For General Counsel and Heads of Legal, taking responsibility for functions beyond the core legal remit can create opportunities to add strategic value and develop leadership experience.
This article examines the potential benefits and challenges of expanding the GC role, including responsibility for company secretarial, compliance, risk management and contract management functions, while considering issues such as independence, accountability and organisational structure.
Key takeaways
- Expanding the GC remit can create greater opportunities to influence organisational strategy and decision-making.
- Combining related functions can improve efficiency, consistency and risk management.
- Wider responsibilities can create conflicts between legal independence and commercial objectives.
- Taking on additional functions may require GCs to develop new management and leadership skills.
- Any expansion of the GC role should be carefully structured, agreed and supported by senior management.
There may be opportunities, formal and informal, to take responsibility for functions other than legal in your organisation. These could offer a natural extension to your core role and provide you with new ways to contribute, develop your career and increase your profile.
Should you widen your role?
The role of General Counsel (GC) is increasingly multi-faceted. You'll need to wear many hats, even if your responsibilities remain within the legal function.
Here, we look at some of the implications of widening your remit and consider roles that could be a natural fit for a GC.
Five advantages of widening your remit
- Housing similar functions under one roof can produce efficiencies not available when they operate separately. For example, placing compliance and risk under a single leadership could enable you to better manage common themes;
- Legal professional privilege (LPP) may be a good reason to bring other activities under the GC’s control. However, the scope and application of LLP is very limited and you’ll need to plan activity carefully, particularly in the in-house context where legal and commercial advice and operations are combined;
- As CEOs reduce their direct reports, the responsibilities of senior managers can broaden. If you're going to be at the top table or the board, you may need to be responsible for more than just the legal function;
- If you aspire to the CEO role, you’ll need broad management experience. Demonstrating your leadership skills across different functions is a good way to get noticed; and
- If you’ve been a GC for a while, broadening your role can give you the opportunity to develop your career and learn new skills. It can also open up new opportunities for senior lawyers in your team.
Five challenges
- Your responsibilities as GC are clear. You know what’s expected of you. You have professional responsibilities. You have authority as your organisation’s senior lawyer and can take an independent view where necessary.
Adhering to these principles could get tricky and create conflicts of interests between your roles if commercial objectives and targets across other functions creep into your remit. It may not be reason enough to decline a wider remit, but you'll need to be flexible and disciplined to make it work; - You’re a good lawyer and run an efficient team. But increasing your responsibilities is challenging and will require you to expand your skillset. Managing different functions and types of people and role can be very different to what you are used to;
- You may need to relinquish your role as Head of Legal in order to take on a wider brief. This could mean appointing someone else to manage the legal team. As GC, you may be doing very little technical legal work. That won’t change if you have wider responsibilities;
- For organisations subject to the FCA’s Senior Managers and Certification Regime (SMCR), the allocation of responsibility for the legal function requires careful consideration. The FCA’s rules specifically allow a firm to allocate overall or local responsibility for its legal function to someone who is not an SMF manager. This means that the head of the legal function does not automatically need to be an SMF manager, although they may be one if they also perform another designated senior management function.
Where a GC takes on additional responsibilities outside the legal function, the position may be different. Firms need to consider whether those additional responsibilities fall within an FCA-designated senior management function or other prescribed responsibility, and ensure that responsibilities are allocated clearly and appropriately.
Functions you may add to your core role
Legal
A GC doesn’t necessarily manage all the lawyers in the organisation. Some may sit in other departments and report to other senior managers.
It may make good sense for lawyers to sit in business units. However, consider whether not having all lawyers report into the GC prevents the organisation from managing its risks and legal business effectively.
You won’t necessarily need to restructure. However, you will need a matrix management system that gives you a dotted line to lawyers in other functions and allows you to impose consistency across the organisation.
Some business units may manage their relationships with external counsel and guard them jealously. These arrangements could work well, or they could prove erratic and expensive. If the latter, add value by unpicking these historic anomalies and introducing an effective, centralised process for procuring external counsel.
In doing so be aware of the political aspects of what you are doing in diminishing local status, autonomy and control and in providing more transparency about local activities to the centre. Not everyone will welcome nor assist you in what you are trying to achieve.
Company Secretary
The Company Secretary is a bridge between the board and the executive management. The role often covers governance and compliance. Examples include supporting the chair, helping the board and its committees function and ensuring the organisation meets its statutory reporting obligations.
Combining the role of GC and Company Secretary will give you board level access, which you may not otherwise have. This means you can give the board your detailed knowledge of the legal issues and risks affecting the organisation.
Consequently, you’ll have the opportunity to remind the board of their legal obligations and the legal risks relating to any plans under discussion.
As GC, you’ll work closely with the CEO and executive management. The Company Secretary also needs to work closely with the chair and the Non-Executive Directors, so there may be sensitivities to manage in these relationships.
However, if the combined role does not report to the CEO, governance issues may not be sufficiently aired at board level. In this case, neither the Company Secretary nor the GC can properly fulfil their role.
Compliance
With corporate governance having a high profile, particularly in heavily regulated sectors like financial services and healthcare, the compliance function has become more specialised and discrete. It’s often a stand-alone function headed by a Chief Compliance Officer (CCO) reporting directly to the CEO and an audit committee. The CCO’s responsibilities may also include the internal audit function.
If it’s not a stand-alone executive function, there may be a case for housing compliance with the legal function under the leadership of the GC. General compliance will always be on your agenda because it concerns the prevention of misconduct and wrongdoing.
Some high profile corporate scandals have put the GC at centre stage in US corporations in relation to legal compliance.
Compliance relies on legal expertise relating to the regulatory framework. It needs tools and processes that manage operations in accordance with that framework and the organisation's objectives and values.
Compliance is also about identifying and managing risk and influencing change in relation to regulatory and ethical issues. For these reasons, the compliance role may be a natural fit for you.
The responsibilities of the roles are not mutually exclusive. As GC, you must advise your organisation on how to make its strategy and objectives compliant with the relevant laws and standards. Compliance is primarily concerned with systems and processes to detect and prevent misconduct. Mostly these responsibilities don’t conflict, but they could.
Risk management
Managing legal risk is a key part of your role as GC. You’ll work with colleagues to calibrate your organisation’s tolerance to risk and manage it in line with that tolerance.
Some organisations now appoint a Chief Risk Officer (CRO) to establish and manage a risk framework for the organisation and work closely with the CCO.
Could the GC also be the CRO given that they’re both concerned with risk?
One problem is in relation to scope. The CRO is concerned with risk across the organisation and in establishing ways of identifying, assessing, managing and reporting it.
The GC's role is to understand how activities give rise to legal risk and work with management to assess and calibrate that risk in accordance with the organisation’s strategy and obligations.
Where an organisation has a CRO, the GC will work with them to:
- Produce a common definition of risk that takes account of activities that produce value and those that don’t;
- Put a common framework, infrastructure and reporting tools in place across the organisation to capture risk and standardise tolerance and management; and
- Ensure risk management tools and reports are visible to senior management by way of good governance.
Contract management
In some organisations, the legal team manages contracts centrally. However, in others this may be impossible due to the volume of work or because the organisation’s structure dictates that departments manage contracts in their area of expertise (with an escalation arrangement with the legal function).
The downside here is that no one team has overall responsibility for collating information on an organisation-wide basis nor for monitoring the compliance of the organisation and its customers and/or suppliers with those contracts over their term. This results in a lack of wider perspective and a failure to quantify and manage contracts adequately.
As GC, you can see across the organisation. You have a clear view of the risks arising from a poor contract management system. A good system is about optimising the process, not about your team drafting or reviewing every contract.
This is an area where you can certainly take a lead and add value in one of the organisation’s most significant business areas. However be aware of getting properly into contract life cycle management as this is a big, complex and highly valuable but often heavily undervalued activity.
There are potential downsides. However, by structuring the process you can ensure that your team becomes the focus for the organisation’s contract management, while avoiding being swamped by high-volume, low-grade work that distracts you from the important, high-risk areas.
Conclusion
Adding to your role as GC can be beneficial to the organisation as it may be more efficient to have similar functions under a single leadership. There are fewer boundaries and there may be increased opportunity to take a wider perspective and spot issues early. There may also be some savings and increased career opportunities for you and your team.
But, there are downsides, both organisational and personal, which you should consider and plan for before you extend your role.