Not GM's latest model
Slumping motor industry sales figures have become a fact of life in the developed economies, as the global financial crisis, resulting double dip recessions and rising unemployment have put a mighty squeeze on big-ticket consumer spending. Middle-class Western motorists are running their cars as long as possible, keeping fast-talking showroom salesmen shuffling their feet, with plenty of time to check the racing results.
The perception of the developing economies is different, with the consensus that Indians and Chinese are snapping up as many cars as their freshly constructed garages and car ports can accommodate. But perceptions and consensus can be wrong.
A few weeks ago, General Motors India announced that its sales figures for July had slipped by nearly a quarter on its position for the same month a year earlier. The company’s local vice president, P Balendran, was quoted by Indian media as saying ‘the market continues to remain sluggish due to high interest rates, high fuel prices and various other factors’.
And he wasn’t rushing to predict an improvement any time soon. ‘With market sentiments continuing to remain depressed,’ added Mr Balendran, ‘we are not expecting the market to show any improvement before the festival season.’
With Diwali not scheduled until mid-November, there could be an uncomfortable wait for GM’s figures to perk up.
Sluggish sales are not the only problem besetting the company, which three years ago was put by its US owners into a 50:50 joint venture with China’s Shanghai Automotive Industry Corporation as part of the American’s bankruptcy rescue package. A fortnight or so ago, GM India lost its top man as Karl Slym bailed out to become rival Tata Motors’ managing director.
Still, there has been at least one recent success for the legal department of the 4,000-employee business. Within the past few days, GM India has seen off a tax demand from the local authorities, with the Gujarat High Court quashing notices issued to the company ordering fresh assessments of its returns for 2006-07.
That victory will have cheered GM India’s local general counsel Samiksha Pandey, who has only been in the role for the past 18 months, but who is planning a significant restructuring of the department.
‘So much happens in a day at GM that you feel that you have lived two days in one,’ comments an enthusiastic Ms Pandey.
GM India has three venues – its corporate headquarters in Halol, a research and development centre in Bangalore and another regional plant in Telegaon Dabhade.
Ms Pandey’s local legal department consists of seven lawyers, with all bar two based in the headquarters office. All are Indian qualified, as is the general counsel herself, although she is also qualified to practise in New York.
Your legal department team is relatively small in India. How do you structure the workload?
I don’t have specialists in my team – we don’t have that luxury. One day a lawyer will be working on an employment law matter, and the next they will be juggling a technology licensing agreement. They do a wonderful job with that.
But there are changes I’d like to make to the running and structure of this department. The first major reform I’d like to make is to put lawyers on the ground in the GM India plants. Doing so is extremely critical as it will be helpful in relation to our risk-management strategy. I’m not able to do that for the time being, but that is my first major strategic goal – to have counsel in the plants managing issues such as industrial relations. Having knowledge of local laws and the ability to speak the local language will be a great benefit.
I’m pretty clear in my thinking for the development and the strategy of this department. I do not want lawyers who can analyse sections 4 and 5 of the Companies Act – I don’t need that. What I need is someone who is able to gauge and assess risk and is able to articulate those dangers well. We need to have that level of ability down on the ground at the two plants managing the show.
What is your broad approach to instructing private practice law firms?
I try to give my team as much flexibility as possible in engaging outside counsel. They have quite a bit of discretion in deciding to whom they want to go and what they want to gain from the outside advice.
The issue in India is that in-house legal departments at companies must strive to ensure that delivery happens on time, but at
the same time that there is never a compromise on quality.
That is what I say to my team – provide me with valuable advice on time. You could take ages producing a detailed memo, but it will be of no use to me. I think they are now beginning to understand that.
In the past I’ve not had timely advice, and the excuse given was that outside counsel had not advised – that the in-house lawyers were still waiting to hear from them.
My direction to the team now is that if outside counsel are not adhering to our timetable, then change the outside counsel. We are not obliged to use the same external law firms – so change counsel until we get the best articulated and most timely advice.
The ability to manage outside counsel is one of the most important roles of in-house lawyers. If you want to have a good career in house, then you really need to learn how to do that.
Personally, I have a select group of outside counsel to whom I know I can reach out at any time of the day. But likewise, I myself do not stick by one external counsel exclusively. That is the biggest mistake any general counsel or senior in-house lawyer could ever make – you should always be in a position to be able to fire an external counsel if you need to do so.
Does your work predominantly involve instructing domestic Indian law firms or do you also liaise with global legal practices? And, on that theme, what is your view of the growing band of legal process outsourcing companies in India? Is that service – which is onyour doorstep – something you ever consider?
I don’t directly instruct global law firms – that is done by our Shanghai office. But I often work very closely on those deals. The same approach applies to US deals – outside firms would be instructed in the first instance by our US offices, but I would work closely on those deals as well.
Regarding local outsourcing providers, we don’t use them. I don’t have the necessary volume of run of the mill work. We have very specialised agreements, so I expect our outside counsel to do a first run on the drafts with our in-house team looking at all the clauses and understanding our own exposure levels. Each agreement has to be assessed individually. So I wouldn’t encourage the use of legal process outsourcing at GM.
Some suggest that in-house legal departments in the West have used the global financial crisis as leverage to put the squeeze on outside counsel fees. Is this a phenomenon witnessed in India as well?
As general counsel, one is expected and required to manage risk. GM is not the type of corporation that would engage in penny pinching in relation to compliance issues. So in terms of dealing with risk exposure, cost is never a factor. It is a very clear and straightforward approach at GM –compliance is a very big part of the corporate culture. Therefore, as a general rule one is expected to keep costs low, but never to skimp on the compliance costs.
The automotive industry has expanded recently and considerably in India. What has been the most important legal issue to emerge from that rapid growth?
Because the Indian market is growing so quickly, unfortunately consumers are not becoming smarter but more ignorant and downright stupid. They want to claim damages on every small thing. Every manufacturer in the Indian consumer product industry is struggling with the same issue – consumers are making claims that are more and more frivolous.
A serious related concern in India is that the criminal liabilities are so huge. Companies are very concerned not to have a criminal case launched against them. In India you don’t want to get involved in litigation. So what happens? There is pressure on the sales team and after-sales team to make sure that they manage the consumers well so there is little chance of litigation.
Litigation in India takes years to conclude and is a complete nuisance. It is not like in the US where in six months a trial is over. It is much more bureaucratic in India.
Is the quality of the legal education system in India keeping pace with international demands? Are you happy that domestic law graduates are capable of dealing with global commercial issues and legal practice standards?
Indian law graduates are generally well enough prepared to function in the global legal profession environment. Although also having a foreign degree is a big advantage – you learn to think sharper and you learn to write sharper. In India, lawyers tend to write five pages when they should be writing one. For some odd reason, that is the approach law schools take.
For example, I have had a serious challenge in explaining to the junior lawyers in my own team to keep correspondence and advice notes short. That’s because the advice concerned is going to the business, and the business doesn’t need to see or know all their research – it just needs to know the crux of it. That is a challenge young lawyers working in my team face initially.
Beyond that, every year there is an improvement in the standard of Indian legal education and our law schools are producing better lawyers.
CV -- Samiksha Pandey
General counsel of GM India, Ms Pandey did a five-year law degree at the University of Pune, graduating in 1998. She then worked at a local Indian law firm, Vaish Associates, that was at that time associated with global accountancy practice Deloitte.
In 2001, Ms Pandey travelled to the US to undertake a masters at Boston University law school; after graduating, she stayed on to take a role with international delivery service FedEx. While at that business she returned to India.
In 2006 she journeyed again to the US to join an Indian company in San Francisco. She then shifted to GE Oil & Gas in the States before returning to India to take her current position at GM a year and a half ago.