Organisations grapple with numerous legal complexities in the realm of corporate governance, necessitating expert guidance and strategic decision-making. Within this demanding landscape, General Counsels (GCs) have become pivotal in equipping the Board to effectively navigate legal and regulatory challenges. As expectations evolve, GCs are now expected to extend their roles beyond conventional legal responsibilities and assume positions as strategic advisors, commercial enablers, and influential business leaders. This article delves into the primary risks that GCs find concerning, the evolving nature of their skill sets, and explores avenues to further enhance their value within organisations.
Beyond Legal Compliance
In today's business environment, the profound words of the late Ben Heineman, former General Counsel of GE, carry great significance: "The General Counsel should ask not just whether something is legal, but whether it is right." This powerful statement signifies a fundamental shift in perspective, highlighting that the role of the GC extends beyond mere adherence to legal requirements. It entails a responsibility to ensure ethical conduct, safeguard the company's reputation, and contribute to strategic decision-making.
In the global business landscape of today, an organisation's integrity and reputation are of utmost importance. As the custodian of legal and ethical standards, the GC holds a unique position in guiding the board to recognise the significance of acting with integrity. No longer confined to providing legal opinions solely on compliance, the GC now plays an active role in fostering a culture of ethical behaviour and promoting compliance throughout the entire organisation. By fulfilling this role, they actively protect the company's reputation and cultivate trust with stakeholders.
The Power of the Board-GC Partnership
The relationship between the Board and the GC holds immense significance as the GC's advice and guidance are crucial for making sound business decisions. Serving as a trusted advisor, the GC provides support to both the executive leadership and the board in fulfilling their fiduciary responsibilities. The GC always prioritises the best interests of the company and its clients as their guiding principle. It is the responsibility of the GC to establish a direct relationship with the board, independent of the CEO's presence, to ensure transparent communication and foster trust. Board members should feel at ease approaching the GC with inquiries, knowing that confidentiality will be respected and that the GC's loyalty lies with the company. Ultimately, the success of the GC's role is determined by the personal trust built, rather than formal reporting protocols.
The GC and the board share a common objective of safeguarding the organisation's interests, underscoring the importance of establishing a strong partnership. Regular attendance of the GC at board meetings promotes open communication and ensures effective handling of legal matters. By involving the GC in key events and fostering ongoing dialogue, the board can strengthen the relationship and cultivate trust.
Collaboration between the board and the GC is essential as both entities serve as guardians of the organisation. Through open communication, mutual respect, and a shared commitment to the organisation's success, the board and the GC can collaborate to navigate legal complexities, uphold ethical standards, and propel the organisation forward.
While Boards generally express satisfaction with the performance of GCs and their effective fulfilment of responsibilities (with 68% indicating satisfaction), GCs themselves are driven by their pursuit of excellence and constantly strive for improvement in a fast-paced and demanding environment. However, a survey conducted by Clyde & Co reveals that fewer than half of GCs feel they are performing at an exceptional level. This disparity in perception is understandable considering the ever-evolving demands and the ambition of legal professionals to stay ahead of the curve and leave a lasting impact. Against this backdrop, the role and perception of GCs will continue to evolve and develop in the future. GCs need to embrace this dynamic landscape and adapt their skill sets to meet emerging challenges. Some key areas where their skillsets are evolving include:
- Business Acumen: GCs are expected to possess a deep understanding of the organisation's business objectives, industry dynamics, and market trends. This enables them to align legal strategies with business goals and provide strategic advice to the board.
- Risk Management and Mitigation: GCs must have strong risk management skills to identify, assess, and mitigate legal and compliance risks. This involves proactive risk assessment, implementation of robust internal controls, and the development of risk mitigation strategies.
- Collaboration and Communication: Effective collaboration and communication skills are crucial for GCs to work closely with cross-functional teams, external stakeholders, and the board. Clear and concise communication of legal risks and implications is essential for influencing decision-making.
- Technological Aptitude: As technology continues to shape the business landscape, GCs need to embrace legal technology tools and possess a strong understanding of data analytics, contract management platforms, and cybersecurity measures.
By continually developing these skills and embracing emerging challenges, GCs can position themselves as invaluable assets to their organisations and contribute to their long-term success.
Contributor to Long-term Success
The pivotal role of General Counsels (GCs) in empowering the Board should not be underestimated. They provide indispensable legal expertise, ensuring compliance and mitigating risks. By serving as strategic advisors, GCs enable the Board to make well-informed decisions that align with the organisation's objectives. Moreover, they make valuable contributions to enhancing corporate governance practices and effectively managing relationships with stakeholders. Organisations that recognise the immense value of General Counsels as key contributors to board empowerment are better prepared to navigate legal challenges, seize opportunities, and achieve long-term success. Through their expertise and guidance, General Counsels empower the Board to make informed and strategic decisions, upholding legal compliance while fostering a culture of transparency, accountability, and ethical governance. Embracing the collaborative partnership between GCs and the Board significantly enhances an organisation's ability to thrive in the complex and ever-evolving business landscape.
Author: Varun Bhatia, Co-Founder of 3NServe.
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