GCRC Interview: James Liddiard, Head of Legal at Innovation Group – Whole Interview

Here is the entirety of our recent interview series with James Liddiard from Innovation Group. “James Liddiard joined Innovation Group as Group Head of Legal in January 2002. In addition to responsibility for the delivery of legal services across the Group, James was appointed Group Company Secretary in February 2010. Prior to joining the Group, James worked as a corporate lawyer in private practice. He is a Solicitor, and qualified in 1996.

Innovation Group is a global provider of business process services and software solutions to the insurance, fleet, automotive and property industries. It enables clients to unlock the potential of increased collaboration, outsourcing and strategic partnerships, helping to reduce costs and risks, improve efficiency, increase customer satisfaction and achieve growth. With a commitment to flexibility and innovation, Innovation Group is able to provide tailored solutions that can meet the demands of today and adapt more rapidly to the needs of tomorrow.

You’ve been a GC at Innovation since 2002. I’m just wondering how much you’ve noticed the role changing in the last 11 or so years?

Well it’s evolved beyond being simply a legal role, which is how it started out when I came in as a corporate lawyer fresh out of the City looking for an in-house challenge. Over the years, the role has grown. It’s grown as a result both of legislative and regulatory change, and also due to me taking on greater responsibility within the organisation.

The real change here was my appointment as Company Secretary, which didn’t come until February 2010. Up until that point, it remained a primarily legal role but with a global reach. Since 2010, I’ve become far more involved with the running of the business, and as Company Secretary, I am a Board member too. At Board meetings I take the minutes but more significantly I provide guidance and advice to the Board. You don’t have the same impact or responsibility as a main Board director, but the Board still looks to the Company Secretary for support and, as a result, my profile within the business has increased.

And so, as part of the Company Secretary remit, I’ve become involved with issues of corporate governance, compliance, executive remuneration and share schemes. Now my role also encompasses information security,sustainability and CSR, and also responsibility for the group insurance programme. So you can see that, in time, especially over the last three years, my role has expanded considerably from where it was.

So where I was doing 90% legal work before now I’d say my workload is more 30 or 40% legal work and the rest of it is Board matters, corporate governance and compliance, information security, sustainability, and the insurance programme – the legal work is part of a portfolio of responsibilities which I now have.

So you say 90% when you first came in and then now it’s only 30-40%, which means there’s a lot of outsourcing of legal work…

Yes though I have an assistant now, whereas when we started off in 2002 I was on my own. I was on my own until around 2007 when we started taking a secondee from an external law firm. Now we have a permanent assistant for the UK business. Also, at Innovation Group, we operate in eight different territories, so we have have legal support in South Africa and in the US. It’s also worth mentioning that the way the organisation is run is through a very thin corporate layer, the HQ function if you like, and then the individual regions are de-centralised. They’re run akin to separate businesses, and that’s primarily because that’s the way the business grew – through acquisitions in different territories. We’re thin on top, and, as a result, governance from the centre is a challenge.

If you think about all those responsibilities, in a FTSE 100 company, they would might be split across numerouspeople. In a FTSE Small Cap company, which we are, we just don’t have the resources to throw that many people into it, so consequently, we’re having to manage risk in the business and decide where to allocate the limited resources that we have.

And do some of these decentralized regions have their own legal budgets?

Yes and consequently those two lawyers in South Africa and in the US report in to their own local business units. Because those business units have their own budgets and cost centres, it means that those individuals report directly to their regions. They come to me for help when they need it for example with contract or governance / compliance or insurance related queries. But their primary focus is to their region.

How much do you think lawyers making the jump from private practice towards being an in-house lawyer need to appreciate how multifaceted the role is?

I think it depends on whether you’re dealing with the role just as an in-house lawyer, or whether you’re dealing with my role, which is, as I’ve demonstrated, as non-legal as it is legal. If you’re dealing with a purely in-house legal position, I think there are two primary things to bear in mind. One is that, unlike in private practice, where you’re a fee earner and generating revenue for the business, in an in-house environment you’re a cost. You’re a supplier to the business and therefore you have to demonstrate value to your internal client, and one way you can do that is by saving money on fees, because obviously, as a salaried employee, you’re cheaper to the company than paying for the same services from an external private practice firm, provided you are kept busy!

More significant, I think, is the building of trust in personal relationships within the business, and demonstrating the value of the in-house lawyer to the business. The only way I think value can be demonstrated is by being commercially orientated. If not managed effectively, I think procurement and sales teams in business generally can view legal as an inhibitor rather than a facilitator. What you have to do is to overcome that perception and show pro-activity and commercial acumen. In other words, you have to become an asset to the business.

I think that we hear that theme a lot: the business facilitator, not the business inhibitor. But you name two functions there: procurement and sales, which are quite different philosophies internally…

Within Innovation Group, we are not massive buyers of services. We don’t outsource any business functions. We buy utilities, but we don’t have procurement teams for that – we’re just too small. But we do have sales teams because we have software and services to sell, and, of course, salespeople are motivated to make the sale. But equally, the Company has to protect its position, for example by avoiding onerous contracts. So we have to ensure that the right checks and balances are in place.

The only way to achieve that is by educating your sales team. That means training on contract principles and on our standard-form contract. For example, it means explaining what a limitation of liability clause is, its impact, the significance of a termination for convenience clause, and so on. Sales people generally don’t have a legal background, and they won’t understand the significance of legal provisions in contracts without the training, so that’s important.

And did you find this from experience, that training was the response and the answer to your needs? This kind of pro-active education of the salespeople for example?

I think we don’t do enough training, and really it relies upon the strength of the relationships between the legal team and the sales team. So we have to be working together, they have to see the value of the legal team as a value-add in order to keep engaging with us. We’re a people business, as you know, and so everything hinges on the quality of the personal relationships between the individuals.

And logistically this is difficult with you being in the UK and then these eight different countries, so it is a challenge….

Yes. If we have a significant commercial contract or a significant acquisition, because of our limited resource,we often engage external lawyers, though we do try to manage our UK, South African and US BPS commercial contracts in-house, because those are the regions where we have the legal resource. In the UK, on acquisitions, I am very closely engaged with our external advisers. With regard to overseas acquisitions, less so, but the regions still have to engage with Group in the UK, for regulatory as well as governance reasons.

You’re still growing, your priorities are different at different stages of growth. We were talking yesterday with another in-house lawyer about the life cycle of companies. So the type of legal requirements match the life cycle of the company?

As we keep growing I’m sure that there will be a requirement to add to our legal team and there will probably be a requirement to do the same with regard to the other areas of my responsibility. We’re likely to requireanother resource for administering share schemes, for example. We’ve already employed a sustainability professional. It’s a question of matching increased compliance and regulatory obligations with trying to develop the business insofar as we can for the benefit of our stakeholders.

A lot of what you’ve said is about inter-departmental collaboration, and we saw on your website that you really value collaboration as a big part of your philosophy and your business. How do you, as in-house lawyer who is a Board member as well, manage all this work in a collaborative way?

That’s a good question. With difficulty I think is the answer. It’s a massive remit and in larger companies these responsibilities would be split between other individuals. The way this should work is that I retain overall responsibility and I delegate the day-to-day management of each area of responsibility to other employees. So, for example, the UK legal work is delegated on a day-to-day basis to the other in-house lawyer that we have on site. The information security work is delegated to one of our finance team; the administration of the share schemes again is delegated to a member of the finance team. The sustainability and CSR piece has, just over the past few months since March, been delegated to another employee. So you can see that part of my role is as a manager.

And that is just as well because it just takes one big project to absorb so much of my time that the day job becomes difficult. One big transaction and I can find myself wiped out.

And you became a project manager?

Partially yes, but much of my work, in particular the Board matters, the Group legal and the insurance work, is not delegated.

So essentially your day job has a certain sort of routine to it, but when these big events come along, you find yourself having to prioritise…

Yes!

And the only way to really deal with this is to grow your budget so you can increase your capacity?

I’m not necessarily sure that’s the answer to be honest, because the business would obviously be sensitive to the increased cost The cost / benefit analysis would have to support the investment first, and in smaller companies that is more difficult to justify. In terms of the legal work at the moment, I think having two of us in the UK, one concentrating on Group work and the other on work for the UK business, is sufficient.

One of the big things we’ve noticed is that a lot of lawyers, including in-house lawyers, are often reluctant to use certain modern legal technology because of potential risk. What do you think about lawyers being predisposed to being sceptical about technology because of risk aversion?

I’m not necessarily sure it’s about risk aversion. It’s more the difficulty of getting to grips with it that is the issue. I’m just thinking of the various products we use – EchoSign is one product that we use and we’ve got portals for our investor relations product, portals for our registrar product, a portal for our LMS on the training system, all these different products all with different logins. I know technology is supposed to be time-saving and efficient, but often, the way it’s presented, it just takes a bit of overcoming these barriers to entry in order to actually use it. There seems to be a natural reluctance to take the time to get to know the product, to make the time-savings and the cost-savings, because there’s that initial learning curve to get over. Because we’re all so busy, it’s difficult to make the time investment to do it.

It’s no excuse – I know it’s no excuse – but it’s the reality of having multiple products with multiple means of accessing them. If there was a product that allowed you to access all your products through a single login, for example, that would be a great benefit to us. I think a lot of companies must deal with multiple products and have these issues.

The other option is to try to use the same password for everything but this is not very secure.

We had a conference last week which was all about technology. And one of the speakers came out with this very impressive line saying that the lawyers of tomorrow will all have computer science degrees. Obviously there is growing amounts of automation, automated legal software and so on. How technologically adept do you think lawyers in the future are going to have to be?

When I started out it was all green screens and internal email. I qualified as a solicitor in 1996, so, I think back then, fax machines were common, and since then, email has taken over everything. I’m sure that we are far more efficient now than we were in 1996 in terms of what lawyers manage to achieve in a single day. But of course, we’re also busier, because the advent of technology has meant that you are always contactable, wherever you are in the world, unless you are somewhere without a mobile phone signal.

It’s probably added greater expectations from your employer, too. With modern technology, there is no escape!

Well this is really interesting because your business is outsourcing, and in many ways the role that you have is one that should be traditionally outsourced, but there are certain roles and functions that you can’t outsource…

That’s right. I accept that with my position. I’d be surprised if it weren’t the same for other professionals in similar positions in other companies.

Legal education is something we’re hearing a lot about at the moment and we’re very interested in your background, that you went into the Innovation Group as a secondee, and you stayed on to become the GC.

To be fair, I was the first in-house lawyer at Innovation Group. Innovation Group floated in 2000. It was evident that from the float that there was a need for an in-house lawyer. From day one I could have called myself GC because I was the only lawyer! But, now I think that – after a decade – I’ve matured into the role.

Should there should be a fast track education process for legal students or private practice solicitors to go in-house?

The thing is that many of the desired skill sets for being in-house are learnt through experience. You can teachon, for example, understanding financial statements. If you’re working inside a PLC, there’s learning about how a PLC operates: you need to understand about the regulatory and corporate governance requirements, for example. I think you learn a limited amount about such matters at law school, but from my experience it doesn’t prepare you for life in a legal or compliance team in a public company.

And there isn’t really any formal training for in-house….

No, there’s not, no. And what’s more, especially in our organisation, where we’ve got limited resources, you can easily become kind of siloed in your area of responsibility and miss out on the bigger picture. So you’re missing the wood for the trees – you’re so busy just looking at contracts and dealing with contractual matters that you don’t understand, you’re missing out on how the business is governing itself and how it’s operating. And in my experience, the best in-house lawyers are the ones that fully understand how the business operates, and what the strategy is.

If you understand the commercial drivers within the business, then I think that is going to make you into a more useful asset to your business because you’re understanding the whole picture, you’re not just in your narrow little field. The challenge is to break out and understand what is happening around you.

About William Barns-Graham

William is the content manager and head of communications at GC Research Club. He is a professional journalist, researcher and strategist. He has worked at GC Research Club since February 2013 and has rapidly become a distinguished voice in the in-house legal blogging community, writing on Lexis Nexis and interviewing leading legal thinkers and writers, in house lawyers and CEOs within the legal tech world. He has also coordinated the GCRC Sports Panel series.
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