Driving the Strategic Interests of Corporate Malaysia- the need for best in class In-house Legal Services

Driving the Strategic Interests of Corporate Malaysia

The Malaysian Corporate Counsel Association (MCCA) held its second General Counsel (GC) Forum on 26th June 2014 at The Westin, Kuala Lumpur. The theme "Driving the Strategic Interests of Corporate Malaysia-the Need for Best in-class In- House Legal Services" set the stage for the panel, comprising mostly of selected senior GCs from Khazanah-linked companies, to articulate their experiences and their aspirations for the development of the legal services industry in Malaysia.

This GC Forum provided a platform for an interactive dialogue on the challenges facing the legal services industry as a whole and also highlighted certain issues which are unique to Government-Linked companies (GLCs).

From the energy sector, Izhar bin Ismail of TNB explained its social strategic role in nation building whilst balancing that with the need to be profit-driven. Tariffs are regulated and allow for a permissible level of profit, but no such limits are set for business expansion overseas.

Chee Mei Feng from CIMB cited her organisation's motivation to stay competitive domestically and internationally. Regionally and globally CIMB has to be at par with the likes of JP Morgan, and she urged law firms to be ready to face similar intensity in the level of competition from their overseas counterparts.

Michele Kyhte also stressed the importance of being internationally competitive and cited Proton's expansion overseas over the last two decades. In her view Corporate Malaysia is certain to grow further spreading its interests around the globe.

The MCCA's President, Thavakumar Kandiahpillai, commented on the hybrid-like role of the GLCs that combined a strategic socio-economic function with a profit-driven thrust and in this way the GLCs act like a bridge between the policy influencers and the private sector. He shared his views about Shell Malaysia's success in upscaling its in-house counsel unit and proving its effectiveness as a regional in-house legal services hub in terms of quality and cost. He also stressed the importance of leveraging on the MCCA as a professional body to represent legal counsels from varying industries on issues of common interest in any interaction with regulators and other stakeholders.

Various points of interest were raised by the panelists and participants on the challenges faced by in-house counsels, many of which also touched on the general developments within the legal services industry. The main ones are summarized as follows:

1. In-house counsels have to build up their knowledge of cross-border transactions and therefore need to leverage on the skills of others as a learning tactic. In certain specialized areas, in-house counsels may have the edge over their external counterparts. Production Sharing Contracts (PSCs) is an example of this. The PSC was introduced by Petronas in 1976 as the medium to engage capable oil and gas companies to participate in Malaysia's upstream petroleum blocks.
2. In selecting which law firms to appoint, they are assessed based on the quality of their deliverables. Relations cultivated over time would also help manage the lawyer-client relationship.
3. The perception that Malaysian lawyers and law firms are cheap (and of poorer quality then their regional neighbours) is restraining the legal services industry from growing to its full potential. Added to this is the restriction on their ability to market or advertise their services. The capability is ready to be tapped but the conditions of a liberalized legal services market are needed to help drive up salaries to levels that fairly reflect the true worth of their services, and to accelerate the learning of specialized and highly-sought after skill sets.
4. The MCCA may offer the ideal platform for the legal profession to seek an unambiguous definition of attorney-client privilege through changes in the relevant laws, in particular the Evidence Act. There is still today no express provision granting attorney-client privilege between in-house counsels and their in-house colleagues. Due to the lack of clarity in-house counsels in Malaysia are likely to resort to copying correspondences to their appointed lawyers to avoid any doubt about privilege. Any amendment to the Evidence Act should also address the definition of "in-house counsel": whether they should exclusively be law degree holders or law graduates who have been called to the BAR.

Many of the participants at the GC Forum, a mix of law practitioners from legal practice and private sector companies, were attending for the first time. Some expressed ideas on how the MCCA should develop on the points of interest arising from the dialogue. Based on their impressions of what transpired that evening, they were willing to accept future invitations from the MCCA to attend similar events in the future.

Attendance at the MCCA GC Forum is by invitation only. Information on upcoming events and how to become a member is available on its official website: www.mcca.com.my.