The recent 2016 NYSE Governance Services/BarkerGilmore Survey Report, “The Rise of the GC: from Legal Adviser to Strategic Adviser,” reflected the same points raised during LLM, Inc.’s budgeting and predictability webinar this past spring. Currently, the chief legal officer, general counsel and team are expected to do more than practice law; they must also be prepared to address a variety of different needs. This includes offering strategic and business advice.
The survey reached out to U.S. corporate directors and executive officers and explored current and future roles and expectations of the general counsel. The survey offered the following key takeaways:
– 97% of respondents expect the GC to be part of the executive management team by the year 2020, an increase of 16 percentage points from 10 years ago.
– The role of the GC continues to evolve, with 14% currently acting as chief risk officer, a number that is expected to more than double to 31% by 2020.
– When asked which competencies directors and officers anticipate would be the most valuable for the GC to have in 2020, the top two traits were sound judgment (72%) and high integrity (69%), ahead of legal expertise (63%).
– A compelling majority (79%) of directors and officers surveyed agree that by 2020, one of the general counsel’s most valuable functions will be to advise the board and the CEO.
– Only 40% of directors and officers said ROI is of importance in evaluating the GC.
What’s behind the rise in rank of the GC? A “rapidly escalating regulatory landscape and a growing wave of complex mergers and acquisitions.” The perception of a GC’s value in contributing to an organization’s success has steadily climbed and is expected to continue.
As the GC role and expectations evolve, with functions characterized as more proactive than reactive, the “traits and competencies” necessary will have to change as well. Bottom line, it’s no longer acceptable that the GC is on the sidelines. The GC is a very important player, from beginning to end.