General Counsel: a greater strategic role?

The role of the General Counsel should undergo a healthy and long overdue reappraisal in today’s demanding business climate. In-house lawyers require a greater combination of skills than ever – commercial nous, financial business acumen, general managerial strength as well as wide legal knowledge and experience. Credibility and stature are paramount and evidence suggests that the in-house Legal Adviser has much more to offer at board level in the future. Businesses that understand how to maximise their senior legal resource will undoubtedly have a competitive advantage.

The Reality

The reality is, however, the title ‘General Counsel’ does not denote the same level of involvement at every company. At one extreme, the Chief Legal Officer, the highly paid US-style legal and business adviser to the Chief Executive, is a trusted member of the board, never far away when strategic decisions are being made or crises being managed.

At the other end, disturbingly, there are still plenty of General Counsel who do not attend Board meetings and are not consulted on strategy. They are generally regarded as a hindrance rather than a help in moving the business forward or, at best, a necessary evil.

The role of the General Counsel also varies depending on the type of business. A highly regulated business, for instance, will require a technically expert lawyer well versed in the relevant regulatory regime who may require the assistance of a compliance team. In fast moving unregulated organisations, a commercial mind and a deft brain are more at a premium as lawyers will need to assess risk quickly and often take a broad brush view in order to move the business forward.

This can sometimes involve a less than lawyerly attitude to risk: weighing up the business case against the likely risks in a robust and commercial fashion. What these businesses want from an inhouse lawyer is an adviser who is seen to offer solutions – creativity and problem solving in the strategic sense are absolutely critical.

Better Risk Management

A rich diet of regulations, such as Sarbanes Oxley, the 8th Company Directive (its EU equivalent) and the Combined Code are all necessary but unwanted distractions for a General Counsel. The General Counsel has a duty to the company (and its shareholders) to ensure good corporate governance. But what shareholder wants an immaculately administered company that is on the verge of wiping out shareholder value through poor risk management?

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