Deloitte Legal is not only a global law firm with substantive presence in Europe, The Americas, China and Asia Pacific, we're the future of outside counsel. Priority one is helping raise the effectiveness of General Counsel. Working closely with our Deloitte Global network of financial, risk, tax and strategy advisory partners, we are able to execute on a strategic and technical level, allowing the General Counsel to deliver on their ever increasing demands. The role of the General Counsel is becoming ever more vital.
Accordingly, GC's need outside support that provide much more than advisory, evidence and bandwidth. The below scope map offers a fundamental guide:
Equally, Ben W. Heineman Jr., former GE General Counsel and Harvard law fellow just published a new book, "The Inside Counsel Revolution: Resolving the Partner-Guardian Tension" which delicately elucidates the evolving phenomenon. Below is an excerpt:
The rise of the General Counsel - Transforming law and business
The practical ideal of the modern General Counsel is a lawyer-statesperson who is an outstanding technical expert, a wise counselor and effective leader and who has a major role assisting the corporation achieve the fundamental goal of global capitalism: the fusion of high performance with high integrity and sound risk management. For the lawyer-statesperson, the first question is: “Is it legal?” But the ultimate question is: “Is it right?”
This vision of the General Counsel has been a critical element of the inside counsel revolution which began in the late 1970s and which has increased in scope and power ever since. Working with the CEO and other senior executives, the GC must forge an unbreakable bond between performance, integrity and risk on a set of foundational corporate issues: business strategy, culture, compliance, ethics, risk, governance, citizenship and organization. To do this, the GC must resolve the most basic problem confronting inside lawyers: being partner to the board of directors, the CEO and business leaders but ultimately being guardian of the corporation.
This practical ideal is attainable because General Counsel and inside law departments in outstanding corporations have become far more sophisticated, capable and influential, transforming the realities of both business and law in two important ways.
First, the role of the General Counsel inside the corporation has significantly grown in importance. The GC has often replaced the senior partner in a law firm as the primary counselor for the CEO and board of directors. The GC role has broad scope – beyond law – that includes ethics, risk, governance and citizenship. The GC is a core member of top management, participating in debates not just about risks but also about opportunities, not just about law but also about business, not just about public policy but also about geopolitics. The GC often leads units beyond the legal department, like public affairs, taxes and environment. The General Counsel is now often seen as having importance and stature comparable to the Chief Financial Officer by directors, CEOs and business leaders because the health of the corporation requires that it navigate complex and fast-changing law, regulation, litigation, public policy, politics, media and interest group pressures across the globe. As a result, the expertise, quality, breadth, power and compensation of the General Counsel and inside counsel have increased dramatically.
Second, the role of General Counsel outside the corporation has also significantly grown in importance with a related, dramatic shift in power from outside law firms to inside law departments over both matters and money. Because corporate law departments are increasingly staffed by outstanding specialists and generalists, inside lawyers have taken on day-to-day management and strategic direction of major matters affecting the corporation – ranging from cross-border transactions to multi-front litigation to international enforcement investigations. The General Counsel and inside lawyers have also strongly reasserted control over money spent on outside law firms: focusing on cost control from front-end budgeting and negotiated fees to back-end audits and cost disallowance, from preferred provider relationships to “strategic partnerships,” while also using new technology and innovative third-party vendors to reduce outside law firm spend. Finally, General Counsel and inside lawyers are increasingly advocates, points of contact or negotiators with important public and private parties in both developed and developing economies. On the critical risks and opportunities of “business and society” issues, boards and business leaders now delegate major responsibility and key outside relationships – to the General Counsel to help reach its commercial and citizenship objectives across a minefield of policy, law, enforcement and public scrutiny.
With increasing commercial complexity and inexorable globalization, the core issues the General Counsel must address pose challenges of burgeoning difficulty. Assuring legal compliance and mitigating legal hazard requires understanding complex, multiplying, conflicting and uncertain formal mandates and enforcement practices in myriad regional, national and sub-national jurisdictions. Setting voluntary global ethical standards beyond what the law requires entails balancing prudential considerations (interest of the corporation) and moral concerns (what are rights of – and duties to – stakeholders) in nuanced contexts across the whole range of corporate activity from technology and manufacturing to marketing and sales. Mitigating risk – beyond legal and ethical hazard – involves specialized knowledge in understanding a broad range of economic and noneconomic threats to the corporation and setting up robust systems and processes to prevent or mitigate such risks, especially those that pose catastrophic danger. Governance demands finding a right-sized role for a board that cannot manage the corporation but has an important oversight function as well as dealing with the menagerie of shareholders that has myriad, often conflicting objectives, as evidenced by the contrast between activists and stewards. Defining the corporation’s citizenship means the GC must constantly have in view four fundamental duties: to the corporation and its employees, to stakeholders, to the rule of law and the administration of justice and to creation of public goods so necessary for a fair, secure and growing society. Finally, the GC is a key player in the vital leadership task of creating the culture of high performance with high integrity which shapes all these issues because it is so vital to how employees think, feel and behave.
As briefly noted above, two related aspirational roles are the key to my vision of the General Counsel. In helping fuse high performance with high integrity, the General Counsel as lawyer-statesman must engage in robust debate on major corporate initiatives of all shapes and sizes about what are the “ends” of that action, not just about “the means” for carrying it out; about “purpose” not just “process”; about what is “right” as seen through the lenses of performance, integrity and risk, not just about what is “legal.” A lawyer-statesperson must function, often simultaneously, in the three fundamental roles of a great lawyer: as technical expert, as wise counselor and as accountable leader. In so doing, the GC must possess not just “core” legal competencies but also “complementary” competencies beyond law that include: asking “what ought to be” questions; having financial, scientific and technological literacy; implementing, not just deciding; leading and building organizations; having global brains; and, ultimately, in being a great generalist to define – and solve – multidimensional problems properly.
The General Counsel must also serve both as partner to the board and business leaders and as guardian of the corporation. The fusion of the partner and guardian roles turns on GC integration into the core activities of the corporation. But there are many obstacles to this fusion which critics often cite when expressing doubts about whether GCs can possess the independence to be true guardians: business leaders’ lack of understanding about law and policy; anti-lawyer sentiment in companies; inside lawyer fear of CEO retribution; and group pressure, to name a few. These obstacles can be overcome by the independence and courage of the GC; by alliances with key staff leaders (CFO, head of HR); and by a close relationship with the board of directors. But, at the end of the day, the relationship with the CEO controls. The CEO, like the board of directors, must have the vision of high performance with high integrity and must affirmatively want a General Counsel to be a lawyer-statesman and partner-guardian, never afraid to speak out on what is “right” for the corporation.
I am optimistic that these board and CEO attitudes can – and will – exist. This is so not because of some nice theory, but because of hard necessity. The inside counsel revolution occurred in part as a reaction to the excesses and acquisitiveness of outside law firms. But the key driver was the dramatic increase in global commercial complexity and in related “business in society” issues which sophisticated inside lawyers can handle with speed and skill. Astute CEOs and boards know highly talented, broadly experienced, analytically rigorous and consistently innovative General Counsels – and outstanding law departments – are needed to deal in a systematic and rigorous way with the core issues of business strategy, culture, compliance, ethics, risk, governance and citizenship.
Because these necessities, and the external pressures on corporations, are only going to increase, I believe that the rise of the General Counsel as a symbol of the inside counsel revolution – and support for the concomitant roles of lawyer-statesperson and partner-guardian – will continue to gain board and CEO adherents in global companies, both in the United States and in the rest of the world.
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