Balance between risk and opportunity increasingly difficult
As general counsel continue to wade deeper into the world of business, balancing risk and opportunity while meeting board expectations will be difficult, according to a new report.
KPMG’s third general counsel report, Through the looking glass: How corporate leaders view the General Counsel of today and tomorrow, reveals that the tension general counsel face between protecting their company and enabling value is only going to increase.
“As the GC ventures further into the realm of business, it will become harder to maintain this balance while meeting the expectations of the board,” the report read.
“The challenge is a matter of degree, requiring GCs to become ever more comfortable with the technical details relevant to their business and industry, as they take on positions of increasing influence, necessitating broad, incisive decision-making.”
KPMG’s previous two general counsel reports, in 2012 and 2014, were based on the views of general counsel themselves, whereas this year it interviewed 34 business leaders from around the world to see how corporate leaders from outside the legal function view the position.
While corporate leaders feel that general counsel are rising to the challenge of juggling risk and opportunity, there is a sense of urgency that general counsel should do even more to facilitate business growth.
“Companies need general counsel who will manage the legal function as a business that is integrated into the overall strategy of the enterprise,” said Phillip Ostwalt, KPMG advisory and investigations partner.
“Exceptional legal skills are a given; it is the other attributes that will help them to reinforce their business value.”
The report revealed the five main attributes that general counsel must embrace to succeed in the future.
Firstly they must be business leaders: “Providing insightful commercial advice to the other senior executives and the board, based on sound legal principles”.
Secondly, risk managers: “Being constantly alert to and vigilant against an increasingly broad array of global threats to the company, and handling them accordingly”.
Thirdly, technology champions: “Leading the change in mindset from technology as a standalone, isolated specialism to the all-pervasive reality of doing business in the digital age”.
Fourthly, key communicators: “Adeptly handling communications with key stakeholders such as the board and investors, as well as effectively communicating with regulators and internal teams”.
Lastly, builders of corporate culture: “Setting a tone of trust at the top and building a risk-aware culture in which compliance is not seen as a straitjacket, but as a source of competitive advantage”.
The business leaders interviewed also highlighted five key risks on which general counsel need to focus, being regulation, technology-related risks, reputation, contracts and litigation.