What General Counsel should be up to
I believe it’s so important for the company management, as well as for in-house lawyers and GCs, to be clear about the role of the legal function and its objectives. In the note below, I would like to summarise my 22 years of observing the different aspects of the GC role. In my view, legal support has three major objectives and functions:
Operational legal support for business (the main interest of management):
The legal cost associated with this first objective is mainly the concern of management, as they need to deliver profit and any costs bother them. At the same time, they aren’t particularly excited about assets and investment protection, as that is not their primary responsibility, which is the second objective of the legal function.
Security and protection of shareholders’ assets and investments (the primary role of the GC and the Shareholders’ objective);
Investment and asset protection is primarily the responsibility of the GC, while the GC also provides operational support in order for the business to run smoothly.
Maximising returns via smart advice and representation (an objective of both the unit and the shareholders);
Smart advice can consist of a variety of legal work resulting in a maximum investment return, including different types of litigation and arbitration. Support in gaining tax and customs benefits, different types of investment agreement with the government, etc., lobbying and legislative development.
Management’s desire to save on operational support is understandable and the GC should use various means to implement an effective programme for achieving savings and supporting business.
Even so, to compromise on the second objective might lead to serious loss of investments and shareholders’ assets, so the legal budget shouldn’t be management’s main concern. There are dozens of companies in which the lawyers believe their job to be to save money. While everything just comes down to making savings, these companies have and will continue to have serious problems because they might lose assets or have to write off losses.
The third objective is the main concern of both management and shareholders. This is sophisticated work that not necessarily everyone can do and management should appreciate this. I think understanding the above is crucial to the success of the legal function and I hope most managers and GCs realise this. At least this is what my experience of working with clients, including shareholders and legal staff, taught me.