Originally from Behind the Scenes in International Arbitration

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CHAPTER THREE -- IN-HOUSE COUNSEL OF THE PARTIES

I. THE PLAYERS MOST CONSPICUOUS BY THEIR ABSENCE FROM THE ARBITRATION PROCEEDINGS

The parties’ in-house counsel are conspicuous by their absence from international arbitral proceedings. 

In speaking of the parties’ in-house counsel, I mean to refer exclusively to those working in sophisticated, modern legal departments, whose general counsel reports directly to the CEO, controls the choice of outside counsel and contacts with them, and is an integral part of the company’s management. He or she is a business partner of the CEO and in the company’s organizational chart, is at the same level as those in other key corporate functions: finance and administration, human resources, sales and marketing, production, planning, and so on. The general counsel in such companies heads the internal legal department and is responsible for the management, either directly or via outside counsel, of all the legal issues confronting the company.

This model of the in-house legal department is more or less standard in American companies, but not in those of continental Europe, where the internal legal function is often subsumed under other corporate functions and its role relegated to that of minor matters such as debt collecting and performing straightforward corporate duties such as drawing up minutes of the board of directors, powers of attorney, and so on. When more important issues arise, management resorts directly to outside lawyers, circumventing the internal lawyers.

The situation in continental Europe, however, is changing fast, and now there are companies with in-house legal departments to rival those of American corporations.