A law degree opens doors. One of those doors is the internal reigns of a company or large corporation, the role we often refer to as general counsel (also known as in-house counsel).
The increased importance of general counsel in the business world is worth emphasizing. The sheer numbers of general counsel between the 60’s and 80’s quadrupled in America, and a moved from a middle management role to one directly involved in strategic management.
Mary Daly suggests that this shift occurred due to rising legal costs, and for this reason, this trend is unlikely to reverse. Lawyers found the role appealing as an escape away from the billable hour. The main functions secured by general counsel at the end of this growth period included:
- managing and reviewing legal services provided by outside counsel
- supplying routine legal services, and occasionally more complex work
- directly counselling clients on regulatory requirements
- creation of compliance program
Daly describes this shift in power as follows,
General counsel, not law firm partners, are now the “statesmen” to chief executive officers (CEOs), confidently offering business as well as legal advice.
The strategic function, and ability to proactively address issues, is also a factor that DeMott cites as a rise for the prominence of general counsel. According to Simmons & Dinnage, this intangible and non-transactional source of value is what allows modern corporations to enhance its value.
The tensions and competing responsibilities between the different roles of counsel also leads to ambiguity of function, and occasionally, shortcomings in the manner in which they perform their job.
For many of us outside of the role of general counsel, the ambiguity of the role means that we rarely understand the job fully, and it likely varies considerably depending on the organization in which the lawyer is functioning. To illustrate, Tanina Rostain states,
Despite the increased prominence of the lawyers who run the legal departments at major corporations, surprisingly little is known about their work.
Events like the Canadian General Counsel Awards (CGCA) help illustrate the wonderful work that these lawyers, often a step removed from the rest of the legal community, are engaged in.
General counsel can play an enormous role in shaping the culture and direction of an organization. They are shaped by the corporation they are in, but also shape these institutions as well. For example, the role of general counsel in promoting corporate social responsibility has been described as “pivotal,”
General counsel are ideally situated to serve as leaders in the struggle to define the parameters of corporate conscience. They can and should be held accountable for promoting integrity on the part of corporations and their constituents.
The CGCA makes particular effort to recognize a company successful in social responsibility, providing this year’s award to Telus.
The pressures to be a “team player” means that if a relationship is too close it can compromise the ability to provide objective legal advice, in particular when that advice creates obstacles for the accomplishment of particular business objectives.
Greg MacKenzie of the 407 ETR Concession Company Limited, a finalist for both litigation management and mid-market excellence, illustrated this sentiment when he told me at the CGCA, “It’s all about the team.” The desire to work on a team though is also part of the interest for many lawyers in moving into these positions.
DeMott cites the following factors for the appeal of working as general counsel:
- the fit between the general counsel’s position and an individual lawyer’s talents (the “fit” hypothesis), where the lawyer experiences growth in skills and functions, while the company benefits from the legal expertise
- the prospect that service as general counsel may furnish a good launching pad into other positions
within senior management (the “launching pad” hypothesis), including the CEO
- the position’s anticipated economic rewards (the “economic rewards” hypothesis), by comparing benefits such as stock options available to general counsel, which are not available to partners in the firm
- the contrast with partnership in a large law firm (the “law firm contrast” hypothesis) beyond the economic rewards, in particular, greater collegiality in the work environment for general counsel
One lawyer who used her legal career as a launchpad is Shannon Rogers of Global Relay. Rogers worked for a large Bay Street firm before joining the B.C. startup, founded in 1999.
She was told by a managing partner at the time that this move was a death to her career that she would regret forever.
Instead, she grew with the company into international markets by focusing on electronic message recordkeeping and supervision through technology and compliance for legal and audit purposes.
“Stay open to all the ways your legal skills can be used,” said Rogers, the recipient of the 2015 CGCA Business Achievement Award.
The presence of women as general counsel in particular may have been a response to institutional barriers within law firms. Giesel theorizes that the presence of women in these general counsel positions “should positively affect the success of women in law firms, the law firm environment, and the status of women in the legal profession.”
Hugh and Sally Gunz examined the potential conflict between strategic decision making and professional responsibility among the membership of the Canadian Corporate Counsel Association (CCCA) (a part of the Canadian Bar Association), and argue that this role may have resulted in the loss of some of their professional judgment as lawyers,
It is not that these practices turn them into white-collar criminals, but rather that the kinds of ethical dilemma that they face in practice typically call for fine judgement concerning the interests to be considered and the actions to be taken. The more they become ‘embedded’ in the firm’s top management team (TMT), the more likely they are, we argue, to adopt a decision-making style when faced with these dilemmas that resembles that of a ‘normal’, non-professional executive…
The less they saw themselves as lawyers, the more their judgement appeared to resemble that of non-lawyers.
Grace Giesel suggests that the more secluded nature of general counsel from the rest of the bar reduces the perceived risk of professional discipline. She recommends greater support and integration with the bar in order to foster a culture of legal compliance.
The secluded nature of these roles also means opportunities for others. In addition to women, others who experience challenges in traditional law firm settings tend to thrive as general counsel.
Fernando Garcia of Nisan & Infinity Canada was the Tomorrow’s Leader Award recipient at the CGCA. Garcia’s journey from Latin America to a high-priority neighbourhood in Toronto was recently detailed in the Legal Post.
Garcia told me that his contribution to the profession is to encourage more open-mindedness and welcoming to diversity. He highlighted to benefit of the new LPP Program, and how these candidates have plenty to offer if provided the chance.
Garcia also emphasized the team-based nature of his work, “What separates us is the people who work for you.”
What Rostain concludes is that although the earlier era of general counsel deferred considerably to business objectives and managerial preference, the more modern lawyers are willing to draw a clear line in the sand. This is likely due to regulatory action directly against lawyers for corporate misconduct in recent years. Ironically, these actions and statutory changes were exactly the type of market demands that Rogers capitalized on with Global Relay.
Gunz also came across an unexpected finding. The longer the lawyer worked in the role of general counsel, the more they saw themselves as non-lawyers. But the opposite effect was observed the longer the lawyer had their association with their employer. In other words, general counsel who remain in this role with the same company tend to solidify their professional identities and corresponding responsibilities as a lawyer, despite any involvement in TMT strategic management.
Regulatory changes already underway may themselves change the dynamic for general counsel.
DeMott predicts that the relationship between directors and general counsel will weaken as a result of new regulatory requirements for use of independent outside counsel and retained audit committees. These external “gatekeepers” will play their own role in ensuring corporate compliance.
Board of directors will be more directly involved in the selection, retention and compensation of general counsel. Once accountable to directors instead of CEOs, general counsel will likely assert greater independence.
Simmons & Dinnage affirm that as the role of general counsel continues to evolve, they will find a greater role in governance through acting as “innkeepers” who promote healthy governance through compliance and ethics, but as an employee embedded with a single client,
In-house counsel do not operate in a legal vacuum but must consistently weigh both legal and business concerns in a dynamic environment plagued with uncertainty. This dual competency enables in-house counsel to develop a pragmatic understanding of business strategies (both short term and long term), riskmanagement initiatives, global operations, and the relevant legal environment. Well-positioned innkeepers, especially when complemented by external gatekeepers, are an essential feature of healthy corporate governance in large corporate firms.
The development of compliance specialists and ethics advisors is a business practice which could potentially be imported in a large law firm structure.
Chambliss & Wikins, in their survey of thought leaders in the U.S., suggest that this may be a more effective way of approaching professional discipline in a self-regulated profession, and moving instead towards a model of “enforced self-regulation.” The development of these are only likely to occur though with encouragement of the lawyers’ insurer.
What this also means is that the door, leading from a large law firm to a general counsel position, may no longer only be unidirectional. Large law firms can benefit from the strategic decision making skills of general counsel, and assist in the risk management of their own practices internally.
A law degree may open doors. A role as general counsel may act as a launching pad. The combination of both might result in a launching pad through doors we haven’t even seen yet, and the bar would do well to keep these counsel within the fold in order to explore these possibilities.