Facing up to in-house problems

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An academic at a new research centre describes some of the unique challenges facing Chinese corporate counsel

With the growing maturity of a market economy and continuing improvements to China’s legal system, the importance of law to Chinese companies is increasingly apparent and legal affairs management has certainly caught the attention of companies’ senior management.

Ye Xiaozhong
Ye Xiaozhong

In recent years, legal affairs management has made major progress under the guidance of the State Assets Supervision and Administration Commission and other institutions. However, in general, legal affairs management within Chinese companies is still in the development stages and Chinese corporate counsel are facing many challenges. Some of the main challenges are:

  1. The focus level of legal affairs management is still not high enough and management of legal affairs is not clearly differentiated from the professional handling of specialised legal matters. As a result, Chinese companies are used to dealing with corporate legal matters in a technical and operational manner, and are not able to handle corporate legal matters from a strategic and management perspective.
  2. Institutional support for legal affairs management is not strong enough; having no legal affairs management function or putting in place only a low-tier function is still common among many Chinese companies; the scope of legal affairs management is rather narrow; the implementation process for a general counsel system is slow; personnel with legal functions are still lacking both in terms of numbers and specialised skills or experience.
  3. Systems of legal affairs management at operational level are not complete; awareness of the scope, work mode and operational procedures of systematic legal affairs management is still lacking; a scientific and standardised working methodology of legal affairs management has not been formed.
  4. The IT level for legal affairs management is low; awareness of the role of IT in legal affairs management is not high enough; many companies have not established basic IT systems for legal affairs management; for those that have, the systems have defects in either functionality or procedural design, or both.
  5. The theoretic foundation for legal affairs management is weak; courses or further studies for various aspects of legal affairs management including core principles, positioning, scope and management methodology is still incomplete and insufficient; legal affairs management is at a rather spontaneous and early stage; legal affairs management theory cannot provide strong support to meet the actual needs of legal affairs management.

All of the above have restricted and even hindered the productivity of legal affairs management and the realisation of legal affairs management value.

Ye Xiaozhong is director of the China Research Centre of Corporate Legal Affairs Management, established by the Business School of the China University of Political Science and Law