Breaking down governance

Governance

A recent panel at the Association of Corporate Counsel (ACC) Australia’s In-house Counsel Day in Sydney, sponsored by Copyright Agency, heard a new twist on the purpose of brakes on a car.

Speaking at a session on governance and ethics, Chief Legal Counsel from Canon Australia, David Field, asked the audience, “What are brakes on a car for?”

His reply was a refreshing insight into the benefits of good governance. “To allow the car to go faster.”

To extend the analogy, rules, regulations, licences, rather than always having the effect of slowing things down, actually facilitate business practises happening faster, because you have confidence that if something unexpected comes up, you are going to be able to catch it before anything goes too wrong.

Chaired by the Copyright Agency’s General Counsel, Josephine Johnston, the panel also featured Jenny Rees, former General Counsel with Optus, and discussed recalibrating company perceptions of in-house legal practitioners being seen as the “ministry of no”. According to Field, “I want to be seen as a trusted adviser who is there to broaden the horizon of commercial decision-makers.”

The panellists discussed the popular litmus test of the newspaper front page, as a way to keep corporate governance and ethics top of mind. That is, asking the CEO or COO how they are going to feel if something ends up on the front page of the newspapers.

Jenny Rees added, “Another way is to ask how would you feel telling a friend or relative about a ‘questionable’ practice – if you’d feel embarrassed to tell – it’s probably not a good thing.”

The panellists all agreed that governance policies that are incredibly detailed but ultimately ignored are ineffective.

“We’ve got to aim to meet the standards but without too much red tape, otherwise implementation is going to stall,” said Jenny.

David described two types of corporate clients’ behaviour as dangerous. “There’s the one that never takes any of your advice, and then there’s the one that does everything you advise. The danger with the second group is that it leads to an abdication of commercial responsibility – and an easy out: ‘The lawyers told me to do it.’

“I see in-house lawyers as providing a source of competitive advantage and differentiation through the insights they provide.”

Striking a balance between insistent employees who just want to get it done at any cost, and ensuring regulatory requirements are adhered to is a constant.

David Field provides a useful tip: “One of the ways we try to avoid pitfalls, is to look externally at various case studies and apply those to our environment. That way we can learn from other people’s mistakes and hopefully avoid making them ourselves.”

“We actually ran a case study on the ball tampering incident in the Australian cricket team. You can see there how because they were riding high, hubris crept in and the leadership failed to live up to their obligations to junior team-mates.”

“Particularly when you have a valuable and high-profile brand, the community judges very harshly, and enormous damage can be done to reputations and brand.”

Jenny Rees cited Workplace Health and Safety as a governance standard which literally could prevent the loss of lives.

Changes to the legislation were an opportunity to review and reassess the underlying objective.
“Rather than taking the attitude of ticking a compliance box, let’s focus on the underlying objective of ensuring safety.”

Josephine Johnston said copyright licensing was one of a bundle of governance measures companies should be reviewing as compliance was cost-effective and provided enormous flexibility, especially for report sharing and reuse of images and articles.

Checking that you are not working in a bubble is another tip.

David says, “In one instance in a previous role, I thought I knew exactly what was being said to customers. I had written the script, and I knew it was compliant, so I was overly confident in the face of challenge by the regulator. But, when the regulator provided their evidence, the reality of what was being said by the sales people was quite different. So the lesson was, understand that your view of the situation is really only a hypothesis, and make sure you test your hypothesis against reality.”