GE Healthcare's Hassan Hassan outlines the challenges facing the modern general counsel as they confront an increasingly global and risky business environment

As we approach the second decade of the 21st century, general counsel have an opportunity to reflect. We began the previous decade with a stock market crash and ended it with the greatest global economic crisis since the 1930s.

In between, we have seen many companies collapse amid fraud and corruption. We saw the Sarbanes-Oxley Act and other legislation enacted as a reaction to corporate and accounting scandals, including those of Enron, Parmalat, Shell, Tyco, WorldCom and others. The scope of the Foreign Corrupt Practices Act continues to expand, with expectations for huge growth in US and international enforcement of anti-corruption laws.

The record $1.3bn (£625m) in fines paid by Siemens to settle bribery allegations is a stark example of the financial loss that results from a lapse in integrity, or worse, the absence of a culture built on integrity. Globalisation has added many challenges to the role of GCs, including navigating a stormy landscape of legal, regulatory and reputational risk.

The recent corporate scandals did not create themselves. They were the results of decisions for which the CEO was ultimately accountable. Where were the general counsel when these CEOs were deliberating on a course of action that would later cause the subsequent demise of their companies and careers? Did the GCs fulfil their roles as closest legal adviser to the CEO? Did the GCs speak with candour and clearly communicate the risks and long-term implications of the CEO's decisions? Or did they acquiesce to pressure and ignore the peril, under the guise of advocating for the business?

General counsel must serve as business partners as well as the last line of defence, steering the company away from risky or illegal actions. It is critical for general counsel to recognise that CEOs are vulnerable to human fallibility, which may result in critical lapses in judgement – even intelligent people are capable of making unintelligent decisions.

The global economic crisis brings increased pressure to perform, and the stakes often trigger flawed decisions. The global map has been redrawn. Multinationals will more closely focus on opportunities in emerging markets for robust and sustainable growth. While GCs help corporate leaders to confront risks and devise commercial strategies, we must be sure to check that risk with discipline and diligence.

Albert Einstein said: "We can't solve problems by using the same kind of thinking we used when we created them." Reflection enables us to learn from mistakes and evolve how we think. GCs must be prepared to think broadly and also specifically to respond to the challenges ahead; to proactively remove global barriers to success and to use judgement and process to navigate the turbulent sea of global enterprise risks.

What are some of the essential qualities for GCs in a much-changed world of business? Solving today's problems requires us to think differently. But creativity and innovation should supplement, not substitute, the core competencies of an effective general counsel. Identifying solutions beyond the obvious is a process – seeing beyond the obvious requires us to address the obvious first. As corporations undergo a period of renewal and transition into a more regulated environment, we need to balance the obsession to think 'outside the box' and get back to basics. In this regard, the core qualities and competencies that distinguish an effective GC have not changed. They are:

  • strong ethics and integrity;
  • intelligence, intellectual curiosity and gravitas gained by experience that is measured by achievement, not just years;
  • candour, confidence and independent judgement informed by experience and instinct, and often supported by an awareness of the local realities of the market where the company operates;
  • management ability to effectively establish and lead the in-house legal and compliance function;
  • exceptional communication skills;
  • ability to be accepted as a trusted adviser to the board, the CEO and other executives; and
  • access to and influence on the CEO to ensure that decisions balance short-term return with long-term risk.
  • General counsel must also develop and strengthen their skills to meet the challenges that lie ahead in an increasingly multi-polar business world. They must:
  • see the world more broadly, with a multi-cultural perspective;
  • sharpen knowledge of differences in laws and regulations across countries;
  • recognise red flags where local business custom and the extra-territorial reach of US law may clash and upgrade due diligence to cope;
  • prepare to help solve increasingly complex business problems by strengthening business skills and judgement and also by having access to colleagues with requisite expertise and experience; and
  • set priorities, but recognise that it is not all about the big picture assignments. Sometimes a small issue, if ignored, can have a big impact on the company.

The demands on general counsel keep us focused on the present, but we need to reflect upon and learn from the corporate mistakes of the past. We need to have simple and effective internal controls, processes and resources integrated with our business operations. They must ensure robust adherence to the spirit and letter of the rules.

Over-reliance on compliance metrics, illustrated in coloured dashboards, often oversimplify the complex realities on the ground. Our actions as in-house counsel, along with the actions of our business colleagues, bring sense to those rules. The rhetoric of corporate governance and compliance must be supported by measurable progress. Aspirations must be supported by achievements. We will be measured by what we do.

More than words, the post-recession world needs leadership, thought and action. Are you ready to meet the challenge?

Hassan Hassan is the associate general counsel for GE Healthcare in the Middle East, Africa, Central Asia, Turkey, Russia and CIS regions. Leigh Dance, president of ELD International, helped Hassan prepare this essay following a recent roundtable discussion in Dubai.