The GC/CFO relationship in the Financial Services industry
James Darbyshire, GC at FSCS
James is a member of the Leadership Team at FSCS, the UK’s statutory fund of last resort for consumers of failed financial services firms. James leads on all legal issues affecting FSCS, specialising in commercial litigation, regulatory law, insolvency law and public law, and manages a team of 10. The team won The Lawyer’s In-House Public Sector Team of the Year Award in 2014 and 2016. James also sits as a Non-Executive Director on the Board of London Capital Credit Union, and as a Trustee and Director on the Management Committee of The Public Law Project, an access to justice NGO.
Apperio: Please tell us about your day-to-day relationship with your Finance team.
James Darbyshire: At FSCS we work very closely with our Finance team, and due to the nature of what FSCS does, we do so in a number of areas.
We do collaborate very closely in relation to the budgeting and forecasting process. While we budget and forecast annually, we touch base with Finance on a monthly basis, so we have a better idea of how we are doing against our budget. We use a finance system to upload any invoices that we get during the month, but the Finance team also has access to Apperio, which means that they are also able to keep an eye on our spend on a day-to-day basis without actually having to specifically talk to us about it.
Apperio: And speaking of technology, a recent survey conducted by EY found that two thirds of General Counsel believe the legal function hasn’t benefited from technical innovation as much as other functions, such as Finance. Would you agree with this statement and has it played a factor in the dynamics between Legal and Finance?
Darbyshire: Yes, it is fair to say that legal teams and probably law firms have historically been less inclined to use technology in their day-to-day operations. We certainly used to come across issues such as inconsistency in how often the law firms were invoicing us. The challenge was that the Finance team, being naturally much more rigorous and working to a much more regular timeframe, found this to be an issue back then. Whereas now, with the use of legal technology such as Apperio, this data has become much more accessible for them and therefore it allows for a more harmonious relationship. This has made communication between our legal and finance teams easier thanks to our better understanding of what’s happening on particular cases and matters and the ability to monitor these in real-time, rather than just hearing about them on a very infrequent and ad-hoc basis in the past.
Apperio: And how much of the data provided by the legal department is passed onto the CEO and board of directors by the CFO? Are there any key pieces of information you’ve found useful?
Darbyshire: I would say not very much, and only when there’s a particular need. That being said, whilst there is perhaps room for improvement, I don’t believe that an increase in the amount of data is needed.
I do think however that it would probably be useful to have a bit more information on a consistent and regular basis, because then the executive will be able to see what the trends might be in terms of external legal spend. A summary of the spend in key areas of work we undertake, a forecast going forward and any kind of trends that can be extrapolated as a result of what’s happened so far are all useful insights to have.
Apperio: And finally, what would you say is your top tip for the Legal and Finance teams in the Financial Services industry that are looking to drive efficiencies across their departments?
Darbyshire: I think the main thing would be to make sure that their law firms truly understand their businesses and organisations. External counsel, especially in an industry as complex as FS, has to be able to understand what can be spent on external costs by their clients. Without that understanding, law firms won’t be able to tailor their advice accordingly and to make it pragmatic and relevant to the business. This would also help them ensure that they’re deploying the right kind of teams in order to meet their clients’ requirements.
One thing that we do at FSCS and have found particularly helpful, is having secondees from our panel law firms, so they can really understand who we are and what we do. It’s something that we have been doing for a long time and have started doing more with people at different levels. For example, with one of our law firms, as well as having a solicitor secondee, we are also getting secondees at trainee and legal apprentice level. We have found this to be a very cost effective way of getting legal advice, but it is also an excellent way of supporting access to the legal profession in a different way.