The Evolving Role of the General Counsel

Today’s Evolving General Counsel Role, the Board, & Corporate Culture 

Today’s General Counsel role evolves at the same accelerated rate of change as the companies it serves. It has expanded from what we think of as the traditional role—of being the legal risk manager,  supplier of legal services—to include being an advocate for an ethical and inclusive company culture. One very revealing fact is that organizations with an ethical and inclusive corporate culture can reliably demonstrate two other factors: the GC is vocal within the organization about important cultural and legal issues and has a good relationship with her/his board. 

We can see an evolution of business culture articulated by institutional investors. Blackrock CEO Larry Fink’s 2018 letter to CEOs of the companies in which Blackrock invests was a powerful wake up call for boards to assert their role in linking long term strategic growth to the engagement of all stakeholders, more likely with a diverse board and inclusive culture. The fact that he titled it A Sense of Purpose speaks volumes. 

Business does not happen in a bubble – it happens in the same world where we all live and raise our families. Companies are being called upon to do more for their employees and for their communities in a way that is sustainable, and they are being held accountable for such change by their Boards, who are being held accountable by shareholders. Boards have more to do, as does management, as does the General Counsel.

THE MODERN GENERAL COUNSEL

As we navigate this boardroom culture shift, how has this shift expanded the role of the General Counsel? It has expanded four foundational responsibilities:

1. Compliance, Risk Management & Prevention

The General Counsel has always been the corporate officer who carries the water for legal compliance/legal risk management and helps the company navigate its way through legal challenges. Today’s GC has a responsibility not only to be the “defender in chief” but also to offer advice to keep the company out of trouble. One of the best ways to ensure legal compliance by business units is by setting the appropriate tone at the top. If an organization is intentional about establishing its corporate values as including integrity and ethics, that mindset should become part of business decision-making.

By advocating for that behavior within the organization and by developing a collaborative relationship with the Board in its setting and overseeing the corporation’s cultural ethical values, the GC is a crucial actor in the company’s ability to achieve its long term strategies. 

2. An Advocate for Reputation & Culture

Things can be “legal” but still not be advisable in light of stakeholder interests, or the company’s long-term goals. If something is strictly legal it may still harm the company's reputation. It is part of the GC’s role to advise and counsel the company not only about about legal risks but also about events and policy that could damage the company's reputation and culture. Encouraging companies to think about internal practices that affect the company’s reputation in its community, and that reflect on the corporate culture internally is within the purview of the evolving role of a GC, one who has regular access to the company’s board of directors. Advising on the impact of policies that shape culture is proactive risk management. 

3. Savvy Assistance in Decision-Making

Thinking through the legal and cultural ramifications of business decisions is not only proactive risk management – it’s smart business. The role of the GC has had to expand into being more business savvy in order to give relevant legal advice.

When I started my legal and business career, the General Counsel was viewed as the person who provided and managed the course of all of the legal services for the company. The larger the company, the more complex this role. As my career progressed and the world changed, the role of in-house counsel evolved. For the in-house lawyers to understand the legal risks involved, they needed to better understand how the business worked. They needed to understand the levers within the company.

Forward-thinking lawyers began to get more involved, often embedded within business units. Consequently, they grew to become counsellors in the truest sense of the term, to not only prevent problems before they could materialize, but to offer innovative legal strategies that supported the business goals. The more I understood about business processes, the more the business people trusted that I was helping them figure out the best way to get their projects done, on time, under budget and without legal repercussions. It became possible for me to raise aspects of their projects they had not considered.

With the increased rate of disruption in the marketplace, the General Counsel is often in the best position to proactively advise the business decision makers about regulatory change that could affect business operations or new products being developed. That additional business advisory role complements and informs the GC’s broader role as an advocate for a culture of legal compliance and broader corporate values—always a great tactic for proactive risk management. 

4. Encouraging an Inclusive Culture

Business leaders are in their positions because they are visionaries who get things done. But the same things that make them successful there mean that sometimes they don't think about all of the issues.  

Today’s GC realizes the importance of diversity in decision making, and that having diversity in the workplace and on Boards is not enough. There needs to be a culture of inclusion, so that the Company gets the benefit of hearing varying perspectives that come from diverse voices. That includes having a Board that appreciates the perspective of a forward thinking GC, that she/he has life experience, business knowledge and a framework for thinking about the world that is unique and valuable. Someone who thinks about risk management and long-term implications first will see not just red flags, but also opportunities where a C-Suite and board may have a blind spot.

Being someone who is willing to speak up and advocate as part of the chorus of diverse boardroom voices may very well benefit the company’s bottom line as well as help keep it out of trouble.

Making room for things like Legal Risk Prevention, Advocacy of Reputation and Culture, Savvy Assistance in Business Decision-Making, and Encouraging an Inclusive Culture mean that today’s General Counsel is more than a legal mind—today’s GC is a critical part of setting the tone at the top and driving the corporate culture in a beneficial direction, one in which leadership is intentional about creating longterm, sustainable shareholder value and in being more responsive to stakeholders.

The State of Boardroom Strategy

Ever changing and ever-present risks are plaguing the boardroom. What steps are being made to tackle them?

A Statistical Snapshot On Boardrooms in 2017

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For a deeper dive into the evolving thinking around this evolving role, explore these reports:

• ACC: Chief Legal Officers Survey (2018)

• ACC Global Summit: Achieving Trust and a Positive Work Culture (2018)

• Raconteur: Including general counsel could prevent scandal (2018)

• Columbia Law School: How General Counsel Are Becoming More Essential in the C-Suite (2017)

• Bloomberg Law: Why the Role of General Counsel Is Expanding (2016)

• Harvard Law School: Lawyers as Professionals and as Citizens: Key Roles and Responsibilities in the 21st Century (2014)

5 Things Boards of Disruptive Companies Need to Watch

Anyone watching Silicon Valley companies lately knows that every disruptive breakthrough that redefines a market can turn around and disrupt their own growth if no one is paying attention.

Uber’s absentee board for much of Kalanick’s tenure is one example. The litany of privacy concerns and questions now plaguing Facebook is another.

Indeed, the things that make tech entrepreneurs great at disrupting industries can also plant legal landmines if no one on the inside is watching their back.

By the time we read about these stories in the news, it usually feels like someone inside should have seen it coming and done something – and that means either no one did (which is scary), or someone did and didn’t do anything about it (which is scarier).

Here’s what boards should be paying attention to for disruptive companies.

1.    The Charisma Trap 

All too often, charismatic founders ride on charm and chutzpah. That plays great in the media, but not so great in the world of governance. It’s the board’s responsibility to make sure that the glad-handing and bluster that plays well with the camera is backed up by legally sound paperwork and best practices. Founders aren’t supposed to know all of that stuff – the board is. And it’s the board’s responsibility to speak up, not get swept up. Uber could have saved itself a lot of bad press and a year of backsliding if they had taken action early on Kalanick, or even seen it coming and stepped in long before it became an issue in the media.

2.    Pushing the Envelope Too Far

Facebook is the current poster-child for this, but they are certainly not the only one. Have they finally pushed the privacy envelope too far to keep growing and save face? We’ll see. What we do know is that they repeatedly get in trouble for not putting the privacy of their users first. That’s the kind of thing the board should be pushing for – and it falls squarely in the lap of the modern general counsel.

3.    Skipping Stakeholders 

Stick around the Concinnity blog long enough and you’ll hear us talk about how important it is to mind the stakeholder gap. A disregard for stakeholders is an abdication of the basic responsibilities of a board. Every Board of Directors has a responsibility to identify who all of the stakeholders are in the organization and make sure that their interests are taken into account when decisions are made. With disruptive companies, it can be easy to ignore one or more sets of stakeholders in the name of speed and progress. Don’t. Executives, employees, customers, and suppliers all deserve a voice. It’s the board’s responsibility to give them one, and make sure the company leadership is listening.

4.    Not Preparing Culture to Grow

Startups have a reputation for emphasizing fun, flexible work cultures. That is great for internal team morale and cohesion, but it cannot come at the expense of planning for the structural and systematic requirements of growth. If a company succeeds, growth follows. And with that growth comes a larger staff and a team that will rapidly grow beyond the initial group of 10 or 12 employees. When the company hits 100, things will change a lot. When they hit 1,000, they’ll have changed again. The board can play an important role in emphasizing that the internal culture needs to adapt along the way, not ignore what’s happening and hope for the best.

5.    Letting Legal Lag

Growth will also mean governance realities and challenges most startup founders don’t even know exist. People start disruptive companies because they dream of making a difference, not because they dream of filing paperwork or dealing with SOX regulations. It’s not the job of executives to learn all that stuff -- It’s the board that needs to sound the alarm and help prepare the leadership to do what is necessary so that they can keep leading and growing the company.

Disruption is not doomed to fail.

Disruption can indeed be well-supported and done right.

The key is a strong board full of smart people who know their role and are willing to speak up.

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How The National League of Women Voters and The National Football League Found Concinnity

Not long ago I heard a story at a board colleague’s retirement dinner that made me smile

At the retirement dinner in late 1984 the staffs of both the National League of Women Voters and the National Football League were busy going about their respective businesses. Unbeknownst to them, their worlds were about to collide.

The League was hard at work getting agreement between the campaign staffs of Walter Mondale and Ronald Reagan on the particulars of the fall presidential debates, something which, I understand, is about as easy as negotiating a major trade agreement. At long last the dates were settled and the staff went about the process of notifying the media. Almost immediately the president of the League of Women Voters received a phone call from a senior executive with ABC television.

As it turns out, ABC had the rights to broadcast the Sunday night NFL games that year, and the campaigns and the League had picked a time for one of the debates that conflicted with an already scheduled NFL game.

The ABC executive was in a real pickle, and he let that be known in no uncertain terms. ABC was contractually obligated to the NFL to broadcast the game; violating that contract would have cost the network millions of dollars. But broadcasting in a time slot conflicting with the presidential debates amounted to public relations suicide. He was hoping to convince the League of Women Voters to change dates.

The reality was that the league president was between her own rock and hard place: bringing the Mondale and Reagan campaigns back to the negotiating table would be no easier than renegotiating an NFL broadcasting contract.

So the president of the League of Women Voters had a better idea, much to the shock of ABC. Why not just call the NFL commissioner and talk it over? Undoubtedly a good percentage of the NFL audience wanted to watch the debates and, no doubt, there were plenty of voters who would be torn between the debates and the game, which is to say these two leaders had a number of stakeholders in common.

They needed a skillful, harmonious, and elegant way to piece together the various parts of this shared dilemma. They needed concinnity. And they got it. With the help of the commissioner, the debates were moved up a half an hour and the game was moved back. Everyone gave a little, and everybody won.

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The 10 Most Common Corporate Governance Mistakes

EFFECTIVE CORPORATE GOVERNANCE IS A HALLMARK OF ANY HIGH-PERFORMING BOARD AND EXECUTIVE TEAM.

We believe that governance and leadership are the most important ingredients for high-performing organizations, and of course, governance is half the battle, although often overlooked.

Below are the ten most common corporate governance mistakes we typically see:

1. Failure to clarify roles and responsibilities between the CEO/C-suite and the board.

2. Failure to get the right people around the boardroom table, fully engaged, and doing the right things.

3. Failure to develop a consensus in detail about where you are, where you are going, and how you will get there.

4. Failure to tend carefully to the interests of multiple, diverse stakeholders.

5. Failure to be deliberate about exactly what information the board needs to do its job.

6. Failure to be clear on the board’s responsibility for culture and its role with the CEO in managing and changing it.

7. Failure to get CEO and C-suite compensation right.

8. Failure to understand CEO (and C-suite) need for a coach and the board’s very different role as a boss.

9. Failure to appreciate the inevitability of CEO, C-suite, and boardroom turnover, and inadequate efforts to keep it positive.

10. Failure to actively cultivate wisdom in the boardroom: thinking vs. doing, reflecting vs. reacting, compassion vs. insensitivity and uncaring.

Each of these mistakes has its origins in a failure to be deliberate in pursuing consensus, working together in harmony, and approaching corporate governance through concinnity.

Step one to resolving these issues is certainly awareness, but an important second step is accepting that good governance is a journey, whether you have deep experience or are new to it. Those who do it well seek sustained excellence and appreciate the journey, and by no means adopt an attitude of “been there, done that.” And of course, achieving good governance is a journey you take with other board and executive team members who may or may not share your depth of experience or views.

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