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   The New Normal – In-House Lawyers Step into the Limelight

   This is a big part of the impetus behind The Legal 500’s GC Powerlist Teams , supported in Finland by Castrén & Snellman, where we’re considering the ways in which leading legal teams in the Nordics are having a significant impact both internally and externally. This is being seen in a number of ways: transforming processes in the legal team and its interface with the business; being a significant part of major transactions; partnering in new and creative ways with legal providers. The Rise of the New In-House Lawyer As with everyday life, technology is everywhere and is transforming the way law is delivered, and many in-house teams are at the cutting edge of this revolution. From e-discovery to contract and signature automation as well a full scale AI, in-house teams are finding different ways to work themselves and use external providers in a much more discerning fashion than ever before. Risk for corporates and their officers are higher in a world of ever increasing regulations. As we see the penalties for companies and c-suite executives who ignore this new world order, the role of the inside counsel has never been more important. But it’s not just about keeping executives out of jail, it’s also about setting a vision and a path. This demands a new type of in-house lawyer, one who can be a business partner, risk arbiter and legal advisor. This importance means that general counsel are now increasingly part of the c-suite or moving that way. They are also developing teams who are thinking differently about their role and how they perform it in the modern company. Legal Teams and the Power of ‘Why’ Teams and how the people within them are empowered are central to the modern organisation. Increasingly what is central to this is the idea of culture or purpose. If we look at two key ideas in business thinking there is the phrase, apocryphally attributed to management guru Peter Drucker, ‘culture eats strategy for breakfast’. Unless teams feel motivated, empowered and indeed have a sense of ownership, even the best strategic planning can fail. Google has stated that part of its core values to its  staff to is to empower everyone to act like a founder of the company not just an employee. Similarly, marketing guru Simon Sinek spoke in his 2009 TED talk about the golden circle of why. This went on to become one of the most viewed TED talks of all time. In this, Sinek states that individuals or organisations work best when defined by a strong sense of why, which is central to what they do. This is apt to the role of legal teams, as without the defining sense of ‘why’ they potentially become mere legal technicians. One leading general counsel characterised this as the significance of the legal team in contributing to and maintaining a company’s North Star, without which it would lose its way. Catherine McGregor The writer is Publishing Director of The Legal 500’s in-house lawyer initiatives and Editor-In-Chief of GC Magazine. She is passionately interested in the role of the client in determining the future of legal services and is a long-time advocate of diversity in the law.

   Published: 1.11.2016

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   Attention Employers: Professional Standards Are Coming to Russia

   What is a Profstandard? A profstandard is a legally-required standard aimed at improving the quality of labour resources, employees’ professional growth, and compliance with international qualification standards (link in Russian). Applying to certain types of work, profstandards include: Industries such as metallurgical engineering, timber, chemicals and the hotel business are already required to use their new profstandards. Examples of some new profstandards for the hotel business include Manager of Hotel Complex/Chain, Head of Food and Beverage Outlet and Confectioner. The profstandards adopted by the Ministry must be applied whenever any of the following laws specifically requires that a particular standard be applied: Who Must Apply Profstandards? Russian law clearly requires the following types of companies to apply profstandards: At present, commercial entities do not have to apply profstandards to all their employees without exception. In cases when an employer is not required to apply profstandards, the employer may use the profstandards adopted by the Ministry of Labour as a reference point. This could include things like identifying job titles, job functions, requirements for education and work experience, developing personnel management, organising trainings and certifications for employees and development of job descriptions. How to Apply Profstandards? If, as an employer, you are required to apply profstandards by the direct requirements of applicable law, you should prepare a procedure that includes, among other things, formal evaluation of your employees and especially adjust their job descriptions and job titles in line with the profstandards, and also revise your remuneration system. It is also important to bring your local acts in line with profstandards. You are not entitled to dismiss an employee simply because his or her qualifications and profstandard mismatch. Instead, you can either provide your employee with the opportunity to receive supplementary education or you can perform a formal assessment of your employee, which strictly complies with the procedure required by labour law. The Russian Labour Code does permit you to dismiss an employee in case of an unsatisfactory result of such a formal assessment. Consequences if You Don’t Apply Profstandards? If your business fails to comply with mandatory profstandards, your business may receive a warning the first time. However, if your business fails to comply with mandatory profstandards again, your business could face administrative fines and other penalties for each violation as follows: Protecting your business is a good investment and we recommend that you find out whether your company already needs to comply with new mandatory profstandards or whether you may need to be ready to start using profstandards in the near future.

   Published: 26.10.2016

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   Responsible Investors and Active Owners

   Investors as Drivers of Change When visiting Finland in August, Roel Nieuwenkamp of the OECD described how the focus investors have put on responsibility has completely changed the game. For example, a Dutch pension fund sold its holdings in pharmaceuticals company Mylan after it was alleged that the company’s drugs were being used to carry out executions in the US. Institutional investors have taken the lead in the field of responsible investing for a while now, and require that ESG (environmental, social and governance) principles be complied with in their investment targets. Private equity investors are also increasingly viewing potential investments through the lens of responsibility. Concrete evidence of this is that the Finnish Venture Capital Association is currently drafting responsible investment recommendations for its members. The recommendations point investors towards active ownership. The key is not just to have responsibility principles in existence, but to actively weave them into the daily operations of target companies. High standards for responsibility and their effective implementation can also serve as strategic advantages when raising venture capital. Incorporating ESG Principles into Legal Documentation We currently seem to be seeing a kind of ESG 2.0 phenomenon. Investors and parties managing investments have a more solid will to commit to ESG principles. The clearest evidence of this is the incorporation of responsibility issues into standard legal due diligence reviews of investment targets. We have also been discussing how to incorporate ESG principles into investment documentation in a way that would be legally binding on the parties. Reaping the Benefits of Business Opportunities Investors have a twofold interest in responsibility issues. An ESG analysis will provide investors with an assessment of a target company’s current state. The analysis can also be used to guide an active ownership policy and steer the target company away from a path that could lead to identified cost risks being realised. On the other hand, an investor’s focus on responsibility issues can open up entirely new business opportunities based on, for example, sustainable development. Responsibility is here to stay, and companies would be wise to make the most of the business opportunities brought by sustainable development, for example, in the circular economy.

   Published: 19.10.2016

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   Use of Data on the Radar of European Authorities

   The issue of data as an asset has become a hot topic in the European Commission and among national authorities. Both the European competition authorities and the data protection authorities are keeping an eye on how companies use data. For example, the national competition authority in Germany, the Bundeskartellamt , is investigating whether Facebook has abused market power by imposing unfair privacy terms. At the moment, there is no coherent European wide approach, and the European Commission is now considering whether to propose legislation that would authorise national authorities to take action against potential antitrust abuses of data. Collection vs Use of Data The European approach has been described in a couple of recent speeches given by Commissioner Margrethe Vestager.  According to Commissioner Vestager, there is great potential in big data. It may well allow for welfare-enhancing innovations and improvements that smaller sets of data might never give rise to. However, data is a raw material that cannot be owned and does not wear out like conventional commodities or assets. From a competition law point of view, there is nothing wrong with collecting and holding even significant amounts of data as such, especially if that data is not purely unique. What should be carefully looked at, however, is the way in which the holder of valuable data chooses to use that data. Competition rules can be enforced against companies that use unique data in a way that undermines competition and hurts consumers. Ultimately, that could involve, for example, foreclosing competitors by restricting access to unmatchable data, buying up a rival in order to get hold of its valuable data or perhaps even facilitating coordination by giving away overly detailed information about one’s own business. Big Data, Competition and Privacy The rise of big data onto the radar of the European authorities effectively means that companies working with large data sets need to conform not only to privacy and consumer protection rules, but also to competition rules. Although these are inherently different sets of rules, they all share the same end goal of fairness and consumer welfare. It is worth keeping in mind that leveraging one’s strong position to degrade privacy policies or to otherwise reduce privacy protection could also be considered a breach of competition rules. Big data and competition was also one of the main topics of our recent client seminar. Click here  to have a look at our colleagues, Jussi Nieminen 's and Hannele Huimala's, presentation on potential competition concerns that could be generated by big data. 

   Published: 5.10.2016

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   When Suits from All Over the World Meet to Check the Pulse of the Legal Profession

   All this takes place during more than 200 sessions, workshops and panels held during this week. At the same time, there is ample opportunity to network - meeting friends, business partners and new contacts. What’s on in Washington? Because of the location and timing of this year’s conference, there will be a unique opportunity to hear from senior US government officials such as retired General Colin Powell and U.S. Attorney General Loretta Lynch. We can also experience the current, controversial U.S. Presidential election campaigning first hand; who will draw the long straw, Senator Clinton or Mr Trump? Convention sessions expected to prove especially popular include those covering the challenges of law firm management and the future of the legal profession. Expect to be hard-pressed to find an empty chair in the new showcase sessions as well, where some of the world’s leading legal thinkers will expound on the role of the legal profession in society today. Of course, everyone has their own particular favorites among the wealth of sessions on offer at the annual conference.     Carola: “As a M&A lawyer, I personally look forward to the session about project management in M&A transactions and to the session on human rights in due diligence. Both issues are close to my heart and I hope to return home with new ideas to share with my team.”  Pauliina: “My favorite session topics include those relating to law firm management issues. Sessions in which clients give insights about their future and their views on how lawyers should change their activities in order to better assist are especially useful and thought-provoking.” The Greater Good: The IBA’s Raison d’être The IBA was inspired by a United Nation’s vision a few years after the end of World War II with the aim of supporting the establishment of law and the administration of justice worldwide.  The IBA strives to influence the development of international legal reform and to shape the future of the legal profession throughout the world. Its principal aims and objectives are: This is what the IBA is all about - supporting the rule of law all over the world. Protecting the fundamental principle that no person, nor government, is above the law, a principle which is our collective safeguard against arbitrary governance, dictatorship and anarchy. Carola: “One evening during the Vancouver conference, I rented a bike for a couple of hours and went to Stanley Park. And whilst resting my eyes on the most beautiful sunset over a completely calm Pacific Ocean, I realised why it felt so important being part of the IBA. It’s because, at the end of the day, our work is about building global peace and we are all privileged to contribute by being part of that process.” Many of our partners have actively participated in the IBA, and its many committees, over the years. Carola: “I still remember like yesterday my very first annual conference in Vancouver in 2010. And how impressed I was about how truly global our profession is after all, even though most lawyers are qualified to work only in the jurisdiction where they graduated.” Pauliina: “I first joined our IBA delegation in Dubai in 2011. For me this all was very familiar, after having already been active in the International Association of Young Lawyers, AIJA, for almost 20 years at that time. In many ways, AIJA is the little sister of the IBA.” Across Borders During our week in DC, we will also spend time meeting old and new friends from the leading law firms around the world with whom we regularly work. With them we have been providing our clients a seamless service for years, wherever in the world they need it. Recently, we launched an interactive map on our website that shows the extent of our international network. Take a look if you have a moment, and please do let us know what you think about it. *** Are you interested in the IBA conference? Follow #IBAwashington, @P_Tenhunen and @CarolaLindholm .

   Published: 19.9.2016

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   Controversial Directive Targets Common Tax Evasion Situations

   International guidelines for preventing aggressive tax planning are already being drawn up in the OECD’s BEPS (Base Erosion and Profit Shifting) project. However, the project is proving slow to reach the finish line, which has led the European Commission to draft the Anti-Tax Avoidance Directive in record time, and a political understanding was reached on the new directive in June. The Commission’s original goal for the directive was to weed out tax avoidance with strict statutes. The end result, however, is lighter than planned, and the directive has already been criticised as a compromise. The criticism is, in my view at least, premature. The implementation of the directive has only just started in Member States, and it is impossible to know how tight the various national requirements will end up being. Taxation Situations Targeted by the Directive National measures to implement the directive have begun in Finland, and new legislation is being drafted. The Commission’s directive deals with five issues generally associated with tax avoidance: Faster Results through State Aid Regulations? The directive sets a minimum level of regulation, which means that it is possible to enact even stricter national provisions. The goal of the Member States is on the one hand to secure their tax accrual while on the other hand remaining attractive destinations for investors. It will be interesting to see just how different Member States implement the directive. Rather than rely on the directive, it seems to be easier for the Commission to intervene in aggressive tax planning via state aid regulations. The Commission has taken a heavy-handed approach in state aid cases involving multinational corporations. A recent example of this is the 13 billion euro back tax imposed by the Commission against Apple in Ireland. The amounts to be collected can be large when companies have acted in accordance with agreements made with or legislation enacted in individual Member States.

   Published: 14.9.2016

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   How to Take Data Protection into Account in M&A Transactions – 6 Tips

   As regards transactions, careful consideration must be given to when, and on what basis, the disclosure of personal data is permitted. From the buyer’s point of view, it is necessary to become thoroughly well-informed concerning the target of the transaction, whereas the seller may only disclose personal data as permitted by law.  We have put together six tips that will help you take data protection into account at each stage of a transaction. 1)     Agree on Data Protection in the Non-Disclosure Agreement Parties to a transaction often enter into a non-disclosure agreement (NDA) which governs the way in which confidential information about the target may be processed during the transaction. It is worth agreeing already in the NDA how necessary information about the target may be disclosed to the buyer without unlawfully disclosing personal data. Taking data protection into account by agreement at an early stage of the transaction may make it easier for the parties to prove that they have acted within the limits of the law. 2)    Note the Restrictions Concerning Disclosure of Personal Data As a rule in personal data processing, the controller, who is the person or body  responsible for personal data processing, shall not disclose personal data to any third party. According to this rule, the seller shall not disclose personal data to the buyer in the context of a transaction before executing the transaction. The personal data of the employees or customers of the target company shall only be disclosed to the buyer with the consent of those persons, or in cases in which those persons are deemed to be aware of the disclosure. As transactions are often highly confidential, asking for such consent or informing such persons of such disclosure is usually out of the question. However, an exception to this is the situation in which the know-how of key persons of the company is being sold, and such key persons are aware of the transaction. Additionally, data which is publicly available, such as the personal data of the company’s management, may be disclosed. 3)    Consider Alternatives to the Disclosure of Personal Data The seller may refrain from unlawfully disclosing  data to the buyer by anonymising personal data by, for example, concealing personal data in documents or by delivering model agreements instead of actual employment and customer agreements to the buyer. Summaries, statistics and profiles of different kinds are also permitted provided that no individual person can be identified from the contents thereof. When considering whether to disclose data, the necessity requirement should be borne in mind: only data necessary for executing the transaction may be disclosed and, as a rule, not until the execution of the transaction. The buyer rarely needs individual information for the purposes of determining value or for identifying risks, and in most cases there is usually an alternative available. 4)    Take Care of Data Protection Comprehensively While disclosing data of the target to the buyer as a part of the due diligence review, the seller must also ensure security of that data in relation to other parties to the transaction. For example, if the seller uses virtual data room services, it is also recommended to agree with the service provider on the non-disclosure, security, and return of the data. It is important that confidential data be returned and is not left behind after execution of the transaction. Accordingly, do not send privileged information relative to the transaction, or material containing personal data, by email. 5)    Manage Data Protection Related Risks in the Sale and Purchase Agreement The manner in which the target company has processed personal data and documented its stages of processing is valuable information for the buyer. Due diligence enables the buyer to detect possible data security threats or inadequacies in the target’s data processing. Based on its findings, the buyer can prepare for any possible subsequent penalties by agreeing with the seller on the handling of such liabilities. Appropriate processing of personal data also pays off from the seller’s point of view as it may increase the value of the target sold. This is emphasised in industries like healthcare and wellbeing, and digital services destined for consumers, in which personal data is extensively processed. 6)    Remember Obligations Following the Execution of the Transaction When the transaction is executed, the disclosure of personal data, such as employees’ data, to the buyer is finally authorised. In a business purchase transaction, the buyer becomes the party responsible for that personal data and the seller is no longer authorised to process employee or customer related data. The buyer must take care to ensure lawful processing of the personal data and must update the file descriptions, among other measures. However, in some cases the seller may continue to have access to the personal data which is in the buyer’s possession after the execution. This may be the case, for example, if the seller provides services relating to payroll or personnel administration to the target company. Such services are often provided during the transitional period after execution until the buyer itself is able or has the time to organise such services. In cases like this, the buyer or the target company shall agree in writing on responsibilities relating to the processing of personal data for the period during which the seller shall act as the controller of personal data on behalf of the buyer or the target company. Timeline of an M&A Transaction from the Point of View of Data Protection

   Published: 8.9.2016

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   New Data Protection Regulation: Agreements Set to Get Longer

   Controller and Personal Data Processor According to the Data Protection Regulation, a controller is a company or other entity that keeps a list of persons and registers their data. In practice, nearly all companies are controllers, simply because they have employees. If your company offers, for example, payroll administration services to other companies or you offer a cloud service for storing and processing other companies’ customer data, your company is a personal data processor . Update All Your Personal Data Processing Agreements The current set of norms—the Data Protection Directive and Personal Data Act—set certain data processing obligations, which mostly fall on the controller. The controller has been the one responsible for processing personal data in the manner required by law. The controller and processor have been able to agree on their mutual obligations concerning the processing of personal data (for example, in a service agreement). The parties have been able to agree, among other things, on what data security measures to follow in relation to personal data processing and on whether the processor has the right to transfer personal data outside of the EU/EEA. The new Regulation will also impose obligations on the data processor, and these obligations must be incorporated into the agreement with the controller if they aren’t already. In practice, this means that whether your company is a controller or a processor, all of your data procession contracts will have to be updated if they are to remain valid once the Regulation enters into force. Agree on at Least These Things If your company is a processor of personal data, the Data Protection Regulation obligates you to agree to: Regardless of whether you are in the role of controller or processor in an agreement, make sure the agreement includes the subject, duration, nature and purpose of processing, the type of personal data and the groups of data subjects (such as end customers). Remember to also include the rights and obligations of the controller. The agreement also needs to state the following: I believe that the importance of data processing clauses is set to increase and that parties will use more detailed clauses in the future. Correspondingly, I believe that contracting parties will likely start giving data protection matters more weight in other types of clauses as well, such as guarantee and limitation of liability clauses. Increased obligations also often end up being reflected in service prices.

   Published: 6.9.2016

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   Responsible business conduct – what’s up?

   First, it is worth mentioning that responsible business conduct (or corporate responsibility) is nothing new. For example, the guidelines for multinational corporations developed by OECD member states are celebrating their 40 th anniversary this year. Despite, or perhaps because, of this midlife crisis, this field is witnessing a few fundamental changes: It is easy to see signs of these main trends, as presented by Prof. Nieuwenkamp. Responsible business conduct has also become our daily life at Castrén & Snellman through discussions in relation to financing arrangements, M&A deals and conducting business partner due diligence. For our part, we continue this discussion with our next seminar in September which will include inspiring examples of best practices in implementing responsible business conduct principles.

   Published: 1.9.2016

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    Pro Information Retrieval Tips for Lawyers

    Accuracy and Speed Knowledge management, or KM, teams found their way into Finnish law firms around the year 2010. I start working in knowledge management in 2007. KM specialists are a very small profession in Finland. We all know each other and regularly exchange views, for example, concerning new databases and trends in the field. In my work, I have noticed that accuracy, speed and problem-solving ability are important skills in information retrieval. Every retrieval assignment requires that I weigh what the best and most comprehensive possible result  is in the time available. Reliable and Up-to-Date Sources Are Key The spectrum of information requests I encounter in my work is very wide, from conservation areas for flying squirrels to requests for corporate information. An extra twist is that requests can involve domestic law, EU law or international law. It is often quicker and more cost-effective for clients that basic information retrieval is carried out by an experienced information retrieval professional. Successful information retrieval requires that the information is up to date, reliable and easily accessible. For example, in Finland, the poor availability of Court of Appeal judgements can be a real challenge. Our firm’s KM team has access to an extensive legal library, electronic literature and numerous legal and corporate databases such as Suomenlaki.com ,  Edilex ,  Lexisnexis  and Swedish   Karnov . My team has a wide range of tasks. For example, we may draft a legislation and case law monitoring memo for our firm’s employment lawyers or proofread a legal memorandum to ensure all of the citations of proposed EU directives are up to date. The subjects of information retrieval assignments themselves also vary a great deal. These are just some of the subjects we have gathered information on over the years: Tips for EU Data Retrieval Due to the sheer amount and scope of information in EU databases, retrieving EU data can be challenging. Selecting the right search words is absolutely the key to a successful result. For example, in the EUR-Lex database, slightly altering how the search word is written can increase the number of hits from 200 to 2,000. In EUR-Lex, many problems can be solved just by going directly to the advanced search and choosing which collection to search. For example, if you are looking for information on the EU’s Data Protection Regulation, go to ‘Advanced search’ and pick ‘Legislation’ as the collection to search. It is also worth limiting the search to just the title in order to keep excess hits out of the results. As a comparison, if you just search for ‘data protection regulation’ using the simple search field, you get 105 hits as opposed to just one using advanced search. When searching for EU legislation, always look for the most recent consolidated version, i.e. the up-to-date text. Consolidated means that any changes and corrections made after enactment are combined into one text. The consolidated version is available in EUR-Lex about two to three weeks after the amending act has entered into force. An extra challenge posed by EU data retrieval is that there are no legislative materials published for EU norms, such as the government proposals published for Finnish legislation. On the other hand, support for the interpretation of EU norms can often be found in the other language versions of the text. Ultimately of course, the interpretation of a norm is the job of the Court of Justice of the European Union. However, it is possible to follow the EU legislative process through the preparatory documents in EUR-Lex. The Commission’s COM documents are particularly useful in this respect. The European Parliament’s OEIL database is also a potential source for information on the progress of legislative work. EUR-Lex also has many useful summaries of EU legislation that give a quick overview of subject and also include relevant case law. A recent example of a EU legislative summary is the right to be forgotten on the Internet . Artificial Intelligence and the Future of Information Retrieval It has been predicted that artificial intelligence will be part of daily life in law firms by 2020, and I think this will probably be the case. AI will be able to process of information, carry out searches, predict judgments, analyse contracts and manage documents. Many international law firms, such as Linklaters, Berwin Leighton Paisner and Clifford Chance, already use AI for mass data searches. A famous example is IBM’s AI ‘attorney’ Ross, which provides data retrieval assistance in US law firm Baker & Hostetler . Ross is able to rapidly search thousands of cases and laws and generate an answer in natural language. Ross also tirelessly monitors significant new cases and laws around the clock without human error. International law firm Clifford Chance also uses AI to review contracts and ensure cybersecurity. It looks like the future will be nothing if not interesting in this field!

    Published: 10.8.2016