According to the survey conducted by Forbes Insights and K&L Gates, 38 percent of manufacturing executives are forming alliances or joint ventures to grow their businesses and stay competitive, but it is raising challenges for general counsel.

General counsel challenges

The report cites examples of unconventional partnerships which are helping manufacturers reduce the costs of developing new products, increase supply chain efficiencies and even prevent the theft of intellectual property. However, the report warns they can also present challenges to legal teams, and outlines what legal teams can expect when manufacturers forge such partnerships. While innovative, they can also increase the risk of legal liability. The report notes production costs in countries such as China and India are low, but joining forces with suppliers in foreign locales, where government oversight may be negligible, can lead to costly recalls, reputational damage and legal fines. The report argues that to minimize a manufacturer’s exposure to risk, general counsel must carefully consider the dangers of partnering with companies in less-developed markets and poorly regulated environments.

New Expertise

More than a third, some 34 percent, of the survey respondents cite competition and antitrust as an area where legal expertise will be the most needed over the next three years, closely followed by international trade policies (32 percent). Getting to know a manufacturer’s key competitors requires deep domain knowledge, but by understanding strategic priorities, target markets and evolving customer base, general counsel can anticipate more how certain partnerships might affect compliance and strategic decision making for years to come. In some instances, the report suggests developing better business expertise and domain knowledge will produce a new breed of general counsel: tech-savvy lawyers with practical business knowledge who can help manufacturers capitalize on new partnerships. General counsel should also look at building their relationships with regulators, due to an increasingly stringent regulatory environment. The report says this is a smart strategy that requires general counsel to embrace new responsibilities, such as gaining greater clarity around a regulation’s jurisdiction, analysing the impact of new laws and educating regulators on a manufacturer’s market.

Strategic Role

As partnerships become more complex, and the contracts binding them, manufacturers are increasingly relying on general counsel not just to draft a contract but also help manage it on an ongoing basis to avoid disputes and better support commercial teams. This is creating new opportunities for general counsel to play a more critical and consistent role in strategic decision making. With complex contracts, regulation and unconventional partnerships call, general counsel are finding a role to act as corporate strategists, not just legal experts. The report cites an executive from a major motor vehicle engine manufacturer, “The C-suite now sees legal teams as strategic partners who bring the knowledge of the law to the C-suite environment.” The report can be found here.