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Through their in-depth knowledge of the law and their business, general counsel (GCs) have a key role to play in organisations.
But is the voice of the GC being heard?
Businesses need a culture in which GCs are routinely consulted by the executive board and given the opportunity to help shape strategy.
Sophie Gould talked to Veta T Richardson, President & CEO of the Association of Corporate Counsel (ACC), about how ACC is advocating for GCs as key influencers of corporate culture and what needs to happen to get GCs’ voices heard.
I started my in-house career immediately after law school, which here in the US is very unusual. I went to work for Donald P Walsh, one of ACC’s founders and GC of Sun Company (now known as Sunoco), an oil and gas energy company. I worked in corporate
securities, finance, and transactions for 11 years before making a transition into bar association management. Even though it was a very different role to move from a multi-billion-dollar oil company to a non-profit association, Sunoco supported my
transition and the general counsel even offered that if I didn’t like it, he would hire me back so long as it was within two years. I was very fortunate to work for a law department with people who were so supportive of professional development
for young lawyers.
I worked at ACC for four years as deputy GC, before being promoted to vice-president and deputy GC. I was then recruited to run another bar association, Minority Corporate Counsel Association, which focused on diversity issues, and served there for 10
years. In 2011, I was selected as ACC’s CEO and that’s the position I’ve held ever since.
If you had told me in law school that I would leave practice to run a bar association for in-house counsel, I would never have believed it. It’s interesting how life takes unexpected twists. Young lawyers need to be open to new opportunities even
though they may entail a risk. It’s in those risks that you may find the best opportunities for professional growth and learning.
What’s most instrumental to all the jobs I’ve held is that my undergraduate degree is in business, giving me a solid understanding of the basics of financial statements, marketing, finance, and economics. Understanding how businesses run has
been essential both when I counselled businesses and now in an executive leadership role.
ACC has around 60 chapters globally, and with approximately 2,500 in-house lawyer members, ACC Europe is one of our largest. The UK is part of our Europe network, and we hold a variety of educational and networking events in London each year. Lawyers
come together for legal and professional education, opportunities to network and to share resources and tips on how they can better serve their corporate clients.
At the global level, we have board members from the UK who participate in setting the strategic direction of our association. And at the ACC Europe chapter level, there are also designated in-house counsel volunteers who are country representatives and
are responsible for organising and developing in-country or in-region programming for the local members.
ACC’s Chief Legal Officers 2018 Survey showed that globally, 73% of all GCs almost always attend board meetings. This figure is much lower in Europe – it’s only 57%. We believe that this is likely due to the fact that in Europe fewer
GCs report directly to the CEO. Globally, 64% of GCs report to the CEO, but in Europe that percentage falls to 52%.
GCs are more likely to attend board meetings if they report to the CEO. This is because they’re more involved in strategic initiatives and business decisions and are more integrated into the executive management team. Other statistics show that
globally, 61% of GCs who report directly to the CEO say they work on strategic initiatives with the CEO, the board and other executives. When they don’t report to the CEO, only 39% of GCs say that they’re regularly involved in working
on strategic initiatives.
ACC advocates for the GC to attend board meetings as an executive attendee. However, to maintain independence, we do not advocate that GCs have a seat on the board of their own companies. We believe that GCs should be present to offer input related to
strategic discussions and utilise their knowledge of law as well as their deep knowledge of the business. GCs should have an influential voice in the boardroom when the business is grappling with challenges and trying to figure out how to address
them, or managing crises that arise.
Central to ACC’s advocacy is supporting GCs to demonstrate the value that they and their law department add to the company so they can earn that seat at the table.
In Europe, it is more common than it is in the US for GC to report to the Chief Financial Officer (CFO). Our survey tells us that about 22% do, and ACC considers this an ill-advised governance practice due to the potentially inherent conflict in the role
of the two officers. GCs should not report to the CFO.
The GC needs to be able to have direct meetings with the CEO without the CFO being present. Independent meetings ensure that the CEO has the benefit of direct legal counsel for the business, not counsel that is filtered through the CFO or any other business
executive. Developing the relationship with the CEO is a step in the right direction towards the CEO deciding to make that change.
At ACC, we have focused on helping boards to understand why it is important for the GC to have that direct line to the CEO and why they should have the GC attend their meetings. GCs are the natural ally to the board and the CEO in setting the right ethical
tone from the top. Ensuring that the GC has a permanent seat at the executive and boardroom tables demonstrates the top-down commitment to an organisation that is legally compliant, operating in an ethical way and that is taking proper protection
regarding its reputational risk.
ACC scored a big win recently. We advocated to the National Association of Corporate Directors (NACD), an organisation based in Washington DC that represents independent directors in national as well as multinational companies. NACD publishes an annual
Blue Ribbon Commission Report on a topic that is a priority in the eyes of corporate directors. In 2017, corporate culture was the topic of that Report. ACC advocated that one thing that boards of directors need to pay attention to is the role and
position of the GC.
Boards need to develop a corporate culture where the GC and members of the GC’s team are regularly consulted, not just by the executive team and by the board, but also at lower levels of the organisation too, especially as businesses expand or seek
to develop strategies in areas where perhaps the law may be uncertain.
We were successful in getting the NACD Blue Ribbon Commission Report to include a recommendation on this. It also adopted ACC’s other recommendations that the GC should be a direct report to the CEO and that they should attend board meetings and
have a chance to weigh in as the board discuss the future direction of the company.
Yes. At our Global GC Summit, held this year in Amsterdam, our GCs from Europe and around the world supported this and independently reached these same conclusions. GCs must have a seat at the table and it is in the company’s best interests to ensure
this happens. We believe that this discussion needs to take place at the board level, and if the GC is not currently present, board members need to ask why not.
If you look at the constant stream of new regulations from the EU and attempts to analyse the impact of Brexit, European companies face significant business challenges that are made more difficult by the regulatory and legal world they’re operating
in. It’s foolhardy for any corporation not to seek the advice of counsel and regularly have that person at the table as strategy is developing. Greater interaction between the business and the legal team reinforces that management is doing what
they can to reduce any potential risks that may damage corporate reputation. If they are not inviting the GC to the table then perhaps there are potential blinders to issues that could have been raised and addressed had the GC been present.
We’ve set up a special webpage on governance because ACC views the issue of the GC having a seat at the board and CEO’s table as a governance issue, not just as a good thing to do. We would also encourage GCs to circulate the NACD Blue Ribbon
Commission report on corporate culture to their CEO and board of directors. We hope that in doing so they can prompt conversation within their corporations about what the tone at the top should be and what steps should be proactively taken to make
sure the right tone is being set.
ACC governance resources
White paper on The General Counsel as Corporate Culture Influencer
2017 NACD Blue Ribbon Commission Report on Culture as a Corporate Asset
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