Getting on Board
It's easy to describe Sarbanes-Oxley as the worst thing that has happened to companies in the history of regulation. Reams of reports and white papers have been written about the potential risks in-house counsel face under SOX. But SOX hasn't been all bad news for general counsel. As recently as...
June 30, 2006 at 08:00 PM
2 minute read
It's easy to describe Sarbanes-Oxley as the worst thing that has happened to companies in the history of regulation. Reams of reports and white papers have been written about the potential risks in-house counsel face under SOX. But SOX hasn't been all bad news for general counsel.
As recently as 2000, CEOs didn't perceive general counsel and other senior in-house counsel as contributing much value to the company's bottom line. In the late 1990s, the GC commonly reported to the CFO, not the CEO.
But the passage of SOX instantly elevated the GC's stature. Now, the GC is considered an invaluable asset that not only guides the legal function of the company, but also is essential to the company's long-term business success. Reporting structures changed, and the GC's advice was recognized as crucial in assessing risk. The GC was further acknowledged as an essential resource for the corporate board.
The natural extension of this last point is that more companies should actively recruit general counsel to serve on corporate boards as outside directors. CEOs and CFOs are already on the short list for corporate board seats, but there is absolutely no reason that more general counsel shouldn't be serving on boards as well.
The traditional argument against using general counsel as outside directors is that they don't have the requisite business skills, financial knowledge or “real” business experience to effectively provide the strategic guidance that boards need to solve their most complex problems. That argument no longer applies.
Complex problem solving is exactly what lawyers do best. The ability to consider the relative merits of multiple points of view and analyze potential scenarios is just the kind of perspective that a good corporate board member must provide. Arguably, your experience as counselor makes you better suited for a board seat than a business executive whose experience has been limited to deals or finance.
For years, outside lawyers have been serving on the corporate boards of nascent and mature companies. The best business lawyers–whether in-house or outside counsel–are great business people. Talk to your CEO and chairman; make sure the message gets to the board that the best candidates for board vacancies may very well be your peers in the in-house bar.
Let me know what you think by e-mailing me at [email protected].
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