Business risk is on the rise and corporate boards of directors can’t ignore it. The threats of cybersecurity and related litigation, an increasingly regulated business environment, as well as the complexity of global commerce – think mergers and acquisitions relative to the Foreign Corrupt Practices Act – all call for greater awareness of legal issues at the strategic planning level.
This is why Major, Lindsey & Africa (MLA), together with our sister company Allegis Partners (AP), hosted a panel discussion on this very topic in the Chicago offices of Dentons in November 2015. Our distinguished panelists were Kim Rucker, former General Counsel and Corporate Secretary for Kraft Foods Group, who served as the panel moderator; Sara Hays, Allegis Partners; Mary Ann Hynes, Dentons; Rick Palmore, Dentons; and Paul Williams, MLA.
What was clear from the discussion is that legal risk and business risk are increasingly intertwined. A good example is how cybersecurity breaches can involve law enforcement in addition to undermining consumer trust and confidence. For high-profile firms, the resultant media attention can seriously impact brand value and the company stock price.
This is why a firm’s general counsel plays a critical role. Better yet, the lawyer-director can proactively steer the corporation to avoid unnecessary risk altogether. Research out of Cornell (Litov, Sepe and Whitehead) found that companies with lawyer-directors performed better (in stock price), had fewer adverse judgments from accounting malpractice, and more often tied executive compensation to performance rather than risk taking.
Our panel also grappled with the question: How does an attorney earn a board seat? The consensus was that lawyers should develop business skills, perhaps even earn an MBA, but also accept and even seek assignments that help him or her demonstrate acumen in strategic planning, in managing nonlegal operations, and in project management of major transactions such as acquisitions. What qualifies anyone to be on a board is a history of leadership – and results.
Not every board position is right for even the best candidates, but with a plan and an expressed interest in one day serving in governance, a qualified lawyer can become an essential part of a board of directors. As global leaders in executive search, AP and MLA are ready to engage lawyers who have these aspirations.