As the winner of the ‘General Counsel of the Year’ at the 2016 Global Counsel Awards, we asked Markus Diethelm, group general counsel for UBS AG, his opinion on what it takes to be a successful in-house counsel, the best way to advise senior leadership and what winning the award means to him.
Describe your current role (responsibilities, size of team, structure).
I am the group general counsel for UBS, a truly global role as all of the legal staff worldwide report to me – we have in total roughly 800 people. We are responsible for all litigation, regulatory, supervisory and other issues that the bank has of a legal nature. We have divisional general counsels for our Swiss private and corporate bank, asset management, investment bank, as well as our US and international wealth management businesses. In addition there are global functional roles covering disclosure, corporate transactions, regulatory projects, litigation and investigations and employment legal. Finally, regional general counsels provide coordination and management of legal requirements in the respective region. When I joined the company in 2008 the lawyers reported into divisional chief executive officers, which I considered inappropriate and we moved to a centrally led global legal team, collaborating across all areas of the firm.
What led you to a career in-house?
Simply, an opportunity arose. I joined the in-house team at Swiss-Re in 1998 on the recommendation of a litigator who was actually opposing Swiss-Re at the time. It was looking to list itself on the NY stock exchange for a large transaction and needed a US-trained lawyer who was ideally also Swiss, so it was a perfect opportunity. I had no plans to move in-house originally, but gradually found that the role of the general counsel was becoming increasingly interesting, as well as more demanding. In the current market it is legal exposure that determines much of a bank’s risk, making the general counsel position a very interesting one.
In your current role, what is the most challenging situation that you have faced? What are the most significant challenges that in-house lawyers are likely to face over the next few years?
In 2008 I joined at the start of the clean-up of the US exposure of aiding and abetting tax laundering and evasion. Subsequently we launched a number of conduct behaviour initiatives, including the clean-up of Libor and foreign exchange. We firmly believe that we did the right thing in self-declaring, but we ultimately paid a price which was similar to those which behaved very differently and it was a challenge to stay the course in these circumstances.
Communications are also a growing challenge – the legal matters are increasingly global in nature, the company governance structures are becoming more complex as part of the ‘too big to fail’ initiatives and the rate of information exchange among regulators has become extremely quick. Responsibly managing large and complex litigation matters, while satisfying the information requirements of regulators, internal governance bodies and other stakeholders without risking losing legal privilege because of some disclosure obligation is extremely challenging.
Are there particular types of legal issues that you routinely refer to outside counsel? And what kind of matters do you tend to handle in-house?
Generally our litigation matters are referred to outside counsel and other partners for expertise as well as the large document reviews which are typically the most costly side of a litigation matter. We anticipate that this will change in the future as we increasingly use automation to give cheaper, faster and better access to data.
The way in which other legal work is handled is also changing. I think that there are a lot more intelligent solutions to be developed to address regulatory interpretation and this will have an impact on the economics of in house counsel as well as law firms. Technology is going to change the legal landscape a lot so there will be a change in the way that lawyers are used and we will have to adapt to that.
What do you consider to be the essential qualities for a successful in-house lawyer?
It starts with track record and great passion as a lawyer – this is still key as the company entirely and exclusively depends on its in-house legal staff to deal with all legal issues. The second most important criteria is communication – the times when you could write a memo to file and think you have done your job have long gone. To be able to communicate effectively, to the business, to the regulators and to the media about the case is increasingly important.
I also like to have diversity, not just in terms of women which happens to be very good here, we are close to a 50/50 range which is wonderful – but also in terms of experiences and skills. By that I mean a willingness to rotate, a willingness to move into other positions, within the company and geographically.
Further, one of the first requirements for any successful lawyer is to know your client. As an in-house lawyer the company is your only client so you must know them inside out, know the annual report cover to cover.
Lastly, as an overarching trait, I expect in-house lawyers to be challengers; they need to be able to challenge other lawyers first and foremost and then be able to challenge and collaborate with the business also.
What’s important for in-house counsel to consider when advising senior leadership?
They must make themselves understood! Lawyers can often be complicated so their advice needs to be pitched at the right level – they need to fully disclose, educate and inform people about an issue without the risk of it getting lost in translation.
It is also important to consider the senior leadership as a partner, particularly during the gestation period of formulating the legal advice. It is therefore necessary to collaborate and make the advice all-inclusive, to speak with the relevant business people and to engage and embrace the business when formulating a decision so that it does not come as a complete surprise.
How does the legal department contribute to your company’s growth?
Three words: it allows it! The regulatory requirements, compliance standards, supervision, governance requirements and various levels of intermediate structures in a company mean that lawyers could create a phenomenal bottleneck, but instead we facilitate the growth and make it possible. For example over two-thirds of the legal function are focused on advising on the development of products, on creating market access and on client related issues. They are in the midst of creating the engine for the growth of the company, by determining the field in which growth can occur.
With regard to your industry, are there any significant developments worth highlighting?
A general development is that the legal costs associated with the financial services industry have increased exponentially and the risks associated with these costs are accordingly very high.
Everyone is talking about the impact of regulatory changes in financial services, I believe that an even bigger development both for the sector and also the legal industry will be automation, this will hit us very dramatically as a firm and a legal function. Generic legal advice needs to be sought at much lower cost, much quicker and at higher quality; so we should consider how technology will allow us to access the law (ie, research), and how it will affect what other skills we will need.
If not a lawyer, what would you be?
When I was 16 I did an apprenticeship as a Baroque furniture restorer and I think I would have been perfectly satisfied had I continued with this. Most likely had I not been a lawyer I would have gone into business – a legal education provides a good basis for this. I think I could also have ended up doing something entirely different, perhaps a farmer or working with animals – my passion is breeding horses – going back to my roots may be an option. On a personal level, it is impossible to do this job at this intensity if you do not have an internal smile. Most of the time this depends on external factors rather than the job in front of you, so that is why these dreams remain current.
What did winning a Global Counsel Award mean to you?
It was an absolutely wonderful recognition on a personal level, but it was also far more than that. Eight years ago UBS was on the verge of failing. The fact that I was even eligible for this award is a remarkable justification of the strategy that we, the executive board, initiated shortly after I joined.
However, no person can do these things alone and in a short interview I did internally I immediately passed the award back to my team; while I was fighting some large litigation matters, they continued to look after a lot of other issues, which in turn allowed me to concentrate. Really I view this as a collective recognition as well as a wonderful personal surprise.
The purpose of the Global Counsel Awards is to identify those in-house counsel, both teams and individuals that excel in their specific roles. The primary aim is to reward lawyers for demonstrable achievements across the full spectrum of in-house responsibility, not simply those who have acted on high-profile transactions. To make a nomination for the 2017 awards please click here.
For further information on the awards, please visit www.globalcounselawards.com.