Being general counsel used to be a pretty straightforward job. Crush employee complaints, manage outside litigations, and stop the business-side leadership from landing the company in the government’s crosshairs. But as the years go by, general counsel are moving across that business-legal divide and taking on more decision-making responsibilities traditionally reserved for someone who doesn’t have to serve as corporate consigliere.
There are certainly a lot of advantages to placing a lawyer at the heart of a company’s strategy, but does it also rob the company’s chief legal counsel of a critical bit of distance?
NYSE Governance Services and BarkerGilmore recently released a study detailing trends in the role and responsibilities of general counsel based on a survey of U.S. corporate directors and executive officers. The key takeaway is this:
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Indeed, a compelling majority (more than 70%) of directors and officers agree that by 2020, in-house counsel’s most valuable functions will likely shift from serving as an ethical sounding board and ensuring the board adheres to best governance practices (which ranked first and second in 2015) to acting as adviser to the board and the CEO.
Welcome to the center of the action! Hope you enjoy your new found liability responsibility. According to the report, the reason for this shift is the “rapidly escalating regulatory landscape and a growing wave of complex mergers and acquisitions.” That’s fair enough, but isn’t that more reason to keep the chief legal counsel insulated?
Some people see no problem with this development:
Marla Persky, former senior vice president, general counsel, and corporate secretary of Boehringher Ingelheim USA, agrees. As she clarified in The Generalist Counsel: How Leading General Counsel are Shaping Tomorrow’s Companies [affiliate link], “A general counsel needs to be a business person first and a lawyer second — not a lawyer that understands the business, but a business person that happens to be a lawyer.”
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Hm. Obviously in-house counsel have always worn two hats, but still… pretty sure the ethical guidelines of the practice tend to frown upon being “a lawyer second.”
In The Inside Counsel Revolution: Resolving the Partner-Guardian Tension [affiliate link], former GE general counsel, Ben W. Heineman Jr, notes, “The greatest challenge for general counsel and other inside lawyers is to reconcile the dual– and at times contradictory– roles of being both a partner to the business leaders and a guardian of the corporation’s integrity and reputation.”
Yeah, what he said. Generally the word “contradictory” is a red flag for lawyers, but apparently we’ve decided that’s going to be more of a friendly advisory in the near future. And maybe this is going to work out fine and involving lawyers more directly with business decisions facilitates proactive legal guidance and improves corporate responsibility.
But that risk of business-side capture and eroding independence shouldn’t be taken so lightly.
The Rise Of The GC: From Legal Advisor To Strategic Advisor [NYSE]