For general counsel seeking a ‘seat’ at their organisation’s board or executive table, their role has never been more important. At a time of diminished public trust in companies and additional scrutiny from regulators, the role in-house lawyers can play is increasingly critical. The recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has refocused attention on the fiduciary duties of boards. All organisations, including but not limited to those in the financial services sector, are under pressure to improve governance, protect their brand reputation and behave in a way that meets community expectations.
A seat is generally reserved for those within organisations who are considered to have the courage and resilience to make decisions that effect significant change. A robust in-house legal function, represented at the table by a general counsel, sends a signal to all internal and external stakeholders that legal and ethical compliance matters. However, many general counsel struggle to command the respect that secures them a seat. Some lack regular access to board directors. Others may not be among the direct reports of the chief executive officer (CEO), even as they fulfil dual roles as company secretary or head of risk.
How should general counsel go about building their credibility and influence? In the latest round of our General Counsel Insights Series, MinterEllison and the Association of Corporate Counsel Australia sought the views of some of the nation’s top in-house lawyers. Roundtables were held in Melbourne on 27 February, led by Chris Ryan, general counsel for EnergyAustralia; in Sydney on 19 March, led by Betty Ivanoff, group general counsel for Coca-Cola Amatil; and in Brisbane on 23 May, led by Joanne Moss, chief legal officer for Pizza Hut Australia.
Some pointed and even provocative perspectives emerged (republished here on a non-attributed basis). Achieving a seat, and then maintaining it, can require everything from business acumen to relentless networking to improving one’s personal branding and executive presence. But the board and executive dynamics must be traversed carefully once there.
What does it mean to have a seat?
Working at the top of an organisation can feel like a natural place for an ambitious general counsel, used to being a high-achiever. “The ability to influence strategy at the top of the funnel” was how one roundtable participant described the benefit of having a seat. Others expressed a “fear of missing out” by being absent at important discussions and meetings. Another said: “You don’t want to be seen as sitting out to the side, like the doctor called in when something goes wrong. You need to be equal to the other top influencers.”
Yet lawyers often face a perception problem. Launching the Melbourne roundtable, Chris Ryan recalled the scathing words of Sir Henri Deterding, oil magnate for Royal Dutch Shell. “Lawyers are not business people,” he wrote in a letter in 1916.
Overturning fixed mindsets is hard. However, general counsel have no choice but to debunk the belief that lawyers are blockers and disciplinarians if they wish to add genuine value to their organisation. While legal knowledge is a prerequisite, roundtable participants noted that the worst outcome is to be seen as a “blocker” or “goody two shoes”, just there to “get people into trouble".
Understand the business
The best way for general counsel to achieve influence is by showing a keen interest in the business. As one participant observed, “For me, having a seat at the table means understanding where the business wants to go and being able to help them with that journey.”
Betty Ivanoff, who moderated the Sydney roundtable, explained how in her early years as a general counsel, she thought her role was “to interject when they do something risky”, but now she felt more integrated in the organisation’s strategy. Hosting the Brisbane session, Joanne Moss described the experience during her career of proving she was a practical lawyer who understood the organisation’s commercial objectives.
I worked hard to build business acumen,” she said. “I became fluent in the organisation’s strategic vision, financial reporting, data analytics, performance management and digital platforms.”
There was consensus that general counsel should proactively build relationships with different functions in the business, rather than waste time micromanaging the legal team. In the words of one participant who worked at a construction firm, “When I started, I just literally put on my hard hat and boots and went out to understand the concerns on the ground. And people saw that – it’s quite a social organisation and people use Yammer heavily. Now, they invite me to their meetings because they know I understand the business as well as they do.”
It is important that general counsel are seen as accessible and approachable rather than “guarded by layers of lawyers”. If so, they are more likely to be invited to cross-functional meetings or think tank sessions. “You don’t want anyone to be scared of coming to see you with any question, innovation, idea or problem,” one said. “But if you don’t converse at all levels, right from the bottom of the organisation to the CEO, then they won’t.”
Building relationships to make a mark
Having a direct line to the CEO is a key mark of influence. This provides a springboard for general counsel to get involved in corporate strategy at an executive level, before ascending to a board-facing role. The Association of Corporate Counsel’s global Chief Legal Officers 2017 Survey found that 72 per cent report to the CEO, 18 per cent to the board, 13 per cent to the chief financial officer (CFO) and 7 per cent to the chief operating officer among others (assuming that some have dual direct reporting lines). In the Chief Legal Officers 2019 Survey, 76 per cent of those who reported to the CEO said the executive team often sought their input on business decisions, compared with only 48 per cent of those who reported elsewhere.
However, reporting to the CEO is not essential if general counsel develop strong relationships with other senior executives and regularly attend board meetings. “Looking at our people, I don’t think our CEO needs another direct report. Let’s work within the structure and make it work well,” one general counsel said. Another emphasised that power can exist across the organisation, such that the ‘innovation table’ may be more important than the board or executive table. He recalled how the first general counsel he served under refused to talk to anyone below her in the hierarchy. “That provided a fantastic opportunity for me. She was off talking to the chair of the board. I was talking to the business, where all the decisions were made. When you talk about getting a seat at the table, the question is which table?”
Judge when to speak up
General counsel who know how to deftly intervene when something isn’t right will grow their respect and influence within an organisation – enhancing their ability to secure a permanent seat.
There is a fine balance between supporting business growth and delivering results for stakeholders, and, on the other hand, acquiescing to the crossing of a legal or moral line.
Lawyers must always be aware of legal and reputational risks relating to daily operations, conduct or transactions, as well as penalties and fines. At times, they may feel the business is not giving these risks due care.
Even where the business is legally compliant, the Royal Commission findings now require all organisations to go further in ensuring they maintain a social licence to operate. . As one participant said, “It’s a lot easier building great relationships with executives when you’re helping them do exactly what they want. What about the situation which will inevitably come where you have to put your foot down?”
Participants felt it is best for general counsel to initiate difficult conversations one on one. These should also occur early in the decision-making process as an issue or strategy is debated. Mitigating risks and instilling good behaviours in real time saves trouble down the track. “Every now and then I have had to go head to head with an executive, because things were moving too quickly,” one participant said. “What I struggle with is when the legal function is seen as the ‘fix it’ at the end, once you’re in the jam,” added another.
Ultimately, the general counsel’s role is to advise what the law is, as well as the intention behind it and the potential response from regulators. The aim should be to stimulate a dialogue about the best way to achieve the company’s goals. “If you’re authentic and give an honest view as to what might go wrong, people respect that,” one participant said. “ They’ve got to know what the risks are.”
Navigate the CEO and board
Taking one’s seat at a board or executive level requires astute management of relationships with senior stakeholders. The difficulty is that as general counsel develop these close working relationships, they remain obligated to retain their independence, recognising that they ultimately act for the company as opposed to management.
General counsel should have delegated authority to access the board with any significant concerns without first being required to seek consent from management, even where they report to the CEO. However, the parameters around when this “dotted line” to the board can be activated are unclear. Roundtable participants expressed a fear of being seen as “dobbing on the business” or undermining the CEO. As one general counsel put it, “Most times that you’re going to the board without telling the CEO, it’s about the CEO.” Another participant suggested a possible approach: “You need to say to board directors, ‘I have this concern; my instincts are telling me there is something the CEO is doing, or is aware of, that is not quite right. Can you advise me how I should deal with it, bearing in mind my role is to protect the company? I’ve got enormous respect for the CEO but this is very troubling for me and I’m losing sleep.’ Chances are the board will say it’s really grateful.”
Earning the loyalty of those at the top can cement a general counsel’s seat. No board director wants to be held personally liable for breaching their fiduciary duty. However, general counsel have limits on how far they will go to represent clients. As one participant recalled, “A leader of ours was called before a Royal Commission. He was being called to give evidence, but what he was planning to say I suspect wasn’t the whole story.” He continued: “I still don’t know what the entire truth of the situation was. As a lawyer, that’s an incredibly uncomfortable situation to be in.”
Another general counsel cited friends who had resigned from organisations: “They decided that if the bad behaviour continued, then that wouldn’t be a place where they wanted to work.” Ultimately, if the culture requires that a general counsel turn a blind eye towards unlawful or unethical behaviour, he or she may feel compelled to pursue a seat within another organisation rather than risk non-compliance with their professional obligations and damage to their personal reputation.
Build your brand
At the Brisbane roundtable, participants discussed the need for general counsel to embody ‘executive presence’. Beyond technical competencies, the ability to have your voice heard, command respect and be seen as a leader plays a major role in securing a seat. Qualities which participants viewed as desirable include emotional intelligence, staying calm under pressure, and the ability to listen and synthesise views into a decision. Then there are the intangibles: “The way you look and sound is important.” One general counsel who joined a company with no in-house legal team had to convince people she had a “voice worth listening to”. What helped her was confidently expressing her opinion, instead of being a fence-sitter. “That earns a lot of respect and lets you stay at the table, I’ve found. The worst thing we can do as lawyers is the ‘if, but and when’ and vacillate.”
Many felt that general counsel need to “build their brand” internally and better promote the benefit of their legal function. Seats at the table are limited, and to reserve one, general counsel will often be required to compete with senior leaders in marketing, sales and communications. One participant recommended all general counsel hone an “elevator pitch” summarising their value proposition to the organisation in a few sentences. This might involve the ability to meaningfully engage with regulators, diffuse brand and reputation issues or advise on risk mitigation strategies for disruptive technologies.
For one general counsel, the best way to demonstrate value to their CFO (of whom they were a direct report) was via data and numbers.
The general counsel’s value proposition will mean different things to organisations depending on the landscape of the industry, and the knowledge and experiences of each of the directors and executives.”
When in doubt, just turn up
General counsel enjoy rapidly improving prospects for snaring a seat at the table. The corporate sector in Australia has entered a period of managing risk rather than engaging in reckless risk-taking. Yet lawyers' role is more than just a handbrake.
How can general counsel convince an organisation that they have an important contribution to make? Roundtable participants were unanimous: above all else, it’s important to just show up, even to innovation brainstorming sessions or cross-functional management meetings that on the surface may not seem to require legal input yet.
Sometimes, you’ll never get a seat at the table. So you just have to sit down at the table and then demonstrate your value”
In fact, training an organisation that early legal input is imperative to achieving a sustainable commercial outcome sets the groundwork for securing a seat. As one participated noted, “I tell my stakeholders that I understand the commercial objective, and that I want them to achieve it. However, there are many different ways to get there. So, let’s map it out properly initially, otherwise it’s going to become a very expensive process when you come to me down the track.”
Another general counsel recounted with a laugh how she was invited to present at a board meeting. “I didn’t have a seat at the table. The chair made a comment at the end saying, ‘It’s really good to have you here’. I took the plunge and asked the chair whether I could attend future board meetings, to which he agreed. And that was how I secured my seat.”