General counsels are currently expected to take on more responsibilities than ever before within their organizations. In the past, their main job was to guard the company against legal and ethical offenses, but the role is so much more than that now.
In addition to avoiding legal infractions, general counsels are expected to provide strategic planning advice for the executive team.
In fact, many directors believe one of the general counsel’s most valuable functions is to advise the board as well as the executive team on business strategy. Enter the Chief Legal Officer.
The role of chief legal officer (CLO) is often a publicly-traded company’s most powerful legal executive. The CLO is an expert and leader who helps the company minimize legal risk by advising the company’s other officers and board members on any major legal and regulatory issues the company confronts, such as litigation risks. The CLO oversees the company’s in-house attorneys. The CLO may also be a member of the company’s operating committee and is overseen by the CEO.
New corporate realities have evolved over the years to include a diverse scope of enterprise risks which has correspondingly broadened the role of in-house counsel. Executive teams are looking for general counsels who can not only juggle the litigation aspects of the business but who can also contribute to the company goals. Ultimately, a Chief Legal Officer needs to be able to fulfill business promises, manage the legal department, and provide significant company value.
When looking for a general counsel, most directors and officers are looking for someone with two main attributes: in-depth legal expertise and sound judgment. The third attribute, however, that many teams highly prize is business acumen. Company leaders believe a general counsel with these three attributes will be successful in the position and will be a valued strategic advisor to the company.
It’s expected that a general counsel will have broad legal knowledge, but legal acumen is no longer enough to succeed as a corporate legal executive. Chief Legal Officers need to be willing to acquire a better understanding of the business and industry they work in. A well-rounded CLO will contribute to the growth and success of a company, not just serve as a legal watchdog.
What business leaders are starting to realize is that general counsel can provide better legal advice when they have a thorough understanding of the business and industry. A GC is involved in important contract negotiations and makes impactful company decisions on a regular basis.
A deeper understanding of internal and external company dealings allows the GC to weigh the various business implications and make a decision that will benefit the company. In-house counsel with a strong grasp on enterprise risk management as well as a solid understanding of the business and industry can provide much more value to the business strategy on a regular basis.
A majority of companies do not have a solid general counsel succession plan in place. Many law departments are running on lean budgets so it can be difficult to single out a candidate for succession. It’s also difficult to determine a general counsel’s successor when the company attorneys all work on the day-to-day business needs and are rarely involved with higher-level risk and governance issues.
In most cases, companies look to an legal executive recruiting firm to benchmark internal candidates against external talent. While internal candidates may have the business knowledge executive teams seek, the dynamic role and long list of GC expectations make finding the right candidate for the job a high priority. Companies don’t want to be limited to internal applicants, so they open the role up to external candidates to find the very best match for their needs.
Culture fit and the ability to act as a reliable advisor are two key factors directors typically consider when searching for in-house counsel. Emotional intelligence, in particular, is prized amount GC candidates because high emotional intelligence often signals better stress management during high-stress situations. People with high EI are also more likely to build strong relationships and are known for being thoughtful. These two characteristics make it easier for a GC to connect with others and become a well-trusted advisor.
Corporate directors today are looking for a lot more in a general counsel than legal advice. Expectations for GCs are high, and these expectations aren’t likely to change in the future. When searching for a general counsel, it would be wise to seek a candidate with cross-educational training in business or someone who has extensive on-the-job experience. A great general counsel candidate will have just the right mix of legal acumen, business insight, and strategic know-how. A combination of these three competencies makes a strong candidate who will succeed in the expected role and contribute to the company’s overall growth.
Cowen Partners is a national executive search and consulting firm. Our clients are both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 100 companies or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite and include VP and director level leadership roles.
An in-house counsel, such as General Counsel or Chief Counsel, becomes a cost-saving investment when it seeks the right specialty legal advice from trusted and qualified specialists. They can manage outside legal advisors with a keener, more experienced eye, and free up time that would have otherwise come out of other non-legal employee schedules. Even better, in-house counsel dedicates 100% of their time to your company and delivers results and strategy much faster than outsourced legal advice. You will find that an in-house counsel mitigates legal expenditures as much as they increase productivity and efficiency across other departments.
While your in-house legal counsel should be well-versed and firmly embedded in your company mission and strategy, their expertise will not extend to every legal issue that arises. The range in a company’s legal needs makes it impossible for one lawyer or one general law firm to advise and handle everything, which is a fact that only becomes more apparent as the marketplace expands and accelerates with 21st-century technology. From trademarks and intellectual property protection to employee termination to shareholders’ agreements, the legal field is riddled with both broad and industry-specific pitfalls.
Some other factors that will make hiring in-house general counsel a financially viable option include going public in the next 5-10 years, the development of high value intellectual property, being in a federally regulated industry, and spending more than $500,000 in outside legal expenses in a year. If your company takes the right in-house counsel approach for the right reasons and at the right time, you will see your investment pay off in more ways than one.
In an age when outsourcing is the trend, and companies are relying on outside contractors more than ever to help grow their business and expand their position in the marketplace, it can be difficult to know how and when to in source specialized professional services. Specially, when should a company invest in developing and hiring in-house legal or general counsel?
The answer is murky at best, especially when it comes to dealing with legal issues. Knowing when and how to transition from outside legal consulting to hiring a full-time in-house counsel is one of the most crucial and difficult decisions a company must make. Indeed, it is a decision that has only become harder to make as the market changes.
There are some general guidelines that can prove helpful throughout the process. While every company and industry demand a slightly different strategy, it is generally time to consider hiring in-house legal experts when your operation is between 40-100 people. If you have complex or more extensive legal needs, you might consider hiring in-house counsel sooner.
Many company executives balk at the idea of hiring in-house counsel because it sounds like an expensive investment that might not make long-term financial sense. Integrating an in-house counsel as a core part of your employee base, however, can drastically improve your company savings and prove to be one of the most worthwhile investments an organization can make.
If your C-suite is debating whether to incorporate in-house legal counsel, there is plenty to consider. Analyze your previous legal expenditures and use that as the foundation of your legal strategy. When you find that your legal bill is about two times the entire cost of hiring in-house counsel, you can (and should) think about integrating in-house counsel into your company structure.
As your business grows and your legal needs evolve, there are some pivotal pros and cons to be aware of to maintain company security and success.
Today’s complex and unpredictable economic terrain has made commerce more volatile. It puts far more pressure on companies to approach their short-term and long-term goals with nuance, flexibility, and cleverness. No one can afford to bring on a full-time team member that cannot contribute to further developing and implementing a company-specific strategy.
If your company is beginning the process of hiring in-house counsel, bring outside voices and experts into the candidate search so that you hire legal counsel that brings as many analytical skills and as much creativity and adaptability to the table as any other employee or department. Ensure that you identify and target lawyers and attorneys that are a natural extension of your brand and familiar with your specific industry’s legal happenings, based on carefully developed search criteria.
In-house counsel can also help improve internal operations and strategy. Instead of existing employees seeking issue-specific legal counsel to put out fires, an in-house counsel will proactively develop company protections and contribute to overall company success day-in and day-out through detailed legal plans tailored to your business.
Regardless of your industry, do not underestimate the value of experience. Every candidate should bring 5-10 years of diverse experience to the table. Look for resumes that reflect a deep understanding of intellectual property law, tax law, employment law, contract law, and cooperation and securities law. These are areas that come up in virtually all businesses, and an in-house counsel will prove more valuable when they have a thorough awareness of those legal niches.
The general counsel position is a major part of the executive leadership team. You need someone who displays great leadership skills, sound judgment, and a strong sense of ethics. Finding a candidate who meets all of these expectations as well as your business needs can be difficult. Before sitting down for an interview, you need to consider what skill set and competencies your company needs in a general counsel. For instance, if your company is expecting to start handling acquisitions, then someone with a corporate law background may be beneficial.
To get you started, below are five assessment questions you should be asking a general counsel candidate no matter the scope of the position.
Hiring outside counsel is expensive. By asking candidates this question, you can understand how the criteria a candidate uses to determine when to use inside attorney staff and when to hire outside help. It’s also helpful to know how a candidate determines which law firm to hire when seeking outside counsel.
You want to look for three main points in a candidate’s answer to this question.
The right candidate for the job will have the practical experience and a few recommendations for reducing spending in the law department. A candidate should be suggesting ideas such as relying on in-house legal services as well as utilizing smaller, more affordable, firms when seeking outside counsel.
You need someone who understands budget limitations and comes with creative ways to overcome monetary constraints.
Listen to how the candidate solved the problems as well as the overall outcome of the situation. Did the candidate work with stakeholders to develop a strategy? Did the candidate research unfamiliar topics?
The answer to this question will show you how each candidate will handle potential issues that arise at your company.
This question will also help you compare answers between candidates. What one person saw as challenging might be a normal business day for another candidate. The complexity of each challenge will show you the types of problems the candidates have experience handling so far.
It’s really important to understand a candidate’s risk tolerance and risk management. The right candidate will be able to demonstrate what was learned from a risky situation as well as explain how it was handled. If it didn’t go well, then this is an opportunity for the candidate to explain how it would be done better in the future.
Managing risk isn’t always easy and you need someone who can bounce back after an error and do better in the future.
The general counsel interacts with a number of different people, but regulators and the executive team are two important groups you need to ask about. You want a candidate who has experience working with regulators and who has an organizational system in place for maintaining documents.
Since the general counsel will be working alongside your executive team, you want to know how well candidates are currently working with their teams. High-level responsibilities and an expanded role outside of the legal department are two strong signs that a candidate has earned the trust of their executive team.
Including these five questions in your interview will give you a solid understanding of each candidate’s key competencies. The general counsel is a crucial member of your executive team, so understanding the strengths and weaknesses of each candidate is essential to your business.
Cowen Partners is a national executive search and consulting firm, with top legal recruiters trusted across several industries. Our clients are both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 100 companies or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite and include VP and director level leadership roles.
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