The Role of the Modern General Counsel

Abstract

The last three decades have seen a transformation in the role of the general counsel in major US companies. The general counsel has replaced the senior partner in the (external) law firm, as the go-to person for the CEO and the board of directors on advising on a plethora of topics ranging from regulatory compliance to risk mitigation to tackling cross-border operational issues and general (corporate) ethical standards. The broader role that general counsels play has had a positive impact on the overall quality of in-house legal departments, including lowering external legal costs and turn-around time. However, these are ancillary benefits and not its raison d'etre, and a series of events over the last several decades are responsible for shaping the role of the general counsel. Specifically, the adoption of a higher standard of director liability through judicial decisions in the US, and, an increase in regulatory oversight and scrutiny of corporate actions have compelled companies towards stricter compliance regimes, and general counsels seem best suited to oversee this task. However, the role is not without conflict as general counsels owe a duty both to the board of directors and management. Hence, changes in the corporate governance structure may be necessary to minimize the conflict if not completely remove it.