Initially published in Texas CEO Magazine (1/23/16)
Companies in nearly every industry struggle with the difficult decisions of when and how to hire General Counsel. While these questions routinely surface in business planning and board meetings, the answers can be difficult to come by. The most common questions in the board room regarding General Counsel are: 1) What are the real advantages to having competent General Counsel as a member of our company’s executive leadership team, and 2) How can our company ensure that General Counsel will provide advantages to our business?
What are the Primary Functions of General Counsel?
In years past, some corporations, large and small, considered General Counsel as a luxury. Critical legal affairs were often handled by external counsel and managed by one or more non-attorney members of the company’s executive team. With the increasingly litigious nature of business along with post-recession corporate scrutiny of every line item expense for employee costs on the balance sheet (including members of the executive team), corporations have not only embraced the onboarding of General Counsel, but have expanded the role. General Counsel now manages external counsel, provides legal and operational strategy, oversees or advises other teams within the company, and serves as a critical voice of reason within the executive team.
Why Consider General Counsel?
Today, the position of General Counsel must be seen as a true value-add in terms of risk reduction and business strategy. As such, General Counsel should be on-boarded and welcomed as a leader in the business and a full member of the executive team. General Counsel helps to set and implement the strategy and direction of the company. If General Counsel is properly and fully integrated into management decisions, the company will benefit by operating with the assurance that its decisions and directions will be implemented in a legally compliant fashion, as well as in a manner to reduce risk and contingent liabilities.
What to Look for in a Candidate?
Given the critical nature of the roles that are filled by General Counsel, as well as the overall sensitivity of the information that is analyzed and acted upon by said counsel, businesses should be looking at more than just the candidate’s pedigree when making a hiring decision. Graduation from an ABA accredited law school and admission to a state bar are merely the bare minimum requirements. Essential to the candidate selection process is a review of the experience and breadth of the attorney’s legal and career background, along with a review of his/her interpersonal and team-player skills.
General Counsel is entrusted with making challenging legal and strategic decisions for the business. With the unique technical and sensitive nature of the role, companies must exercise great discretion and review the true intangibles of the candidate. These intangibles are often difficult to determine in an interview and are seldom obvious on a resume…
Is this an individual of integrity? Does she have the strength of character to keep confidences? Does she have the conviction to say “no” when that is the correct answer for the best interests of the business? Does she have the creativity to find a way to say “yes” and to shepherd other team members to other alternatives when they are viable? Is this individual’s personality one that will lend itself to supporting and sustaining business growth?
An additional critical intangible to uncover during the candidate selection process is forthrightness and humility with respect to breadth of personal expertise. While General Counsel is charged with the overall legal compliance and direction of the organization, the executive team should not charge her with knowing everything. Just as it is unrealistic for the company to expect its General Counsel to know and do everything in the legal arena, it is equally unrealistic (and dishonest) for the candidate to suggest that she has the answer to or can do any and everything involving legal matters.
General versus Specific Counsel. What is the Difference?
If the company does not intend to fully utilize General Counsel, then hiring that person would be just as frustrating to the company as it would be to the hiree. As an alternative, consider whether hiring a specific attorney charged with a specific function would fulfill the current needs. Here are a few common examples of where specific counsel may be useful:
Technology Firm – It would be common for a rapid-growth information technology firm to hire specific counsel to assist with pointed matters such as patent applications.
Real Estate Firm – Similarly, a real estate development firm may be inclined to hire specific counsel to assist with acquisitions, platting, construction, leasing, closings and the like.
Collections Firm – A collections firm may routinely hire specific counsel to assist with and to expedite day-to-day legal collections matters.
These examples are certainly not exhaustive of suggestions where specific, rather than General Counsel, might be appropriate. While a company can usually save a bundle of money by hiring specific instead of General Counsel, that company must understand the limitations of the specific counsel’s body of knowledge and experience. Yes, it is possible to develop and promote the specific counsel to the General Counsel role over time. However, a properly engaged General Counsel is intended to be a full member of the executive management team of the company. Before moving in that direction, consider asking the questions, “Do we see this specific counsel candidate serving as a full member of our executive management team? Does this candidate possess the creativity, business fortitude, and leadership skills to help us steer and grow our company?”
Conclusion
Determining when to hire General Counsel, and how to properly engage such counsel, will likely be some of the more difficult hiring decisions that the company will undertake. The evolution of the role and responsibilities of General Counsel lends itself to new considerations in order to make a good hire. As the nature of litigation and business velocity change in a complicated global economy in which exposure and risks seem to increase on a daily basis, General Counsel will assume first chair responsibilities in assisting the executive team in charting its course.
Wise business leaders will heed the advice of this article – General Counsel are more than attorneys, they are strategists, executive team members, and protectors of businesses – as such, they require special considerations and unique scrutiny during the hiring process.
The proper hiring, inclusion, and integration of a competent and growth-oriented General Counsel will be a true value-add to your executive management team, as well as to the overall health of the company.
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W. Brian Memory is Senior Vice President and Assistant General Counsel as PlainsCapital Corporation. An alumnus of Emory University School of Law, he is admitted to the State Bar of Texas and his breath of experience includes more than ten years of practicing law at corporate law firms and corporations. He can be reached at brian.memory@plainscapital.com or at william.memory@gmail.com.
James R. Nowlin is Chief Executive Officer of Excel Global Partners and Managing Principal of the EGP Family of Companies. A graduate of Duke University School of Law and the University of Virginia, he is admitted to the State Bar of Texas and has completed executive coursework at Dartmouth’s Tuck School of Business and Northwestern’s Kellogg School of Management. He can be reached at jnowlin@ExcelGlobalPartners.com.