Once relegated solely to providing straight legal advice to business leaders, in the previous decade general counsels have become more and more like business leaders themselves. In fact, a brief glance at the website of any Fortune 500 company will reveal their general counsel participating as a primary senior executive officer serving as a sort of consiglieri to the board of directors and the chief executive officer.
This is not surprising, given the wide range of skills most of us who serve in the general counsel capacity bring to party. Add to that dynamic one crucial fact: there exists no legal problem that didn’t begin first—and will always also remain—a business problem.
To be sure, general counsels typically have strong negotiation skills and a deep knowledge of corporate law, but many of us have gained actual business management experience and acumen as we have pursued our career paths. This combination of business and legal expertise has allowed many general counsels to more effectively advise boards and CEOs within the context of their business strategies and with advice tailored to their particular challenge of the moment. The law is always the framework within which we operate, but the most effective of us fully grasp the bigger picture.
To that end, businesses looking for a general counsel—or, even better, an outside general counsel—should search for a professional whose knowledge base goes beyond the boundaries of the corporate law learned in academia or as an associate at a big firm. Board members and CEOs should seek a general counsel who understands the challenges of operating a complex business that is full of sometimes difficult people, both inside and out. They need a general counsel who can advise them on issues of risk mitigation, finance, strategy, stakeholder politics, structure and practicalities, in addition to the more mundane laws and regulations.
Outside general counsel should provide ‘business intelligence’
So what are some of the skills your outside general counsel should have, beyond an in-depth knowledge of general business and the law? S/he should be able to read a balance sheet, navigate covenant structures, manage a dispute to avoid a litigation, facilitate a joint venture with a wary partner, assuage the troubling relationship between an investor and the CEO and/or work with the board and CEO to finesse the transition of a subpar management incumbent, while facilitating her/his more suitable replacement.
A general counsel should, above all else, carry a discretionary element of natural expertise and subtlety, in every business circumstance, solve problems of the company before they arise—and assuaging all concerned when they do. S/he is the Steve Nash of the corporate legal world, dishing off the ball to help the executives s/he serves flourish, while requiring and seeking none of the accolades for her/himself.
We’ve seen how this type of relationship works in practical settings. There have been many instances in which we have been brought in to help a company’s executives determine the relative merits of one strategy or another, or weigh a material decision about something else, and we’ve helped them examine the various potential outcomes. Never have we provided an answer that hadn’t previously been somehow considered (we have no magic wand); however, our perspective—baked in our secret business/legal sauce—has always moved the needle and been gratefully appreciated, allowing otherwise intractable issues to be resolved. Most times, because of our involvement in circumstances like that, we’ve never “left the room.”
There is another compelling reason for executives to work closely with an outside general counsel: in-house counsels have a career path to be concerned about and a corporate ladder to climb. Outsourced general counsels, on the other hand, expect to be used as a more temporary solution. There are other companies that they advise and, therefore, they have no axe to grind and no bread to butter.
The risk to an outside general counsel when providing truthfulness and direct talk is de minimus, so they remain free to offer unadulterated counsel. In our experience, the outside general counsel serves more effectively in a targeted role of solution facilitator than their in-house brethren, who can often not see the forest through the trees.
Tom Wyckoff of Wyckoff General Counsels is a 25-year corporate attorney and business executive with a deep resume ranging from public company CEO to trusted, multi-year corporate associate at one of New York’s most highly regarded Wall Street law firms, and as general counsel of several companies varying in size from startups to $100 million in sales. Connect with Tom to discover how Wyckoff General Counsels can help you take your early- to mid-stage business to its next level as your outside general counsel.