If your responsibility extends beyond legal, your management skills have been recognised and you have the skills and ability to deliver results.
Yet, what are the pros and cons of having a wider brief?
Taking on a wider brief
The role of General Counsel (GC) varies significantly between organisations. Some organisations have several GCs across their divisions or regions, all reporting to an overall group GC. But if you've reached GC level, you’ll certainly be responsible for the legal function across the organisation as a whole or, at least, for a business division or region. You'll work with colleagues in other departments, especially those involved in governance, compliance and risk.
In some organisations, the GC also has responsibility for other business departments or functions. These may vary but here we consider those functions that overlap with, or are the most complementary to, the legal team.
- Company secretarial. There’s a natural overlap between the legal function and the company secretariat because of the impact of company law and the requirements of good governance. A large, complex organisation may have several boards and committees and combining the GC and Company Secretary roles can ensure a consistency of approach to all relevant compliance and governance issues.
- Compliance. The scope of the compliance function varies according to the nature of the organisation, including whether it’s in a regulated sector. As GC, you’ll be concerned with compliance issues generally in relation to statutory and regulatory requirements. You’ll be keen to ensure there are appropriate compliance systems in place (whether electronic or manual) to report and identify all risks. Placing compliance under the GC’s lead can help reduce the risk of compliance gaps and of issues being overlooked.
- Internal audit. Often reporting directly to the CEO, this function is concerned with internal compliance and investigating potential wrong-doing. Housing internal audit with the legal function can potentially protect sensitive investigations with legal professional privilege.
- Risk management. In larger and heavily regulated organisations, risk management is often a separate function headed by a Chief Risk Officer. Making the GC ultimately responsible for risk management enables organisations to pool intelligence and adopt common risk management processes to achieve cost and operational efficiencies.
- Government relations. In regulated sectors, government relations also often includes liaison with regulators. In-house lawyers will work closely with key external stakeholders, particularly their lawyers and policy advisers. While this function will also be of importance to other departments, such as corporate communications, it can make sense for government relations to fall under the GC's leadership.
- Procurement/contract management. A good contract management system is likely to combine devolved responsibility to business units; often with "playbooks" of pre-agreed permissible changes from standards and with escalation procedures to the legal team for non-standard arrangements. Implementing such a system is a key part of your role. Increasingly these functions include contract life cycle performance/adherence monitoring, service credit enforcement and change control management. Similarly, you’ll be keen to ensure the organisation's procurement procedures are compliant and deliver value. That’s why making the GC responsible for both of these functions can help ensure compliance and consistency;
- Sales contract processing. Linked to, but distinct from, contract management, sales contract processing can become complex in organisations with high volumes of sales contracts. As GC, you’ll want to agree standard terms and processes as far as possible, with playbooks and escalation for non-standard cases. As with procurement, life cycle management is becoming increasingly important particularly when there is a need to check that commitments you make in your sales contracts which are actually to be performed by subcontractors are also in their sub-contracts i.e. "back-to-back" agreements. Because the legal team will be involved in the process anyway it can bring certainty and consistency for you to have ultimate responsibility for sales contract processing; and
- HR. Much of what the HR team does has a legal dimension. This includes employment policies, contracts, employee/contractor relationships, pensions and benefits, recruitment and severance, relocation and redundancy, mergers & acquisitions and TUPE (Transfer of Undertakings (Protection of Employment)). As the importance of the HR role has developed, many organisations have appointed an HR director of equal standing to the GC. However, where this isn’t the case, the GC is well placed to manage HR because of the many legal aspects of the role. This may include sourcing and instructing external counsel and managing the quality and costs of the services they provide.
Benefits of cohabiting
From yours and the organisation's perspective, there are many advantages to having the GC responsible for certain complementary functions. These include:
- Operational efficiencies achieved by housing common functions under one roof. For example, by using the same IT and other systems and removing boundary issues which may otherwise arise.
- Simpler planning and budgeting. You’ll be able to look across the functions and identify areas that need attention or resource, including in relation to unplanned contingencies.
- Improved people management. You’ll be able to spot and remove any work duplication and assign the most appropriate person to specific tasks. For example, a task that was previously carried out by a lawyer may be assigned to a non-lawyer, freeing up the lawyer's time for higher value work.
- Enhanced knowledge-sharing, enabling you to identify and act early on any risks across the departments you manage.
- Potential to apply legal privilege. As head of the overall function, you may be able to apply legal professional privilege to certain activities within your area of responsibility. Note, however, that this is not as straightforward in the in-house context as once thought.
- Consistency of communication and messaging. If you’re responsible for government or regulator relations, you’ll be able to agree an internal position before speaking to your government or regulator contacts; and
- Reduced administration. Consolidating similar functions means fewer responsible people at the top table and fewer reports. Your CEO may well appreciate this.
Potential problems
It’s also useful to consider the potential problems that may arise when bringing complementary functions together under your leadership. Things to consider include:
- Your professional and ethical responsibilities as your organisation's chief legal officer (CLO). As GC, you can take an independent view where necessary as you’re concerned with the best interests of the organisation as a whole, rather than of a specific business unit. Wider responsibilities can bring conflicts of interest between commercial objectives and your duties as the CLO. To manage any conflicts, you’ll need to define your responsibilities, identify where conflicts may arise and devise a process for dealing with them. This could involve delegating some decision-making responsibility. You’ll also need strong managers across the functions you lead.
- Reduced time to devote to your role as CLO. In a busy organisation with multiple legal risks to manage, managing multiple functions may distract you from your core legal responsibilities. You may find delivering as a general manager and operating as your organisation's senior lawyer difficult roles to combine.
- Whether to relinquish your role as senior lawyer and move into general management. For example, you could become a corporate director with legal a part of your responsibilities. Although straightforward, this may raise the question of where the senior lawyer (not you) should sit in the new hierarchy.
- The FCA’s Senior Managers and Certification Regime. If you’re the GC and head of the legal function in an FCA-regulated organisation, you’ll probably be subject to this regime. In the FCA's consultation about the regime, one position was that including GCs in the regime could undermine their impartiality. But GCs will be caught anyway if they manage other business functions.
Conclusion
Managing functions other than legal could give you a great opportunity to learn new skills and make an even greater contribution to your organisation. It will enable you to increase your profile and, perhaps, set you on the path to becoming a CEO. Placing complementary functions under single responsibility also offers your organisation many benefits, such as improved operational efficiency and enhanced risk management. However, there are issues to consider. Combining the role of senior lawyer with other responsibilities can give rise to conflicts. You could find yourself moving away from your original role as the organisation’s lawyer and doing less legal work. You may relish this, but you’ll need to manage the boundaries between your responsibilities and limit your scope to roles that are genuinely complementary.