The “New Order” of GCs and the Law: Comments on the Results of the 2015 General Counsel Excellence Report

May 8, 2015

meeting boardroom professionalsOne of my former law partners (and a former in-house attorney) would regale me with stories about the “pecking order” for law school graduates in his day; Marc had graduated law school in the mid-1970s, even before I was a gleam in my father’s eye.  In Marc’s day, the best and brightest went on to work downtown in shiny, tall buildings for “Big Law”- while those without sterling credentials were “relegated” to in-house company positions.  Back then, the positions of power and influence were held by the almighty law firms.

The introduction to the recent 2015 General Counsel Excellence Report released by Global Legal Post in association with TerraLex touched on these yesteryear stereotypes and was a reminder of how times have changed. The report’s data and the featured corporate counsel interviews only reinforce the “new” order, touching on GC’s transforming role in crisis management, M&A, divestures and strategic alliances.  Of greater interest, however, was the transformation of the GC as it related to her role as strategic advisor to the business and in the selection of outside counsel.

  • General counsel as strategic advisor. According to the report, the new watch-phrase for general counsel is “added value.”  In this context, added value means the GC’s contributions as strategic advisor to the board of directors and company.  According to the report, 60% of the respondents said regulation and compliance are their biggest short-to-medium term concerns.  Accordingly, GCs are in the prime position to demonstrate their value by serving as a navigator to “chart a course across an increasing complicated set of rules and regulations.” Advised Rosemary Martin, GC of Vodafone, “GCs need to engage with senior executives in a way that results in executives seeking out their advice before it is too late, and in a way that ensures that the GC will be listened to when it really matters.”
  • General counsel as discerning purchaser of legal services. According to the report, 81% of the GCs surveyed said they were in charge of selecting law firms.  In the context of relationships with outside counsel, “added value” is about defining a process by which to take limited budget to secure outside expertise and help. While half of the GCs admitted that long-standing relationships helps guide decisions, the data regarding the adoption of new management techniques is remarkable.  Forty-five percent (45%) of the GCs admitted to using some form of competitive bidding to distribute work, and 22% said they mostly use this technique (an increase from 14% from the prior year).  A startling 42% use tenders, auctions and other “e-procurement” techniques to select a law firm, citing the advantage of price transparency.

My favorite line from the report that decimates the stereotype of GC as second-class citizen in the legal landscape?  “The passion for cost cutting that gripped national global corporations in the wake of the financial crisis has given GCs the whip hand.”  My, how times have changed.