The role of the general counsel (GC) for a corporation varies slightly based upon such factors as the company’s size, the type of industry and the region in which the company operates. Larger companies demand more from their GCs than smaller companies. Despite the differing factors, the overall expectation for the GC is to deliver the highest possible quality of legal services to the corporation.

Understanding the General Counsels’ Responsibilities in the Boardroom

One of the main differences between a GC and a private attorney is that the GC only has one client — the corporation. The following is a list of 10 responsibilities of the general counsel in the boardroom:

  1. The Corporation as a Client

The primary role of the GC is to provide legal services to the corporation, not the officers and directors. GCs owe the duty of loyalty and the duty of care to the corporation. This can sometimes pose a conflict of interest. GCs may represent different subsidiaries. However, this can also present a conflict of interest if a subsidiary is at odds with the parent company, as in the case of a bankruptcy. GCs must be familiar with different laws and liabilities in the areas in which the company has subsidiaries. They should also be knowledgeable about all aspects of the business, know the state rules of confidentiality and have actual knowledge of the facts in question.

  1. Corporate Compliance and Security

GCs must understand how the rules of ethics apply to non-legal business advice and they should step in upon learning when an officer is in violation of a corporate obligation that could negatively impact the organization. GCs don’t have a duty to pass judgment if management decisions are made in good faith, even if they aren’t in the corporation’s best interests. As advocates for the corporation, GCs should ensure that other lawyers abide by the rules of professional conduct. GCs may serve as a board director or media liaison and follow the related rules for each. They must also know the rules for any other states, provinces or countries in which they serve. In addition, GCs should be familiar with the reporting rules for the Sarbanes-Oxley Act (SOX) and the violations for GCs.

  1. Record Retention and Management

Documents are important because they can be used to protect the corporation or constitute liability. SOX requires companies to preserve all records pertaining to the annual audit for seven years after the audit is completed. Most executives agree that corporations could do a better job of managing and retaining records. GCs should ensure that they can locate records quickly when needed and that they protect records that could be subject to litigation.

  1. Reporting Structure

Most GCs report to the board of directors, the CEO or President, the Chief Financial Officer or the Chief Operating Officer. GCs report to the top because they also bear many of the same responsibilities as the corporate secretary. In addition, GCs who report to the top have more weight and they have the advantage of being more integrally involved with the business planning of the company. Direct involvement in business matters helps GC to anticipate and prevent legal troubles.

  1. Internal Legal Department Structure

From a historical perspective, most corporate legal department structures have had a hierarchical structure where there are several levels between the GC and staff attorneys. More recently, corporations are beginning to adopt a flat organizational structure to take the focus off titles so they can respond more quickly and effectively to crisis situations and new initiatives. Legal departments are generally categorized as centralized, decentralized or as a hybrid.

  1. Controlling Legal Spending

One of the better-known responsibilities for the general counsel is helping a corporation control costs. With this in mind, most GCs consider the “three Cs”: communication, contemplation and capitalization. Communication refers to clarifying and discussing costs. A host of things fall under contemplation, including analyzing, evaluating and exploring alternatives. Capitalization refers to producing and protecting revenue, exploring internship programs and representing themselves well with lenders’ counsel. The legal structure also includes equitable and timely compensation for attorneys.

  1. Risk Identification and Assessment

Many corporations have a risk management team, and the GC plays a strong role in the risk management process, which is defined as identifying, reducing and minimizing the impact of risk. Every company should develop its own unique risk management plan. Risks may include the loss of real property, personal property or net income. Loss of key personnel through death, disability or retirement is another area of risk. All companies must also be prepared for the risk of a lawsuit.

  1. Crisis Management

One of the most important times that corporations need their GCs is in times of crisis. GCs are usually instrumental in helping to develop efficient crisis plans that include conducting an internal investigation, cooperating with government investigations and responding to the media.

  1. Litigation

The cost of litigation has increased substantially over the last decade. Litigation must be factored into controlling costs. A primary responsibility for GCs is to develop an efficient litigation strategy, communicate it to management and oversee it. Careful planning minimizes the cost of litigation, and includes assessing the facts, staffing the case and establishing a preliminary budget. GCs may also decide whether they need to involve outside counsel.

  1. Outside Counsel Management

When GCs determine that it’s wise to hire outside counsel on a matter, they decide whom to hire and how much work to outsource for a case. GCs interview various firms and set up an engagement letter with the firm they select. The process should include outlining costs for the life of the case and debriefing afterward.

Qualified GCs are valuable assets for setting up systems and processes to prevent situations that can lead to lawsuits. As part of corporate leadership, they provide legal guidance and advice for board directors and executives. In the event that litigation becomes imminent, GCs represent the corporation or ensure that the corporation has adequate representation by hiring outside counsel. Finally, GCs deal with the media and protect the corporation’s reputation.