Businesses Are Addressing Gaps by Adding Lawyers to Their Boards

Put a lawyer on your board of directors? Sounds like a great idea.

Smart companies are always thinking about the design of who they put in which room to get the best outcomes, and it’s a delicate balance. Everyone wants to be “in the room where it happens,” where power is wielded and (supposedly) the big decisions and money are made.

Putting someone “in the room” is a form of a promotion, a recognition of a person’s value and the expertise they bring to the company. Today, there are more calls for boards to have members with a broader range of technical skills to oversee their company effectively—if a board lacks a particular area of expertise, it can send a powerful message that an area isn’t strategically important.

Companies should always be thinking about adding new board members to cover the important areas, get more diverse perspectives, and handle the increasingly heavy and complex workload that regulators and litigious shareholders may require.

But if you aren’t careful, the room can get mighty crowded, and fast. Take the proverbial C suite that has grown to an alphabet soup where every discipline needs to recognized—COO, CLO, CFO, CISO, CBO, CSO, CHRO. It’s starting to look more like a conference center than an actual suite.

The size of your board can have a real impact on your company’s direction. Groups that are too big meet less frequently, tend to take fewer risks, lack cohesion, and can favor consensus over bold risky moves. There’s no “one size fits all” for corporate boards—I’ve seen them vary in composition from 3-30, though most tend to settle around 6-12 members. You want a board big enough to cover the bases and get the work done, but small enough to manage and have real discussions about what’s important.

Is there room for a lawyer? As a lawyer, of course I love the idea, but not just because it provides more career growth opportunities for the legal set. It’s because of what lawyers bring to the room. What’s discussed in a board meeting often depends on the background and strengths of the individuals on that board.

Studies such as this one from Heidrick & Struggles last year, and other sources, show that the vast majority of board seats still go to individuals with CEO and CFO experience. That’s not surprising given the important business experience these functional areas bring to the room.

Still, too often, board searches default to these core areas. A room full of former CEOs and CFOs naturally will focus primarily on business and financials, and potentially miss happenings in other disciplines that can severely hurt the business. Lawyers bring a different way of thinking, a different perspective.

You can learn a lot about what a company values, and what it sees as areas of medium and long-term focus, by watching their board appointments. Take Coinbase’s recent announcement about adding three new board members, two of whom are lawyers. The company is locked in an enforcement action brought by the Securities and Exchange Commission (and supported by a number of state regulators), charging it operated illegally as an unregistered securities broker.

Just a few months ago, a New York federal judge rejected the company’s arguments that the SEC lacked authority over this area. Coinbase already has an outstanding general counsel in Paul Grewal, but the stakes are high, so the company tapped Paul Clement, a former US Solicitor General who specializes in appellate advocacy and the US Supreme Court, to join their board.

A second new board member, Chris Lehane, is an experienced, savvy political strategist who transitioned from the Clinton administration into executive roles at tech companies such as Airbnb and OpenAI. Clement and Lehane are top legal and regulatory minds, so landing them is a powerful one-two punch for a company that has significant regulatory and political challenges.

Just because the Coinbase boardroom has two lawyers (out of 10) doesn’t necessarily mean your company needs one in the room too. But whether you’re a public or private company, it’s probably a good time to engage in a matrix exercise to see what your board does need. A board matrix is a grid that lists your board members on one axis, and a list of the essential skills that your board needs along the other axis.

Skills might include (but aren’t limited by) things like finance, risk management, CEO experience, industry background, and connections. Areas of critical importance to your company’s strategy should marked. If you’re like a lot of boards, your matrix may reveal some critical gaps to weigh when thinking about what to add to your board.

Does your company face substantial legal or regulatory challenges? Does it have a history of integrity or ethics/compliance challenges that needs to be addressed? Can your general counsel fill in these gaps by attending and speaking up at board meetings? Or do you need to add a legal heavy hitter to the room? Who you hire will speak volumes about what matters, and your gaps may come back to haunt you.

You might need a lawyer.

Rob Chesnut consults on legal and ethical issues and was formerly general counsel and chief ethics officer at Airbnb. He spent more than a decade as a Justice Department prosecutor and he writes on in-house, corporate, and ethics issues.

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