In the first six years of the 21st century, we have seen many changes that have resulted in greater corporate scrutiny--SOX, tighter SEC reporting and disclosure requirements and increased criminal and civil penalties for inappropriate corporate activity. In response, general counsel of publicly held companies are working more diligently with their CEOs and business partners to avoid these minefields. Notwithstanding these perceived obstacles, general counsel also are working more than ever on the business side to increase shareholder value while protecting their organizational reputations.
These changes require GCs to possess skills that enable them to handle a growing range of executive responsibilities that are vital to ensuring the company's success.
The first skill is leadership, which determines--more than any other single factor--the success or failure of an organization. A 21st century GC must be well versed in the arts of leadership and influencing others to achieve a successful organizational outcome. This characteristic is particularly important because the general counsel is uniquely positioned to influence the company's direction on such issues as governance, litigation strategies, ethics, compliance and overall business strategy. In their leadership roles, general counsel are also the guardians of the company's reputation. As we all know, the strength of a company's reputation is directly linked to its value.
The second skill is risk management. The GC is an essential player in a company's risk-governance program. General counsel are expected to identify the range of business and legal risks the company confronts and assess their potential impact on the company. Working with other functional areas such as finance, regulatory affairs and compliance committees, the general counsel leads the process of identifying risks and determining risk tolerance.
The third skill is litigation management. Litigation is a fact of life, and it has the ability to change the way a company operates. As a result, the litigation acumen of the general counsel is of significant importance. This skill is particularly important with regard to issues that could garner media attention, especially given that every company is one headline away from a flood of lawsuits.
The fourth skill is business insight. General counsel must be on the front-end of business strategy. This means that they should be capable of adding a strategic business dimension to the legal advice they render to the management team. Moreover, it means that the general counsel should be sitting at the table with the Ph.D.s, MBAs and CPAs as they develop and solidify business plans.
The fifth skill is a keen understanding of corporate governance. Knowledge and understanding of SOX and associated regulations and rules is essential to a general counsel's ability to provide advice in the current governance environment. GCs must be intimately involved in financial reporting, the review of internal control procedures and audit results, and the management of the disclosure and due-diligence processes.
The sixth skill is political savvy. Maintaining good working relationships with the various organizational functions is the most effective way for the general counsel to identify problems within the company. The GC's political savvy in developing relationships within the organization will assist in broadening the aperture for identifying issues confronting the business. Creating partnerships within the company and getting buy-in where necessary is essential in the resolution of critical issues.
The list of skills I have outlined here is not exhaustive. However, each skill is essential to the role of the GC in the modern business environment, in which corporations are under intensified scrutiny. Indeed, corporate reforms have dictated a new type of GC--a facile, nimble, flexible and proactive individual who has the capacity to work across multidisciplinary functions and serve as a strategic business partner.
Vincent J. Napoleon is senior vice president, general counsel and secretary of Digene Corp., a Maryland-based biotech company.