The Hayne royal commission was a “big game changer” for Australian businesses, having flow-on effects for the nature and function of legal departments.
In its latest Roundtable Briefing, focused on the general counsel’s relationship with the CEO and board, legal recruitment firm Mahlab outlined that CEOs and boards now expect “even more rigour” around content and behaviours from their legal and governance functions.
General counsel in attendance agreed that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was a “big game changer” for businesses across the country and had a “tangible impact” on the relationship between the GC and/or company secretary and their CEO and board – especially in ASX-listed businesses.
According to Mahlab, most participants at the roundtable “felt strongly” that the post-royal commission environment had given birth to a customer-first approach which requires leadership flowing down from the top.
“Most [roundtable] participants felt strongly that the post-royal commission customer-first approach was now evident within their organisations and required leadership from the top. One GC commented that ‘courageous conversations’ are required on issues stemming from the [royal commission] rather than being ‘an industry of self-comfort’,” Mahlab said.
“CEOs and boards now expect even more rigour around content and behaviours from their legal and governance functions. Similarly, [roundtable] participants expect their CEO and the board to lead by example. One participant commented, ‘There’s no point having training for executives if they don’t turn up. This goes to culture’.”
Most GCs view the royal commission in a favourable light, Mahlab continued, noting that every company, not just financial institutions, was forced to take a wholistic view of governance.
“Organisations led by their GC (who often get the blame for compliance and legal failures) have put into place processes to ensure rigorous compliance measures in order to survive and have continued success as a company,” it said.
Many GCs stated that post-royal commission there is more of a focus on regulatory work which has enabled lawyers to broaden their remit, further develop their skill set and get closer to decision-making by the business. One GC commented that post-royal commission, there is a lot more prescription around rules, but the rules are now values-based, with fairness being the defining principle, i.e. the focus shifted from shareholder to customer.”
In the same Roundtable Briefing, attendees agreed that – now more so than ever before – it is critical that general counsel act as wise advisers to businesses and be “true, honest and empathetic” leaders to their teams.