Core functions of the legal team: supporting other corporate functions | Practical Law

Core functions of the legal team: supporting other corporate functions | Practical Law

This note considers how the legal team can work with and help support the other corporate functions within an organisation. It looks at the team's relationship with departments that serve internal clients, rather than an organisation's customers and suppliers.

Core functions of the legal team: supporting other corporate functions

Practical Law UK Practice Note w-010-5078 (Approx. 7 pages)

Core functions of the legal team: supporting other corporate functions

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This note considers how the legal team can work with and help support the other corporate functions within an organisation. It looks at the team's relationship with departments that serve internal clients, rather than an organisation's customers and suppliers.
In larger organisations, the legal team will often be part of a corporate services division, perhaps headed by the general counsel (GC) or a corporate services director. The legal team will work closely with other corporate services functions to support the organisation's customer-facing and back-office activities.

Company secretariat

Private companies are not required to have a company secretary, unless their constitution requires it. Public limited companies must have one and many larger private companies choose to have one. Large organisations with complex structures often have a company secretarial department that consists of qualified company secretaries and administration staff. They deal with compliance with company law, listing rules, shareholder agreements and regulatory requirements. The company secretarial department also supports the boards and committees that form part of the organisation's governance structure, which allows the company or group to operate compliantly as an entity. In addition, the company secretary advises the directors on their personal duties and obligations at law and under the company's governance documents.
The GC's role is to advise the company, via the company's directors and managers, on its duties and obligations at law and in its trading activities. In some organisations, the GC is also the company secretary. In this situation, the GC will be involved in ensuring that the organisation complies with its filing and registration requirements, and will also deal with the administrative requirements of boards and committees (such as agendas, papers, minutes and board actions). In other organisations, mostly larger companies, the role is split in two. In this case, the company secretary will often work closely with the GC and legal teams to provide advice on:
  • Laws governing share dealings, shareholders, directors, and mergers and acquisitions.
  • Compliance with regulatory requirements for reporting and audits, and meeting governance codes such as the Corporate Governance Code.
  • Induction and evaluation training for board and committee members, including in relation to decision-making, conflicts and diversity.
  • The structure, constitution and powers of the organisation.
  • Compliance requirements relating to matters such as modern slavery, anti-bribery legislation and listing rules.
For further information, see For company secretaries.

Corporate communications

The corporate communications (CC) function (also known as public relations or public affairs) has become increasingly influential in many organisations and now often manages its dealings with government. The Financial Times defines CC as being dedicated to:
"The dissemination of information to key constituencies, the execution of corporate strategy and the development of messages for people inside and outside the organisation."
Today, managing the tone and consistency of communications across multiple internal and external channels is vital in every organisation. A busy CC team will deal with:
  • Media relations.
  • Reputation management.
  • Environmental, social and governance (ESG).
  • Crisis communications.
  • Government and regulator liaison.
  • Internal communications.
In all these areas, CC will work closely with other departments, including the legal team. For example, they will handle media enquiries about any litigation involving the organisation or negative media coverage. In sensitive areas, CC will liaise closely with the legal team to establish a company position, clarify the facts and understand what they can say legally.
When dealing with CC, it is important for the legal team to explain the legal issues clearly and succinctly, and set out what the risks are. Ideally, the legal team should work with CC regularly so that you can learn how to write legally "safe" content in CC language. Crafting messages for external and internal audiences is a key aspect of reputation management, so it pays to understand how CC works and the pressures the team are under to release information and respond to enquiries.
Remember, your CC colleagues will often want to cooperate with the media and release more, rather than less, information. Consequently, you need to be clear where your red lines are and, in particular, where you must advise against releasing information. It is important to do this with a clear understanding of the company's overall risk appetite and messaging competencies. Several business crises have shown that a more empathetic and perhaps legally exposed messaging strategy has actually done less overall harm to the business than a more protective approach may have achieved. You'll also need a process for dealing with particular types of enquiry from CC, including those subject to the Freedom of Information Act 2000 or data protection legislation.

Finance, tax and treasury

The finance department deals with every aspect of the organisation's financial affairs and is involved in the budgetary and reporting cycles. If you manage your departmental budget, you'll need to understand these cycles to ensure your plans are factored in and costed. You'll also need to understand how other departments' plans and objectives may affect their legal needs. For further information, see Practice note, Fitting the legal team into the annual business planning, budgeting and reporting cycle.
Finance reports on the organisation's financial performance, often in the form of dashboards and traffic light reports. You should ensure that the data you collect and report on fits in with your organisation's format. If you have some control over what you report, focus on value rather than just cost and activity. In particular, highlight how the legal team has helped protect the organisation's assets and reputation, and how innovations you have introduced have resulted in greater efficiencies.
It is important to understand how finance colleagues use numbers and terms, such as materiality or percentage chance, as they will probably not use them in the same way that you do from a legal perspective. This can lead to confusion, especially when dealing with high-impact activities like reporting accounting reserves against litigation outcomes in the audited accounts. For further information, see Practice note, Demystifying company accounts.
Tax law is complex and subject to change. Although you may not have to advise on tax law, you'll need to be aware of how changes may affect your organisation's trading relationships, its terms and conditions and relationships with employees and contractors. In particular, you should aim to ensure that tax advice in your organisation:
  • Is implemented properly and is sustainable across business practices, including showing adequate local decision making and control in subsidiary entities.
  • Is implemented effectively in intra-group, as well as external facing contracts.
  • Is consistent with the way that your intra-group contracts, intellectual property (IP) licences, and group external contracting parties are actually written.
  • Is sustainable in an anti-avoidance environment.
  • Can be unwound in a clear, certain and cost-effective way if the law changes.
The treasury function manages the organisation's financial relationship with shareholders, lenders, regulators and the tax authorities. It is also concerned with the organisation's banking arrangements, liquidity and investment strategy. Treasury teams often operate these arrangements under complex contracts with banks and other lenders. It is important to ensure that these contracts are properly understood and are not entered into unless they can be done compliantly.
Common treasury tactics that can create major challenges of this kind include:
  • Cash pooling for interest.
  • Taking a charge over bank accounts and other assets (with resulting restrictions on what can be done with those accounts or assets) to secure borrowing rights from lenders, which may be used to buy assets, buy back shares or fund acquisitions.
  • Debt factoring. This is where a company sells debts to a third party at a discount to get earlier payment of that debt from the third party.
  • Debt placement or collection. This is the sale to a third party of the right to collect debts in return for that third party being able to keep a share of the debt; the less likely it is that the debt will be collected, the larger the share sold will be.
  • Extending payment terms to suppliers or delaying the entitlement to initiate and invoice to delay when payment has to be made.

Human resources

Human resources (HR) play an increasingly strategic role in many organisations as they seek to respond to globalisation, changing employee expectations, technological disruption and political and legislative change. The scope of the work that HR departments now undertake has increased the need for expert legal advice on many issues, including:
  • Business expansions, contractions or relocations and the attendant workforce issues, whether under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE) consultations and bargaining rights or changes to terms and conditions and severance terms.
  • Recruitment checks, movement of labour rules and visas, and taxation and reward strategies.
  • Use of social media by the organisation and its staff, which require user and privacy policies.
  • Flexible working, both in the context of health and safety outside the office, and in relation to different types of engagement, such as employment and contracting.
  • Employment contracts, handbooks, disciplinary manuals and employment policies generally.
  • Internal investigations.
  • Gender pay gap reporting, modern slavery checks, the national minimum wage and workplace pensions.
  • Dealings with external counsel, employment tribunal cases and subsequent training and guidance on lessons learned.
  • Hiring and firing issues, together with redundancy procedures and severance terms.
  • Diversity, equity and inclusion. There is now a growing focus on mental health and transgender issues in the workplace.

Information technology

Dealing with information technology (IT) policies is another important part of the legal team's work. The legal team is likely to have wide-ranging responsibilities that include understanding the technology and the supplier business model, as well as the law, to advise on:
  • Artificial intelligence (see AI toolkit (UK)).
  • Non-disclosure agreements, software development agreements, outsourcing agreements, software licenses, cloud services, SaaS agreements, telecommunications services agreements and service level agreements.
  • Intellectual property rights.
  • Data protection and data security policies and procedures.
  • How and what systems to search (and in what ways) for a claim, a regulatory investigation, a data subject access request or a dawn raid.
  • Issues arising from software license audits.
  • Disputes with suppliers, interruption of supplies or supplier insolvency.
  • Risk allocation, liability allocation and responses to cyber breaches and data breach notifications.
These issues are particularly important when commissioning or adapting software services, as this raises issues around data privacy compliance and ownership of software code integrated into your organisation's software. For further information, see Practice note, Demystifying IT lawyering.

Property and facilities, and health and safety

Your organisation's estates and facilities management department will rely on you for legal advice across a wide range of property-related issues. Increasing numbers of these areas carry large fines and criminal liability for organisations and for managers and directors personally. The critical areas are:
  • Property agreements, including:
    • sales and purchases;
    • development agreements;
    • leases;
    • licences; and
    • wayleaves.
  • Utility service contracts, facilities management and outsourcing agreements.
  • The development of a property database recording notice periods, renewal dates and term-end dates.
  • Disputes and notices to quit.
  • Construction contracts and agreements with external advisors.
  • Premises and occupier liability, health and safety training, and compliance assessment. This is particularly important if there are a high proportion of outsourced, consulting, contracting or short-term employees.
  • Insurance.
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