GC Views – Vincent Wong, Credit Suisse Hong Kong

Talking to Vincent Wong, Head of Legal, Private Banking APAC at Credit Suisse Hong Kong.

 

We are delighted to have Vincent Wong, Head of Legal, Private Banking APAC at Credit Suisse based in Hong Kong as our first interviewee. Vincent has broad experience in managing large teams of lawyers and compliance officers in global banks.

Vincent spoke with LOD to discuss the changing role of in-house counsel and the trends within both the legal and banking industries.

LOD: Firstly,thank you for your time and for being our first GC as part of our new GC Views series. At LOD we have seen the role of GC shift in recent years from a focus on pure legal technical work to a more commercial and strategic approach. Is that something you are seeing, and if so, how has that impacted on you and your role?

Vincent: Yes that is definitely the trend, especially now I am in more of a senior position.  The day-to-day legal work is undertaken by the team and as a senior member and leader of that team I tend not to be at the coalface doing the actual drafting and legal work.  I still do some from time to time – to keep the pencil sharp – but otherwise my role incorporates liaison with senior management as a strategic advisor.

This definitely makes the role more interesting and professionally more satisfying. I end up sitting on committees next to business partners looking at various things that in previous years Legal would not see as its remit, such as our risk profile, other than purely legal risks, when doing deals. I also comment on some of the commercial aspects of transactions we are looking at and that is a lot more fun than purely being a technical lawyer!

LOD: In terms of how you and your team structure the work, are there any particular legal issues or types of work that you would routinely refer to outside counsel, or do you tend to handle more and more in-house?

V:  I can see a definite trend toward the latter.  There has always been a focus on legal costs and GC’s having to justify their existence – quite rightly so from a shareholders point of view.  I need to ensure that my team are really delivering value over and above what outside counsel can do.  We believe we can do the same job – probably as well and sometimes better – at a lower cost. When you present an external legal bill to the business they see a direct cost and take a cost conscious point of view, so we definitely have to justify our need for external advice. This is particularly so for private banks. Capital market deals in investment banks are typically all farmed out to external counsels.

If I look at the work I tend to refer out it’s the large transactions, and big lending deals – such as lending to quasi institutional type clients or the ultra-high net worth or family office with legal representation, or difficult/challenging regulatory questions where we feel we need external counsel expertise.

“I need to ensure that my team are really delivering value over and above what outside counsel can do.”

LOD:  In keeping a lot of work in-house, do you feel you are able to demonstrate your value to the business, not only from a cost effective point of view, but as a trusted advisor?  In your opinion do you think in-house lawyers have become an indispensable part of an organisation?

V:  I think so yes.  I think those organisations that have gone down this road for some time have realised that it is not just convenient, it also means that work can be done much more efficiently.  You can refer things pretty much immediately to people who know the business inside and out.  It’s a very different proposition to having to structure your questions, explain things to your outside counsel, explain the issue and how the processes work and then wait a few days before a piece of advice comes back – which might not be what you really want.

I am not trying to downgrade the importance of outside counsel at all, they obviously deliver a huge amount of value in situations that you want them to step into, but I think the business realises that having someone immediately available across their table who knows their business is invaluable.

LOD:  From your experience, what advice would you give to other in-house counsel and are there any things in particular you see as important when advising senior leadership?

V:  You need to earn their trust.  I think as a legal advisor you don’t really want to be seen as an adversarial person.  You sometimes have to deliver difficult messages when you see things shouldn’t really be done the way they are being proposed.  This can be a challenging conversation, but by working with the business partners in transactions and building that trust, it makes those conversations a lot easier.

It’s really about making the time to meet with people, talking to them on a continuous basis and demonstrating an interest in how their business is run. Rather than saying “well I am just looking at the legal issues here and I’m not that interested in whatever else goes on”, you need to understand the specific issues and drivers for their role.  This makes a big difference in the way senior colleagues engage with you.  Once you have that trust it makes life a lot easier, even in pretty difficult conversations.  You still have that debate and some of that will be very robust, but they will always listen. That is the key role that we play.

“I think as a legal advisor you don’t really want to be seen as an adversarial person.”

LOD:  It sounds like having that debate demonstrates your credibility as well?

V:  Exactly.  I think business people are pretty astute.  They are not looking for ‘yea-sayers’ and ‘rubber stampers’, they actually want you to challenge them from time-to-time to make sure they are on the right track. I see a real value from building solid relationships with the more senior  people in the business to make sure that I deliver when they need advice.

 

“I think business people are pretty astute. They are not looking for ‘yea-sayers’ and ‘rubber stampers’.”

LOD:  In terms of 2017 and the industry you are operating in, what do you think will be the main opportunities and the main challenges for you and your team?

V:  Main opportunities – the main focus right now is watching what is happening in the geopolitical situation in the US, UK and Europe, which all seem to be in a bit of disarray.  I think sitting here in APAC we have a big opportunity.

I can see the big banks and global organisations adopting a more regionalised approach going forward. Credit Suisse have already come out very publically, a year or so back, to say we will be more regionally focused, so APAC is now a division in its own right.  We can determine for the most part how and where to deploy our resources and what business focus we want to have.

Up until this point, the US and UK have been the centres for a lot of major global banks. I can now see this changing with more autonomy given to other regions.  This means our strategic role sitting in APAC will grow.  There will be increasingly more opportunity to exercise independent judgement on matters, and craft solutions to fit the Asian business model specifically.  So for me in 2017 and beyond this new type of autonomy will be a huge opportunity for the GC function in the APAC region. Of course there will still need to be strong collaboration with our global colleagues to ensure that we have a consistently high standard control environment.

Main challenges – it has to be the regulatory landscape. Whether it is in the US, the UK or in HK I think the regulators are really flexing their muscles in a big way.  It is no longer enough to look at the law and interpret the law, we now have to be the experts in guiding our businesses on where they should be heading.  I know it’s a bit of a cliché, but looking round the curve and seeing what’s ahead, seeing how the regulators will think in 6 months or a year’s time is very important.  That is the challenge right now because things are changing so rapidly it’s very difficult to keep up with just the regulations.  Working very closely with our compliance colleagues – who have a lot of interaction with the regulators on a day to day basis – is pretty key.  Exchanging views in industry forums and the wider legal community, just to keep each other appraised of what is going on – subject to divulging anything confidential – is also crucial.

“I know it’s a bit of a cliché, but looking round the curve and seeing what’s ahead, seeing how regulators will think in 6 months or a year’s time is very important.”

LOD:  We are undoubtedly seeing that trend across APAC, with the number of requirements coming through to us for regulatory and compliance lawyers increasing, particularly within the last 6 to 12 months.  Are there any other trends you are seeing in the banking and financial services industry, or is the regulatory side the focus?

V:  A more stringent regulatory landscape is definitely the focus.  However, I have also seen more of a move to compliance being separated from the legal function.  When I joined Credit Suisse just over 3 years ago we had a combined legal and compliance function that I headed up for APAC.  The trend now is that the regulators want to see compliance as more independent from legal.  I think there is still a perception by some regulators that lawyers tend to be a little too pro-business and they want more independence from a compliance function whose mandate is to be the internal controller.

This should result in more opportunity for a stand-alone legal function to be more strategic and to focus efforts on helping the business to achieve their ambitions. Since our split a year ago the legal role has definitely shifted and evolved.  I most definitely see this as a trend.

And the debate on the 3 lines of defence is a live one as well. All the regulators are very much focused on how the 3 lines of defence are delineated and they want a lot of clarity around who is doing what.  They want to know what the front line’s responsibility is versus the second line’s responsibility (risk, compliance and legal) and then the third line of the internal audit function.  There are a lot of questions about that, especially after a couple of recent hiccups in the banking sector.

There is also a lot of talk about disruptive technology and the use of robotics for routine legal work. I think the legal industry, especially in-house functions, have a lot of catching up to do.

LOD: Thanks so much for sharing your insights, it’s been really interesting. Before you go it would be good to understand a little more about you and your current role at Credit Suisse?

V:  I look after the legal function, supporting our private bank offering in APAC with a team split equally between Hong Kong and Singapore.  I also have a dotted reporting line with our legal teams in Australia, Japan and India, where we have domestic private banking set-ups.  We call these ‘booking centres’ where we offer private banking services and we book the assets on-shore in those locations. The size of the primary team is roughly about 20 people with a smaller number in the other hubs.  I report to the APAC GC, Albert Rim, who is responsible for the whole of Credit Suisse for APAC.

LOD: Before going in-house in the banking sector, you were a private practice lawyer for almost 4 years, how come the change to a career in-house?

V: Good question. Even though I was still relatively junior, the decision to leave was primarily driven by the fact that the recent trend in law firms has been to really drill down and specialise. This had resulted in me being in a very small team which focused almost exclusively on IPO’s.  I effectively ended up doing one after the other and just couldn’t see a way in which I could add to my legal skill-set.  Even though I was only around the 4 year PQE, I decided it was time to get a broader experience.  Given the fact that I was familiar with banking generally it made total sense to go into the banking sector.