Who Should Legal Report to
I replied that “law” has two very different responsibilities – and that the reporting relationships between the corporate function and senior management should be structured accordingly. 3. Report to the Council. The survey results should prompt senior management to question whether OCOL has effective access to the Board of Directors. For the second year in a row, only a slim majority of respondents reported having a direct reporting relationship to the board, and nearly 40% said they had no reporting relationship to the board. Information about conflicting roles, duties, and responsibilities is a completely different topic for future blog posts. See also: compliance.com/blog/legal-counsel-versus-compliance-officer/ and compliance.com/publications/the-dynamic-duo-ensuring-partnership-between-legal-and-compliance/. Unfortunately, only 8% of CCs have a real leadership role, with most (59%) doing tactical legal work and providing legal advice rather than interfering with the high-level strategy. GC often focuses primarily on the strictly legal aspects of the guidance it provides and does not meaningfully consider non-legal business considerations such as the impact of the law on strategic initiatives or the bottom line. The hierarchical structure of the GC is one of the most discussed topics among in-house lawyers today. And there is no shortage of opinions on this subject.
Much of the conversation revolves around the appropriateness of the GC CFO`s reporting structure, as opposed to the various reasons why senior managers might choose this reporting structure in the first place. And while the pendulum has kept swinging back to the GC CEO`s report, some business leaders still want their CFOs to lead their legal executives. Things to look out for: There are some specific pitfalls that CCs need to be aware of when taking on the role of corporate lawyer and management consultant. CCs need to clearly understand where legal advice differs from management advice in order to preserve the protection of solicitor-client privilege. Lawyers must also remain independent and keep an eye on their professional commitments, even if they are heavily involved in the management of the business. The survey offers a number of useful perspectives on the interaction between legal and economic issues. In this context, the survey data help inform the Board of Directors about the organisational structure and the role and function of the Legal Service; how OCOL interacts with and influences management and the Board of Directors; OCOL urgent trade concerns; and professional trends that may affect the functioning of the legal department. Other areas where technology adoption can increase efficiency within the Department are an IP management system where there is a lot of IP work. A contract management system for contract-intensive departments saves countless times in the search for contracts, clauses and contract dates for your in-house lawyers.
If your business gets a lot of legal holds, considering legal blocking software can also save you a lot of time. It all depends on what your stakeholders are looking for, your business and its activities, and how your legal department is currently set up. Since OCOL typically serves the board as the chief legal officer, this result is a yellow flag. The absence of such a direct report can unnecessarily complicate the board`s ability to oversee the role of the company`s legal department and serve to marginalize the department`s role for internal and external audiences. Benefits: A corporate social responsibility (CSR) initiative or program helps a company pursue social responsibility to various stakeholders, including the public, and considers the company`s impact on all aspects of society. This includes balancing the net impact on the economy, the environment and the community. As a member of a profession subject to a strict code of ethical conduct, the GC is the necessary advocate for the ethical conscience of the company and is therefore in an excellent position to be the lead CSR advisor to the Board of Directors and the management team. This, combined with the GC`s unique ability to cross the business law spectrum, allows the GC to understand all of the company`s legal requirements and resources, making the role of business ethicist a natural choice for any GC. With this in mind, OCOL reporting to a senior executive other than the CEO should be viewed with caution by the Board of Directors. A reporting relationship with a COO may be acceptable as long as the CEO also has appropriate access to the CEO.
However, other forms of reporting relationships may be a cause for concern. In terms of managing the people, operations, and budget that make up the business function, this requires a steady hand from a proven manager who is accountable and led by another proven manager. Not a lawyer whose entire career has been limited to legal advice. And not a CEO whose scale is insufficient for a strong hierarchical relationship. If you are considering future opportunities for the GC and are not a strong supporter of the reporting structure, you will be in a better position to assess whether the GC CFO report can change once you join the company. Or if you`ll be able to convince executives in the interview process that a CEO hierarchical structure is the best way to go. Or finally, you may find hierarchical structure more acceptable when weighed against all the virtues of opportunity (because of your better understanding of the reasons behind it). Thus, understanding it can give you more clarity when assessing the viability of future GoC opportunities. Best Practice: The GoC should assist the Board of Directors and senior management team in identifying the company`s core ethical values and establishing itself as a leading ethics advisor to help create an ethical environment for all of a company`s business relationships, both internally and externally (with employees, management, contractors, etc.). (ii) While industry regulations continue to be seen as the biggest legal challenges for their organization, the impact of policy change is increasingly seen as a major legal challenge. BarkerGilmore`s white paper reveals key findings of reporting line survey “GCs that spend more time on strategic work are simply more efficient,” said Abbott Martin, vice president, research, legal and compliance practice, Gartner.
“At a time when a company`s success is often defined by legally protected assets (IP, data rights, reputation) and legal services (risk governance), GCs are critical to business strategy and must align their time accordingly. The pandemic – with the interdependence of government action and business response – has only increased the importance of CM. The usual view of many lawyers when they find themselves in a scenario where the GC reports to the CFO is that senior managers do not value the legal function. While this is undoubtedly true in some cases, it is not true in all cases. There are other reasons that influence the decision, including: For example, this 2021 edition of the survey confirms the continuation of the OCOL “upward trajectory” in positions of power and influence within the company, involving tasks beyond those of a technical law professional. The results confirm as a best practice a direct reporting relationship between OCOL and CEO, but suggest that more work needs to be done with respect to OCOL interaction with the Board of Directors. The results also provide valuable insights for coordinating the company`s legal, risk and compliance functions. This is consistent with the view that OCOL`s role extends beyond that of technical legal advisor to include the additional roles of intelligent advisor and business partner of management.
 Companies that do not place OCOL prominently and limit its involvement to purely technical legal issues are increasingly seen as outside the mainstream of corporate responsibility. Recently, a member of the board of directors of a West Coast media company asked me this question: Our CEO wants to reduce the number of his 13 direct employees, including the general counsel. What do you think about the fact that the General Counsel reports to the Chief Operating Officer? The benefits: This allows the GC to be fully immersed in the company`s activities and specific transactions from the outset, providing several benefits in terms of corporate governance. First, it allows GC to structure business agreements in a way that supports the company`s long-term goals. Second, GCs enables it to proactively respond to the company`s needs for legal expertise recruitment and other areas. Third, it provides GC with the context it needs to provide more meaningful advice that addresses operational effectiveness concerns. 3. Know and evaluate your team Next, get to know and evaluate your team. Meet the entire team to share your short- and long-term vision for the legal department. Learn about their workloads, their pain points, and think about how they can provide better services. Let your team know that you are seeking their feedback and that they have personal responsibility for any initiatives you have for the department. It may be a good idea to hold a regular team meeting each week to determine the status of various projects and determine staffing or other needs for such projects.
Discover Thomson Reuters` Practical Law Connect, the legal expertise solution developed by and for in-house counsel As technology continues to disrupt and reorganize the way business is conducted, GCs are also taking on an entrepreneurial role in managing their company`s external affairs and reputation. Again, this is a shift from traditional legal work to a role where the GC is actively involved in the development of corporate strategy and is the driving force behind corporate policy, public affairs, regulatory affairs and ethics.