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Minter Ellison

Many different hats: the role of the modern general counsel

05.09.2017

 In partnership with:

 Acc


Key takeouts


Person 

The modern GC is a varied role that needs an equally well-rounded individual to fill

Medal 

Organisations who let GCs 'off the leash' will be rewarded with unique strategic perspectives

 Football

Uncouple the role from being a 'lawyer only' and they'll integrate with the team to kick goals 

 Heart hand

The role requires one to be the trusted advisor, the barometer, and sounding board to the executive

 Value

The GC role attracts, and requires lawyers who want to actively contribute to the bottom-line

Technology Trends 

From emails to artificial intelligence, to stay relevant GCs must understand and forecast trends and be masters of all technology


Introduction

‘Facilitator’ or ‘firefighter’. ‘Bridge-builder’‘’ or ‘Jack of all trades’. These are just some of the ways Australia’s leading general counsel affectionately describe their professional contribution. So, how are this burgeoning legal workforce enjoying life? When MinterEllison recently asked the question, it discovered that the companies who truly allow their general counsel to flourish gain much more than a source of cheaper legal advice. Rather, they are enlisting a valued strategic adviser and business partner.

Joining with the Association of Corporate Counsel ACC Australia, MinterEllison hosted a series of roundtables in mid-2017 with senior ASX200 general counsel from sectors including banking, retail, telecommunications, engineering and construction. The aim was to provoke a stimulating peer-to-peer discussion about the roles of general counsel and the pressures they face today. Events were held in:

  • Melbourne on 6 June, led by Mei Ramsey, Group Executive Legal Governance & Regulatory Affairs for Medibank Private Limited
  • Sydney on 8 June, led by Michael Vardanega, General Counsel & Executive General Manager, Corporate Affairs for Challenger Limited
  • Brisbane on 11 July, led by Andrew Clarke, Group General Counsel & Company Secretary for Origin Energy Limited.

Drawing on original observations from participants (republished here without attribution), this paper paints a vivid picture of a profession that is securing more influence and responsibility within the corporate environment – even as the practice of law experiences profound disruption.

Chief legal officer

The primary ‘day job’ of general counsel is serving as the leaders of their organisation’s legal department. Typically, but not always, they report to the chief executive officer (CEO). They also manage a talent pool of lawyers as well as specialist teams, and oversee the organisation’s portfolio of liabilities and risks. 

Legal responsibilities can vary widely depending on the nature of the industry, and most importantly, the size of the company. According to a survey by the ACC, about 65% of Australian general counsel work in organisations with 10 or fewer lawyers. Hosting the Brisbane roundtable, Clarke noted that general counsel with smaller teams tend to “retain their hands on the levers” and wade through routine tasks such as document management and drafting contracts. A frequent grumble is that too much time is taken up with management. As an attendee at one of the roundtables wryly observed:

I spend so much of my time managing people in the team that it’s actually quite refreshing to then go and do some legal work.
 

 

Key business partner

Most general counsel are nonetheless attracted to the role because they want to make a wider contribution in a business capacity – and to experience more corporate dynamics than are available in a law firm. Increasingly, the profession is being asked to do more than provide strict legal advice or litigation support. Today, general counsel’s contribution extends across diverse areas such as strategic planning, financial affairs, business processes and project management. They also oversee the company’s records and documentation, as well as relationships with key vendors and suppliers. IT systems and technology, particularly cyber security, is another area coming into sharp focus as more companies suffer from data breaches or have their intellectual property stolen by patent trolls. 

Therefore, it is vital that general counsel are able to place legal issues in a larger operational context, even if they do not strictly see themselves as businesspeople or technology experts. At all three roundtables, attendees emphatically agreed that they had been hired to be part of the decision-making, and accept accountability for the company’s losses and wins. As described by one general counsel:

Of course, you have responsibilities to provide legal advice, but you’re also meant to be part of the business – not sitting on the sidelines, writing lengthy advice and throwing it over the fence

 

Hosting the Sydney session, Vardanega argued that the role of general counsel as legal managers – while still relevant – is gradually yielding in importance to their contribution as ‘counsellor-in-chief’ to the CEO and the board, as well as strategists informing the company’s longer-term direction. Several general counsel noted that they were required to contribute in the boardroom and potentially lead discussions involving thorny questions facing the company. These might cover new executive hires, or general business considerations involving the risks associated with a merger or acquisition. In these situations, many general counsel recalled sensing a shift in the atmosphere. As an attendee observed, “Everyone at the table turns to you and says, ‘This is why we’re paying you. We need a decision’.”

It is strongly in the interests of general counsel to build a relationship of trust with the CEO and other senior managers. Attendees generally agreed with the sentiment that “some CEOs get it, some don’t” in valuing the profession’s broader business contribution and diverse skillset. Being an active voice in the boardroom was seen as a far better option than “remaining stuck in the corner and crunching out the legal work”. The fact that general counsel are not required to meet key financial metrics (unlike, for example, the sales and marketing team) also gives them the luxury to step back and adopt more of an enterprise-wide view. In the words of one attendee, “My CEO said to me, ‘I really need someone independent who has a different perspective’.”

The importance of wearing the right hat

Nonetheless, most general counsel are acutely aware that they operate in a sensitive position requiring the fine balancing of business, legal and ethical considerations. Depending on their circumstances, they may also need to consider whether forthright independence is actually welcome . One of the most profound observations was that general counsel wear “many different hats” – and need to be acutely conscious of “what hat they’re wearing in every particular situation”. While general counsel may enjoy being business executives first and lawyers second, one observed, “Sometimes you have to be the lawyer first. You can get inadvertently dragged across into a business discussion when your mindset should be legal. The needle moves, but you have to be aware of what your role is when you’re doing it.” Another added: “If I’m doing the right thing by my organisation, I need to find where the line is.”

Other general counsel countered that being bound by the values and culture of their organisation was something they signed up for in accepting the role. Rather than being too independent of the business, it was important to be integral to the business or suffer a loss of credibility. (An exception would be where the general counsel had to conduct an internal investigation.) In the words of an attendee:

 

There’s a certain ‘calling a spade a spade’. However, one of the things I enjoy is the collegiate feel and working as a group to achieve the business plan.

 

Mastering the internal politics

General counsel experience varying levels of seniority within organisations. In most cases, they do not take direct responsibility over every decision. Instead, they are often influencers who must manoeuvre behind the scenes to achieve the best possible outcome. Wielding clout within the organisation requires them to develop sensitive political antennae, strong interpersonal skills and emotional intelligence. This helps in dealing with strong personalities in a business’s upper echelons.

A challenging scenario was identified at one roundtable where a general counsel might know the organisation was on the wrong course, yet did not have the ear of the CEO. In such cases, it was suggested that general counsel must work hard to convey the right message through a variety of other figures within the organisation – up to and including the CEO’s personal assistant.

This issue was also discussed at another event where participants drew an interesting distinction between general counsel exerting ‘persuasive’ power as opposed to ‘positional’ power. One attendee noted than in 16 years, he had only laid down the law to his colleagues once. “On every other occasion, it’s about persuasion and talking to the business. If your ideas aren’t good enough to persuade people that they should be taken into account, then you’re not doing your job. If you say, ‘Do it because I’m a general counsel’, or ‘Because it’s the law’, you’ve almost lost the debate.”

There was a feeling that resorting to “putting the flag up” was an option that should only be exercised judiciously. Instead, an important function of general counsel is being able to diagnose an organisation’s appetite for risk and whether the vulnerabilities involved are legal in nature or belong to another business function such as sales or public relations. “We have to ask on every decision – is this our job, are we the people in the organisation primarily responsible for this issue?” said one attendee. “The answer is ‘yes’, only if we’re about to breach the law and all go to jail. But almost nothing else falls within that category. It’s somebody else’s risk profile and you can’t take their decision-making away from them.”

Making a wider contribution

Today, general counsel are tested in many complex situations. For example, they might oversee periods of dramatic change as their organisation transitions from a state-owned enterprise to a listed entity. Another challenge is handling mergers and operational restructures that create a revolving door of personnel. 

Occasionally, general counsel must balance multiple roles, such as being company secretary, compliance team leader or crisis management coordinator. One attendee noted the importance of carefully controlling the flow of information to board directors as part of managing personal liability exposure. Another observed that general counsel bring transferable skills to many different portfolios. “Safety, obviously, has a huge risk management and regulatory role associated with it. Similarly, in crisis management, you want people who can remain calm and logical, distinguish facts from assertions and work through issues.”

Unfortunately, many general counsel find themselves caught in a trap where they are stymied from making a wider contribution because they can’t extricate themselves from daily legal work. One attendee summed up the conundrum: 

 

I can’t improve the business because I’m too busy doing the business.

 

At the Brisbane session, Clarke alluded to a general counsel who is authorised to spend 20 per cent of her time on business improvement. Few organisations, he acknowledged, can afford to take their in-house lawyer offline for the equivalent of one day a week. “However, if we don’t do that, we’re giving in to the hamster wheel,” he said.

Proving value

The growth in the number of lawyers working in-house is predicted to subside as businesses in an uncertain global economy face pressure to control headcount. This places an even greater onus on general counsel to demonstrate value. Part of the issue is that their work is qualitative rather than quantitative. At one of the roundtables, it was observed how companies are much more willing to hire accountants during high-demand periods such as tax season – whereas the worth of in-house lawyers is seen as more nebulous. “Justifying why you need another six-figure salary in the overhead structure is more difficult compared to other departments,” one attendee noted.

General counsel have several options. One is to negotiate more qualitative metrics with their employer with a view to earning greater performance bonuses. This could correlate their ability to translate strategic advice into tangible financial outcomes. Alternatively, in-house lawyers could move into higher-value work streams – for example, by renouncing their involvement in procurement contracts below a certain dollar amount. It is also becoming more common for general counsel to outsource routine work. By distributing their own workload, general counsel can move to supervising the workflow. This will allow them to become intimately familiar with different parts of the business and take on a more valuable role.

Incorporating technology

A final major theme explored during the roundtable sessions was how technology is transforming the role of lawyers. Clients can be advised more quickly and seamlessly than ever before – but there is also unprecedented pressure to deliver immediate answers. One attendee recalled that as a young lawyer in the mid-1990s he was put in a room with a standalone computer and told to “work out what this internet thing is”. He said: “I literally sat there surfing the World Wide Web on a dial-up. We didn’t even have computers on the desks at that point. Now, you receive the email, quickly followed by the phone call 30 seconds later, asking, ‘What do you think?’”

Already, many general counsel are automating routine document management and invoice-handling. Advances in machine learning and artificial intelligence will only accelerate this process, making it possible to snap-analyse 100-page court judgments faster than even the brightest paralegal. In addition, blockchain technology and smart contracts – in which agreements such as financial transactions are programmed to execute automatically based on computer code – have enormous potential to revolutionise standard form contracting. Offering a prediction in Sydney, Vardanega suggested that general counsel could one day be required to practice law in code, rather than English.

What next?

The future for general counsel is uncertain. Business challenges are becoming more interdisciplinary and complex; technology is rapidly evolving; and the competition from alternative legal sources is increasingly fierce. This will likely force the profession to keep jostling for ongoing relevance within organisations – and to seek impact further up the value chain.

At the session in Sydney, Vardanega concluded by asking what advice attendees would give to their niece graduating from Year 12. Answers ranged from studying French and pure maths to “show you can apply yourself and think in different ways”, to pursuing engineering as part of a combined law degree because “logic and problem-solving are invaluable in today’s workplace”. Another attendee recalled advising a relative to “study something you enjoy because you don’t want to come out of university only knowing one thing”. All agreed that rounding out legal studies with time in a commercial firm offers unbeatable exposure to a broad range of work.

Above all, there was a recognition at all roundtables that the general counsel of tomorrow will be expected to balance many different hats. As one attendee reflected, “In my team, I would say there are better lawyers than me. If I was to say what people value, it’s your judgment, your understanding of the business and how you communicate with all levels of the organisation.” Another agreed:

 

Increasingly, the legal skills are the least important part – as long as you know who to call and have a good team

 

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