When One General Counsel Isn't Enough, Consider Two

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Victoria Reese is the global head of Heidrick & Struggles’ Legal, Risk, Compliance & Government Affairs Practice based in New York. Her recent placements include general counsels, compliance officers, corporate secretaries, governance officers, other high-level internal legal officers and related infrastructure positions. In addition to large financial institutions and corporations, Victoria has worked extensively with hedge funds and other investment management companies. She regularly speaks at conferences and symposia regarding the legal and search industries and has published articles on leadership trends, marketing in professional services firms and the attraction and retention of top talent.  

Bloomberg BNA: What makes a general counsel well-suited for the boardroom?

Victoria Reese: Great question. I think there is no scientific antidote when it comes to GCs (general counsels) on boards, or really any executives on boards. Whether it's a GC, or another type of background, boards need to consider the delicate chemistry balance and the skills/experience make-up for the boardroom. Not every board needs a GC, and not every GC is suited for a board. You must take into consideration the company's obligations, current challenges and of course strategic direction.

The problem is finding GCs with the public company experience and broad business exposure. Meaning, they've worked in M&A, compliance and governance programs and perhaps they've led their company through a turnaround, a set of challenges, regulatory risks or headline risks, and successfully led that company to the other side. That person is going to be very valuable to a board.

BBNA: Are there particular qualities that a potential GC should possess to effectively also serve as a board member?

Reese: Yes, I think that's what the new GC is really all about and what most of my clients are looking for. Someone who is a lawyer by training, but also is a strong business partner. A leader who brings strong charisma, personality, influencing skills and ability to build consensus in a room. These are some things the GC usually has a lot of experience in—doing a decision tree, bringing two sides together—which can be very, very valuable in a boardroom. And, GCs who have a financial acumen and deeper operations experience are very valuable as well.

BBNA: When a general counsel is a member on a board, what are the legal issues or particular functions to which he or she should be particularly attentive?

Reese: Many businesses at this point are facing various areas of external scrutiny, and I think more and more contemporary boards are focused on risk across the board. Not just is it legal or not, but how is it going to be perceived by the public, company shareholders, shareholder activists, the street and regulators. So this can be anything from employment issues—how are we hiring someone and how are we firing someone—to ethics, disclosure obligations and of course compliance, which is a hot topic these days.

BBNA: What makes boards of companies in certain industries more in need of having a general counsel on their board?

Reese: Businesses that have found their way into the spotlight. Businesses facing negative headlines or experiencing regulatory risk are likely in greater need of having a GC on their board. For example, telecom, financial services and pharma—those boards are obvious ones to have another strategic bright legal mind in the room.

BBNA: What are the advantages of having two GCs on the board?

Reese: Well, it depends on background and experience. A lot of the lawyers on boards have strong government backgrounds, which is very valuable these days. Someone who can navigate Washington is critical to have in many boardrooms, as well as those leaders with strong legal and risk backgrounds.

I think there is no scientific antidote when it comes to GCs on boards, or really any executives on boards.

BBNA: Why might boards be reluctant to include GCs on their boards? What are the possible drawbacks?

Reese: We see very few GCs being asked to be on boards, and I think that's because the CEO and the directors feel that the legal perspective is well-represented in the boardroom already by the company's acting GC and the board's outside counsel. Boards will have their own counsel as well, so they will say we don't need to add that skillset to the boardroom at this point.

Again, you have to tap a new board member as a business partner. Someone who is going to understand risks and ramifications, but is solutions oriented. It goes back to chemistry and that broader view. You don't want someone who is just going to be the “no” department carried on to the board. In fact, a board needs a leader who can think through strategic alternatives.

BBNA: Why might a general counsel be reluctant to serve on a company's board?

Reese: Sitting GCs are often conflicted or prohibited by their company's policies to sit on boards, so you see a lot more retired general counsel (continued on page 399)(continued from back page)or retired lawyers going on the boards. And then there are of course the risk-averse general counsel, and they are very aware of the risks from shareholder activists that confront the board, whether you're a general counsel or a senior executive.

BBNA: Why don't more companies have multiple GCs on their boards?

Reese: Again, that goes back to we already have too many lawyers in the room anyway, why don't we want to balance out the skill sets. There is a trend of having former CEOs, financial experts and CFOs in the room. However, we feel this is slowly shifting, and hopefully more boards will be open to looking for this profile. Also, it can be a great source of diversity as well, women and persons of color who are sitting GCs, retired GCs or former law partners.

BBNA: How does adding a GC to the board increase gender diversity in the boardroom?

Reese: So if the board is looking to add a woman to the board who has C-suite experience, the GC world is a pretty deep pool. Obviously it could be deeper, I think there could be many more women GCs, as in all the positions in the C-suite, to add diversity. However, it's been a place where there have been very prominent and successful women. Diversity is important on the board, and in a pool where they can look at are GCs from public companies who have a lot to offer.

BBNA: How is the increasingly popular discussion of cybersecurity and technology affecting GCs in the boardroom?

Reese: Whether you're a large big box retailer, or whether you're a giant insurance carrier, this idea of security around data breaches is becoming more and more important. Our clients are hiring GCs that have a firm grasp on technology, risk management, IP, customer information, and big-data. That is a boardroom demand that can 100 percent be found within the GC landscape.