In Conversation – Nick Watson Keystone Law
Meet Nick Watson – Keystone Law Partner with a particular relationship to the business of risk.
Prior to joining Keystone Law Nick Watson worked in house at Control Risks, a global risk consultancy committed to helping clients build organisations that are secure, compliant and resilient in this age of ever-changing risk and connectivity. Whilst there he gained invaluable insight into the myriad of risks facing businesses and organisations in today’s world from compliance risks, to geo-political risk, security, terrorism, technological risk and even global pandemic risk of the sort we are facing now with Covid 19.
In a nutshell, the answer is objectivity and intellectual independence, rigour, a friendly challenge, and a fresh perspective.
We may be invested in our clients but we have an overarching obligation to provide the best advice – even if that advice sounds a note of caution or raises matters of concern. That said, we don’t just spot problems. We must, in equal measure, identify solutions and suggest ways to mitigate risk.
Outside counsel work with a variety of clients across different industries. Those clients bring us a wonderfully diverse range of issues. Our clients can leverage all that prior experience when we advise them.
Q. How does your background as an in house lawyer affect the work you do now?
As an in-house lawyer, you tend to approach issues more holistically. Over time, I have come to believe that questions should not be crudely categorized as ‘legal’ or ‘commercial’. Business decisions have legal implications; and legal advice has commercial repercussions. The two need to work in harmony to achieve the best outcome.
You see the truth of that in a very real sense when working in house. Your lived experience is one where you do not always differentiate between legal and business questions; you just roll up your sleeves and get on with it. You try to focus on achieving an outcome that balances risk and reward. What is an acceptable balance will depend on a variety of factors.
Managing risk requires you to understand that concept in a broad sense and not to view it purely as something negative. It is not necessarily the case that a large opportunity carries substantial risk nor that a significant risk brings with it the possibility of a big upside. But one needs to be dispassionate in one’s assessment of risk, take a step back and see it as an integral part of the operating landscape and a necessary corollary of opportunity.
So much of risk and crisis management is tied up in preparedness. One needs to think widely and deeply about the different threats that an organisation may face and devise mechanisms or frameworks within which to manage and respond to them.
Winston Churchill is credited with saying that plans are of little importance, but planning is essential.
Managing a crisis is not about being quick and agile in the moment. (At least, it is not only about that.) It is also about being prepared. Have you worked through different scenarios? Do you know who to involve in taking decisions? Establishing these and other key parameters in advance, will help you to manage a crisis in real time, based upon the best available information and advice.
A lawyer’s role in crisis planning or management need not be restricted to identifying and managing potential legal threats and liabilities. Yes, those are areas where legal expertise gives special insight. But lawyers have other qualities and skills that are useful in a crisis (and in planning for one): the ability to assimilate large amounts of information, to triage and prioritise, to remain calm under pressure, to think strategically as well as tactically, to be creative (yes, some of us are!). All of these will help an organisation to prepare better and build resilience.
Q. From your experience over the years can you say if some types of crisis are more common than others?
It is fair to say that some businesses will face certain exposures on a more frequent basis than others. A number of factors will be at play: industry, geography, business maturity etc. To those organisations, dealing with the adverse impacts of common or frequently occurring threats may feel less like crisis management and more like an extreme form of business as usual / performing under pressure. If you are a resilient business, you may be able to take in your stride situations that others might experience as a crisis.
So do some crises occur more than others? Almost certainly, but it is more productive to start by thinking about crises in terms of broad categories of threat. By saying a crisis of type A occurs more than type B you may fail to spot the less obvious (but equally serious) threat.
Rather than trying to narrow your focus to any particular type of crisis, start with a broad set of questions and then gradually narrow your focus to prioritise the most likely sources of risk. This is easier to do if you don’t just involve people who are insiders. You need as full an understanding as possible of the potential triggers, and the consequential types of crisis that you may experience, so that you can plan effectively. If you fall into the trap of only looking at what you know, the so-called black swan event may escape your attention entirely and you will be exposed without even realising it.
Q. How have some businesses been better prepared for Covid 19 than others and what has been the result?
It is quite apparent that some businesses have coped better with COVID-19. Through a combination of grit, ingenuity, and audacity some businesses have evolved or, more dramatically, mutated allowing them to safeguard their futures (survival) and seize new opportunities (growth).
It will not necessarily be the case that they anticipated a global pandemic. More likely, they had established a good internal infrastructure for making decisions under pressure. They were comfortable working with ambiguity and taking tough decisions based on only partial knowledge. This internal resilience will have helped them to move forward with greater assurance than some of their competitors. If they were intellectually and organisationally prepared for uncertainty and disruption, they will have been better able to face up to the challenge of COVID-19. That is so even if a pandemic were not at the top of their risk register.
Moreover, businesses that valued diversity will likely have responded to COVID-19 with greater alacrity and success than others. Access to a greater range of views and perspectives enables creative problem-solving. This is always useful – especially in these exceptional circumstances.
Q. What can you best do to help in house lawyers and their teams be prepared?
Preparation is like revision for exams, training for an endurance sporting event, or saving for retirement. Pick your favourite analogy, it’s still not fun. It may not be urgent, but it is important.
When focusing on preparation and planning you must focus on the objective and understand why you are doing this: it gives peace of mind, and creates assurance in the steps you take as the business grows because you know that you will be more likely to be resilient if the worst happens. Being prepared is not just about going through the motions of planning; it is as much a question of mindset. You must commit to the process and be open to the necessity of preparation: accept it and, indeed, embrace it as a positive use of your time.
Q. You also act for clients in corporate and commercial transactions. How does your experience with risk management influence your approach to transactional and commercial legal work?
The concept of a risk-based approach informs a great deal of my work. It is important to understand what one means by risk – it should not be thought of as existing in a vacuum. So, risk is not managed by me following established legal ‘norms’ without regard to my client’s objectives; nor do I simply adhere to a series of priorities set by my client without applying some independent judgment and analysis to challenge or test the assumptions on which they are based.
Understanding what can go wrong, and how to manage that so that the impact is lessened, is tremendously helpful when working in a corporate and commercial capacity. I don’t obsess over every possible outcome. A risk-based approach requires one to look at probability and impact. A potential hazard which is unlikely to arise may not deserve the same level of attention and negotiation as one that is more likely to occur but would have a less serious outcome.
Therefore, when working on corporate and commercial transactions I try to reach a shared understanding with my clients of what is likely to go wrong and what would be the impact if it did. This insight then needs to be examined through the lens of their own appetite for risk. You have to advise in context and within the parameters of their objectives and priorities.
Q. “A man who is his own lawyer has a fool for a client”, or so Lincoln said, but have your experiences affected the way you look at risks in your own life?
It is quite true that it is difficult to advise yourself! When trying to manage one’s own risk profile it is all too easy to reach the wrong conclusion. I like to war game any important decisions by imagining that the question had been brought to me by a close friend who wanted my thoughts on what they should do. That gives me some emotional distance by placing the question into a third party context.
This approach is not fail-safe and, frankly, it is why one would always recommend seeking independent advice. It is difficult to create objectivity through such an artificial mechanism. Neatly, this brings us full circle to the first question regarding what an external lawyer brings to the party. Independent judgment, and detachment are inherently valuable. When those factors are allied to the legal expertise and business savvy that a good lawyer possesses, then I think the proposition is clear.
Q. Had you not become a lawyer what would you like to have been?
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Patrick Selley. Keystone Law, 48 Chancery Lane, London, WC2A 1JF.
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