The integration of Legal & Compliance in the end-to-end process of BioTech organisations
Insights from 6 senior legal leaders from European Biotech companies
Biotechnology companies are evolving quickly and most of them in a highly specialized field. Resolving legal issues in the BioTech field may be therefore perceived as a delinquent piece of art. The legal & compliance department must be capable to deal with different topics, for example compliance with biotechnology regulations that are changing constantly and intellectual property protection.
To get a better understanding of the role, positioning and daily challenges of the legal department within BioTech companies, we interviewed 6 senior experts right out of the field: Dirk Van Broekhoven (General Counsel at Etherna), Inge Delputte (Legal Director), Laetitia Szaller (General Counsel & VP Business Development at AM Pharma), Erik Domines (General Counsel at Xbrane Biopharma AB), Daan van Well (Chief Legal Officer, General Counsel at SOPHiA GENETICS) and Tim Vandorpe, General Counsel of an innovative molecular diagnostics company.
A brief look at the structure of Legal & Compliance within a BioTech organisation.
In general, the Legal & Compliance department within a company ensures that the company complies with all the requirements specified in the applicable laws and regulations. Legal & Compliance departments provide training to internal staff and management board, and they should be the first point of contact on legal and regulatory changes. How is Legal & Compliance organized within a BioTech organisation? Reliable positioned or decentralized into a corner?
“I coordinate and follow up all different legal activities. It is mainly contractual review work, and currently less litigation related. So, all written contracts should be reviewed by me. In addition, I also provide legal advice. As far as Compliance is concerned, not all the Compliance work just ends up on my plate. For specific matters, I can rely on a specialised Compliance group within the company, led by our Operations Lead. The key task of this specific Compliance group is focusing on GMP, Good Manufacturing Practices. However more general compliance cases usually end up with me to handle and process.”
Dirk Van Broekhoven, General Counsel at Etherna.
How the Legal & Compliance team is structured depends on factors such as the size and geographical spread of the organisation and how it operates. Inge Delputte, Legal Director, exposes the structure of her team: “Our legal team in Europe exists of three people: a contract coordinator and two legal counsels. From a global perspective, there’s one legal counsel represented in the US and a team of five lawyers located in Japan. As Legal Director, I’m responsible for the negotiation of contracts, GDPR matters, Ethics, etc. Compliance responsibilities lie with a different team. But of course, there is a lot of consultation between Legal & Compliance.”
At SOPHiA GENETICS, Daan van Well (Chief Legal Officer, General Counsel) has built up his legal team out of 3 pillars: Legal Affairs, Risk & Compliance and Corporate. His team operates worldwide, with physical presence in Switzerland, France and the US.
While some legal departments of BioTech companies consist of several team members, mostly spread across the globe, there are also solo legal departments. At Xbrane, a Swedish Biotechnology company, Erik Domines runs the legal department on his own as a General Counsel: “It’s a delicate matter to be the only legal person within the organization, however it’s not a problematic situation. As General Counsel I am very much involved as a trusted part of Xbrane. As a solo legal department, being part of the management team is crucial to put the right legal topics on the agenda. I report to the CEO.” It takes courage to be the single corporate lawyer of the legal department. Expanding the department, without adding headcount, is possible if solo lawyers join organizations like the Association of Corporate Counsel , General Counsel NL and Cercle Montesquieu. By building a network, they get in touch with in-house lawyers in similar positions who can help and share resources.
From General Counsel, Chief Legal Officer to Contract administrator, the different legal roles that are placed within corporate legal departments evolve quickly. Tim Vandorpe gives an insight into his team: “Our team counts a contract officer, two senior counsels and a general counsel. Sometimes we can also count on extra manpower on freelance basis. We also have two senior people in our internal IP team The DPO is not part of the legal team. Regarding reporting, Legal reports to the CFO. Compliance work that is handled within the legal team relates among others to providing advice on market abuse or certain regulatory questions, while other compliance topics are dealt with by other teams.”
It’s not the most common practice of Legal & Compliance, but they are also sometimes involved in proactive lobbying. The Legal & Compliance department aims to be regarded as a value-driving business partner within the company. Laetitia Szaller, General Counsel & VP Business Development at AB Pharma, explains: “There’s a significant difference between in-house and external. Our legal team has two specific roles within the organisation: a strategic role, operating at high level, and of course an advising role. Our job is a mix of strategy, vision, and support. We are more a partner towards the business.”
The way in which Legal & Compliance has found its place within the BioTech company and the image that goes with it, depends on the company structure and culture.
“In our company there is a matrix structure. The aim is to not work in departments anymore, but more in function of lifecycles. There are some functions who are not fully integrated into one life cycle but are offering more support to all different life cycles, such as the legal team. We are working case by case within the various life cycles. The main workload is contract review and drafting, corporate housekeeping and advisory.”
Tim Vandorpe, General Counsel of an innovative molecular diagnostics company.
The added value of Legal & Compliance for the business. Achieving company objectives vs. monitoring customized KPI’s by Legal & Compliance?
Legal and compliance departments deliver risk-aligned guidance to help the business execute on its growth priorities. Dirk Van Broekhoven gives clarity about the role of Legal & Compliance in achieving the company goals: “The company objectives are discussed and determined within the management team. As General Counsel, I can share my opinion and comment on the defined objectives. Legal plays a very prominent role in a biotech company. The pharmaceutical world is a highly regulated one. The need to take all the rules into account and apply them properly is of great importance here as a legal professional. This great responsibility also determines the weight of the legal team within the company and the role of the lawyer. Legal may certainly not be the ‘last stop’ in projects and activities. We can state that legal can be a determining factor whether company objectives are achieved on time and level of excellence.”
Defining KPI’s for the legal department should not be considered as a walk in the park. Companies should take into consideration that perhaps the right KPIs for the in-house legal department are likely not to be the same as those most appropriate in measuring the performance of the outside counsel.
“Our corporate objectives are very specific. Within our legal department, we translate these objectives into actionable ones for our department. For example, the amount of signed and revised clinical contracts.”
Laetitia Szaller, General Counsel & VP Business Development at AB Pharma.
Legal & Compliance experts often get stuck in determining the most critical areas, how to monitor and measure them. The most used Key Performance Indicators vary from legal spend, response time, deadline compliance to cost per matter or lawyer. According to Dirk Van Broekhoven: “For our legal department, there aren’t specific KPI’s formulated these days. However, we track the number of filed litigations, contracts, and patents. We also keep an eye on budget metrics, and outside counsel activities are also tracked by accounting. Regarding reporting, I have a straight up communication line with the CEO and the board. I report directly towards them.” And Inge Delputte adds: “Also our legal team doesn’t have such detailed KPI’s, e.g. by referring to quantitative thresholds. Much attention is nevertheless paid to the performance of the lawyer. On a monthly basis, full reporting is given to the C-Suite on the actual involvement of the Legal Department in strategic and operational topics. Such reporting includes topics such as: budget status, matter status, risk reporting and training status.”
What is the best way to determine KPI’s? A frequently used technique is establishing a SMART KPI policy. SMART KPI stands for key performance indicators which are specific, measurable, attainable, relevant and time bound. SOPHiA GENETICS is a data-driven company, where for the legal department the KPI’s are a translation of the SMART corporate KPI. Daan van Well clarifies: “For example, registering 7 patents a year is a very clear KPI, based on the SMART principle”.
However, opinions are divided on the effectiveness of KPI for the legal department: “I notice that the results of projects are often outside the control of the legal department. So, we find it quite difficult to specify certain KPI’s for Legal which are linked to project success. Numbers don’t always reflect the quality of the work that has been done. The evaluation of competences could be interesting: for example, KPI’s based on training goals could add value. It’s undoubtable that defining and monitoring KPI’s will remain an important topic for legal departments.”, says Tim Vandorpe. Erik Domines of the company Xbrane adds: “Chasing KPI’s is not my main priority. But I do support the idea of organising more educational activities on Legal & Compliance internally”.
With the right KPI’s in place, legal departments can influence internal staff behavior and show the department’s value and effectiveness. Whether these metrics should be based on a quantitative or qualitative approach, is still a topic of discussion.
The relationship between legal and the business. Room for improvement or already a match made in heaven?
“Legal is deeply involved in business activities. Most of the time, the collaboration goes well but we are certainly aware that improvements can be made. There are examples of draft contracts which are sent to Legal too late in the process. The IP team must also be involved very early in the development of a product and must be kept abreast throughout development. We regularly organize training sessions and speak with business owners to ensure that the timely involvement of legal and IP is part of the processes they follow. The success of the collaboration between legal and business depends on a lot of subjective factors as well.”
Tim Vandorpe, General Counsel of an innovative molecular diagnostics company.
At certain companies, there is a culture where business departments tend to avoid relying on legal resources unless it’s necessary. Or where Legal & Compliance quickly adopt a reactive attitude towards the business. Whereas a pro-active attitude makes legal professionals better equipped to provide service and advice. They will work more effectively with internal clients, reduce misunderstandings, and achieve better outcomes. The workload of the legal department is only getting more complex, Laetitia Szaller confirms: “The role of a legal counsel in a BioTech company is not always an easy one. There’s a high pressure. You need to handle risks and create solutions to different, complicated matters. I think being a real business partner is the key to success. In general, legal departments normally don’t have a positive image within companies. It’s something to work on, and whereby I believe that experience and creativity can help.”
What factors determine a good relationship between legal and other business units? It is either ingrained in the corporate culture or not, according to Dirk Van Broekhoven: “The added value of the legal department must be built into the corporate culture and processes. Making Legal part of a management team gives substance to that. I firmly believe that Legal should play the role of a full business partner for other teams and departments. Experience shows that other business colleagues are not aware of all different crucial elements at handling contracts. So, the role of Legal during these processes is crucial. Some departments may have mastered handling contracts better than others, those teams can be given more autonomy of course to take care of their contracts”.
Various initiatives to improve the image of the Legal Department. Digitalisation pays off.
To optimise communication between the legal department and other business partners, digitalisation is inevitable. Digital communication improves internal collaboration, especially among geographically dispersed team members. “Everything that can be digitalized should be digitalized. Different departments within companies are seldom at the same level of digital maturity. I also notice the difference in digital maturity in cooperation with law firms. Unfortunately, some law firms are very analogous and old school. They dip the digital interaction in projects”, remarks Erik Domines of Xbrane. The road still seems long to get all departments of organisations and their stakeholders on the same digital level. Digital collaboration tools provide employees with the ability and flexibility to work better and faster.
Besides investing in digitalisation, another way to improve the relationship between the legal department and other business units could be offering several trainings and learning sessions, given by Legal & Compliance, to all internal business colleagues. An idea that is applauded by several senior leaders within the Legal Department.
“The business should be educated better in the context of legal aspects. Legal supports the business with the negotiation of contracts, GDPR related questions and other ethical aspects. It’s the responsibility of Legal, I believe, to make all kind of templates readable for other business departments. We know it’s very complicated for people outside the legal field to get a good understanding on how to handle and manage contracts”.
Inge Delputte, Legal Director
The usage of legal information management systems and tools within BioTech companies. Still a theory or already in practice?
There’s always room for improvement when it comes to digitalisation and internal collaboration. Legal technology offers software tools and solutions to make legal services more efficiently and helps legal professionals to tackle regulatory and compliance burdens at a higher level. Using a platform that provides corporate legal departments a transparent view of their legal activities and detailed reports, increases the productivity tremendously. To what extent are legal departments already digitised?
“To collaborate with the business we have an Intranet and SharePoint. For the legal team itself, we haven’t implemented any tools or software to support us in our daily way-of-working. Today, there is still a lot of manual work and re-work for the legal team. We have a lot of contract templates at hand. Our current database is supported by outdated software. It has been created for storage of final signed contracts. And regarding security, there are only two options for giving access to this database: it‘s either all or nothing. Due to the current lack of adequate tools, we are very pleased to have our contract coordinator who is very hands-on and guarantees a smooth follow-up by using an Excel file to keep the overview. On short term however, we are working on the implementation of smarter solutions.”
Inge Delputte, Legal Director
The maturity in digitalisation varies from one legal department to another. What type of tools or systems are already being used in legal departments today? Dirk Van Broekhoven states : “Today, we are working with a basic contract management system. The purpose of this tool is just to store all our contracts electronically. I have made an Excel sheet to get an all-round view on the follow-up of contracts. We have some contract templates but due to today’s lower volume of generated contracts, we are not automating or standardizing the process. And for e-signing, we use DocuSign“.
The fact that legal information management tools and software are becoming a fixture in the processes is also confirmed by Laetitia Szaller : „We also use DocuSign for e-signing. For managing contracts and archiving, we rely on another specific platform. So currently we are only supported by technology in the area of contract management and electronic signatures. But other areas of our job could also benefit from other tools later on. The focus should switch from contract management to content management, more generic“.
The development of the legal industry has significantly transformed the provision of legal services. Legal departments will need to reconsider cost structures and invest in technology to increase efficiency.
“We use software solutions for contract management and e-signature. It’s a good investment. In itself, I don’t think legal tech solutions are that expensive any more, especially when you compare it to years ago“.
Erik Domines, General Counsel of Xbrane.
With the advent of technologies such as AI and NLP, legal departments can gain more value in their business.” It would be valuable if AI could identify the different IP parts. Artificial Intelligence is already involved in a lot of domains of legal, the next step is introducing it in IP management as well.“, states Domines.
Legal technology will continue changing the future of the legal sector. Legal professionals should keep up-to-date and monitor the tech landscape continuously. According to the General Counsel of an innovative molecular diagnostics company, Tim Vandorpe: „We will certainly keep an eye on the market. Why? Because we see more specific tools and systems emerging. But before we make an investment in terms of resources, we are first going to expose the pain points in our organization and see which tools and software are really needed to solve them“.
The top priorities for Legal & Compliance in a nutshell. 2022’s Ambitions and goals?
Gartner identified four key risk themes for Legal and Compliance in 2022: evolving societal expectations, the new employee-employer relationship, geopolitical competition and corporate disruptions and new frontiers of technology regulation. These themes are translated into concrete priorities and working points, for example at Xbrane: “Close the onboarding and creation of a good Legal & Compliance structure in the organization is the top priority in 2022”, says Erik Domines as General Counsel.
For most legal departments their mission is clear, Laetitia says: “Staying agile and abreast of new developments as a legal department. One component to achieve this technology supporting the legal function such as, a highly interactive platform to manage all our content and information. Searching and finding content shouldn’t be a bottleneck anymore”. Inge Delputte adds: “Our main priority is automation. We understand that using the right software will be inevitable, and it will have a positive impact on the workload of our contract coordinator and legal counsels. For defining our priorities, we have defined precise opportunities to improve efficiency in each of the following 4 pillars. Firstly, legal intake and matter management. Secondly, template creation (both content and lay-out). Thirdly, legal team visibility, and finally, external networking.”
What concerns legal departments the most these days? Daan van Well, from SOPHiA GENETICS, focuses on Data and Intellectual Property: “That’s where the risks lie. Legal professionals must take into account the ever-growing regulation of the industry in the areas of Data, Artificial Intelligence and IP.” Industry regulations and data privacy will pose big challenges and opportunities for the upcoming years.
Let 2022 also be a year of self-reflection for legal teams on their performance of the past few years. Tim Vandorpe concludes: “We want to deep dive into our current processes and redefine some of them. This is currently happening on European level, but we need to involve the United States as well. Another priority is to constantly ensure that our templates are up to date with the latest legislative changes, specifically the ones that are used the most by the business teams”.
In addition, the business world gradually crawled out of the Covid pandemic. There are instructive lessons to be learned from this difficult period. The digital way of working gained momentum. As a result, more and more departments within companies are operating in a hybrid way. For example, at SOPHiA GENETICS, there’s a new way of working: “Being present at the office for 60%. That’s how we roll from now on.”, says Daan van Well. The only pitfall in a more digital way of working, and remotely, is that the human factor is easily lost from sight, even in a tech company. Therefore, the legal department of SOPHiA GENETICS, has introduced an efficient solution.
“We organize informal short daily teams calls. These are sessions without concrete agenda, everything can be discussed there, for example discussions around the coffee machine. It’s a productive outcome of the daily online calls during the pandemic lockdowns”.
Daan van Well, Chief Legal Officer, General Counsel at SOPHiA GENETICS.
Last question left: are the ambitions or challenges for a legal department in Bio Tech companies more specific or different than in other industries? Dirk Van Broekhoven shares: “The future of our department, and company, depends on the results of the research. The legal team should evolve with the evolution of company activities. If these activities increase, the legal department will have to expand as well. A more generic goal for all legal professionals in 2022 might be being treated and approached more proactively by the business. Of course, the lawyer’s own attitude plays an important role in this but working on one’s own internal relations would certainly be beneficial for Legal.”
As a conclusion, based on the different interviews with a wide variety of senior legal leaders in the European biotech scene, we can state that a General Counsel in a biotech company needs to be hands-on, and capable of dealing with high paced changing regulations that put the organisation at risk.
Since everything moves fast, headcount in the legal department remains limited and better collaboration with the business stakeholders becomes key, proper digitalization becomes a must to support the legal & compliance departments in demonstrating their business value.
