The Board and GC: A changing relationship in an evolving risk landscape

What does it mean to be an effective General Counsel in 2022, and how do the Board and the C-Suite - as well as GCs themselves - view their role in today’s rapidly changing landscape?

It’s a remit that has been growing in scope, importance and complexity for some time, with GCs now increasingly taking a seat at the boardroom table, helping to shape the agenda and steer decision-making. But given the confluence of challenges companies are currently facing, what risks are concerning GCs the most, how are expectations changing and how are their skillsets evolving? And what more can be done to allow them to add even more value as strategic advisers, commercial enablers and influential business leaders?

To answer these questions (and more), Winmark and Clyde & Co conducted exclusive research among GCs, Board members and C-Suite executives globally, outlining their findings in the “Looking Glass Part 3: The Changing Role of the General Counsel” report. These findings formed the basis for some thought-provoking discussion among a panel of leading GCs at a series of recent webinars. Speakers included Fergus Speight of Royal London Group, Sam Clark of Lockton Companies LLP and Hannah Flaxman of Munich Re, together with Clyde & Co partners based in Europe, North America and Asia and Winmark’s Research Director John Madden.

An innovative approach in a dynamic risk environment

Madden set the scene, highlighting that Board and GC perceptions around GCs’ responsibilities have grown more aligned in recent years – however some notable differences remain. Across the leadership layer as a whole, around eight in ten think that the risk landscape is more challenging than it was two or three years ago, and seven in ten believe new risk management methods will be required to address systemic risks such as climate change and global pandemics. An innovative approach is clearly needed in such a dynamic, fast-changing environment; and legal teams have much more than legal advice to offer.

A challenging intersect between legal, ethical and moral issues

Chairing the event, Clyde & Co Partner Chris Burdett picked up on some of the areas where Board and GC opinions diverged, such as around the extent to which GCs and the Board think that advising on ethical or moral risk is a key part of their remit (92% of GCs versus 68% of Board respondents). Panellists agreed that it is the job of the whole executive and non-executive leadership to consider these issues individually and collectively, but that although GCs are there to give sensible analysis and advice, ultimately the decision rests with the Board. Contributing personal (rather than legal) opinions may be appropriate if those views are invited, but GCs must keep the objectives of the Board front of mind first and foremost. One GC made the point that ethics comes into all aspects of decision-making, from who you consult to what actions are taken, saying, “It’s about how decisions are taken, rather than necessarily what those decisions are.”

GCs as business enablers

This fed into a discussion about the perception of the GC and the legal function as a ‘blocker’ or an ‘enabler’ of business goals. The research found that 100% of GCs questioned said that aligning the legal function to business strategy and context is an important part of the GC role (so too did 91% of the Board and 65% of the C-Suite). There was a consensus that the personality of the GC is critical in creating an approachable, constructive presence within the business, which is in turn vital in encouraging business units and senior leaders to consult legal teams for their advice, and panellists felt that in recent years, legal’s reputation as an ‘enabler’ has been gaining ground. GCs are more collaborative with other departments, they spend a large chunk of time assessing the risk landscape and horizon scanning for future risks, and they are increasingly focussed on facilitating business strategy and reducing the legal ‘bottleneck’.

Getting the best out of the legal function

Against that backdrop, the skillsets required within the legal team are changing, with implications for people management, recruitment and retention. Boards are now expecting more than pure legal advice from their GCs and the same is true of what GCs expect of their own teams. Legal departments now need “a broader church of capabilities,” according to Fergus Speight, ex GC of Royal London Group. Sam Clark, GC of Lockton LLP agreed: “If you are leaving your legal team to just do the legal work, you're really selling them short. They need skills outside of the law, such as in other business or industry areas or on issues such as DEI and ESG, and they need not just hard skills but soft skills too.” Building a high-performing legal team is an ongoing challenge – according to the research, when asked if they are achieving this to a very high or outstanding degree, two-thirds of GCs (66%) agreed, as did around half of the Board and C-suite.

GCs and the legal department also need to be empowered to innovate and work in new ways. Business support in areas such as delivering digital transformation and implementing efficiency and operational improvement principles can help them add more value back to the business itself and increase job satisfaction for legal talent.

A good job

Overall, Boards see GCs as performing extremely well and doing a good job (68% say so). Yet for GCs themselves, who are often perfectionists, there is always more to do and improvements to be made in such a fast-paced and challenging environment: fewer than half (49%) of GCs feel they are performing very well or to an outstanding level. This perception gap is not surprising because “There are always new demands and lawyers all want to be ahead of the curve, they want to be impressive,” said Clyde & Co Partner Mun Yeow. Hannah Flaxman, Head of Legal of Munich Re, pointed out, “If you’re not thinking about what you could improve, you’re not doing your job properly.” With that in mind, the role and perception of the GC will continue to evolve and develop as we look ahead.