2/5/2015

Expansion plans? Knock on your legal’s door!

Companies currently have an increasing focus on growth. Is your company as well? I would like to share some observations from a legal point of view. These are not meant to be blocking. However, it is important that you are more ‘aware’ of the implications of every (little or huge) step you are going to take.

Legal and growth don’t have to be observed as ‘cursing in the church’.

Globalization

If you are in business, you are confronted with a range of risks. Rules are getting more complicated, and they are multi-jurisdictional. Your legal department cannot focus anymore on what you are doing in one country. It needs to pay attention to the rules across borders. Furthermore, some legal issues are not country-specific. Therefore, it requires a lot of teamwork and time to manage these risks. The legal department also needs a global network of legal support involving people who can get the right answers. 

Enterprise risk

Companies are exposed to a whole variety of risks: financial, technological, regulatory, public relations and governmental affairs. Some examples are employees stealing company secrets, and geopolitical events shutting off access to a market.

Every expanding company should look further than the legal domain. From a broader perspective the real challenge is the differing mentality, business practices and perceptions in the different countries. You have to know the environment, understand the sensitivities and live up to regulatory standards that do not necessarily originate in the country you are operating in.

All these are forms of enterprise risks that can flourish as your company expands, especially when you do so internationally.

Growing volume of contracts

The negotiation, drafting and execution of contracts have always been a central part of the corporate legal function. However, the legal advisor’s role is changing in response to the growing complexity of formal business agreements.

Next to the internal aspects of contract management, it is critical that the counterpart understands that steps are being taken to keep the written contract up-to-date within the evolution of the business context and relationships after signature. Without effective contract management, the document and the subject matter are likely to diverge, creating the risk of misunderstandings and disputes. Make sure that all the tools and rights in the contract are leveraged as intended.

If your company would create the perception being unconcerned about how your contracts are complied with, it is not right to expect your counterparts to be conscientious about their responsibilities.

Combine your strengths

You don’t need to bow for the sharp challenges ahead. But keep your heads up and combine strengths. That is how your growing company can transform the potential risks into strengths.