Counsel must play role in evolving governance structure
With board directors and corporate officers being portrayed in media and culture as lacking trust and honesty, there is a pressing need to re-evaluate governance structure, which in-house lawyers must contribute to.
Speaking last week at the Governance and Risk Management Forum, hosted by the Governance Institute of Australia, Coleman Greig special counsel and Western Sydney University professor of corporate law and governance Michael Adams argued for lawyers who work in-house to play a role in helping boards bring their businesses into the future.
That role will include, he said, consideration of the top governance priorities for businesses at this juncture, which he condensed into the acronym SEMTEX.
SEMTEX, he explained, stands for: strategy (a more stringent focus on long-term strategy and performance); evaluation (of big and small risks across the board); multi-generational (a recognition of ever-increasing diversity and generational gaps in the workplace); technology (staying on top of tech advancements as well as the inherent dangers of social media); environment (a recognition of the younger generation’s cognizance of sociopolitical issues and how best to incorporate corporate social responsibility into a business); and toxic culture (which must be stamped out both proactively and reactively).
“If you get any of these wrong, it will blow up in your face, and cause damage to the shareholder, as well as your own career,” he warned.
“Being professional and being aware puts you in a much stronger position.”
For corporate counsel, there is a need to provide broader perspective to boards in order to not only challenge traditional structures and retain awareness of the SEMTEX acronym, Professor Adams noted, but also help those structures evolve in the modern marketplace.
“This involves knowing what should be prioritised, considering how much time is being spent on performance versus strategy, how much time is spent on minor versus major risks, how to evaluate new projects, and how to remunerate staff,” he outlined.
“All of these things must be considered, especially given the publicity out of the Royal Commission [into Misconduct in the Banking, Superannuation and Financial Services Industry].”
And while he acknowledged the inherent challenges of such charges for lawyers in-house, he submitted that lawyers nowadays are more broadly educated, by way of multiple tertiary qualifications and ongoing professional development, and thus can help businesses see matters from more holistic and interesting perspectives.
“Counsel should help set the tone,” he concluded.
Professor Adams’ comments support those made by Canon Australia chief legal counsel David Field who, in conversation with Lawyers Weekly, recently argued that the role of in-house lawyers is to positively influence for better business outcomes and culture, and not be an arbiter of what gets done.