The Role of A General Counsel (Corporate Legal Structure)

Ever wonder what is the role of a General Counsel in an organization?

What are the tasks and functions assumed by the General Counsel? 

Who do they report to?

We have the answers for you!

In this article, we will discuss in detail the role of a General Counsel by understanding what they do on a day-to-day basis, where are they located in the corporate structure, how they advise their client and evaluate business risk and the evolving role of a General Counsel.

This article is divided into the following sections: 

  1. What does a General Counsel do?
    • Corporate governance
    • Employment-related matters
    • Litigation matters
    • Legal department operations
  2. The reporting structure of the General Counsel
  3. General Counsel is the company’s main legal advisor
  4. GC evaluates risk and reward
  5. Evolving role of the general counsel
  6. Skills and aptitudes required by the General Counsel
  7. Role of a General Counsel Takeaways

Let’s get started!

What does a General Counsel do?

The primary role of a General Counsel is to provide legal advice to its corporate client. 

The General Counsel will typically be involved in the company’s operations and major transactions.

The function of a General Counsel goes beyond just that of a legal advisor.

The General Counsel is an important business partner and a key stakeholder in business decisions evaluating business opportunities and risk.

The General Counsel will typically oversee several areas.

Corporate governance

Corporate governance is the process and practices adopted by a company to comply with the rules and regulations while balancing the interests of the company and all its stakeholders. 

Investopedia defines corporate governance as “the system of rules, practices, and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company’s many stakeholders, such as shareholders, senior management executives, customers, suppliers, financiers, the government, and the community. Since corporate governance also provides the framework for attaining a company’s objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.”

When it comes to corporate governance, the General Counsel’s job is to ensure that corporate matters, public disclosures and regulatory requirements are respected by the company and its board of directors.

Employment-related matters

In every company, employment-related matters will take an important part of its legal operations.

Every company must adopt policies and procedures for hiring, managing and terminating employees.

Large organizations will have different policies and procedures applicable to different regions.

A General Counsel is involved in ensuring that the company’s employment conditions and standards respect the law.

Whether it’s compliance with the employment laws, managing of internal disputes, employee-related handbook, policies and procedures or the need for specific training required by the law, a General Counsel is tasked to manage.

Litigation matters 

Litigation is an inevitable part of doing business.

A company may actively engage other companies in litigation or in other cases will need to defend against a claim.

A General Counsel will look at the litigation activities of the company and determine what position the company will adopt and act as the main liaison between the company and its external legal counsel.

Defining a litigation strategy, working on dispute resolution campaigns, de-escalating disputes or even pursuing legal remedies will come down to the General Counsel to decide.

Having a legal background, the General Counsel will personally evaluate the legal aspect of a litigious case but will also assemble a team of internal and external legal advisors who have specific experience and competencies to support the case. 

Legal department operations

Running the legal department is another important function of the General Counsel.

Managing the legal department costs, budget, hiring, firing, retaining the services of external counsel, coordinating legal department matters with other departments and so on.

The legal department is a cost center and so the General Counsel will work hard in securing the right budget to ensure the successful execution of the legal department mandates and tasks.

This can be quite challenging as GC’s are always asked to do more with less.

The GC will need to negotiate an adequate budget to run its operations while at the same time finding ways to optimize its legal spending to ensure the legal costs of the business are under control.

The reporting structure of the General Counsel

According to an ACC CLO survey for 2014-2017, about 80% of the GC’s and CLO’s surveyed indicated that the General Counsel reported directly to the CEO.

Some others have indicated reporting to the CFO.

The majority of General Counsels and Cheif Legal Officers of larger organizations are reluctant or even unwilling to report to a person other than the CEO.

They want to ensure that the role of a General Counsel is perceived to be an important executive role giving them sufficient independence from other business functions. 

Another reason why most GC’s report wanting to report to a CEO is to ensure they have a seat around the table for important business decisions.

If they report into a CFO or another person, then the GC may not get consulted on a strategic or important decision of the company or be considered as an important stakeholder.

It appears that a General Counsel can better execute his or her duties while reporting to the CEO of the organization.

General Counsel is the company’s main legal advisor

The General Counsel is the company’s main legal advisor. 

Not only the General Counsel has a duty to provide legal counsel and advice to the company and its stakeholders but he or she must also manage the legal operations of the company.

The General Counsel is accountable to ensure the company is compliant with the applicable laws, the company ensures it implements internal practices and policies to remain in compliance with the law and runs the legal department and its operations.

Similar to a Chief Sales Officer who is accountable to oversee the entire sales function of the business, or a Chief Marketing Officer relating to the marketing function, a General Counsel will lead the organization’s legal operations.

GC evaluates risk and reward

Running a business necessarily implies taking risks.

What’s unique about the role of a General Counsel is that the employer and the client are the same entity.

This means that the General Counsel has the role of advising the company against excessive risk while at the same time enable the company to grow and move forward.

This dual role makes the task of a GC highly challenging but very rewarding.

Considering each company will have a different tolerance for risk, the General Counsel will need to immediately identify the risk appetite of the organization so as to make decisions aligned with that accepted level of tolerance.

Risk can mean loss of money, violation of law exposing the company to fines, risk of litigation, triggering regulatory investigations or an activity that could damage the brand, consumer trust or company reputation.

Evolving role of the general counsel

Before the turn of the century, companies worked heavily with external legal advisors with respect to their legal affairs and needs.

Today, that’s on longer the case!

With the technological advancements and the democratization of legal services, corporate legal departments now find it more cost-efficient to internally handle more and more legal tasks.

The more legal tasks a company will handle, the more the General Counsel will need to be involved in evolving activities.

Today, companies will deal with their own regulatory and compliance matters, employment-related matters, risk management, internal audits, corporate social responsibility, commercial transactions and so on.

The responsibilities of a General Counsel are spread onto a much wider net.

Many companies now speak of a Chief Legal Officer to give the head of the legal department an executive C-suite title demonstrating the importance of this role in the company.

Skills and aptitudes required by the General Counsel

Assuming the role of a General Counsel comes requires a wide range of skills and aptitudes to succeed.

A General Counsel is not just a lawyer, he or she is a business partner who master’s the inner-dynamics of the organization, understands the business challenges, pain points and works with everyone else to achieve the organizational goals.

The GC needs to solve problems, think outside of the box, be an excellent communicator, assess and manage ever-changing business priorities and most importantly, be a leader.

Having great people skills along with outstanding interpersonal skills will surely help a GC succeed in this function.

Role of a General Counsel Takeaways

The General Counsel plays a crucial role in an organization.

He or she is the company’s legal advisor, a business partner, the guardian of legal compliance and the legal operations executive.

In this article, we looked at the role of a General Counsel by understanding what they do on a day-to-day basis, where are they located in the corporate structure, how they advise their client and evaluate business risk and the evolving role of a General Counsel.

We hope you enjoyed this article.

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