With every challenge—and the past year brought many—comes opportunity. As companies in every industry recraft their strategies and redefine their risks in response to current operating conditions, many are also assessing how well-placed their current directors are to oversee the business in the years ahead. As a result, we are seeing top executives with legal backgrounds, particularly general counsel (GCs) and former GCs, entering conversations about potential new directors with greater frequency than ever.
One of the drivers of this nascent trend is tied to the increasingly complex legal, compliance, and regulatory environment in which all corporations operate. This lands squarely in the sweet spot of experienced attorneys who can provide strong oversight and expert insights to management and fellow directors as changes flood over the transom and the strategic significance of outcomes intensifies.
Another factor driving interest in lawyer directors is the number of women and individuals from under-represented communities who serve as general counsel, particularly relative to other C-suite roles like the CEO, CFO, and COO. As boards seek to further diversify their gender, racial, and ethnic makeup, GCs have become a promising new pool of qualified candidates.
But perhaps the most significant shift in attitude toward attorneys is the growing recognition that seasoned legal officers are highly strategic business executives who have a seat—and a voice—at the table for virtually every important issue companies face. While a general counsel once may have been confined to the legal lane, that is no longer the case.
“Name a major decision and you can be sure the GC was ‘in the room where it happened,’” said former Walgreens Boots Alliance SVP and General Counsel Jan Reed, who serves on the boards of two public companies.
Not only is the top legal executive in the room, he or she is often the one providing cool-headed facilitation of management deliberations, guiding colleagues toward a shared understanding of the issues and through difficult trade-offs. Boards also benefit from skilled facilitators who draw the best out of every director and can pull all the pieces together.
GCs, particularly those who also serve as corporate secretary, typically attend every board meeting and every committee meeting, giving them plenty of exposure to board dynamics, including how information gets processed and decisions get made. Some see how board performance improves and how the most effective directors operate. Others observe dysfunction—which, while frustrating, can be highly instructive as they approach their own board careers.
Lawyers also shine as board candidates when there is a desire to add crisis management expertise to the skills matrix—a valuable skillset that has come to the forefront particularly during 2020. Indeed, the chief legal officer is most often the point person in a crisis, responsible for identifying the stakeholders, articulating the risks, and marshalling the resources needed to quell the crisis.
“When bad things happen, be it a compliance challenge, data breach, investigation of wrongdoing, product recall or today’s unexpected pandemic, the GC has the playbook,” said former Ironwood Pharmaceuticals SVP and CLO Halley Gilbert, who currently serves as COO and CBO for Adagio Therapeutics and sits on three public company boards.
Lawyers are also often considered for board roles when certain skills are needed in specific boardroom situations. In addition to broad business exposure, most experienced GCs have sub-specialties gained during the course of their careers, including expertise in fields like cybersecurity, privacy, ERM, government affairs, M&A, restructuring, and intellectual property. Depending on the needs of a particular company, these skillsets may make them the best-qualified new director for the board.
Boards have long embraced current and former CEOs and CFOs as independent directors despite having those titles on the executive team at every company. As with those positions, attorneys on boards must be careful not to behave like the lawyer in the room. Their role, like any other director, is to be as helpful and supportive as possible, using the benefit of their experience for the agreed-upon agenda. Pointing out resources and being a sounding board for the in-house legal team is appropriate; second-guessing is not. However, there’s no doubt that, like CEOs and CFOs, GCs offer a valuable perspective to boards—a reality that corporate leaders are increasingly recognizing. Thanks to their combination of business and legal expertise—as well as their ability to provide support and insights that bolster rather than duplicate that of legal counsel—it’s likely we’ll see companies turning to GCs more and more often to fill board positions in 2021 and beyond.
Heather Wolf, Managing Director in the Board and CEO Practice of Allegis Partners, co-authored this article.