There is a certain irony to be had in the fact that the best general counsel (GCs) these days are so highly regarded because they are not lawyers in the traditional sense. Increasingly, the conversations the Legal Business team had while researching the 2019 GC Powerlist were about branching out into other areas, with risk management oft-cited. ‘Be a lawyer, but don’t act like a lawyer,’ was uttered more than once.
And this approach is not just reserved for the FTSE 100 companies. This holistic focus has touched both the smallest and largest legal teams. On the start-up side, banking app Monzo combined its GC and chief risk officer role for Dean Nash, who is filling the dual position on an interim basis. Donny Ching, the long-established GC of Shell with a more than 1,000-strong in-house legal team, has also had to embrace risk to a greater degree.
He comments: ‘You can’t just look at legal risks anymore, because the legal risk will have certain downsides. If the reputational risk has a larger set of downsides, you may need to say: “Legally, it’s the right thing to do, but we’re not going to do it because it’s going to adversely impact our reputation.”’
This could be oversell: many argue that risk and legal are natural bedfellows. While Nash notes an increased responsibility to learn about the technicalities of banking, such as accounting rules and cyber security, he has largely rolled with the punches: ‘Risk and legal are obviously different disciplines, but they’re not worlds apart. Compliance is almost just a systematic way of thinking about legal. There’s a common skillset across them all.’
‘I’ve never met a firm that wants to be taken over. Every time someone new joins we create a new firm.’
Donny Ching, Shell
Nigel Paterson, GC of Dixons Carphone, has a risk management professional reporting into him. But before that, the GC role encompassed ‘a lot of risk management’. He notes: ‘GCs are increasingly working on compliance as opposed to the legal advice, which is important because fines and sanctions for non-compliance are increasing.’
Bronagh Kennedy, GC and company secretary of Severn Trent, says risk is now regularly infiltrating the day-to-day work of the legal team. For her, it is about assessing risk at the front end and finding ways to nip it in the bud: ‘We’re using data and trend analysis to understand what needs to change, for example, gathering data on our most recent pollution events. What went wrong with the front-end team for that to happen? We’re not here to help fix problems, we’re here to make sure they don’t happen in the first place.’
This trend is even true for the most regulated, with banking GCs having to regularly re-evaluate their strategies. Compliance is still key, but broader considerations of risk are now higher up the agenda. Bob Hoyt, group GC of Barclays, describes his in-house legal function as ‘much more forward-looking. The joke we make around here is I’m making the transition from being a wartime consigliere to a peacetime consigliere and you know from the movie that if I don’t make that change, I’ll get shipped off to Nevada.’
The Big Four have also been heavily under the spotlight in recent years, with regulators probing them over various audits. Jeremy Barton, GC of KPMG, says that his role has changed as a result: ‘Reputation has become an important consideration. We’re at the stage where reputational risk is almost as important as legal considerations.’
‘We’re not here to help fix problems, we’re here to make sure they don’t happen in the first place.’
Bronagh Kennedy, Severn Trent
Of course, GCs are not only having to take on new risk responsibilities. In a profession as varied as in-house law, legal chiefs are required to step into any areas required of them. Daniel Toner, GC of Spire Healthcare Group, has seen his role change dramatically since the company publicly listed in 2014, with an increased focus on governance and shareholder relations.
A by-product of this has been a heightened focus on in-house training initiatives, with a number of high-profile examples. Maaike de Bie, GC of Royal Mail and soon-to-be GC of easyJet, implemented a training programme to ensure all Royal Mail lawyers were financially astute and were therefore confident procuring external services. She even oversaw an internal training academy for junior lawyers, encompassing typical legal skills in addition to broader qualities such as management skills, networking and even meditation.
Bjarne Tellmann, GC of FTSE 100 publishing group Pearson, has written his own book, called Building an Outstanding Legal Team: Battle-Tested Strategies from a General Counsel. In the book he sets out ten core leadership skills required of a GC and nine of them are non-legal. Compounding this, Tellmann sends his trainees to do mini-MBAs or receive ‘executive MBA-style training’ from a range of institutions, including Deloitte University. Aviva, led by legal chief Kirsty Cooper, sponsors anyone in the in-house legal function who wishes to complete an MBA course. As of the end of last year, three lawyers were taking up the offer, with another three set to be sponsored.
At The Royal Bank of Scotland, a broader legal skillset is encouraged rather than taught. RBS has created a ‘gig-resourcing initiative’ where projects and pieces of work are put on a noticeboard for lawyers to volunteer for. It is designed to provide additional opportunities over and above secondments, as well as expand lawyerly qualities. Likewise, Unilever GC Ritva Sotamaa has implemented a flexible experience platform that allows anyone from the legal team to dedicate up to 20% of their time to global projects. In addition, Unilever has created a new position: GC of people and skills. The new GC, James Barnes, is charged with upskilling the legal team and improving the function’s efficiency.
‘The joke we make is moving from wartime consigliere to peacetime consigliere. You know from the movie, if I don’t, I’ll get shipped off to Nevada.’
Bob Hoyt, Barclays
However, building out the remit of the role means exposing the GC to greater potential liabilities. The most high-profile recent example is that of Felix Ehrat, who resigned from his post as GC of Novartis in May 2018 over a deal struck with Donald Trump’s former lawyer, Michael Cohen, to learn more about approaches to healthcare. Ehrat’s parting statement rings particularly true: ‘Although the contract was legally in order, it was an error.’
The lesson here is that just having a prominent role in a business does not make you impervious. Indeed, power equals responsibility. When asked for one thing GCs commonly get wrong, Diageo GC Siobhán Moriarty replies: ‘Assuming that they are indispensable.’
And, as Martin Bowen, GC of Dyson concludes, it is best to leave your ego at the door: ‘Labels don’t really matter. It’s the contribution you make, the ideas you have and what you bring to the table. It’s not about what you’re called.’
hamish.mcnicol@legalease.co.uk