Can you give us an overview of the legal function at the Reserve Bank and how you support the work of the organisation?
The Reserve Bank’s legal function sits within the Governance, Strategy and Corporate Relations Group of the Bank, reporting to an Assistant Governor.
We provide legal support to all business units, employees and managers of the Bank in relation to the Bank’s performance of its functions and exercise of its powers. The Bank undertakes a varied range of activities: it is prudential regulator of banks, insurers and NBDTs; it oversees payment systems and jointly oversees settlement systems with the FMA; it is the AML supervisor for banks and life insurers; it is a landlord; it runs a payment system; it issues currency; it administers primary and secondary legislation; and it operates a very large balance sheet and undertakes financial markets transactions with a range of domestic and international counterparties.
The Bank is best known for setting the official cash rate (OCR), which is one activity the Legal Team does not advise on, although we did support the implementation of the 2018 Amendment Act that introduced a new monetary policy committee as the body that now sets the OCR.
What have been your most recent challenges as General Counsel and how did you address these?
Despite the range of functions that the Bank carries out outlined above, for six years the legal team was just two of us, John Grey and myself. Naturally we were spread rather thin! The result was an erosion in customer service, such as long delays before some clients heard back from us. This became a major challenge, particularly when one of us was out of the office for significant periods of time.
To senior managers, our apparent ability to manage obscured the underlying risk the Bank was carrying with such an understrength function. In 2018 the Bank realised this and from July that year we’ve had a team of four lawyers, with a fifth (who will also be board secretary) soon to join us. The Bank also employed a Procurement Adviser (initially in the Legal Team) which also relieved our workload in the area of procurement and contracting.
Even now we seem rather busy so I am not entirely sure how we managed with only two. Going forward, the welcome challenge is to operate more as a team and to transition away from the two-person band.
Are you rolling out or planning to roll out any innovations to support the work of the legal team?
We have a Client Service Charter that sets out the expectations clients should have of the legal team and in turn how they can get the best out of us. It includes such matters as when we may seek external advice and how we resolve concerns over advice given.
The Charter draws on the professional obligations of lawyers and tries to promote notions of independence and upholding the law. We believe the client service model, with the Bank as the client, is the appropriate framing for our relations with our colleagues. We don’t necessarily look to be strategic partners or anything like that. The Charter is important to us, but seems to be less important to our clients.
This year we intend to roll out a statistically rigorous client survey based on the expectations of the Charter. Through that we expect to raise the profile of the Charter but also gain more participation from clients in setting expectations of the Team and making practice improvements. It will help us take a fresh approach to both the Charter and our approach to working with our clients and gain the clients’ support for any changes. At the same time we will not be losing sight of the need to promote and gain acceptance of our professional obligations.
How do you see the role of the modern in-house lawyer changing in practice?
One trend appears to be more specialisation within in-house legal teams. It seems to be becoming more common for some organisations to have two General Counsel, with two different teams of lawyers working under each General Counsel, and working separately for reasons of specialisation. This may be more common in government agencies than in the private sector. Bigger legal functions also seem to be more specialised, and maybe this is necessary. A more general in-house practice may be more of a luxury for small teams, but I feel being exposed to a variety of work is a good thing for in-house lawyers.