Every top executive has seen the nature of his or her job change over the years. That’s especially true of general counsel—a company’s chief legal officer.
General counsel today aren’t just handling legal matters such as contracts, regulation and litigation. They’re now balancing the concerns of both the business and of the law. That makes the GC both protector and enabler of the company’s value.
This balance is the fulcrum of the GC’s role, according to KPMG’s latest global survey on general counsel which looks at the GC’s role from the perspective of CEOs, board members and other top officers. Most say their general counsel have risen to the challenge of balancing business and legal concerns. Many want GCs to do even more to help the business grow.
Senior executives want as a colleague a general counsel who manages legal risk as part of the business and not as an isolated activity. Such a GC is familiar with and ready to contribute to the company’s operations outside of the law department.
“GCs don’t need to know everything, but they should be able to assess what is important,” one CEO said in the KPMG survey.
When asked to rank the top risks on which the GC need to focus, business leaders – unsurprisingly – rated regulation as the top concern. But technology-related risk ranked second with interviewees pinpointing cyber-related risk as more important than either litigation or contracting. Cyber is an enterprise-wide risk requiring shared responsibility of all senior executives. General counsel are essential to managing cyber-risk, just as IT professionals are.
Technology risk is just one of several areas outside of the practice of law in which senior executives want their GC to contribute their skills. Exceptional legal skills are a given. It’s their other attributes that allow GC to reinforce their business value. What are they? Based on KPMG’s interviews with chief executives, board members and others, the top five attributes of today’s best general counsel are:
Business leader. Proves insightful commercial advice to other senior executives and the board, based on sound legal principles.
Risk manager. Constantly alert to and vigilant against an increasingly broad array of global threats to the company, and handles them accordingly.
Technology champion. Leads the change in mindset, from technology as a stand-alone tool to an all-pervasive way of doing business.
Communicator. Adeptly handles communication with key stakeholders such as the board, investors, regulators and employees.
Builder of corporate culture. Sets a tone of trust at the top and builds a risk-aware culture in which compliance is not seen as a straitjacket, but as a source of competitive advantage.
“What I say to my GC is that you’re like a referee,” says the chairman of a national food services company. “You have a red card, but you can’t use it too much and deprive the company of opportunities. Instead, you should anticipate the issue earlier to avoid having to use the red card.”
Another executive said the GC should be a “business partner that can translate business strategy into a workable framework within our regulatory environment.”
Perhaps the best description of the new role comes from a general counsel himself.
“GCs must use their legal expertise to add commercial value rather than stifling it,” he told KPMG. “Perhaps most important, modern GCs cannot make impartial, purely legalistic decisions from the sidelines. They must exercise judgment on risk and opportunity from the front, harmonizing legal insight with business acumen to help guide their company through the big decisions.”