Chief Legal Officer v. General Counsel: Why You May Need Both
The reasons why some corporate law departments opt for both a CLO and GC range from size to industry to attorney retention, in-house legal experts said.
February 07, 2019 at 05:21 PM
3 minute read
When Larry Weiss joins leading chipmaker company Analog Devices Inc. as vice president, general counsel and secretary on Feb. 11, he will report to Margaret Seif, chief legal and people officer. Yes, the general counsel will report to the chief legal officer.
The legal department at the Norwood, Massachusetts-based business is adopting a not unheard of but still fairly uncommon practice of employing both a CLO and GC.
“Larry will oversee our entire legal group and report to Margaret, who provides oversight for several functions at Analog Devices including legal, HR, and communications,” a company spokesman said of the arrangement.
Indeed, the breakdown of duties between a CLO and GC within departments that have both is generally the same across companies and industries—the CLO is heavily involved in the business, while the GC mans the legal function, in-house legal experts said. But the reasons for adopting such a model vary, they added.
In some cases, “what [the department] is doing is elevating the GC to the C-suite and giving a promotional opportunity to someone on the inside” whom the company is happy with and would like to retain, said John Gilmore, managing partner at BarkerGilmore. “Then the CLO is the person doing the higher-level corporate functions, the higher-value matters for the company, while the GC is there to run the actual day-to-day law department.”
Bestowing the title of GC on several in-house lawyers, all of whom report to one CLO—similar to arrangements where several deputy GCs report to one GC—also helps retention, Gilmore added.
“It makes them feel of value to receive that title,” he said. “They're happy to be able to throw their weight around with that title on their business card.”
Added Susan Hackett, CEO of Legal Executive Leadership, a consultancy for corporate law departments: “Most law departments are reasonably flat—there's not a lot of places for people to go. You may have someone who came in at the associate GC level, and five, 10, 20 years later, they're still there. This is a way to give someone a better title and a promotion.”
Legal departments with both a CLO and GC also generally are seen within large companies with revenue dollars in the billions, said Bob Graff, a partner and recruiter at legal recruiting firm Major, Lindsey & Africa. Last summer, publishing giant Hearst Communications Inc., which reported a revenue of $10.8 billion in 2017, appointed two GCs to replace its former GC, who was promoted to CLO.
Industry also can play a role, added Charles Volkert, executive director of Robert Half Legal. Given all of the issues around data privacy and security, tech companies may be more likely than other businesses to adopt a CLO-GC model. Indeed, both Airbnb Inc. and PayPal have done so in recent years.
Other CLO-GC situations may arise when companies merge, said Graff, who also emphasized that in any legal department where both roles exist, their duties are discrete.
“Unless you're the CLO or the assistant secretary or corporate secretary, you're not dealing with the board, the investors, the proxy issues, the shareholder matters,” he said. “You may have a GC title, but you're not doing any of the corporate governance.”
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