEAN FOR IN-HOUSE?
 Greater scrutiny and dependence on advice
 Pressure on internal and external legal
resources
 Commercial advice needed, NOW! (but
please give me the answer I need…)
 New checks and balances – eg risk
management and authority limits
 New legislation & legal developments
 Knowledge and document retention tested
34

35. AN OPPORTUNITY FOR IN-HOUSE
 Interdependence on business culture and
competencies
 Increased understanding by in-house of the
broader business drivers and goals
 Non-legal (eg financial) competencies of in-
house team
 Opportunity for closer relationships with
business and goals
 Realign relationship with external lawyers
35

36. CSR IN-HOUSE NOW
CSR CORPORATE
GENERAL COUNSEL
& CO SEC
BUILDING PRODUCTS
LEGAL COUNSEL SUCROGEN
& CO SEC LEGAL COUNSEL
PROPERTY ALUMINIUM
36

37. CONCLUSIONS
 For CSR, a time of significant change
 GFC as an opportunity for all in-house
lawyers
 More effective relationships with our
customers and external providers
 Challenge is to make lasting change
37

38. Simon Brookes
Deputy Group General Counsel and General Counsel Broadband & Media
• Simon Brookes is Telstra's Deputy Group
General Counsel and Telstra's General Counsel
Chief Marketing Office.
• In these dual roles Simon deputises for Telstra's
Group General Counsel (Will Irving), manages
the "support functions" associated with Telstra's
• in-house teams.
• This includes staff, operations, finance/budget
and knowledgment management.
• Simon also provides legal support for Telstra's
product, pricing and marketing business unit.

39. IMPROVEMENTS IN IN-HOUSE
PRACTICE SINCE GFC
SIMON BROOKES | DEPUTY GROUP GENERAL
COUNSEL | TELSTRA CORPORATION LIMITED
SIMON BROOKES| IMPROVEMENTS IN IN-HOUSE COUNSEL PRACTICE SINCE GFC, JULY 2010

40. 1. Telstra Legal Services - STRATEGY AND STRUCTURE
Aim to earn Telstra the highest corporate reputation, customer satisfaction
and competitive advantage (through superb legal service).
Legal group structured to deliver client needs
Legal teams are aligned with company’s business units – e.g. customer
facing units, products, operations, corporate centre units
Also centres of expertise in Dispute Resolution and Intellectual Property
Each legal team headed by General Counsel (reporting to GGC) – they are
also members of business unit senior management teams
Structure ensures a close working relationship, a thorough understanding of
that business unit and focussed advice
Also enables early detection of legal issues and greater acceptance of advice
Deputy Group General Counsel role
Dedicated Finance manger, Precedents and also Operations
SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC
40

41. 2. INCREASING PRESSURES ON IN-HOUSE
LAWYERS
Budget/Resources
• Get control of the budget
• Fight for new budget
• Meet existing budget
• Get/keep Headcount
• Market the legal function
Role of Legal
• In decision making forums Delivery of Legal Outcomes
• Deep knowledge of the Systems & Processes
business • Avoiding legal problems
• Seen as “Trusted Advisers” • Signing deals/winning cases • Fee management
whilst also maintaining • Legal Risks at acceptable • Matter management
independence levels • Status reports
• Not seen as “internal • Good compliance processes • Keeping the business
cops/road-blocks” • “Keep the boss out of gaol!” updated
• Respected • Compliance/Training
• Legal environment monitor
• Avoid non legal work
• Adding genuine value Law Firms
• Quality and Timeliness
• Value for money
• Strategic resource
availability
• Knowledge of the business
41

42. 3. IMPACT OF CHANGES IN REGULATION AND
COMPLIANCE TO TELSTRA
Telstra subject to high degree of regulation and regulatory scrutiny
Australian Consumer Law
– New civil pecuniary penalties
– Substantiation notices
– Infringement notices
– Non-party redress
– Consumer guarantees
– And lots more
Voluntary Section 87B Undertaking entered into by Telstra, Optus and Vodafone-
Hutchison. Intended to improve marketing practices in telco industry
42

43. 4. WHAT CHANGES IN BUSINESS?
Increased focus on customer experience and retention.
Legal’s role in improving customer experience
 Advertising
 Ride ons
 Contracts
 Customer complaints and interaction
 Consumer guarantees
 Front of house processes
Backed up by lawyer’s job accountabilities and client survey metrics
SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC
43

44. 5. CHANGES IN LEGAL
A. CHALLENGES AND OPPORTUNITIES
Mix of external and internal spend, and reduced budget
 Over time we have increased the number of internal lawyers
 Competitive tension
 Alternative fee arrangements – “all you can eat” deal with Gilbert + Tobin, fixed
fee agreements at team level with other firms
 Ensure team handles strategic/higher value work internally when possible (lower
value work is minimised)
Increasingly experienced team and more limited promotion opportunities
 Largely autonomous roles in line with experience, mix of work, chance to do new
things
 Formal and day to day reward and recognition
 Various initiatives to improve Telstra Legal as an employer
SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC
44

45. B. ATTRACTING, DEVELOPING & ENGAGING PEOPLE
What’s important in attracting and retaining our people
 Respected Leadership
 Quality of work
 Close to business decisions
 Flexible working arrangements
 Control and autonomy over work
 Benchmarked remuneration
 Diversity and collegiate team
What sets us apart – e.g.
 Cutting edge, challenging and engaging work
 More than ½ of Legal’s senior management team and 2/3 of staff are female
 Around 20% of employees work part-time
SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC
45

46. ATTRACTING, DEVELOPING & ENGAGING – CONT.
Developing and engaging with our people
 Rotations (permanent or secondments) to other legal teams – lawyers and support
staff
 Leadership and management training for people managers and non-managing
lawyers
 Secondments/moves outside Legal
 Participation in cross BU business projects and cross BU groups
 Co-ordination or contributing to extra-ordinary projects
 Giving team members exposure to senior management
 Giving team members opportunity to do new types of work to broaden skills and to
become subject matter experts if they choose
 Giving senior people informal people manager responsibilities
 Scholarships
 Building industry profile and representing Telstra at external forums
SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC
46

47. D. Measuring success
Annual client survey – including a separate survey of senior executives on
our General Counsel
Law Firm survey (our lawyers comment on our major law firms)
Company wide employee engagement survey
Other surveys we’ve run – attraction & retention survey, people
management survey, anonymous feedback for people managers
SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC
47

48. 6. NBN Co.
On 20 June 2010 Telstra signed non-binding Financial Heads of Agreement
with NBN Co and participate in rollout
In addition to shareholder approval, Heads has a range of conditions
including passing necessary legislation and ACCC approval. Also definitive
agreements.
Emphasises need to move to a customer centric organisation
Legal team resourcing
SIMON BROOKES | IMPROVEMENTS IN IN-HOUSE PRACTICE SINCE GFC
48

49. John Knox
Managing Director
• John is the Founder and Managing Director of
Advent Lawyers.
• He is an experienced legal industry professional
having spent over ten years working in major
international law firms in Australia, Asia
• and the U.S.
• Prior to returning to Australia in June 2008,
John was the Head of Marketing & Business
Development at Allen & Overy for Asia, based
in Hong Kong, and then the U.S., based in New
York.
• John has spent a lot of time researching and
reporting on the changing nature of legal
services delivery and will talk about Advent and
what makes it different and an attractive to in-
house counsel.

50. “Improvements to in-house practice since the GFC”
Tuesday 27 July 2010

51. Some interesting statistics..
The majority of users of top 10 law firms in Australia feel that
the specific firm that they use regularly is less than excellent
on cost consciousness
78% (67% in 2007) of in-house lawyers agree that reducing
total legal expenditure is becoming increasingly important in
their organisation
80% (71% in 2007) of in-house lawyers agree that the
percentage of legal work they conduct in-house is increasing
Source – Legal Beacon 2009 and ACLA in-house law report

52. There are new alternatives

53. The Advent model and value proposition
Senior and experienced
lawyers available to work in-
house, on a flexible basis and
at a reduced fixed cost.

54. A proven business model overseas
• Have been going for about 9 years
• Now have over 300 lawyers
• Offices in New York, San Francisco, Boston, Washington, LA, Chicago, London & Hong Kong
• Recently ranked #73 in America’s fastest growing private companies by Inc. magazine’s 500
fastest growing companies
• Clients include American Express, Bank of America, Cisco, Citigroup, Credit Suisse, Deutsche
Bank, Goldman Sachs, Hilton Hotels, JP Morgan, Johnson & Johnson, Mastercard, Merrill
Lynch, NBC Universal, Nokia, Reuters, Sun Microsystems, UBS, Virgin and Yahoo

55. How can the model be used?
• Executing or project managing transactions
• Managing large scale tenders or contracts
• Litigation or dispute resolution
• Implementing regulatory change
• Compliance projects
• Managing integration issues following a merger or acquisition
• Short and longer term “infill” – e.g. replacement for someone on holiday,
maternity leave or assigned to a major project

56. The core foundations of the model
Senior & experienced lawyers
Work in-house
Flexible basis
Reduced fixed cost

57. Senior and experienced lawyers
• Senior and experienced lawyers - at least 8-10 years + PQE
• Private practice and in-house experience
• Access to the whole Advent team
• Best person for the job
• Roll up the sleeves mentality and do what it takes to get the job done

58. Work in-house
• Become part of the client’s team – legal or commercial
• Dedicated resource focused on the project or matter at hand – greater efficiency
• Direct and immediate access
• Awareness of commercial drivers and broader organisation objectives
• They are available again when needed

59. Flexibility
For clients
• Short or longer term engagements
• Can respond very quickly
• Able to extend or send back early
• Extra or different skills can be added as needed
For lawyers
• Variety and flexibility

60. Reduced fixed cost
• Reduced overheads means savings are passed through to
clients
• Fixed fees to ensure objectives are aligned
• Transparency and clear communication

61. Some examples and case studies
Assisting a large Advising an investee Providing a senior
privately owned company on their lawyer to support the
company run and acquisition sales and trading desks
negotiate a M&A by a large private of a large global
transaction equity owned group investment bank
Providing senior Assisting a large
Working as part of a project team lawyers to support the investment bank to
in the review of a major business units of a large develop and implement a
contract as part of a ASX listed FMCG business process to deal with claims
competitive bid and one of the world’s arising in their equipment
largest IT companies leasing business
Providing a deputy general
Assisting a large
counsel to a company to Providing a part time general
privately owned
assist in management of counsel as a company
company to structure
key projects and provide determines the need to hire a
and implement
coverage in the absence of the permanent resource
a new fund
general counsel

62. Partial client list

63. Michael Bradley
Founder and Managing Partner
• Marque was established in 2008 with the
modest ambition of completely changing
the way law is practised.
• Marque Lawyers as a firm have traded
timesheets for more useful measures of
success such as its 4pm Friday Pens
Down Rule and the monthly competition to
see who’s scored the most hits on the
website.
• It’s still law, just done differently.

65. Thank You