Wednesday, 28 March 2012

Let them eat (cold) cake!

This is not a satrical poke at the brioche-chomping UK Chancellor for his insipid responses to questions from the Treasury Committee yesterday, re: "pasty-gate".  However, as the title suggests, there are parallels to be drawn with Marie Antoinette's failure to see the big picture (in MA's defence, she was only 9 when Rousseau attributed the infamous phrase to her).

No, my issue is more fundemental and addresses the impact of poorly thought out policy on business.  In this case, what is "hot", what temperature represents "hot" and if prepared "hot" -what if the pasty is sold once it has cooled down.  This will undoubtedly spawn litigation-a-plenty with a tax authority already famous for the "cake or biscuit" case (my personal favourite case of all time).

Poor policy, makes bad law. Bad law is difficult to interperet and even harder to safe guard against.  It adds cost to every business in terms of compliance and, inevitably, when dealing with failure to comply. 

The problem with bad law is that it is a modern day epidemic.  Regulation burgeons and in-house legal departments find themselves increasingly stretched just to cope with the relentless onslaught of bills, acts, regulations, clarification and direction notes not to mention case law. 

In-house counsel have to cope with this, cuts to their budgets, reduction to their headcount, and the rethinking of their priorities at the eye of a perfect storm.  Ask any GC or Head of Legal what keeps them awake at night, and it is generally worry about what they don't know or haven't thought of. 

The current model of in-house teams working on a "per event" basis with a large panel of law firms can not cope with this epidemic.  The unitary cost of legal has to come down to cope with what business needs (more for less). 

An "on-demand" market can not deliver this and, even worse, it creates the false assumption that buyers can "shop around" for the best price.  It necessitates the re-invention of the wheel and leaks institutional knowledge - all adding to future cost.

Buyers and suppliers (and even suppliers and suppliers) have to "partner" to create a model that can cope with the increasing flurry of bad (and good) law.  This means that buyers have to select their partners on a longer term basis and, therefore, more carefully.  Suppliers have to be willing to co-operate with each other and be transparent around their pricing.

Like any revolution, it is important to understand what side you are on.  For too long there has been the misapprehension that buyers and suppliers are on opposing side.  They are not, they should join forces to battle against the growing leviathan of regulation.  Vive le revolution!

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