skills for the 21 century general...

Skills for the 21st Century General Counsel

ACC EXECUTIVE SERIES 2013 REPORT

This report has been published as a joint effort of the Association of Corporate Counsel and the Center for the Study of the Legal Profession at Georgetown University Law Center.

Acknowledgement and AppreciationThe Association of Corporate Counsel (ACC) would like to acknowledge the role of the Center for the Study of the Legal Profession at Georgetown Law Center in preparing this report. We appreciate the work of Georgetown Project Director Lisa Rohrer, along with the efforts of Juliet Aiken, Mitt Regan and Russ Stevenson. In addition, we wish to recognize and thank Fred Krebs, ACC’s former president and a senior fellow at the center, for his many contributions to the development and preparation of this report.

ACC also appreciates the assistance of the National Association of Corporate Directors (NACD) and in particular its Managing Director and Chief Financial Officer, Peter R. Gleason. NACD conducted an online survey that enabled us to capture the perspectives of corporate directors, which greatly enriched the findings and value of this report.

Last but certainly not least, ACC would like to thank all of the general counsel, directors, executive recruiters, business executives, and thought-leaders who contributed their valuable time to be interviewed and/or participate in the focus groups held to support this report. Your experiences and perspectives were invaluable and are greatly appreciated.

©2013AssociationofCorporateCounsel,Allrightsreserved 3 Formoreinformationwww.acc.com/CLO21

CONTENTS

4 ExecutiveSummary

9 MoreThanaLawyer

11 AddingValueasGeneralCounsel:TheThreeBuckets

DirectorandGeneralCounselPerceptionsofValue12

ManagingtheLegalDepartment16

CounselorinChief25

Strategist33

41 SkillSetsfortheGCoftheFuture

45TheGeneralCounselasInnovator

48AppendixA:Methodology

50AppendixB:InterviewGuide

52 AppendixC:SurveyQuestions–GCs/CLOs

55 AppendixD:SurveyQuestions–Directors

57 AppendixE:ComparisonofGCandDirectorResultsonAddingValue

58AppendixF:AdditionalQuotesfromInterviews

PublishedbyACC,theworld’slargestglobalcommunityofin-housecounsel.



ACCEXECUTIVESERIES 4 Skillsforthe21stCenturyGeneralCounsel


EXECUTIVE SUMMARY

Thelastfewyearshaveseenanunprecedentedwaveofchangeanduncertainty

inthecorporatelegalmarket.Whilemuchpresshasfocusedonthechallenges

facedbylawfirms,lessattentionhasbeenpaidtothechangingroleofcorpo-

ratecounsel.Inparticular,generalcounselarenolongersimplylawyers.They

managetightresourcesinacomplexenvironment;theyarethechiefcounselto

thechiefexecutiveofficer(CEO)andtheboardofdirectors(BOD)onawide-

rangingsetofissues,notjustlegalmatters;andtheyincreasinglyplayakeyrole

inshapingstrategy.

Thisstudyexplores thechanging roleof thegeneralcounselbydocumenting

itsevolutionandpredictingtheskillsetsthatwillberequiredforfuturegeneral

counsel tobesuccessful.Central themestothisskillset includetheabilityto

placelegalissuesinalargerbusinesscontext,embraceriskandmakedecisions,

communicatewithbusinesspartners in languagetheycanrelateto,andwork

seamlesslywiththeexecutiveteamandtheboardofdirectorstomakeproduc-

tive decisions about operations and strategy, which has become increasingly

globalinscope.

This report breaks down the value added by general counsel into three

areas:

1. leaderofthelegaldepartment,

2.counselorinchief,and

3.strategist.



EXECUTIVE SUMMARY

Theroleofalawdepartmentchiefoperatingofficertypicallyincludesdrivingpolicy/guidelinesandactionplansinthefollowingareas:

Strategicplanningandplanimplementation;

Financialmanagement;

Keyperformanceindicators(KPIs),dataanalyticsandreporting;

Outsidecounselandvendormanagement;

Businessprocessandprojectmanagement;

Litigationsupport;

Systemsandtechnology;

Knowledgeandrecordsmanagement;

Humanresources,includingtalentrecruitmentanddevelopment/training;

Probonoanddiversityprograms;

Communications(website,portals,newsletters,blogs);and

Departmentretreatsandvendorconferences.

DetailedjobdescriptionscanbefoundintheLawDepartmentExecutiveLeaderssectionofACC’swebsite:

www.acc.com/community/ ldel/index.cfm

Leader of the legal department

Themostimportantjobofthegeneralcounsel/chieflegalofficer(GC/CLO)re-

mainsthatofthechiefprovideroflegaladviceandmanagerofthelegaldepart-

ment.Approximately84percentofGCsreportprovidinglegaladviceandman-

aginglegalmattersforthecompanyasoneofthetopwaystheyprovidevalue

totheirorganizations.Althoughnearlythree-quarters(74percent)ofcorporate

directorsratedthesemoretraditionalfunctionsinthetopthreecontributorsto

value,theyweremorelikelytoseevalueinotheractivities.Directorsweremuch

morelikely,for instance,toviewthecompliancefunctionasasourceofvalue

addedbytheGCs,thantheGCswerethemselves(54percentvs.34percent).

While managing legal expenditures was lower on the list of value-add activi-

ties(approximately10percentofbothdirectorsandGCsratedthisintheirtop

three),moreexperiencedGCsweremuchmore likely to report that theyadd

valuethroughthisactivity(19percentofGCswithmorethan10yearsofexperi-

enceinpriorGCroles).

Aslegaldepartmentscopewithincreasingregulation,complexityandglobaliza-

tion,withoutcorrespondingincreasesinresources,effectivelegaldepartment

managementismoreimportantthanever.Asthesetrendscontinue,futureGCs

willfirstneedtohaveanexcellentunderstandingofthebusiness,anditssources

ofcashflow,riskandstrategicpriorities.Usingthisinformation,GCsmustthen

beabletocreativelyaddressresourceconstraintsbycontinuouslyreevaluating

theway theystaff legalmatters,useoutsidecounselandmanageprocesses.

Theywillneedtobeadeptatmanagingateamoflawyerswhoaresometimes

globallydispersed,eveninsmallercompanies.Asthemanagementneedsofthe

legaldepartmentincrease,wepredictmoresplittingoftheGCrole,sothatale-

galchiefoperatingofficermaybemorefocusedonmanagementofthedepart-

ment,whiletheGC/CLOfocusesmoreoncounselingandstrategicactivities.

Counselor in Chief

ThesecondkeyareawhereGCsprovidevaluetotheirorganizations is through

counseling the CEO and the board of directors. Approximately half of the GCs

anddirectorscitedcounselingtheCEOasoneofthetopthreevalue-driversthat

generalcounselprovide.AlthoughfewerGCs(20percent)citedcounselingthe

boardofdirectorsasatopsourceoftheirvalue,amuchhigherpercentageofboard

members(38percent)viewthisactivityasasignificantsourceofGCvalue,sug-

gestingthatmanyGCsdonotfullyappreciatethepositiveimpactoftheircontribu-

tionstotheirorganization’sboard.


The counseling role goes beyond simply providing legal counsel; the GC also

serves as a trusted advisor to the CEO and the board. GCs must perform a

delicatebalancingactbetweenbeingtrustedandactivemembersoftheman-

agement team (i.e., having a “seat at the table”) and maintaining their inde-

pendence.Toserveinthisrole,futureGCswillneedtopossessthemanagerial

couragetosay“no,”evenwhenitisunpopular.Todothiseffectively,theywill

needtohaveexcellentcommunicationskillsandemotional intelligencetoen-

suretheyareconstructiveintheirassessmentofriskandrewardsinabusiness

context.Theyalsomustbuildcredibilityandrespectwiththeirexecutivepeers,

whichisinfluencedbythedegreetowhichtheydemonstratethethirdessential

skill—beingastrategist.

Strategist

Perhapsthemoststrikingfindingofthisstudyisthegrowingimportanceofthe

GCroleasastrategicthinker.Lookingaheadfiveto10yearsfromnow,bothGCs

andcorporatedirectorsviewstrategicinputasbecomingalargersourceofadded

valueintheroleofgeneralcounsel.However,thereisadisconnectbetweenGCs

anddirectorswhenitcomestotheGC’scontributionofstrategicinput:GCsare

muchmorelikelythandirectorstoratetheGC’sroleinprovidingstrategicinput

intobusinessdecisionsasbeinginthetopthreesourcesofaddedvalue,bothnow

andinthefuture(seeFigure1).Thisdifferenceinopinionmaybeespeciallyimpor-

tantgivenadistinctiondirectorsmakewhenevaluatingtheperformanceoftheir

GCs.Accordingtodirectors,thehighestperformingGCsaddvaluebycontribut-

ingstrategicadvice.

With strategic input increasing in prominence and necessity, future general

counselwouldbewisetodevelopstrategic-thinkingskills.Todothis,however,

theyneedtobecomfortablewithriskandhelpingtheirbusinesscolleaguesde-

cide which risks arereasonable and which are not. And yet, GCs cannot just

focusonrisksandconstraints,astheyalsoneedtodefineandembraceopportu-

nities.Theyparticipateinconversationsaboutstrategicchoices,bothaslawyersand

asgeneralmanagerswhoaretrainedinthelaw.

Importantskillsthatfuturegeneralcounselwillneedtodeveloptobecomeef-

fectivestrategistsincludeabroadworldview,anabilitytonetworkandgener-

ateideaswithpeoplefromdiverseperspectives,andtheabilitytofocusonthe

longer-termimpactofdecisions.

Asgeneralcounselmovefrombeingtraditionallegaladvisorstocorporatestrat-

egists, they increasingly play a more meaningful role in executive and board-

EXECUTIVE SUMMARY


FIGURE 1

GCs More Likely than Directors to Rank Strategic Input as Top Three Value-Driver

GCs/CLOs Now

62% 71%

27% 37%

5-10 Years in the futureDirectors Now

GCs/CLOs Now 5-10 Years in the futureDirectors Now

62% 71%

27% 37%

EXECUTIVE SUMMARY


roomconversations.Indoingso,futuregeneralcounselmayhelptheirorgani-

zationsadapttofaster-movingenvironmentsbyusingtheirmediationskillsand

insightacrossthebusinesstobringdiverseperspectivestogethertohelpsolve

challenging business problems. When combined with general counsel’s more

traditionalfocusonrisk,GCsintheroleofintegratorcanalsohelpdriveorga-

nizational innovationandrenewal. IntegratorGCscanbrokerdisparatepieces

ofinformationacrossorganizationalsilos,andthenassisttheexecutiveteamin

settingupaculturewheremeasuredriskinthepursuitofnewideasisencour-

agedandnurtured.

In the followingpages,weexplainourfindingsanddetail theevolutionof the

generalcounselrolefromlegaladvisortocounselortostrategist.Futuregenera-

tionsofgeneralcounselwillfindajobthatisbroad-ranging,impactful,innova-

tiveandincreasinglyglobalinscope—arewardingprospectforthoseprepared

tomeetitsdiversechallenges.

TheGCrolehasevolvedsignificantlyinthepastfewdecades.Asthebusiness

environmenthasbecomemore regulatedandglobal, thegeneralcounselhas

becomeamoreintegralmemberoftheexecutiveteam.Thisresearchanalyzes

theongoingevolutionofthegeneralcounselrole.Inparticular,itseeksto:

• capturethecurrentstateoftheroleofthegeneralcounsel;

• understandhowandwheretheroleappearstobeevolving;and

• identifytheskillsandcompetenciesthatwillberequiredforgeneralcoun-

seltobesuccessfulinthefuture.

Severalsourcesofdatawereusedtopreparethisreport:

1. twenty-eight interviews with current and former general counsel, board

members, CEOs, legal futurists and executive recruiters from around the

globe,

2. asurveyof78membersoftheNationalAssociationofCorporateDirectors

(NACD),and

3. asurveyof689generalcounselandchieflegalofficerswhoaremembersof

theAssociationofCorporateCounsel(ACC).(SeeAppendixAfordetailson

themethodology.)

EXECUTIVE SUMMARY


Traditionally,generalcounsel focusedprimarilyonpracticing lawwithina

corporate environment. Today, and in the future, a general counsel must

offer much more than legal acumen. Our research shows that being a

successfullawdepartmentleaderrequiresamoreexpansivenotionofthe

conceptoflawyering.Thisextendedviewencompassesnotjustlegaladvice,

but also counseling and strategic input. Witness the following reflections

fromparticipantsinthisstudy:

From a current general counsel with 11 years in the GC role:I think the biggest surprise to me was the extent to which technical legal expertise is really not that important. … I think you have to expect that your general counsel is going to be a very good lawyer, but there are a lot of people who are very, very good lawyers but, in my opinion, wouldn’t make great general counsel. That’s the base level, and I think that you should be able to take that for granted. The things that make you a great general counsel have very little to do with technical legal expertise.

From an executive recruiter specializing in general counsel searches:I can’t tell you how many times the first words out of the CEO’s mouth are: “I need a business partner.” Sometimes, that’s code for: “I currently have a GC who may be a good lawyer, but he or she is not astute regarding the business issues that our business is facing.” That comes up constantly. They don’t want someone who has got an ivory tower mentality, and a lot of lawyers do.

MORE THAN A LAWYER


MORE THAN A LAWYER

From a former general counsel:Everyone at the top wears multiple hats. You need to deeply understand the business and where it is headed, so your GC hat doesn’t go out the window, but you simply put on more hats. Many of the business people do as well. You want them to wear a compliance hat and a risk hat, for example, in addition to a business hat. So you become much more integrated into that world, but it definitely requires more training and more understanding of the business.

From a general counsel and outside director:It’s hard to say what is discretely a legal issue and what isn’t. I think that is the nature of the beast these days. The things that are purely legal are purely legal, and those are obviously important. But it’s more at the margins where the general counsel has the most value, at least from a board perspective.

The expanding role of the general counsel implies that the GC skill set

needstobemultidisciplinaryandmuchbroaderthansimplyunderstand-

ingthelaw.Forexample,generalcounselareaboveall—likethetitleim-

plies—generalists,muchlikeotherseniorexecutives.Asgeneralists,they

touchallareasofthelaw:employment,contracts,M&A,litigation,etc.But,

successfulgeneralcounselalsoneedtotakeabroadviewoftheexternal

environment,analyzetrends,andusethatunderstandingtohelptheexecu-

tiveteam“seearoundthecorners,”contributetostrategy,andbeproac-

tiveaboutaddressingpotentiallegalandregulatoryissues.Iftheywishto

achievetheirfullpotential,generalcounselmustcontributetothebusiness

morebroadlythanstrictlyrespondingtospecificlegalneeds.

Atthesametime,asregulatoryregimesbecomemorecomplexandbusi-

nessbecomesmoreglobal,themanagementofthelegalfunctionbecomes

increasinglychallenging.GCsnotonlyhavetobeadeptatmanagingbud-

getsandfiguringoutwheretoinvestin-houseandwheretooutsource,but

theyalsohavetodevelopateamofpeopletosupportthemintheirincreas-

inglycomplexrole.ManyGCsarealsoexpectedtodeveloptheirpotential

successors.Thismeanstheyneedtoconstantlythinkaboutthecareerpro-

gressionofmorejuniorlawyersandseniorcounseltodeterminewhohas

thecapabilitiestostepintothetoproleoneday.Whiledoingso,theyalso

mustdeveloprelationshipswithkeybusinessleaders,thechiefexecutive

teamandtheboardofdirectors,andexternalstakeholders,suchasinves-

torsandregulators.

Thisreportexploresthedevelopmentofthegeneralcounselrole.Notonly

does this evolution to “more than a lawyer” have important implications

fordevelopingfuturegeneralcounsel, italsoimpliesanewwayforother

executivestoleveragetheskillsandcapabilitiesofthegeneralcounselrole

withinalargerframework.


Generalcounselfulfillmanyresponsibilitiesandtasksthataddvalue1toor-

ganizations.Ourresearchsuggeststhreebucketsofactivitieswheregeneral

counselcontributetotheirorganizations:

1. leaderofthelegaldepartment,

2. counselorinchief,and

3. strategist.

CEOsandboardsareincreasinglyexpectinggeneralcounseltoprovide

sophisticatedcontributionsinallthreeareas.Todothiseffectively,the

generalcounselofthefuturewillneedtonurtureadiversesetofskillsand

capabilities.Thefollowingpagesdetailthedevelopmentofthesethree

bucketsandexplainthewaysinwhichfuturegeneralcounselcanmeetthe

highexpectationsthattheroleincreasinglydemands.

ADDING VALUE AS GENERAL COUNSEL: THE THREE BUCKETS

1 “Addingvalue”referstothewaysinwhichGCsbenefittheorganizationasawholeintheeyesofstakeholders,suchasseniormanagement,directors,shareholdersandinvestors,employeesandexternalconstituents.


Providing legal advice/Managing legal matters for the company

Counseling the CEO

73% 84%

54%34%

44%

31%

50%

26%

38%20%

12%10%

27%

Proactively addressing legal and regulatory trends that present risks for the company

Providing input into strategic business decisions

Ensuring company is in compliance with relevant regulations

Counseling the board of directors

Managing legal expenditures

62%

GCs/CLOsDirectors

Providing legal advice/Managing legal matters for the company

Counseling the CEO

73%84%

54%34%

44%

31%

50%

26%

38%20%

12%10%

27%

Proactively addressing legal and regulatory trends that present risks for the company

Providing input into strategic business decisions

Ensuring company is in compliance with relevant regulations

Counseling the board of directors


62%

GCs/CLOsDirectorsFIGURE 2

Adding Value: A Comparison of GC and Director

Perceptions

Director and General Counsel Perceptions of Value

ThesurveyaskedcurrentGCsandcorporatedirectorstorankthe11ways

GCsaddvaluetotheorganizationtoday,andhowtheythinkGCswillpro-

videvalueoverthenextfiveto10years(seeAppendicesCandD).Figure

2showsthemosttoleastfrequentwaysthatGCsprovidevaluefromthe

perspectiveofGCsandcorporatedirectors(seeAppendixEforfullresults).

While generally similar in terms of overall trends, director and general

counselperceptionsabouthowGCsaddvaluedifferedinthreeimportantways:

Distinction #1: Directors place less value on managing legal needs.

BothdirectorsandGCsweremostlikelytorankattendingtothelegalneeds

ofthecompanyasoneofthetopthreewaysGCsprovidevalue.However,

directors appear tovalue this contribution less than the GCs themselves,

andweresignificantlylesslikelytorankthisactivityintheircurrenttopthree.

Lookingforward,GCsweresignificantlylesslikelytopredictthisactivitywill

beamongthetopwaystheywilladdvalueinfiveto10years(seeFigure3).

ADDING VALUE AS GENERAL COUNSEL


Distinction #2: Directors place higher value on compliance and counseling the board.

Corporatedirectorsplacedgreatervalueonboththecomplianceandcoun-

selingtheboardrolesthandidGCs.Withrecentlegislationandworldwide

examples of regulators holding boards of directors more accountable for

misdeedsintheircompanies,itseemsunderstandablethattheywouldplace

aparticularemphasisontheseroles.ThelowerrankingthatGCsassigned

tocompliancemayreflectthefactthatsomecompanieshaveseparatedthe

compliancefunctionfromthelegaldepartment.However,theseresultssug-

gesttheremaybeatendencyinpracticetoregardGCsasaccountablefor

complianceevenwhentheyarenotformallyresponsibleforit.

Distinction #3: Directors give lower marks on value of GC strategic advice.

GCsanddirectorsdifferedthemostintheirviewsonthequestionofprovid-

ingstrategic input intobusinessdecisions.MoreGCsperceivedthat they

addvalue(nowand,astheyanticipate,inthefuture)throughstrategicinput

thandidthedirectors.Ontheotherhand,bothGCsanddirectorsexpect

thattheskillofprovidingstrategicinputwill increaseinimportanceinthe

future,andthisviewwasheldparticularlyamongGCs(seeFigure4).This

finding isconsistentwith recentACCresearch indicating thatGCswould

liketospendmoretimeonstrategy.2


FIGURE 3

Identifying GC Management of the Legal Department as a Top Three Value-Driver, Now and in the Future


73%63%


84%68%

73%63%

84%68%

2 ACC’s Chief Legal Officer 2013 Survey.



Ourinterviewssuggestedseveralexplanationsforthisdifferenceinopinion

betweendirectorsandGCs.Manystrategicdiscussionshappenoutsideof

boardmeetings.GCsoftenplaykeyrolesinone-on-onemeetingswiththe

CEOorotherbusiness leadersand inmanagementteammeetingswhere

directorsarenotpresent.Thus,theboardmaynotrecognizetheGC’scon-

tributions as often. Because the GC’s strategic role traditionally has been

limited, directors may not seek out the opinions of the GC on issues of

strategicdirection.Indeed,someintervieweeswithexperienceinbothGC

andboardmemberrolesdescribedthechallengesGCsfaceinovercoming

other directors’ more traditional perception of the GC role. Finally, direc-

torsandGCsmayhavedifferentviewsofwhatismeantbystrategicinput.

GCssometimesgiveexamplesofstrategic inputasbeingcentered in the

legaldepartment,whiledirectorsviewstrategymorebroadly.Thelargegap

betweenthetwomayexplainincongruentperceptionsregardingtheGC’s

contributionstostrategy.Asdiscussedlaterinthisreport,thisgapcreates

challengesandopportunitiesforGCsastheyseektofurtherenhancetheir

rolesonmanagementteams.

Inthesurvey,corporatedirectorswereaskedtoevaluatetheperformance

ofthecorporation’scurrentGC.FortunatelyfortheGCs,baseduponafive-

pointscaleof1(“notwellatall”)to5(“verywell”),everydirectorreported

thathisorherGCranked“somewhatwell”(a4onourfive-pointscale)or

better.Table1comparesthetopthreevalue-driversforGCsranked“some-

whatwell”withthoseranked“verywell”todetermineifperformanceper-

ceptions were linked to the ways GCs were adding value. The ways that

veryhighlyperformingGCsaddvalueareespeciallynoteworthy.

Top Three Value-Drivers, Now and 5-10 Years from Now

GC Performance Rating

Very WellSomewhat

Well

LEADER OF THE LEGAL DEPARTMENT

Providinglegaladvice/Managinglegalmattersforthecompany

69% 84%

Ensuringthecompanyisincompliancewithrelevantregulations

52% 63%

Managinglegalexpenditures 7% 21%

COUNSELOR IN CHIEF

CounselingtheCEO 47% 32%

Counselingtheboardofdirectors 43% 26%

STRATEGIST

Proactivelyaddressinglegalandregulatorytrendsthatpresentrisksforthecompany

29% 37%

Providinginputintostrategicbusinessdecisions3 29% 21%

FIGURE 4

Identifying Strategic Input

as Top Three Value Driver,

Now and in the Future


GCs/CLOs Now

62% 71%

27% 37%


62% 71%

27% 37%



Ourinterviewssuggestedseveralexplanationsforthisdifferenceinopinion

betweendirectorsandGCs.Manystrategicdiscussionshappenoutsideof

boardmeetings.GCsoftenplaykeyrolesinone-on-onemeetingswiththe

CEOorotherbusiness leadersand inmanagementteammeetingswhere

directorsarenotpresent.Thus,theboardmaynotrecognizetheGC’scon-

tributions as often. Because the GC’s strategic role traditionally has been

limited, directors may not seek out the opinions of the GC on issues of

strategicdirection.Indeed,someintervieweeswithexperienceinbothGC

andboardmemberrolesdescribedthechallengesGCsfaceinovercoming

other directors’ more traditional perception of the GC role. Finally, direc-

torsandGCsmayhavedifferentviewsofwhatismeantbystrategicinput.

GCssometimesgiveexamplesofstrategic inputasbeingcentered in the

legaldepartment,whiledirectorsviewstrategymorebroadly.Thelargegap

betweenthetwomayexplainincongruentperceptionsregardingtheGC’s

contributionstostrategy.Asdiscussedlaterinthisreport,thisgapcreates

challengesandopportunitiesforGCsastheyseektofurtherenhancetheir

rolesonmanagementteams.

Inthesurvey,corporatedirectorswereaskedtoevaluatetheperformance

ofthecorporation’scurrentGC.FortunatelyfortheGCs,baseduponafive-

pointscaleof1(“notwellatall”)to5(“verywell”),everydirectorreported

thathisorherGCranked“somewhatwell”(a4onourfive-pointscale)or

better.Table1comparesthetopthreevalue-driversforGCsranked“some-

whatwell”withthoseranked“verywell”todetermineifperformanceper-

ceptions were linked to the ways GCs were adding value. The ways that

veryhighlyperformingGCsaddvalueareespeciallynoteworthy.

Top Three Value-Drivers, Now and 5-10 Years from Now

GC Performance Rating

Very WellSomewhat

Well



69% 84%


52% 63%

Managinglegalexpenditures 7% 21%

COUNSELOR IN CHIEF

CounselingtheCEO 47% 32%

Counselingtheboardofdirectors 43% 26%

STRATEGIST


29% 37%

Providinginputintostrategicbusinessdecisions3 29% 21%

Thehigh-performingGCsdifferedsignificantlyfromtheotherGCsregard-

ingtheirstrategicadvice.GCswhoseperformancewasratedmorehighly

weremorelikelytoaddvaluethroughstrategicinputcontributions.Other

distinctionsalsooffermeaningfulinsightintopotentialtrendsandopportu-

nitiesforGCstodelivergreatervalue.Forexample,GCsperceivedbydirec-

torsasperforming“somewhatwell”weremorelikelytocontributevalueby

managingthelegalneedsofthecompany,andlesslikelytocontributevalue

throughcounselingtheCEOandboardofdirectors.Takentogether,these

findingssuggestthatdirectorsviewmorestrategicandcounseling-oriented

generalcounselashigherperformers.Thus,thispresentsanopportunityfor

GCstoraisetheperceptionofthevaluetheyaddbyfocusinglessonbeing

managersofthelegal/compliancefunction,andmoreontheirrolesascoun-

selorinchiefandbusinessstrategist.ForGCsinapositiontodelegatesome

ofthemanagerialandoperationalaspectsoftherole,theemergingposition

oflegaloperationsmanagermayofferanavenuefortheGCtorefocusmore

timeandattentiononthestrategistrole(seeTable1above).

TABLE 1

The Value-Drivers: Directors’ Perception of GC Performance and Importance Against Key Functions

3 Thisdifferenceisstatisticallysignificant


Managing the Legal Department

Bothgeneralcounselanddirectorsalikeseeprovidinglegaladvice(i.e.,ex-

plainingwhatthelawrequires,permitsorprohibits)asoneofthetopways

thatGCsandCLOscontributevaluetotheirorganizations.Whatisperhaps

moresurprising, isthatbothgroupssawitbecominglessimportantinthe

future.Why?Forone thing,as the rolehasevolved,expectations forGCs

haverisen.Manyviewthelegalmanagementresponsibilityasagiven,and

overtime,generalcounselhavebeenabletosuccessfullydelegatemanyof

thelegal/compliancemanagerialrolestoothersinthelawdepartment.Fur-

thermore, thegrowingcomplexityof theenvironment inwhichcompanies

operate and the ever-increasing challenges posed by new legislation and

regulationshaveraisedthestakesforCEOsandboardsofdirectors,thereby

increasing the importance of the role of counselor in chief. In addition, as

companiesfacestifferglobalcompetition,theabilityofanexecutivetooffer

strategicinputismoreimportant,andtheresultisthesimultaneousexpan-

sionoftheroleofthegeneralcounselasastrategist.

Particularlyforglobalcompaniesorcompaniesselling intomultiple juris-

dictions, the twin challenges of regulation and compliance are growing.

These challenges are universally shared by general counsel worldwide;

however,theyarefeltevenmoreacutelyoutsidetheUnitedStates.GCs/

CLOsbasedinnationsotherthantheUnitedStatesweresignificantlymore

likely tosuggest that theyaddvaluethroughcompliancethanweretheir

US-basedGC/CLOcounterparts(seeFigure5).

US-based GCs only All GCs except US-based

Geographic Origin of Company

33%44%

Geographic Origin of Company

FIGURE 5

Compliance as Top Three

Value-Driver: Views of GCs



As the general counsel of a large global telecommunications company observed:Good companies, of course, intend to and actually do comply with the law, but even when you do that, there are an awful lot of gray areas. … With a global company, you’re not playing one chess game; you’re playing several at the same time. It is entirely possible for you to be wholly compliant with the laws of your country, but maybe run afoul of laws in other places doing exactly the same thing that might even be best practice in your country. So the complexity of doing business lawfully is just off the scale, and as a result, lawyers aren’t just there to document deals. Lawyers are there to help companies identify what is the most rational way of going through the world in a compliant way that allows you to run lawful and reasonable risks and still have a hope of making a profit at the end of it. We operate in 170 countries, and some of those countries are like the United States — they are federal systems with their own states and/or provinces that all have different rules. Are we going to have 170 regulatory lawyers? No, it’s neither possible nor economical — we couldn’t afford to do it.

Theworld iscomplex—andnot justbyvirtueof regulatoryregimes.As

severalgeneralcounselemphasized,thegrowingcircleofstakeholderscre-

atesadditionallayersofcomplexity.“You’vegotanever-expandinggroup

ofconstituentsandparties interested intheenterprise,whethertheyare

activists,ornon-governmentorganizationsorconsumergroups,”explained

onegeneralcounselwhoalsoservesasaboardmemberofseveralpublicly-

tradedcompanies.“Very,veryoften,thoseallhaveatleastsometangential

connectiontothefunctionofthegeneralcounsel.”

Withrespecttoprovidinglegaladvice,whichstillremainsanimportantpart

ofthejob,generalcounselneedtobeabletoframetheiranswersnotstrictly

in legal terms,but in termsthatmakesense to theirbusinesscolleagues.

Theabilitytoeffectivelycommunicatewiththeirfellowbusinessexecutives

essentiallystartswithhavingafundamentalunderstandingofthecompa-

ny’sbusiness.“Theyhavetoknowtheirbusinessesabsolutelyintimately,”

observedonegeneralcounselwhoworksintheenergyindustry.“Theydon’t

needtoknowwhatsection240sub1subAoftheTaxCodemeansintimate-

ly,buttheydoneedtoknowhowtheircompanyearns,recordsanddiscloses

revenue,andsoonandsoforth.Youcanhireanybodyforthedetailedtax

lawwork,buthowthatappliestoyourcompanycanonlybedonebyinternal

counsel.”Thesethemesaboutunderstandingthecompany,itsbusinessand

effectivecommunicationechothroughoutthisreport.

Despitewhatmaybeperceivedasadecreasedemphasisonprovidinglegal

advice, the legalskill remains important. “I think it’salwaysbeenthecase

fromaboard’sperspectiveandisstillthecasethat,asadirector,youwantan

outstandinglawyer—someonewiththebackgroundandcapabilitiesinthe



lawthatyoucanrelyon.Thatisstillverymuchthecase,”remarkedageneral

counselwhoalsoservesasapubliccompanyboardmember.

He continued:But it is increasingly important that the general counsel have the skills to navigate beyond just the legal issues — to have many more of the softer skills necessary to negotiate matters where the rules are not always clear, where the outcomes are not always neat, and where the impact on the overall organization is widespread and profound.

ManycurrentandformerGCsreportthatbecausesuchasmallpercentage

oftheirjobsinvolvedgivinglegaladvice,otheraspectsofthejob(i.e.,stra-

tegicthinking,managingpeople,etc.)toweredinimportanceoverbeingthe

“best”lawyeraround.

According to one GC, a self-described “B-minus” lawyer of a major technology company:Once in a while at a board meeting, a legal issue comes up, and I am able to jump on it and I feel really great, like that is why I went to law school. But 99 percent of the time, I don’t really use my legal skills at all, other than to evaluate the work that people are performing on my team.


ThesurveydatashowthatbothGCsandboardmembersratedthemanage-

mentoflegalexpendituresrelativelylowerinimportanceinwaysthatGCs

addvalue.GivenmuchoftheconversationatACCandelsewhereaboutthe

importanceofthistask,thisfindingseemssomewhatsurprising.AGCwho

consistentlyoverspendshisbudgetandrepeatedlyfailstoaccuratelypredict

legalcostscertainlywilllosecredibility(ifnotmore)withintheorganization.

However,lookingcomparativelyattheotherskillsbeingrankedintermsof

addedvalue,managingthelegalbudgetwasoflesserrelativeimportance.

Interviewswithgeneralcounselandboardmemberssuggestthatthisas-

pectofbeingageneralcounsel,too,hasfallenintothecategoryof“table

stakes,”andisataken-for-grantedcharacteristicofthejob.

As one executive recruiter observed:More recently, what we hear from almost every single search that we undertake for a GC now is there is less focus on managing costs and managing the department. I think those are viewed as givens, and now, the discussion is commercial orientation — so, does this person have an innate interest, an innate capacity to talk about the business and be additive at the senior executive table beyond just legal issues?



Despite its ranking in thesurvey, several intervieweesspokepassionately

aboutthechallengeofdoingmoreworkwithfewerresourcesintheirlegal

departments.

“Alloftheregulatoryactivityandalltheotherthingsthatyouareexpectedto

doandbecoveringandhandlingareresourceintensive—whetherit’sinternal

timeorwhetherit’sexternallawfirmtime,”explainedonegeneralcounsel.

He continued:There is a very rapidly expanding universe of things that you are trying to address. So, there is this increasing resource need, but nobody is sitting there saying: “You should get those resources, let me give them to you. Here — have more money and more people.” That’s not happening. … So, the question becomes: How are you going to accomplish what needs to be done in the face of resources that aren’t going to grow as rapidly as you may feel they need to in order to address all these things?

One consequence of doing more with less is that GCs must have strong

fiscalandbudgetmanagementskills,particularlyincaseswherethelegal

budgetcanhaveasignificanteffectonthecompany’sbottom-lineperfor-

mance.Inmanagingthebudget,generalcounselalsoneedtobeconscious

ofthe“makeorbuy”decisionbyallocatingresourcesforin-houseskillde-

velopment, where appropriate, and using outside counsel or other legal

serviceprovidersjudiciously.

“Youareamanagerofaverysignificantbudgetatmostfirms,”explainedone

generalcounselofamajordivisionofalargefinancialservicescorporation.

Ours is astounding, and as such, you are part chief procurement officer for legal services. So, there are many decisions to be made managing around budgets — about what should be made and what should be bought, what should be invested in and what is something that is more of a one-and-done. So, I take that piece very seriously and I think that is partly how you gain credibility and part of what differentiates a general counsel from a partner in a law firm. You really are a partner to a business, and you are running a very significant profit and loss, even if not traditionally thought of as such.

Thereareopportunitiestomaximizetheefficiencyof in-houseresources

byoptimizingtheratioofattorneystootherstaffpositions.Alawyerdoes

not need to perform every function in a law department, and the gener-

al counsel must become adept at understanding the essential functions.

“Withinthein-housegroup,youcanbemoreefficientbylookingatthemix

andmatchbetweenlawyers,paralegalsandothernon-lawyerprofession-

als,”observedanotherfinancialservicesindustrygeneralcounsel.



AnotherthemethatcameuprepeatedlyduringtheinterviewsisthatGCs

whoarechallengedtodomorewithlessandmanageabudgetneedtobe

abletoprioritize.“Thebetteryourlegaldepartmentbecomes,themoreit

isaskedtodobyitsinternalservicerecipients,muchofwhichisnon-legal,”

observed a general counsel of a large, publicly-held company headquar-

teredinCanada.Butitmaynotalwaysbeapriorityforthein-housecounsel

toperformthatjob.Movingawayfromthetraditionallegalrolesprovokesa

certaindegreeoftensionastheGCalignsandprioritizesresourcesaccord-

ingtotheirhighestandbestusefortheorganization.

According to one general counsel:I am always preaching internally that our only client is the corporation. So when an internal service recipient asks you to do something, you actually need to apply your own business judgment to it and say: “Do I really need to do this? Is this more important than that other job that I have been asked to do?” If not, let’s go back and work on it [later] or let’s figure out another way to get it done so that I can be used more valuably.

Akeyaspectofprioritysetting isriskassessment.“Wearereallyhaving

tothinkcompletelydifferentlyaboutwhatitiswedeliverintermsofwork

productandhowwedeliverit,”remarkedageneralcounselworkinginthe

insuranceindustry.

She continued:I’m having a lot of conversations here around demand management. So, typical “Risk Management 101” says it’s better to get the lawyers involved early on, have them at the table from the beginning and [allow] anybody who has a question ... to ask it. But I could never hire enough lawyers to do that for 32,000 employees. So we’re talking about whether there is a more effective way in a world of limited resources, and how we manage the demand for our services in a way that best serves the company and best addresses the risks that we are asked to address. It is intellectually very interesting and, from time to time, personally pretty stressful.

Eventhoughmanagingthebudgetistablestakes,GCswithmoreyearsin

therolefeeltheyaddmorevaluethroughthemanagementoflegalexpendi-

tures.Thiscouldbebecauseexperienceandexposuretodifferentbudget-

aryandindustryconditions,andtobusinessprocesstools,enablethemto

bemoreadeptatfindingcreativesolutions tobudgetaryconstraints (see

Figure6).



Developing and leading professionals in a global environment

Many general counsel spoke about the critical importance of having the

rightpeople in the rightplaceswhendealingwithcomplexmulti-jurisdic-

tional legalenvironments.Asoneexecutive recruiter,directorand former

GCexplained,“Whenyouareageneralcounselofasizeablelegaldepart-

ment—andbysizeable,Imeananythingabovefiveorsixlawyers—much

ofyoureffectivenessisgoingtodependuponyourabilitytoleadyourteam.”

Effective legal team management is particularly critical when law-

yers are located in far-flung places across the globe. “You need to be

able to find the right people to operate in various regions, particularly

ones with known corruption problems,” described one board member

of several publicly held global companies. “You need to be able to iden-

tifysomeonewho isboth localenough tounderstand localpracticesand

global enough to understand what the legal requirements and ethical

requirementsare.”

OnceaGChasidentifiedthesepeople,leadingthemasanintegratedteam

becomesanotherchallenge.Whenaskedwhatcausesgeneralcounselto

fail,oneexecutiverecruiterdescribedthefollowingscenario:

I’ve seen GCs fail when they aren’t focused on what the team is up to, whether they are motivated and how the work is delegated. It’s not easy, especially if you are a general counsel of a legal team that is dispersed globally, to make sure they are sufficiently motivated and bought in to working toward the same cause.


FIGURE 6

More Experienced GCs Place Higher Value on Managing Legal Expenditures

Time Spent in Prior GC Roles

No prior experience

Less than 5 years

5-10 years

More than 10 years

Time Spent in Prior GC Roles

10%

11%

5%

19%


Clearandsuccinctcommunicationsareakeypartofmanaginggloballydis-

persedteams.“Inamultinationalcorporation, themajorityof thepeople

youworkwitharenotspeakingEnglishasafirstlanguage,andinfact,for

manyofthem,it’sathirdorfourthlanguage,”oneGCreported.“Ifyouare

fullofcomplexidiomsandexpressions,theyarenotgoingtounderstand

whatyouaretalkingabout.”

Many successful general counsel at large multinational companies

have significant work experience outside the nation where their compa-

niesareheadquartered. In fact,globalexperienceandamoreworldwide

perspective is an important trait now and is expected to be increas-

ingly expected for GCs in the future. In addition, the ability to under-

standandappreciateculturalnuancesremainsacriticalpartof leadinga

globalteam.

Motivating and nurturing a team includes making tough decisions when

someone is not working out. “I think you’ve got to be able to build rela-

tionships,butyou’vealsogottobeabletomakesomereallytoughpeople

decisions,”explainedthegeneralcounselofafinancialservicescompany.

Through the course of your career, you are going to potentially hurt a lot of people and maybe significantly impact people’s lives. It’s a tough thing to do, but at the end of the day, if somebody is not performing and you’ve tried to help them perform and they are still not performing, you’ve got to have the fortitude to make those changes. Frankly, you’ve got to deal with them pretty swiftly as compared to wasting a lot of time and causing more disruption in the team.

“When you are a GC, the buck stops with you,” added a former general

counsel.“Youknowyouareresponsibleforsittingdownwiththatmember

ofyourdepartmentandsaying, ‘I’msorry.This isn’tworkingout.’”Thus,

toeffectivelymanagea legaldepartment inan increasinglycomplexand

global environment, the general counsel needs to have the right people,

the right processes, excellent communications skills, and the courage to

rehabilitateorreplacenon-performers.



Managing legal needs in smaller departments

Comparingtheresultsofthesurveysandinterviewsrevealsafewkeydis-

tinctionsintheperspectivesofgeneralcounselinsmallerlawdepartments

(seeFigure7).

GCsofsmallerlegaldepartmentsreportedbelievingthattheyprovidemore

valuethroughmanaginglegalservicesthandidGCsinlargerdepartments.

Onereasonforthisdifferencemaybethatsmallerlegaldepartmentshave

less specialized expertise in-house and the GC spends more time doing

hands-onlegalworkthanotheractivities,suchasmanaginglargerstaffsof

peopleandfocusingonprofessionaldevelopment.“WhenIwasatamuch

smallercompany, Iverymuchrolledupmysleeves. Iwasdoingtransac-

tionalwork,Iwasdoingcorporatesecuritieswork,etc.,”recalledoneGC.

“Butwhenyoureachacertainsize,it’smoreofanorganizationalleadership

rolethanitisbeingalawyer.”

Notonlydolawyersinsmallerdepartmentsspendmoretimedoinghands-on

legalwork,theyneedtobeconversantinabroadarrayoflegalareas.

One GC of a small department summed it up this way:When you are in a small law department, you will probably be more of a generalist because you don’t have dedicated securities lawyers, dedicated employment lawyers, etc. So you need to have the ability to move fluidly amongst areas of law, versus your counterpart at [a large company] who only does securities work. Furthermore, when there are fewer people, their roles tend to be a bit more expansive, and lawyers who tend to be sort of affiliated with the senior management team in the first place tend to have more influence and impact in a smaller organization.

Asglobalizationimpactsevensmallcompanies,theroleofinternational

experience and sophistication may be even more important in smaller

departments.

FIGURE 7

Small Department GCs More Likely to Rank Providing Legal Advice as Top Value Driver


2-9 attorneys

10-24 attorneys

Over 24 attorneys

Size of Legal Department

87%

82%

75%

Size of Legal Department


As one executive recruiter observed: International experience is particularly important for companies without a huge legal department. If you have a global footprint, these companies want to find a lawyer who has had extensive international experience because they have to be able to pick up the issue in China or Korea, or Germany or Brazil, and handle it without a huge department.

Managing the legal department: Implications for skill sets of future general counsel

Ourresearchsuggeststhreeimportantskillsetsthatfuturegeneralcounsel

willneedtodeveloptoeffectivelymanagethelegaldepartment.

Thefirstskillsetiscuriosity and a drive to truly understand the organization and

its business beyond simply knowing brands and strategy.Thisinvolvescompre-

hendinghowthecompanymakesitsmoney,whatitscustomerswant,its

strategyanditscorevalues.Accordingtooneformergeneralcounselwho

wentontobecomeCEO:“Alawyershouldunderstandthebusinessaswell

as,orevenbetterthan,theexecutivesordirectorstheyareprovidingadvice

to, so that they can provide options that are beneficial from the point of

viewofthecompany’sstrategicobjectives.”

Thesecondkeyskillset istheability to hire, develop, motivate and retain a

strong legal team. In order to guide the company through an increasingly

complexlegalandregulatoryenvironment,andfaceglobaleconomicchal-

lenges,successfulfutureGCswillneedtobesuperiorleadersanddevelop-

ers of people. As one former GC and CEO remarked, “People who want

topreparethemselves tobeageneralcounselonedayprobablyneedto

lookinthemirrorandanswerthequestion:HowgoodamIatdeveloping

people?”Thisgoesbeyondjust legaltalentandencompassesdeveloping

relationshipsthroughouttheorganization.

He continued:You have to have an eye for talent. You have to have an ability to evaluate people in-house, whether they are lawyers, paralegals or administrative as-sistants. Then, outside the office of the general counsel, you’ve got to be able to look at the people who are out there in the corporate compliance office, in the controller’s office and anybody else in the C-suite support services — and ask yourself: How good are they and what’s my opportunity to interact with those people in a way that helps them be better at their jobs?

The thirdskill set isstrong budget management combined with effective re-

source/project management. FutureGCsmustbestrongfiscallyandmore

creative with how they allocate legal resources, both internally and with

outsidecounselandotherproviders.AuthorandconsultantRichardSuss-

kindadvocatedsomethingsimilarinhisrecentbook,Tomorrow’s Lawyers:



My thinking is that, in the future, for any substantial piece of legal work, it will become common practice to decompose the matter in question into manageable tasks, to identify the most efficient way of sourcing each task, and to adopt several of the alternative approaches in combination. … To achieve this, we may find it useful to apply production-line or manufactur-ing mentality and methodology to the delivery of legal services; using, for example, just-in-time logistics and global supply chain techniques.4

One GC summed up the challenges of managing a legal department by noting: I’m looking for people today that can not only do the lawyering, but think about the work from a portfolio management standpoint — around metrics and statistics, process management, continuous improvement and project management.

Counselor in Chief

Thegeneralcounselalsoaddsvalueas“counselorinchief”andplaysakey

advisoryroleasamemberof theexecutive leadership teamandwith the

boardofdirectors.Whilebothcurrentgeneralcounselandboardmembers

regardthecounselingfunctionasimportant,boardmembersaremorelikely

toranktheirgeneralcounselasperforming“verywell”iftheyalsoindicated

thattheGCaddedvaluebycounselingtheboard.Becausepubliccompanies

receivemoreregulatoryoversightthanprivateones,thecounselingroleof

theGCisparticularlyasourceofaddedvalueinpubliclytradedcompanies

(seeFigure8).

AdvisingtheCEOandboardaresignificantaspectsofageneralcounsel’s

job.“Mostofmytimeisspenttalkingandmeetingandpreparingforissues

thattheseniorexecutivesatmylevelaredealingwith,”relayedonegeneral

counselofamultinationalcompany.

Counseling the CEO in private

Counseling the Board in private

in public

43% 55%

14% 29%


FIGURE 8

Public Company GCs/CLOs More Likely to Rank Counseling as Top Three Value-Driver

4 Pages37-38.


He continued:Whether it’s a strategic issue for the company or whether it’s a litigation is-sue that could have material effect on the company, I can spend a lot of time just doing corporate hand-holding and being the person who somebody can figuratively cry on my shoulder and talk about how bad things are as we try to work through a problem.

Thisaspectoftherolehasbecomemoreimportanttotheboardofdirec-

tors, as recent legislation has made board members more vulnerable to

legalscrutiny.

A CEO of a publicly traded hospitality company described the atmosphere in the boardroom:With Sarbanes-Oxley, Dodd-Frank and other shifts in board culture, board members are left wondering what the world expects them to do. More important, because they may not have the answer to the question by any stretch, they are very concerned about how things might look later if the train comes off the tracks. Were they asking the right questions, and did they have the right processes?

Theboard’srelianceonthegeneralcounseltoadviseitonthevariousis-

suespotentiallyaffectingthecompanyhasraisedtheprofileoftheGCas

counselor.GCswhohavebeenintheroleinmultiplecompaniesaremuch

morelikelytoreporttheyaddvaluethroughcounseling,particularlycoun-

selingtheboard(seeFigure9).GCswhohavebeeninGCrolesacrossa

varietyofsituationsmayhavetherequisitedepthandbreadthofexperi-

encetobeparticularlyusefulinthiscapacity.

First GC Job

50%

57%

19%

17%

31%

1 Prior GC Job 2 or More Prior GC Jobs

Counseling the CEO

Counseling the Board

49%

Counseling the CEO

Counseling the Board

FIGURE 9

More Experienced GCs More Likely to

Rank Counseling as Top Three Value-Driver



Counseling the C-suite and the board

Theroleofcounselorinchiefcantakeonanumberofdifferentmeanings,

but central to this role are well-developed communication skills. The GC

mustserveasaninterpreterofthelegalenvironmenttotheC-suiteandthe

boardofdirectors.

According to one general counsel, commenting on his experience as the board member of a publicly held company:As a director, my experience is that boards look to the general counsel to give them perspective on not just the problems that present themselves or the tasks that are on the table, but also for guidance on things that the board should be thinking about and how particular issues fit into the overall con-text of the business. So, he needs instant support. And then you need to be able to provide that instant support, while at the same time, being one of the few people who is not quite so driven by quarter-by-quarter performance. You can take a medium- to long-term view and horizon scan for where the next set of legal regulations might be coming from. So, as general counsel, you have to have the ability to alternate between very, very quick short-term reaction and medium- to long-term planning.

Generalcounselprovideeffectiveguidancebyidentifyingissuesandhelping

otherseniorleadersthinkthroughthelong-termimplicationsofthoseissues.

“MyCEOisexpectedtobeontopofahugecompany,plushe’sdealingwith

governmentministersandsecurityservicesandheadsofstateoverseason

adailybasis,”relayedonegeneralcounselofamultinationalcompany.

Thegeneralcounsel’sprofessionalethicalindependencealsoputshimor

her inauniquepositiontoadvise theCEO.“Youneedtounderstandthe

roleisnotjustanadvocateorascrivener,butyouaretrulysomebodythat

issupposedtoarticulateareasonedopinionandshowindividualsaproper

waytogoabouttheirbusinesswithoutbeingswampedoroverwhelmedby

theirownblindersandpersonalbaggage,”assertedonegeneralcounsel.

“Peopletendtorationalizewhattheywanttodointhedecisionstheymake,

andthe lawyer’s job isreallytostepoutofthatrationalizationandtryto

applysomecritique.”

Severalintervieweesdescribedtheroleofcounselorinchiefsimplyasbe-

ingagoodlistener.



“Here’s what happens in my life,” recalled one general counsel:The CEO drops in and says: “Take a look at this letter.” It might be from an agency or it might be from a major shareholder investor or bondholder. And he asks me what we should do. And, while you may give advice, of-ten, you are just letting them hold forth. They are telling you what’s on their mind, and it’s almost like being a psychotherapist at times. Sometimes, I’ve been absolutely quiet, and at the end of the few minutes, the CEO says: “You know, that’s helpful. I think I know what we’re going to do. Thanks.”

Deep involvement in many aspects of the decisions being made at the

boardorC-suitelevelwillenableageneralcounseltobeproactiveabout

potentialissuesandtobeamoreeffectivecounselor.“I’montheriskman-

agementcommitteeandthestrategicdevelopmentcommittee,”explained

one general counsel and board member discussing her experience with

bothoftheseroles.

She continued:It doesn’t have a lot to do with my day-to-day job but it keeps me on the front end of things. It’s been a good model here and in the company on whose board I sit, because when the general counsel is in meetings with the CEO on a regular basis, it can be really useful. He can head off things, he can antici-pate better, and he can make a contribution that helps people go in the right direction from the start.

A seat at the table

Ourintervieweesfrequentlydiscussedhavinga“seatatthetable”asnec-

essary to being an effective member of the executive team. Many of the

generalcounselemphasizedworkingwithotherC-suiteexecutivesasakey

aspectoftheirjobs.“You’llnevergetinvitedtositatthetableunlessthey

thinkyouareateamplayer,unlessyoucanparticipateinthebanterassoci-

atedwithdiscussionstheyhaveonaproductlaunch,oraninvestmentdeci-

sionorapotentialacquisition,”explainedonegeneralcounsel.“Ifyouare

theresimplyspeakingasalawyer,talkingaboutriskfromalegalstandpoint

or a regulatory standpoint, you’ll never be part of the group. You have to

startwiththatbusinessacumen.”

Thisgeneralcounselnotedtheimportanceofchemistryand“fit”withthe

executiveteamasanimportantaspectofgeneralcounselselectionandsuc-

cess.Whenaskedwhatcausesgeneralcounseltofail,manyexecutivere-

cruiters,boardmembersandgeneralcounseldiscussed“personality”and

lackoffit.“CEOsnowreallywanttogetalongwiththeirgeneralcounsel,”

observedoneGCandboardmember.“TheywanttofeelliketheirGCison

thesamepageandthattheGCunderstandstheirvisionsforthecompany



andtheyareincorporatingthatinhowtheydotheirjobs.So,ifyou[theCEO]

arebuttingheadswithyourgeneralcounsel,that’sjustnotsustainable.”

EstablishingagoodfitbetweentheCEOandgeneralcounselrequirestrust.

GCswillbe trustedwhen theirpeersbelieve theywill setasidepersonal

preferencesandpoliticstohelpthebusinessmakethebestpossibledeci-

sions.Manypeople interviewed for this research report spokeabout the

importanceofthetrustedrelationshipwiththeCEO,theboardandother

executiveswhocomprisetheleadershipteam.

As one former GC and current board member shared:I think that the general counsel first and foremost needs to be the kind of person who you can see would be a valued partner to the CEO and the CEO’s executive leadership team. And that could take many forms, but just quali-tatively, that is something that is essential. It has to be somebody that every-body, especially the CEO, views as a trusted person [who] they want in the continuing conversation about how this company is run.

OnefactorincreatingastrongrelationshipwiththeCEOboilsdowntoin-

terpersonalskillsandchemistry.“Imakeabigpointofgettingtoknowex-

ecutivesaspeople,”reportedoneGC.“Whenyouknowthematapersonal

level,you’llhavesomeinsightsintothewaythey’llrespondtodifferentis-

sues,wheretheirhotbuttonsare,etc.”Anexecutiverecruiterinterviewed

agreed:“Frankly,justbeingniceandsomeonewhoisengagingisabsolutely

criticalforanygeneralcounsel.”

Preserving independence

Maintainingone’sprofessionalindependenceandrecognizingtheorganiza-

tionastheclient,asopposedtotheCEOorothermembersoftheC-suite,

remains a perennial issue. While general counsel must develop strong,

trustedrelationshipswiththeCEO,GCsshouldalsoguardagainstpotential

lossoftheirindependentjudgment.SomeGCswhohaveworkedundermul-

tipleCEOsstressedtheimportanceofavoidinganassociationwithaCEO

thatistooclose.

As one GC and board member observed:As a board member, it’s important to me that the GC understands that their obligation is to the company and not really to the CEO [who] hires them. So, even if that puts them in an awkward position, they have to be able to say to me as a board member: “You know, I love my CEO, he’s great. I’ve known him for 10 years, but if there’s something that arises that requires me to come to the board and tell them about it, I’m going to come to the board and tell them about it.”



Effectivegeneralcounselperformadelicatebalancingactbetweenbeing

apartoftheexecutiveteamwhileremainingindependentandservingthe

company.

One GC explained:Once you get to the table, you have to be willing to say: “Hold on. I under-stand the compelling business justification or emotional need to do this, but have we thought about this other consequence?” When GCs go bad, it is because they have become so ingrained with the business, they become such strong advocates for the business, that they forget that they are supposed to be counselors as well.

Whenquestionedaboutthechallengesofmanagingthisdynamicbetween

being a team player and maintaining independence, many more experi-

enced general counsel advise to cultivate respect for your judgment and

findaplausiblewaytosay“yes”muchmorethanyousay“no.”

One long-time GC explained the approach she uses with her executive team:I learned the hard way early on in my career that you have to distinguish between being liked and being respected. You try to get the balance between being liked enough to be a valued member of the team so that they like having you there and think you are adding value, while at the same time, respecting you enough so that when you say “no” they understand. Sometimes, you say, “Hey, guys, look: We can do that, but the risk is likely to be Y.” I appreciate this is my company, so I’m all up for taking the risk, but let’s just make sure we’re all holding hands here as to what the consequences are if we’ve got it wrong and what plan B, or C or D would look like in those circumstances.

One intervieweedescribed theneed tooccasionallysay“no”asnecessi-

tating managerial courage. Managerial courage is about the willingness

andabilitytospeakupandrepresenttheorganizationandact in itsbest

interest, even when it feels uncomfortable or may reflect poorly on col-

leagues. While, theoretically, everyone on the management team should

bewillingtotakeastandagainstbehaviorthatmaynotbeinthebestinter-

estsofthecorporation,lawyershaveprofessional(andregulatory)obliga-

tionstodoso.Recently,therehasbeenanincreasedappreciationthatthe

GChasdutiestotheboardthatmayrequiretheexerciseofmanagerialcourage

vis-à-vistheCEO.



One executive recruiter explained:I used to hear more often in searches that CEOs were looking for a sort of consigliore in this GC hire, but I don’t hear that as much. I don’t think it reflects a diminished importance of the role — I think it’s just a recognition that the GC has duties to the board. And even though the CEO is this person’s boss, if the CEO is engaged in talking prices with the competitor, for instance, you know the GC has got to go to the board, even though that person is figuring out your year-end bonus.

Counseling: Implications for skill sets of future general counsel

ThisresearchsuggeststhatfutureGCsshouldhaveatleastthreeskillsets

tofunctioneffectivelyascounselorstotheboardandCEO.Thefirst isan

abilitytolistenwellandcalibrateresponsestothenuancesofthesituation.

Someintervieweesreferredtothistraitas“emotionalintelligence.”

According to one long-time GC:Most lawyers are trained to talk most of the time — we are paid in order to offer our opinion. But the best in-house lawyers aren’t offering opinions most of the time; they are just listening. They are listening compassionately, they are listening emphatically, and they have a high degree of emotional intelligence, which allows them to appreciate the body language and emotion of the other person.

Othersdescribedthistraitasbeingcomfortableinyourskin,andbeingable

toengagewithpeopleandinfluenceotherstoseeyourpointofview.How-

ever defined, this trait is very useful to those seeking to become trusted

counselors.

Second,effectiveGCs,bothnowandinthefuture,mustcommunicatewell,or,

asoneintervieweedescribedit:“[T]alkaboutcomplexthingssimplyandput

themincontext.”Communicatingeffectivelyalsoincludestheabilitytocraft

anddelivermessagesappropriatetotheaudience.AccordingtooneGC,mes-

sagesmustbetailoredandnotdeliveredwitha“cookiecutter.”



Boards and CEOs don’t want a bunch of legalese; they want you to commu-nicate in a language they speak, and you’ve got to be able to communicate to different audiences differently. I’ve got to talk to the lawyers one way, the corporate secretary another way, the board another way, the CEO another way, and frankly, when you have union employees, another way. So it’s a series of verbal and written communication skills.

Effectivecommunicationwithsomeaudiencesincludesprojectingasense

of“gravitas,”confidenceandcredibility.Asoneexecutiverecruiterstated:

“WhenI’minterviewingsomeoneforaFortune1000publiccompany,I’m

lookingforsomeonewhocanwalkintothatboardroomand,inveryshort

order,sizeupthataudienceandcommunicateeffectivelytothatgroupand

havecredibility.Lawyershavevastlydifferentlevelsofabilitytodothat.”

Similarly,onegeneralcounselobserved:

There are a lot of really good lawyers who can’t really speak in a way that is digestible to their different audiences, whether it’s senior executives or the board of directors. So I think that translation function is huge. The other im-portant aspect is being able to simplify and synthesize. When you’re in a conversation with the CEO or the chief financial officer, you have to be able to take extraordinarily complex legal concepts and turn them into very con-cise, crisp explanations. I do think that those two communication skills [abil-ity to simplify and synthesize] are a really significant part of the successful in-house lawyer.

Finally,currentandfutureGCsmustcontinuetocultivatecourage,which

requires preserving independence through a strong moral compass and

ethics. Several GCs emphasized that, to be a good general counsel, you

shouldbepreparedtoputyourcareerontheline.Asoneformergeneral

counselexplained,“I’vealwayssaid,ifyouarealawyerandyouloseyour

integrity,you’velosteverything.Itisalawyer’sprimaryquality.Ifyouare

not able to maintain your integrity, you should quit.” While this sense of

couragemaynotbenew,aslawyersplayabroaderroleintheorganization,

itislikelytocontinuetoincreaseinimportance.5


5 Muchhasbeenwrittenabouttheprofessionalobligationsofthegeneralcounsel,whicharebeyondthescopeofthisstudy,e.g.,Kim,SungHui,“GatekeepersInsideOut(June25,2008).”Georgetown Journal of Legal Ethics,Vol.21,p.411,2008.ACCalsohasextensiveresourcesonthistopic,seee.g.,Bruno,PaulandDelman,David,“UptheLadderandOuttheDoor:Saying‘No’totheCEO,”July/August2013.ACC Docket,Vol.31,No.6,p.46.


Strategist

Theaspectof thegeneralcounsel roleevolvingthemost is thedegreeto

whichGCsaddvaluetothecompanythroughstrategicinput(seeFigure10).

While strategizing is not the most prevalent activity expending general

counseltime,itisarguablyoneofthemostimportantpotentialwaysforthe

generalcounseltocontributetothecompanyanddelivervalue.BothGCs

and corporate directors predict strategic input will increase the most in

prominenceandnecessitygoingforward.Thus,generalcounselwillneedto

enhance their strategic capabilities if they wish to remain relevant in this

fast-paced,ever-changingglobalbusinessenvironment.

“Generally,15-20yearsago,GCswerelookedatbyCEOsand,moreoften

thannot,byboardsasbeingtheretogiveinputwhenasked,tokeepthem

safewhenitlookedliketheyneededtobehelped,andtorunthelitigation

andgetthebestpossibleresult,”explainedoneformerGC.“Butitwasnot

commonfortheC-suiteorboardtolookatGCsaspartoftheteamdoing

strategicthinkingthatmovesthebusinessforward.Thisisthesinglebig-

gestshiftinwhatyouneedasGC—theabilitytothinkstrategicallywith

otherbusinessleaders.”

Severalexecutiverecruitersalsoacknowledgedthegrowingimportanceof

contributingstrategically.Asoneobserved,“Inthelastfivetosevenyears,

youjuststartedhearingthenumber-onecriterionoutofaclient’smouthis

realcommercialorientation—youknow,someonewhocanbeavoice in

strategy.”Goingforward,webelievethisabilitywilldifferentiatetop-level,

highlysoughtgeneralcounselfromtheirpeers.

Significantly,directorsandgeneralcounselhavedifferentviewsonthecur-

rentvaluecontributionthroughstrategicinput—GCsgradetheirstrategic

contributionsmorehighlythandirectors.Whileboardmembersalsoview

strategicinputasincreasinglyimportant,theyaremuchlesslikelytoreport

thattheirGC’sstrategicinputwasatopcontributortovalue.

GCs/CLOs Now

62% 71%

27% 37%



62%71%

27% 37%


FIGURE 10

GCs/CLOs More Likely to Rank Strategic Input as Top Three Value-Driver


“IfIwerecreatingasetofcriteriaforgeneralcounselnowfromtheboard’s

perspective,Iwouldwantsomebodythatwasastrategicthinker,”observed

oneboardmemberwhoisalsoageneralcounsel.

She continued:… I think general counsel [who] are most successful now and in the future have to be strategic thinkers. I don’t think it’s something that most gener-al counsel are now, and I don’t think it’s something that most lawyers are trained for at all. But I think if you could find it, that person is going to be highly sought after.

Whileitiscommonlysuggestedthatlawyers’trainingandmindsetdonot

align with strategic decision-making, one consultant interviewed took a

contraryview,seeinganopportunityforthefuture:

Real strategic thinking just lends itself so well to the skills that lawyers tend to come with because there is the analysis, there is the risk assessment, there is the long-term plan — where does this road take us — the mapping out and the blueprints. Lawyers are good at that, and I think that would be a great function for law departments to really start assuming more of in the future.

The role of managing risk in strategic thinking

Strategicplanningfrequentlyincludesadiscussionofriskwithinthecontext

of competitive threats. Traditionally, since lawyers deal with and manage

legalandregulatoryrisk,generalcounselcouldpresumethattheabilityto

manageandevaluaterisktranslatestoaddingstrategicvalue.Butonedoes

not necessarily follow another. As one prominent GC pointed out, simply

dealingwithriskasanissueisnotnecessarilybeingstrategicanddoesnot

necessarilyaddstrategicvalue:

Risk assessment is something that lawyers do all the time. But being able to take risk, and being comfortable with business partners taking risk are totally different. It’s about saying: “Here are the 27 risks, and I think we can take 25 out of them.” Lawyers are inherently cautious, but in order to be an effective strategic thinker, you need to be able to figure out what risks you’re comfort-able with.

“Whenthebusinessguysmakeadecisiononabusinessrisk,itisneveran

assurance that it’s going to work, but they do it because if you don’t take

risks,youdon’tdobusiness,”observedanotherGC.“Ithinkthesamething

nowappliestogeneralcounsel.Youhavetobeabletohelpthebusinessguys

assesstheriskandbecomfortablewiththat.”



Ifageneralcounselsimplyassessesrisk,thisdoesnothelpmovethebusi-

nessforward,andtheGCdoesnotmakeastrategiccontribution.Dueto

theirtraining,manylawyersmayfocusonriskassessmentwithoutneces-

sarily contributing to discussions of the development of opportunities in

lightoftherisks.Thus,whilecompaniescertainlyneedtheirgeneralcoun-

seltolookaheadand“seearoundthecorner”tohelpanticipatefuturepo-

tentialdangers,anarrowfocusonwhatcangowronglimitsthevalueofthe

GCrole.ThesuccessfulfutureGCmustgobeyonddiscussing“how”todo

somethingandalsoaddress“what”todo.

Making the value leap: Beyond legal strategist to business strategist

Weseetheprimaryopportunitiesforgeneralcounseltobestrategicasfall-

ingintothesethreecategories,whicharenotmutuallyexclusive:

1. leadingtheirlawdepartments;

2. usingthelawtoadvancethestrategicgoalsofthecompany;and

3. providinginsight(legalandotherwise)intobusinessdecisionsasmembersof

theexecutiveteam.

GCs leading the legal department strategically will find creative ways toimprove the value proposition of the legal department proactively ratherthansimplyreactingtoissuesastheyarise.Thismightincludedevelopingstaffcapabilitiestobetterfulfillthecorporatestrategies;“seeingaroundthecorner”to identifyemerging legal trendsor issuesthatwilldirectlyaffectthecompany,andcraftingaresponse;andtotallyrevampingthepurchaseoflegalservicesbyusingfixedorotheralternativefees,orevenmovingworkfromtraditionallawfirmstoalternativeproviders.

Thenextsteponthecontinuumistoidentifycreativewaystousethelaw

tomakemeaningfulcontributionstothecompany.AsoneGCexplained:“If

thestrategyofthecompanyistoacquiredifferentbusinessesorincrease

market share or become most efficient in a particular field, the in-house

lawyers,andespeciallytheGC,willunderstandhowtousethelawtoad-

vancethosegoals.”



Another general counsel offered a specific example of creatively using the law to benefit the company’s bottom line:A strategy we developed here was to accelerate the deduction of our annual policyholder dividends. In the past, we deducted dividends in the year they were paid. The lawyers worked closely with their tax, accounting and business colleagues to design and implement a process for the board, each December, to make a binding commitment to pay out an aggregate minimum amount of dividends in the following year. This aligned tax accounting with financial accounting and fixed the liability, allowing the deduction to be claimed in the earlier year. The time value of a one-year acceleration of a billion-dollar deduc-tion is a real number. The IRS disagreed, and we litigated with them. Last year, we won the case after more than a decade of controversy, and we now have a victory with a value in excess of $200 million.

Finally,generalcounselincreasinglycontributestrategicallyinmuchbroad-

erways,andCEOsanddirectorsarecomingtoappreciatethesebusiness

contributions.Forexample,oneexecutiverecruiterdescribedwhathiscor-

porateclientsmoreoftenhavebeenrequestingofGCs:

What they are saying is: If we’ve got five or six people around the senior ex-ecutive table, each person needs to not only know their craft, but they’ve got to be part of a team that can help us think about new markets that we are going to enter, what are the impacts of introducing this product, what com-petitive threats are we going to face, what intellectual property challenges are we likely to encounter, what types of environmental issues, what types of compliance matters, etc. So they are not looking for a GC who is sort of sitting at the table and saying, “Hey, you know, when you guys get to a legal issue, I’ll raise my hand and give you my thoughts.” They want a GC who is able to provide some input on a broad range of issues.

Researchersinleadingbusinessschoolshavedemonstratedoverandover

againthathavingdiverseperspectivescanresultinbetterdecisionsifdi-

versity is appropriately integrated in the executive team. “Everyone con-

tributessomethingdifferent—theyallhavedifferentskillsetsandback-

grounds,”explainedonegeneralcounsel.

For example, when you are acquiring a new subsidiary, the business guys will look at valuations, future revenue streams and DCFs. It’s just as important these days to have that acquisition be consistent with the business strategy, which everyone has a different contribution on. Lawyers will ask: Is this a company that will add to our strategy from a legal perspective? Is this the kind of company we want to be associated with? Are there potential prob-lems or liabilities? Lawyers look at the strengths, weaknesses, culture and legal problems. Over time, these conversations become more seamless.



As one interviewee summed up the legal and business contributions to

strategy,“ThereisanexpectationthatwhenyouareattheboardandC-

suite level, youshare responsibility for thesuccessof theorganization.”

Allmembersofexecutiveteamsshouldcontributeineverywaytheycan

todevelopandimplementplanstoachieveorganizationalsuccess.While

theGCmaynot“own”thestrategy,heorsheshouldcertainlybeexpected

toinfluenceitinsignificantways.

Indeed, as legal departments continue to face pressure to provide more

valuewithfewerresources,andasdirectorsandCEOsexpectmorestra-

tegic input fromthegeneralcounsel,generalcounselwillbe increasingly

challenged.ACChasobservedanemergingtrendwithinitslargelawmem-

bershipthatmay, intime,assistGCstomeetthesecompetingdemands.

Somecompanieshavecreatedthepositionofdirectorofoperationsinthe

legaldepartment,andthe incumbentsarenotnecessarily lawyers;many

havebusinessorfinancebackgrounds,and/orMBAtraining.

Lawdepartmentsmayconsidersplittingthetworoles,orfindsomeother

waytodelegatelegaldepartmentoperationsandfreeupthegeneralcoun-

sel’stime,sothatheorshecanoffergreaterstrategicinputandfocusmore

explicitlyonexecutiveandboard-levelmatters.

Strategic input: Implications for skill sets of future general counsel

Mostlawyershavelimitedopportunitiestodeveloptheirstrategicthinking

ability,andmanysuffer fromamisunderstandingormisperceptionabout

how to add value strategically. The primary training grounds — first, law

school,thenlawfirms,governmentandlawdepartments—rarely,ifever,

haveprogramstoteachordevelopstrategicthinkingandplanningskills.

Beingable toprovidevaluable input intostrategicbusinessdecisions re-

quiresagoodunderstandingofbusinessandanappreciationforstrategy.

Some GCs acquire these skills through business school courses. A fair

numbersimplylearnonthejobandbenefitfromanaturalcuriosityabout

businessmodelsandindustrydynamics,whileusingtheirnetworkandin-

terpersonalskills.“ReallystrongGCsareveryconnectedoutsidethefour

wallsoftheircompany,sotheyareouttalkingwithotherGCs,theyaretalk-

ingwiththeirboardmembers,theyaretalkingwithregulatorsandtheyare

talkingwith theiroutsidecounsel,”observedanexecutiverecruiter. “You

shouldbeoutsideyourfourwallsandpickupyourheadandkindof look

aroundandfigureoutwhatelseyoushouldbepayingattentionto—and

havetherigoranddisciplinetodothat.”

Cultivatingabroadviewofthebusinessandindustryalsohelps.



One GC in a technology company described his approach:It’s partly about being a generalist. Traditionally, what I do is spend about a half hour to an hour a day reading various publications, be they indus-try rags, technology rags, blogs, Twitter feeds, etc. If you are doing it right, there is this fermentation in the back of your brain that tells you: This might be a business obstacle or this might be a business opportunity. Maybe it engenders a conversation with an executive or a board member and they say: “Wow! Our lawyer really is invested in the business. He’s really think-ing about some creative things.” And then it also allows you to look over the horizon a little bit and think about potential responses to this obstacle or this opportunity, and whether you have to realign the legal depart-ment a little differently, find some new talent, etc. That’s how I think of strategic planning.

Experience(legalorotherwise),bothinsideandoutsideyourorganization,

alsomatters.NotonlydoCEOswantdiversityintermsofknowledge,skills,

abilitiesandculturalperspectives,theyalsoseekadiversityofprofessional

experiences.

One GC who spent time as a plant manager in a former company shared what he learned through the experience that helped him in his future GC roles:Even though I had already spent a fair amount of time working with business people, the time that I spent in a national management role gave me a very different perspective. When you are in the lawyer’s role, your goal is risk protection and risk management, and you are supposed to be looking at the conservative side and thinking about how to protect the company. The busi-ness manager, on the other hand, is supposed to be more aggressive. And while in both cases you are operating within the course of the law, it’s easy for a lawyer to devolve to the more conservative, safer route, while the busi-nessperson needs to think how to be more assertive and push things forward. On the business side, you are willing to take more risk because that is often what you need to do in order to accomplish your goals.

He continued:Most business partners recognize that experienced GCs have seen a variety of business models, transactional “fall back” positions, internal and exter-nal messaging that works or doesn’t, organization structures, etc. In other words, because of their unique position, GCs can provide unbiased experi-ence and insights in many non-legal areas. This is a large part of what I do every day: brainstorming with business partners who value my business, not just legal, insights.



Finally, a GC needs to cultivate a proactive mindset and be able to think

severalmovesahead,especiallyifsurroundedbyexecutiveshighlyfocused

onshort-termresults.

According to one general counsel:I am personally astounded by some of my business colleagues who think we’ll worry about next quarter next quarter. I don’t fault them, I guess, but someone has to say, “Wait a minute.” We’ve got to think about three and six quarters down the road, and it can be tough to do. But it’s like playing chess, and law-yers need to be thinking about how this move is going to affect the next five moves. I think that is a real skill that every GC needs to have.

YetevenGCswhoareskilledstrategistsmayfindthemselveshampered

bytraditionalviewsofthegeneralcounselrole.“Historically,outsidedi-

rectors think of the GC in the old days as the lawyer, not the strategic

thinker,” observed one GC. “They think we have enough lawyers. But if

thelawyerhasproventobeagoodstrategicthinker,thentheyareableto

bringthingstothetable.”Consistentwiththisnotion,oursurveyresults

indicatethat,today,moregeneralcounselthandirectorsseeGCsadding

value through strategic input. This dichotomy of perspectives regarding

theGCasastrategicthinkersuggeststhatageneralcounsel(oranyone

seekingtobecomeone)shouldknowhowtheirCEOandboardofdirectors

define“strategic.”



Most of the skills emphasized in this research are not new. Many before

us have highlighted the importance, for instance, of sound judgment,

understanding the business, professional independence and effective

communication. In addition to having solid legal skills, today’s high-

performinggeneralcounselalsomustbeabletomanagebudgets,buildand

motivate teams, and provide effective advice and counsel to both senior

managementandtheboardofdirectors.Webelievethiswillcontinueinthe

futureandthatclientperformanceexpectationswillonlycontinuetorise.

Mostsignificantly,however,andaspreviouslydiscussed,weseetheroleof

thegeneralcounselasalegalandbusinessstrategistevolvingandexpand-

ing.Thiswillleadtoanevenmoreintegralroleforthegeneralcounselas

partoftheseniormanagementteamoftheorganization.

Based upon our interviews, surveys and other research, we believe all general counsel should periodically self-assess their current experiences and abilities against those stated below. In addition, anyone who desires to become a general counsel should seek most, if not all, of the following skills and experiences:

Legal skills

• Broad-basedlegalexperience,orataminimum,abackgroundrelevant

totheboard-levelconcernsforaspecificcompanyortargetindustry;

• Abilitytoplacelegalissuesinabroaderstrategicperspective;

SKILL SETS FOR THE GC OF THE FUTURE



Business skills

• Solidunderstandingofbasicfinancialandaccountingprinciplesre-

quiredtoappreciatethefinancialimplicationsofbusinessdecisions;

• Abilitytoseeandevaluateopportunitiesthatcouldbenefitthebusi-

nessnowandinthefuture;

• Abilitytomanagepriorities,projects,budgets,andsetmetricstoen-

sureresourcesareallocatedinanefficientandeffectivemanner;

Leadership skills

• Abilitytoinfluenceandinspirepeopletoengageandworktogether

toprovideseamlesscoverageacrossgeographies,businessunitsand

practiceareas;

• Abilitytomentoranddevelopmorejuniorattorneysandrecruitand

promoteattorneysthatwillbesuccessfulinfuturein-houseleadership

roles;

Interpersonal skills

• Strongemotionalintelligence,includingtheabilitytoempathizewith

colleaguesandstakeholdersandeffectivelymotivateateam;

• Abilitytoeasilyadaptcommunicationandleadershipstylestodif-

ferentparties—frombusinessheadstojuniorteammemberstothe

C-suiteandboardroom;

• Abilitytodevelopstrongrelationships,bothinternallyandexternally;

Personal capabilities

• Willingnesstotakerisksandmakedecisions,especiallythetoughcalls;

• Abilitytolearnfrommistakes;

• Curiosityanddesiretogainadeepunderstandingofbusinessand

industry;

• Creativityandopennesstonewideas;

• Strongmoralcompassandwillingnesstoputone’sowninterestonthe

lineforthewell-beingofthecompany;

• Comfortableworkingwithambiguityandinsituationswherethean-

swersarenotblack/whiteorclearcut;



Professional experience

• Internationalexperienceandexperiencedealingwithattorneysand

businessexecutivesfromdifferentculturalandethnicbackgrounds;

• Experiencemanagingabudget;

• Experiencemanagingdiversegroupsofpeople,multipleprojectsand

cross-functionalteams;

• Experiencewithanoperatingdivisionorbusinessunitoutside

thelawdepartment.

Finally,allgeneralcounsel—andthoseseekingtobecomegeneralcoun-

sel — should keep in mind that most organizations want lawyers whose

judgmentpreventsproblems,whosolvesproblemswhentheydoarise,and

whogenerallyhelps theorganizationbesuccessful.Sound judgmentwill

applyineverysituation:managingthelegalneedsofthecompany,coun-

seling the CEO and board, and providing strategic advice. It also applies

whenactingasintegratorsandinnovators.Oneusuallyacquiresjudgment

throughvariedexperiences,beingchallengedbycomplicatedanddifficult

tasks,andlearningfromone’smistakes.Formany,goodjudgmentmaybe

thesinglemostimportantattributeofageneralcounsel.

Statedsimply,weexpect the“threebucketsofvalue” to remain relevant

for the general counsel of the future. General counsel will need to con-

tinue to deliver value through managing the ever growing legal needs of

corporations, counseling CEOs and boards through increasingly complex

issues,andcontributing to thestrategicdecisionsof theexecutive team.

Tomorrow’sgeneralcounselwillfaceacomplexsetofissuesandwillneed

tofulfillthehighexpectationsoftheboardofdirectors,themanagement

team,keybusinessleaders,demandingshareholdersandcriticalexternal

constituents.Meetingthesediverseneedswillrequireawell-roundedand

highlyexperiencedgeneralcounsel.Forthosewhoareuptothechallenge,

anexcitingandrewardingroleawaits.


EXECUTIVE SUMMARY

The evolution of the GC role from simply advising on the law to also

counseling and offering strategic input, has important implications for

organizationsandhowtheyleveragetheskillsandcapabilitiesthatgeneral

counsel bring to the executive table. In particular, the role of the general

counselfrequentlyincludeshelpingreduceandresolveconflictsinternalto

the organization, while serving as a bridge between the organization and

importantexternalconstituents.AsoneGCstated:

I think of myself almost as a lawyer diplomat, because internally and externally, you are hovering between countervailing and antagonistic forces, both within the company and outside the company. The lawyer’s job is to try to see to the common ground and bring these two together when you are trying to resolve a legal issue — and in that context, almost everything is a legal issue. So you spend more of your time shuttling back and forth between individuals trying to resolve a dispute internally or externally rather than opining intellectually on what is the best course of action in litigation.

THE GENERAL COUNSEL AS INNOVATOR



Havinguniquelinksacrossunitswithinandoutsidetheorganization—in-

cludingattheC-suiteexecutive level—wasaconsistentthreadweaving

throughtheinterviews.AsoneformerGCobserved:

I think the successful GCs are people who are able to manage through personalities, particularly at the senior executive and board level. A successful GC is also able to cater to different constituencies, and in a lot of ways, that is fairly unique to a GC. Whether it’s the investment community, the board of directors, employees or regulators, the GC probably has more constituencies than any other member of the management team.

Ageneralcounsel’strainingasalawyermayhelpimprovecommunication

amongthesevariousconstituencies.“Lawyerstendtobebetter listeners

thanmostbecauseofthenatureoftheprofession,”observedanotherfor-

merCEOandgeneralcounsel.

Lawyers tend to be good mediators in executive conversation. For example, a finance person might not understand the underlying value of what an engineer is pushing because of the finance person’s perspective. I’ve seen lawyers bridge the communications gap among different disciplines and help to manage meetings effectively.

Byfacilitatingcommunicationbetweendifferentpartsoftheorganization,

thegeneralcounselcanplayanintegralrole(andonethatgoesfarbeyond

legaladvice) insolvingdifficultproblems.WhenGCscan facilitatecom-

municationandhelpresolveinternalconflicts,theypositionthemselvesto

helporganizationsinnovateeffectively—anothercrucialroleinorganiza-

tionstoday.

Theconceptof lawyeras innovatormayseemcounterintuitive,giventhe

profession’s traditional focus on precedent. But a general counsel effec-

tively“lookingaroundcorners”attheexternalenvironment,andfacilitating

theexchangeofideasandchallengeswithintheorganization,mayspotop-

portunitiesandenhancetheorganization’sresponsetothoseopportunities

byconnectingthedotsamongorganizationalsilos.

Ageneralcounsel’sroleinmanagingriskcanenablehimorhertohelpthe

organizationunderstandthepotentialrisksandbenefitsofthesenewop-

portunities.Wheneveracompanywishestotrysomethingnew,whether

itentailsenteringanewmarket,pursuinganoveldistributionchannelor

developing a new product, managers need to weigh the potential risk in

this endeavor with its anticipated return. A company’s tolerance for risk

necessarily impactsthecalculationastowhetherapotentialopportunity

isworthpursuing. Ifmanagers live infearofmakingamistake,theorga-

nizationmayendupoverlyconservativeandlosetheabilitytostayahead

ofafast-changingmarket.TheGCcanplayakeyroleincreatingaculture

whereriskscanbetakenandmistakesmadeinwaysthatdonotseriously



endangertheorganization.Ageneralcounselwithasophisticatedunder-

standing of the business and risk management is in a unique position to

performthisfunction.

Manygeneralcounselmaynot feelcomfortableplayingarole in innova-

tion. They may see their jobs as protecting the company, not expanding

boundaries.Asgeneralcounselbecomemoreintegratedintotheexecutive

teamandtheboardroom,however,thereisasignificantopportunitytohelp

thecompanyadapttoadynamicenvironmentbyleveragingtheirposition

andtraininginwaysthatpromoteahealthycultureofinnovation.Someof

thegeneralcounselinterviewedforthisreporthavealreadytakenstepsin

thisdirection.Thisresearchsuggeststhatthosewhowishtoassumethis

roleandprovidevaluetotheircompaniesinthiswaycandosoiftheyview

themselves not simply as traditional lawyers, but as counselors, leaders,

strategistsandinnovators.

APPENDICES


Appendix A: Methodology

Theroleofthegeneralcounsel/chieflegalofficer(GC/CLO)hasevolveddramatically.Changesinthelegal,

regulatoryandcorporatelandscapewillcontinuetoinfluenceandshapetheroleoftheGC/CLO.Thegoalof

thisresearchwastounderstandwhatskillsandabilitiescontributetoGC/CLOsuccessbothnowandinthe

future.Specifically,theresearchstrovetoanswerthefollowingquestions:

1. WhatisthecurrentjobscopeofGCs/CLOs?

2. WhatskillsandabilitiesdoeffectiveGCs/CLOshave?

3. HowdoGCs/CLOsaddvaluetotheircompaniesnow?

4. HowwillGCs/CLOsaddvaluetotheircompaniesinthefuture?

Toanswerthesequestions,wefirstconductedaseriesof28in-depthinterviewsfromthefallof2012tothespringof2013,whichincludedthefollowing:

• 20currentandformerGCs/CLOsofglobalcompanies,

• Eightwerealsomembersofboardsofdirectors,and

• TwowentontobecomeCEOs.

• Fiveexecutiverecruiters;

• Twoconsultants/authors;and

• Oneindependentdirector.

OurinterviewguidecanbefoundinAppendixB.

APPENDICES


Wealsoconductedsurveyswithtwogroupsofindividuals(surveyquestionsareincludedinAppendicesBandC).Thesurveyswereasfollows:

• AsurveyofmembersoftheNationalAssociationofCorporateDirectors(NACD)administeredinJanuary2013.

TheNACDsentasurveyto1,914members.Wereceived78responses.

• AsurveyofmembersoftheAssociationofCorporateCounsel(ACC)inMarch2013.Wesentsurvey

invitationsto4,808members,allofwhomweregeneralcounselorchieflegalofficers,andreceived689

responses.Respondentdemographicsareasfollows:6

• Headquarters:

- 541inUnitedStates,and

- 91outsideUnitedStates.

• Sizeoflegaldepartment:

- 408fromdepartmentswithtwotonineattorneys,

- 147fromdepartmentswith10to24attorneys,and

- 112fromdepartmentswithmorethan24attorneys.

6 Thetotalnumberwhoreportedonthelocationoftheirheadquarterswasdifferentfromthetotalnumberreportingonthesizeoftheirlegaldepartment,whichiswhythetwogroupsdonotsumtothesamenumber.

APPENDICES


Appendix B: Interview Guide

Background

• Careerhistorywithtiming(yearsineachjob)

• Towhomdoyoureport?

• Howmanylawyersareinthelegaldepartment?

• Doyousitonthecompany’sboardofdirectors?

• Areyouthecorporatesecretary?

• Whatisyourjobscope?(businessvs.legalresponsibilities)

• Compliance

• Governmentrelations

• HR/Admin

• Riskmanagement

• Howdoyouparceloutyourtimeamongyourvariousareasofresponsibility?Islegalthemajorityofyour

time?Inwhatdirectionisitmoving?

• Isyourlegaldepartmentcentralizedordecentralized?

• Doyouhavegloballegaldepartmentexperience?

Job history

• Whatqualitiesdoyoupossessthathavesupportedyourelevationtothisrole?(Brieflyprobeoneach

categorybelowaftertheyhaveaninitialopportunitytorespond.)

• Substantivelegalexpertise

• Previousexperience

• Non-legalskills

• Personalitytraits

• Whatsurprisedyouaboutthejob?

Currently

• Howhaveyourjobresponsibilitiesevolvedsinceyoufirstcameinto

thejob?

• WhatkeyfactorscontributetoyourcurrentsuccessintheGC/CLOrole?

APPENDICES


Future

• Thinknowaboutyoursuccessor.WhatkindofpersonwillbestfittheGCrolewhenyouleave?Howmight

theybedifferentfromyou?(Probeonthefollowingsubgroups,butonlyafterrespondenthasanopportu-

nitytobringitupontheirownfirst.Focusparticularlyonnotwhetherthesecharacteristicsareimportant,

butratherwheretheyaretrendingovertime.)

• Substantivelegalexpertise

• Previousexperience

- In-houseroles

- Insidelegaldept.» Outsidelegaldept.

- Pre-JDexperience

• Non-legalskills

- Strategicthinking

- Riskevaluation

- Communication(oralandwritten)» Diplomacy

- Managerialskills(process,organization,delegation,projectmgmt.)

- Abilitytounderstandandworkwithinorganizationalculture

- Collaboration

- Abilitytomentoranddevelopothers

- Relationship-buildinginternallyandexternally» Withwhom?

• Personalitytraits

- Roleoflikeability/gettingalongwithotherseniorexecutives

- Gravitas/executivedemeanor/confidence

- Goaldirected

- Extroversionvs.introversion

- Visionary/bigpicturevs.detail-oriented

WhatelseisimportantforustounderstandabouttheevolvingroleoftheGC/CLO?

APPENDICES


Appendix C: Survey Questions – GCs/CLOs

Thankyoufortakingafewminutestoanswersomequickquestionsabouttheroleofthegeneralcounsel(GC)

orchieflegalofficer(CLO)inyourcompany.Pleaseanswerthequestionsbelowtothebestofyourability.

1. Whatisyourgender?(Male,Female)

2. Whatyearwereyouborn?(1915-1994)

3. Whereisyourofficelocated?(Albania,Algeria,Andorra,Angola,AntiguaandBarbuda,Argentina,

Armenia,Australia,Austria,Azerbaijan,Bahamas,The,Bahrain,Bangladesh,Barbados,Belarus,Belgium,

Belize,Benin,Bhutan,Bolivia,BosniaandHerzegovina,Botswana,Brazil,Brunei,Bulgaria,BurkinaFaso,

Burma,Burundi,Cambodia,Cameroon,Canada,CapeVerde,CentralAfricanRepublic,Chad,Chile,China,

Colombia,Comoros,Congo,DemocraticRepublicofthe,Congo,Republicofthe,CostaRica,Coted’Ivoire,

Croatia,Cuba,Curacao,Cyprus,CzechRepublic,Denmark,Djibouti,Dominica,DominicanRepublic,East

Timor(seeTimor-Leste),Ecuador,Egypt,ElSalvador,EquatorialGuinea,Eritrea,Estonia,Ethiopia,Fiji,

Finland,France,Gabon,Gambia,The,Georgia,Germany,Ghana,Greece,Grenada,Guatemala,Guinea,

Guinea-Bissau,Guyana,Haiti,HolySee,Honduras,HongKong,Hungary,Iceland,India,Indonesia,Iran,

Iraq,Ireland,Israel,Italy,Jamaica,Japan,Jordan,Kazakhstan,Kenya,Kiribati,Kosovo,Kuwait,Kyrgyzstan,

Laos,Latvia,Lebanon,Lesotho,Liberia,Libya,Liechtenstein,Lithuania,Luxembourg,Macau,Macedonia,

Madagascar,Malawi,Malaysia,Maldives,Mali,Malta,MarshallIslands,Mauritania,Mauritius,Mexico,

Micronesia,Moldova,Monaco,Mongolia,Montenegro,Morocco,Mozambique,Namibia,Nauru,Nepal,

Netherlands,NetherlandsAntilles,NewZealand,Nicaragua,Niger,Nigeria,NorthKorea,Norway,Oman,

Pakistan,Palau,PalestinianTerritories,Panama,PapuaNewGuinea,Paraguay,Peru,Philippines,Poland,

Portugal,Qatar,Romania,Russia,Rwanda,SaintKittsandNevis,SaintLucia,SaintVincentandtheGrena-

dines,Samoa,SanMarino,SaoTomeandPrincipe,SaudiArabia,Senegal,Serbia,Seychelles,SierraLeone,

Singapore,Slovakia,Slovenia,SolomonIslands,Somalia,SouthAfrica,SouthKorea,SouthSudan,Spain,

SriLanka,Sudan,Suriname,Swaziland,Sweden,Switzerland,Syria,Taiwan,Tajikistan,Tanzania,Thailand,

Timor-Leste,Togo,Tonga,TrinidadandTobago,Tunisia,Turkey,Turkmenistan,Tuvalu,Uganda,Ukraine,

UnitedArabEmirates,UnitedKingdom,UnitedStates,Uruguay,Uzbekistan,Vanuatu,Venezuela,Viet-

nam,Yemen,Zambia,Zimbabwe)

4. Whatbestdescribesthesizeofyourlawdepartment?(2-9employees,10-24employees,25-49employ-

ees,50-74employees,75-99employees,100-149employees,150-199employees,200-249employees,

250-299employees,300ormoreemployees)

5. Doesyourlawdepartmentemploystaffoutsideofyourhomecountry?(Yes,No)

APPENDICES


6. Ifyes,where,outsideofyourhomecountry,doyouemploystaff?

7. Whatisyourcompany’sannualrevenue(inUSD)?(Lessthan$25million,$25millionto$49million,$50

millionto$99million,$100millionto$299million,$300millionto$499million,$500millionto$999

million,$1billionto$1.9billion,$2billionto$2.9billion,$3billionto$3.9billion,$4billionormore)

8. HowmanyyearshaveyoubeenintheGC/CLOroleinyourcompany?(Enter1ifoneyear,2iftwoyears,etc.)

9. InhowmanypreviouscompanieshaveyouheldaGC/CLOrole?(Enter0ifthisisyourfirstGC/CLOjob,1

ifyou’vebeenaGC/CLOinoneothercompany,etc.)

10.PriortoyourcurrentGC/CLOjob,howmanytotalyearsofexperiencedidyouhaveservingasGC/CLO

forallothercompanieswhereyouwerepreviouslyemployed?(Forexample,ifyouspenttwoyearsasGC

atPriorEmployerAandfiveyearsasGCatPriorEmployerB,youwouldhavesevenyearstotalexperi-

ence.)

11. Inwhatwaysdoyou,astheGC/CLO,addvaluetoyourcompany?Pleaserankthetopfiveofthefollowing

GC/CLOactivitiesintermsofhowvaluabletheyaretothecompany,with“1”addingthemostvalue.

__Providinginputintostrategicbusinessdecisions

__Providinglegaladvice/Managinglegalmattersforthecompany

__CounselingtheCEO

__Counselingtheboardofdirectors

__Ensuringthecompanyisincompliancewithrelevantregulations

__Creatinganethicalcultureinthecompany

__Managinglegalexpenditures

__Guardingthecompany’sreputation

__Proactivelyaddressinglegalandregulatorytrendsthatpresentrisksforthecompany

__Generatingrevenue(throughenforcementofIPrights,etc.)

__Other(specify)

APPENDICES


12. Inthenext5-10years,whichofyouractivities,asGC/CLO,willaddthemostvaluetothecompany?

PleaserankthetopfiveofthefollowingGC/CLOactivitiesintermsofhowvaluableyouthinktheywillbe

tothecompanyin5-10years,with“1”addingthemostvalue.



__CounselingtheCEO








__Other(specify)

13. DoyouexpecttoseechangesintheroleoftheGC/CLOoverthenextfiveyears?(Yes,No)

14.Whataspectsoftheroledoyouexpectwillchangethemostinthenextfiveyears?

15.WhatarethetwomostimportantskillsortraitsthatGCs/CLOswillneedtopossesstobesuccessfulin

thenext3-5years?

16.Thankyouforparticipating!

APPENDICES


Appendix D: Survey Questions – Directors

Thankyoufortakingafewminutestoanswersomequickquestionsabouttheroleofthegeneralcounsel(GC)

orchieflegalofficer(CLO)inacompanyforwhichyouserveontheboardofdirectors.Ifyousitonmorethan

oneboard,thinkabouttheonecompanyforwhichyouhaveeither(1)beenontheboardlongest,or(2)with

whichyouaremostinvolved.

1. Approximatelywhatwasthiscompany’srevenueforthelastfiscalyear?[Over$5billion(Fortune500);

Between$1billionand$5billion(Fortune1000);Between$100millionand$1billion;Under$100million]

2. Howwelldotheskills,abilitiesandexperienceofthecurrentGC/CLOmeettheneedsofthecompany?

(Verywell,Somewhatwell,Notsure,Notverywell,Notwellatall)

3. InwhatwaysdoesthecurrentGC/CLOaddvaluetothecompany?Pleaserankthetopfiveofthefollow-

ingGC/CLOactivitiesintermsofhowvaluabletheyaretothecompany,with“1”addingthemostvalue.



__CounselingtheCEO








__ Other(specify)

APPENDICES


4. Inthenext5-10years,whatGC/CLOactivitieswilladdthemostvaluetothecompany?Pleaserankthe

topfiveofthefollowingGC/CLOactivitiesintermsofhowvaluableyouthinktheywillbetothecompany

in5-10years,with“1”addingthemostvalue.

__ Providinginputintostrategicbusinessdecisions

__ Providinglegaladvice/Managinglegalmattersforthecompany

__ CounselingtheCEO

__ Counselingtheboardofdirectors

__ Ensuringthecompanyisincompliancewithrelevantregulations

__ Creatinganethicalcultureinthecompany

__ Managinglegalexpenditures

__ Guardingthecompany’sreputation

__ Proactivelyaddressinglegalandregulatorytrendsthatpresentrisksforthecompany

__ Generatingrevenue(throughenforcementofIPrights,etc.)

__ Other(specify)

5. WhatarethetwomostimportantskillsortraitsthatGCs/CLOswillneedtopossesstobesuccessfulin

thenext3-5years?(open-ended)

APPENDICES


Appendix E: Comparison of GC and Director Results on Adding Value7

Top Three Value-Drivers, Now and 5-10 Years from Now8

Directors, N = 78Now FutureA B

GC/CLO, N = 669Now FutureC D



73%C 63% 84%AD 68%C


54%C 54%D 34%A 35%B

Managinglegalexpenditures 12% 6% 10% 8%

COUNSELOR IN CHIEF

CounselingtheCEO 44% 36% 50%D 45%C

Counselingtheboardofdirectors 38%C 31% 20%A 22%

STRATEGIST


31% 44% 26%D 33%C

Providinginputintostrategicbusinessdecisions 27%C 37%D 62%AD 71%BC

7 Eachtablecontainsnotationrelatingtothetestingofstatisticalsignificance.Todisplaytheresultsfromthesetests,eachcolumninthetableislabeledA,B,C,etc.,andanytimeanumberisstatisticallydifferentfromanothernumberinthesamerow,itislabeledaccordingtothecolumnwithwhichitisstatisticallydifferent.Forexample,fortheTable1item“providinglegaladvice,”theNACDresponsesandGCresponsesforthecurrenttimeframearestatisticallymeaningfuldifferences.Also,thedeclineinthevalueofthisactivitybetweennowand5-10yearsamongtheGCgroupisastatisticallymeaningfuldecline.

8 Note:Severalitemsonthesurveyweredroppedthatconsistentlywereratedlowerinimportance.Theseitemswere:creatinganethicalcultureinthecompany,guardingthecompany’sreputationandgeneratingrevenue.

APPENDICES


Appendix F: Additional Quotes from Interviews

Wefoundthesequotesenlighteningandofferthemassupplementalwisdomonthetopicsnoted.

On how being an excellent lawyer is necessary but not sufficient criterion to be an excellent general counsel

From a general counsel and board member of several publicly-held companies:I really do believe that there is a significant majority of lawyers who still think that being a top-flight lawyer is most of the game. But from my perspective as a board member, and frankly from my experience as a GC, I don’t think that’s the case. I am sure we all know top-flight lawyers who flamed out as GCs. That is not accidental or coincidental. I think you do have to be the best lawyer. That’s your foundation. But being the best lawyer is not just about being good; it is your foot in the door to having the kind of influence that you need to have.

From an executive recruiter:They don’t want you to leave behind your technical legal expertise and your ability to spot issues. But you are first and foremost a business person with a technical legal background.

On managing a global team

From a general counsel of a large global company:The concept of double jeopardy doesn’t exist in the international regime, so how do you comply? Well, you have to hire very good people internally and externally. You also have to make risk identification and risk mitigation part of your daily language. You have to understand what businesses you are doing, and in which jurisdictions, and who is doing it. You have to understand what the local regulatory regime is and you need people on the ground — whether they are employees, consultants or external lawyers — who can monitor the horizon and monitor the news media to see what’s going on and whether the company might be adversely affected. And you need a rapid escalation system when things do look serious so that you can pay attention to it because you no longer have time to think about things. You have to almost act as soon as you find out because of the speed of not only the ways news travels, but also due to the more compressed expectations that your customers, your shareholders and your employees have about the company. They expect the company to respond immediately.

APPENDICES


On the role of counseling the CEO and the board

From a board member of several global companies: I want someone who has the capacity to distinguish between individual situations and systematic issues. So I want someone who can spot trends, who can help the board understand [whether] this is a one-off situation and it’s an exception, or is this a cultural issue that we need to address, or something that hasn’t been well enough communicated or complied with in the organization that needs a broader effort. That’s very important.

From a general counsel and board member:You really look to that general counsel to watch your back as a board member. You just have to feel like the person in that role has a really good understanding of the nuances of the rules and how they work within your company and industry.

On preserving independence

From a general counsel:I am a significant player in most of our board discussions and interactions. I am very much at the table, and my opinion is solicited and valued. And I think part of that has to do with the notion of having no political agendas. I’m now on my third CEO here, and if the board perceives you as having a particular political agenda involving a CEO, when the CEO goes, you’re pretty much gone, too. The key is to focus on what the job is and not on playing politics.

From a general counsel:And then there are times when you just kind of have to say “no.” I normally start the conversation by saying, “Look, guys, you know me. I rarely say absolutely no unless something is really giving me a heartache, or I really think the risk is just not something that I am prepared to recommend this company takes — and this is one of those situations.” And you are doing it maybe three or four times a year versus every day.

From a general counsel and board member:When a new CEO comes in, I think most general counsel realize that they may not keep their jobs. I think that is an appropriate reaction, because the way the role has evolved, general counsel are much closer to their CEOs than they used to be.

APPENDICES


From a former general counsel and CEO:The general counsel usually knows far earlier than anybody else in the corporation when something is headed in the wrong direction, is a little off the track or is just not right. And the general counsel has to be a person who is committed to having the uncomfortable conversations with executives and with directors, whether the general counsel thinks they want to hear it or not. That’s something that I would characterize as just managerial courage. You’ve got to have it, and the one general counsel that I’ve seen fail lacked managerial courage.

On providing strategic input

From a general counsel:In years past, if you were working on a joint venture agreement, you might have spent more of your time actually working on the joint venture document or on the legal issues associated with the joint venture document. Now, however, you might spend a lot more time on the thought process and the business structuring of the joint venture, thinking about your company’s role vis-à-vis the other company’s role, how this will work, the politics of it, the business dynamics, and helping the business person work through the strategic issues as much as the legal issues. Your expertise happens to be in the law, this guy’s expertise happens to be in operations, and this guy’s expertise happens to be in marketing, but you are at a level of the organization where you are trying to achieve strategic objectives so you’re helping to formulate how best to do that.

From a former general counsel:I was an experienced general counsel working in a company where we were always going into new businesses and new markets. When I went to a new company, the benefit of the knowledge that I had acquired was a very positive contribution to my new company, because I was able to talk to challenges in certain market places or certain ways of doing business that might not be commonly known.

From a former general counsel and board member:One evolution that has taken place is splitting the job of general counsel into two pieces. Some companies now have a general counsel who runs the operation of the legal department. The larger the department, the more important this job becomes, because you have to have somebody who is hiring and recruiting and understanding the globalization, etc. And a lot of times now, you have a chief legal officer who is above the general counsel, and that is the person who sits day-to-day with the senior management team and helps run the business.

APPENDICES


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