Business & Practice

Perspective: Why the Role of General Counsel Is Expanding

March 11, 2016, 3:16 PM

Editor’s Note: The author of this post is general counsel at a company active in health, nutrition and materials.

By Hugh Welsh, President and General Counsel, DSM North America

In October, United Airlines named general counsel Brett J. Hart its interim CEO while CEO Oscar Munoz recovered from a heart attack. While not unprecedented, it was striking that United would turn to their general counsel to keep the company stable during this time of crisis, rather than a more traditional choice such as the company’s President or CFO.

Across corporate America, we see more and more companies giving their general counsels additional roles and responsibilities that have been traditionally held by others on the executive team. What is driving this change? What does this evolution mean for young lawyers who aspire to the general counsel position? How will law firms and other service providers who traditionally serve GCs have to adapt?

First, let me make one thing clear: this trend goes beyond the expansion of subject matter under the general counsel’s purview. While it is true that general counsels are increasingly concerned with regulation and compliance as well as data security, as a 2015 survey by TerraLex confirmed, they are also increasingly taking on core business functions like communications, public & investor relations, government affairs, security, financial services, administration and human resources.

Take Twitter’s general counsel Vijaya Gadde. When the company’s director of communications left in July, she took over that responsibility on an interim basis. In October, Twitter named her permanent director of communications. While rumors abound that Twitter is looking to bring in a senior executive for public relations, Gadde is running the search process and the new hire is expected to report to her.

So what advantage does Twitter derive from having its general counsel also oversee communications? Twitter gets a trusted and proven leader whose judgment the CEO and executive team have come to rely on making decisions about how the company portrays itself and tells its story to investors and the public alike.

Another example is Tom Sabatino Jr. of Hertz Global Holdings, Inc. After helping Walgreens complete its merger with European pharmacy leader Alliance Boots, Sabatino was recruited to help the car rental giant manage the fallout from accounting errors and an investigation by the Securities and Exchange Commission. Upon his hiring as senior executive vice president, Chief Administrative Officer and General Counsel, Sabatino was tasked with overseeing Hertz’s legal, compliance, human resources, labor relations, communications, government affairs, community relations, real estate, facilities, and security functions.

Why did the company give other operational functions to Sabatino that fall so far outside the traditional bailiwick of a general counsel? Because as a long standing general counsel and in-house counsel, he has a global view of the company and is able to see how each of these functions contributes to the company’s overall strategy and bottom line. He had also likely gained experience with these functions in his previous roles at Walgreens, United Airlines, Schering-Plough and others.

At DSM North America, we have followed a similar model. Having worked for both a major law firm and in-house at plumbing and heating giant American Standard, I had broad experience when I joined DSM North America. Now, as President, General Counsel and Secretary I have brought that experience to bear working with executives across our business units and at our headquarters in the Netherlands to maximize the value of our company’s shared services, including legal, government affairs, financial, communications and HR. My broad, generalist perspective helps me create professional service strategies and solutions that work across DSM’s diverse business units.

After a successful string of mergers, acquisitions and divestitures in the last 5 years DSM has it’s portfolio set. We are now embarking on an aggressive reorganization of the company’s service functions. The company is now creating professional functions operating at low cost, high value added – with the flexability and adaptability to meet the ever changing needs of a multi-national corporation in the 21st century.

Though the general counsel serves as the chief legal officer for a company, the most important aspect of the role — as the name suggests — is to counsel the executive team. This requires a broad understanding of the company’s specific business as well as business generally. The general counsel must stay up to date on best practices and be able to offer insights into HR, administration, communications, compliance, accounting, real estate – in short, the functions that serve as the backbone for every corporation, regardless of its specific business line. To do the job well, general counsels can add value outside the legal department, making them natural choices for expanded roles within the C-Suite.

For aspiring general counsels, it is critical to use the early years of their careers to accumulate broad experience across core functions, even if that means shifting between industries. Interactions with different departments allow them to not only gain insight into the legal challenges specific to each function but also how they operate on a granular level.

In the evolving C-Suite, general counsels are taking on a broader set of roles and responsibilities than ever before, allowing companies to maximize the value of their diverse and unique perspectives and experience. To be ready to seize this opportunity, we general counsels must continue to grow our skill sets and enhance our subject area expertise across all of the professional service functions.

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