The General Counsel: A Definition
General Counsel is a position used to describe the lawyer at the company or the leader of a company’s legal department. The General Counsel is usually the most senior lawyer and, in some instances, the only lawyer, at the company. Corporations that are subsidiaries may have a General Counsel, as well as their parent company.
The General Counsel is a senior corporate officer of a company. The General Counsel’s specific duties are usually defined by the company’s Chief Executive Officer (CEO) , but may specifically include management of the company’s legal and litigation issues, guidance on corporate legal strategy, oversight of large internal and external legal matters and the management of the company’s intellectual property and regulatory matters. In short, the general counsel serves a very important role within the corporate structure, as it is the general counsel that directly addresses a corporation’s need for legal services and provides vital legal advice and counsel to corporate management.
The Responsibilities of a General Counsel
The responsibilities of the most senior lawyer in your company are immense. Affectionately known by your staff as "the company attorney," the General Counsel (or Chief Legal Officer or General Attorney) is retaining a consultant or law firm to represent the Corporation; reviewing and entering into or terminating contracts with vendors and third parties; reviewing and commenting on other contracts that the company enters into; reviewing and commenting on documents to ensure that company assets are protected; advising the Board of Directors on all legal matters; advising the executive team as to corporate risks; and many other legal issues that will arise.
The General Counsel will also need to understand the Corporation’s industry and its positions within that industry. This may involve reviewing industry-association anti-trust guidance documents to ensure that the company representatives are complying with the nine areas in which the Department of Justice may challenge actions that tend to restrain trade. It also involves knowing the SEC rules, where applicable; knowing the industry trading rules; and knowing what the government may do in the industry. Nobody will do this as well as the General Counsel.
General Counsel Skills and Qualifications
According to the Association of Corporate Counsel ("ACC"), a General Counsel is "an executive who’s responsible for most, if not all, of the legal affairs of an organization."
Accordance with the ACC’s recommended definition, a GC needs to possess both subject matter substance and strategic sensibility. These two broad categories break down into three areas of skill sets, training, and experience.
With regard to skill sets, the GC should be a jack-of-all-trades ("they must be comfortable advising business units on disparate issues…they are often called upon to explain to those units how their silo areas interface with the company as a whole"). Although subject matter expertise is a necessity, that expertise does not need to be across the board. A GC does not need to have expertise in every area of the law; however, a GC needs to know the basic underpinnings of certain areas so that a GC can see how particular issues interplay ("once a general counsel has gained a basic familiarity with a broad range of legal issues commonly confronted by other internal clients, he will be much better equipped to ferret out, quickly, those specific issues with which he should get involved").
Next, GC’s need to be trained and/or schooled in the art of "creating consensus and persuading others." In that vein, the ACC recommends "actively developing contacts and relationships with other executives, particularly those in training for higher office – to strengthen ties and build alliances." That go-to person then will be able to "act as a conduit between the executives and the company’s legal function."
Having the above skill sets and training should enable a GC to reach a level of experience where he or she can "anticipate potential legal problems and act proactively, whether it’s developing an employment practice that places a premium on compliance, or drafting a dispute-resolution mechanism to address emerging areas of risk before a crisis arises, the general counsel’s legal skills should have reached the point where he or she can help the company cope with changing legal circumstances rather than being constantly reactive."
Finally, a GC "needs the leadership and management skills necessary to keep the corporate-legal function on track with respect to mission, objectives, and budgets." Nonetheless, the ACC recognizes that an internal GC "might be forced to focus on one area of the law at the expense of another of vital importance to his or her employer…a company might decide to bring in outside counsel with requisite expertise or to rely on a partner at a firm from which the company has been a major client."
To that end, "the general counsel needs to work closely with senior officers to determine the right mix of internal and external counsel for the company."
In sum, a GC "must be able to assess the needs of an organization, determine whether those needs can be met internally or externally, and develop strategies for meeting them."
General Counsel vs Legal Counsel
General counsel differs from other legal counsel and lawyers in a company, such as department counsel. General counsel focuses on all aspects of the business in the long term, rather than legal issues as they arise, and takes a broader view of litigation risks. General counsel are involved early on in business decisions and work more collaboratively with members of the business. The position is not third party-facing. For example, it is less likely that customer contracts that have already been negotiated with a customer would be given a telephone call to general counsel by the business persons negotiating those contracts if an issue arose.
Corporate governance and compliance oversight and responsibilities are primarily within general counsel’s purview, and general counsel are also responsible for all dispute resolution and litigation activities. General counsel plays a business-focused role in managing risks related to internal and external business activities. Having general counsel ensures the company’s compliance with applicable laws and more internal policies. General counsel coordinates and oversees the legal functions of all external legal counsel, as opposed to having a separate lead lawyer for each business or function of the company. In-house counsel and external counsel work together with the common goal of supporting and contributing to the overall objectives of the business and protecting its interests.
Independence and authority to advise from a business and legal perspective on decision-making at the top levels of the company, in particular, goes directly through general counsel. This creates a more cohesive legal approach to often complex situations by having general counsel set the goals and strategies to best achieve the objectives of the business.
General counsel often also supports the senior executives of an organization and provides guidance on complex issues and fosters relationships with the board of directors, especially if the company is subject to additional SEC and regulatory obligations.
The Influence of a General Counsel on Company Culture
The appointment of a General Counsel can also have a significant impact on the culture of a company. A General Counsel is not only responsible for legal matters, but also serves as a reflection of the company’s ethics and values. By ensuring that the company is in compliance with local, national, and international laws, the General Counsel is responsible for cultivating a culture of compliance and ethics. Policies and programs are more likely to be effective if there is buy-in from high-ranking executives. This means that the General Counsel plays a vital role in educating executives and employees about the consequences of noncompliance with company policies, and communicating the message that one of their most important jobs is to ensure compliance.
A General Counsel is often required to serve as a role model in the workplace by not just communicating compliance expectations to employees but also embodying and reinforcing these values in his/her daily behavior. Doing so is vital to establishing a compliant and ethical work environment. It has been shown that top executives’ ethical behavior trickles down to other levels of the company , positively influencing the bottom line. A company’s inability to demonstrate its commitment to ethics and compliance can result in lost business and legal disputes. A General Counsel is tasked with the monumental job of ensuring the entire company is in compliance, and given this responsibility, it is important that he/she be held accountable for its efficacy.
Hiring a General Counsel is one of the first steps a company takes in establishing a culture where ethics and compliance take center stage. Doing so shows the company’s executives, shareholders, clients, and employees that ethics and compliance are a priority. This is especially true if the General Counsel is hired from outside the company and has no ties to the company. Although appointing a General Counsel is not the only measure a company can take to ensure it is creating a culture of compliance and ethics, appointing a trustworthy General Counsel can be instrumental in limiting the company’s liability.
Difficulties for General Counsel
The role of general counsel is not without its challenges. One of the key challenges facing a general counsel is building an effective working relationship with the new CEO or President. Oftentimes, the new leader expects the general counsel to hit the ground running, providing immediate solutions to a multitude of legal issues. It is important for the general counsel to gain the confidence of his or her counterpart, often the CFO or COO, as this individual will serve as a direct link to the board of directors, allowing the general counsel to be a trusted advisor. While the general counsel and the board are not in a strict principal-agent relationship, the board, and particularly the audit committee, may have a role to play in the oversight of legal matters. However, if they don’t trust the relationship between the management team and the general counsel, they may insist on their own outside counsel being involved in matters such as litigation. Being trusted by the board as an advisor may prove difficult if legal matters are consistently managed at the wrong level within the organization, and if the general counsel does not provide pragmatic guidance that makes sense in the context of business objectives. The general counsel may also face difficulty in finding common ground with other legal team members, as tasks delegated to his or her subordinates may not align with what the general counsel believes are the appropriate tasks. Setting expectations with staff in all areas (corporate compliance, litigation, etc.) is imperative to creating an efficient workflow. This executive level of management is important to demonstrate to the rest of its staff that the GC possesses the leadership and negotiation skills necessary to be an effective representative of the company.
A General Counsel’s Future
As companies face an increasingly complex maze of regulatory demands, fierce competition and the compelling need to increase their profitability, the pressure on corporate counsel to embrace new opportunities and redirect traditional participation in all areas of business planning will only increase. It is likely that the companies that will be most successful in meeting these increasing challenges are the ones whose general counsel are recognized as full partners in all areas of business decision-making. General counsel must rethink their roles within their respective organizations. Executive leaders want their general counsel to have broader responsibilities and be more agile advisors who can provide risk assessments and develop proactive strategic thinking in the context of the legal requirements and risks . This will require fostering a culture of collaboration and creativity, using technology to develop a framework for faster information-gathering, and offering practical guidance on courtroom developments and trends that will affect operations. At some point in time, general counsel as an executive team member should also consider merging the in-house and outside teams to better utilize the capabilities of both groups and allow in-house counsel to act more like a regular member of the business team. To aid this effort, general counsel of the future must be adept in five areas necessary for managing the legal function: creating a strategic vision; identifying and managing outside counsel; managing in-house staff; managing budgets; and performance evaluation, with metrics developed in advance.
