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.