General counsel are increasingly relied upon by CEOs and directors for their skills and opinions, according to a new survey.
In the 2014 “GCs In The Boardroom and Beyond” survey from BarkerGilmore, a legal recruiting firm, it was found that GCs are more likely to be considered a member of the executive management team than even ten years ago, the survey of CEOs and board members said.
The survey showed that 86 percent of those participating said the GC was considered as part of the executive management team, compared to 55.5 percent 10 years ago. In addition, 66.4 percent said the GC is also the company’s corporate secretary.
The GC is looked upon as a “sounding board,” a “trusted adviser” to the CEO, and can “provide sound judgment” on company governance and legal matters, the survey said. In fact, over 91 percent of those surveyed said the GC was considered a “trusted adviser to the board.”
“The numbers were really significant,” John Gilmore, a managing partner at the recruitment firm, said in an interview with InsideCounsel.
Looking back, Robert Barker, also a managing partner, said that 20 years ago, the general counsel may have been the only lawyer in a corporation.
But over time, companies have found they have brought more legal matters in house, than relying on outside law firms.
The in-house lawyers are more in-step with executives, so they can spot a deal or issue that has arisen, BarkerGilmore said.
Inside counsel “speak their language,” Barker explained.
Gilmore adds that given the responsibilities now given to GCs and in-house attorneys, the legal department is not considered “an expense,” but more of a “necessary element to the success of the business.” GCs, in fact, help businesses succeed, especially given the need for regulatory and legal compliance by the company.
“They can resolve the matter quickly, get the deal done quicker,” Barker said.
The general counsel is more of a chief administrative officer, too, and may even have other units, such as human resources, report to him or her.
As a result, GCs salaries are at an all-time high.
Also, about 71 percent of directors surveyed said GCs add value by actively contributing to business strategy discussions.
In addition, directors said GCs add value to several functions. The areas identified by the survey are: compliance and ethics (98 percent), governance (95 percent), risk oversight (86 percent), and discussions on mergers and acquisitions (85 percent).
When it comes to whether to have a GC on a board of directors, the survey showed the directors were split.
“In general, the benefits of having a GC as a board member appear to outweigh perceived challenges measured in this study, such as having too narrow a viewpoint or a conflict of interest,” according to a statement from the firm.
The directors also found that the GCs’ skill sets are “well suited” to being a director at a public company. Among the reasons for the fit are: the ability to evaluate risk and giving “strength to board decision-making.”
Yet, close to 30 percent of directors said a current GC does not have the time to devote to being a director at another public company.
To see the full survey results, please click here.
The survey was undertaken by NYSE Governance Services, Corporate Board Member and BarkerGilmore.
The survey findings concur with a recent InsideCounsel report that increasingly, high-level in-house counsel are being asked to not only be legal leaders, but also to be proficient in the business as well.