Over the past few years, recruiting professionals have seen a rise in general counsel roles that don’t quite rise to the level of a true top in-house legal executive.
These positions are often referred to as “head of legal,” “vice president of legal” or “senior vice president of legal” — among other terms.
While many organizations are hiring GCs and chief legal officers who can handle it all — business leaders with a legal mind — some organizations are looking to bring in a legal leader who is narrowly focused on navigating risk, compliance and legal-specific matters.
The head of legal role is expected to serve as the top legal representative in the organization, but it is often not a member of the C-suite and often has a reporting line to someone other than the CEO.
Head of legal roles
The San Francisco Bay Area is the hotbed of innovation.
Whether they are in cybersecurity, SaaS, biotech, fintech, clean tech or some other technology, startups are looking for their inaugural legal hire to help with immediate influx in legal work — much of which may be rather mundane (e.g., NDAs and commercial agreements).
Where the company is in its life cycle and growth trajectory and what the company perceives to be the importance of the legal function in achieving its immediate business goals influence the company’s decision to call the legal executive head of legal, GC or CLO.
For such startups, hiring a head of legal is often the more logical starting point — saving money (as these roles usually command a lower base, bonus and equity) and creating an opportunity for an up-and-coming legal leader to advance if they prove themselves. The business also reserves the option to bring in a more experienced GC or CLO once the company matures.
For larger, public or matrixed organizations that boast a sizable legal team, however, the obvious option is a seasoned CLO or GC at the helm.
This individual reports to the CEO, oversees the board of directors and is involved in both legal and business strategy, as the two are inextricably intertwined in this type of an organization.
What the role entails
Head of legal roles do not have the robustness of a typical GC or CLO position. There is rarely a business operational component and, instead, this role is mainly focused on legal advice.
Similarly to the GC, the head of legal is usually responsible for overseeing the legal budget; working with internal and external attorneys; leading strategic and commercial transactions; overseeing litigation, regulatory and compliance; spearheading international expansion; and assisting with employment issues, among other responsibilities.
As they grow in the role, these attorneys may gain oversight of the government affairs function.
The key difference, however, lies in the reporting structure.
While they are still the top legal representative for the company, head of legal professionals tend to report into the CFO/COO. This structureresults in these leaders having less influence with internal and external stakeholders due to lack of direct access to the CEO and board.
Ironically, while most business leaders yearn for a legal leader with strong business judgment, the head of legal position makes that very challenging to achieve.
The head of legal is typically not a member of the core executive team and thus doesn’t have a seat at the table when it comes to strategic business discussions.
Thus, the head of legal often ends up providing theoretical advice based on a limited amount of business considerations and not the type of commercially driven legal advice that business executives are looking for.
It then becomes a self-fulfilling prophecy: the head of legal starts out as a second-class citizen two steps removed from the CEO and board and is not privy to the kind of information that would enable them to be a strong partner to the business. Therefore, they continue to prove their inadequacy as a practical and business-oriented legal partner so long as the reporting structure remains unchanged.
Employer benefits
For early-stage startups, bringing in a head of legal is often the preferred approach as it allows the company to align incentives according to their immediate needs.
In other words, as the company grows, the head of legal is given the opportunity to prove oneself before being promoted to the GC or CLO seat, assuming the company does well.
If the head of legal doesn’t end up instilling enough confidence in being able to take the company through growth or an exit, the company retains the ability to hire a GC or CLO, thus demoting the head of legal.
Furthermore, startups are often cash strapped as they grow their revenue generating products or services. Hiring a head of legal usually means providing a lower compensation package, both in terms of cash compensation and equity.
Some of these growing organizations may not yet be in a place to have a robust executive team but still need the in-house support of a legal expert to help them navigate regulations and legal matters. They have not likely mapped out the idea profile and are looking for a lawyer who can come in and provide legal direction and keep them out of the courtroom.
Candidate benefits
I speak with candidates regularly who are struggling with the decision about whether to accept the head of legal role.
I advise attorneys to seriously consider the role if:
- They have not yet been the top legal executive of a company and this is an opportunity to get one’s first exposure to a quasi-GC role.
- They are interested in learning a new and growing industry.
- They want an opportunity to take a company public.
- It is an employers’ legal hiring market with very few GC or CLO opportunities.
- The company in question has a proven leadership team, is in hyper-growth mode and has at least a few years’ financial runway.
- The company has promised to re-evaluate the title and reporting structure as they near a growth target or an exit.
Concluding thoughts
The biggest negative of structuring the top legal role as head of legal with limited access to the C-Suite and board is that it often leads to ineffective legal counsel. Ironically, this is the biggest negative for the employer as well.
Legal executive candidates have a strong preference for a GC or CLO title and a robust role in which they are part of the core leadership team reporting into the CEO and with a seat at the table, as this allows for a more impactful, strategic and collaborative role.
There are many instances, however, in which a head of legal title is the best option for the employer (e.g., a start-up company) and at the same time a solid option for the candidate.
For example, if the role would be the candidate’s first quasi-GC role, or gives the candidate an opportunity to take a company public, it’s worth considering even if it’s not the top role that one is aiming to land.
