Wanted: In-house legal leaders who can interpret world events

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In a world of “polycrises,” where interrelated crises have unfolded to present unique challenges for businesses, chief legal officers are under increasing pressure to provide strategic advice on geopolitical events.

“The need for the general council to take a broader view of the world is part of a current trend,” says Nick Hedley, co-founder of executive search firm Hedley May. “Just being able to give the legal answer doesn’t make you very valuable to a CEO.”

Hedley advises company executives to appoint general counsel who are knowledgeable in five areas in particular: geopolitics; climate change; Social inequality; technological revolution; and the aging of the population.

General counsel should consider how such developments will affect their companies, he says. “They have to be thoughtful about these issues, but also be aware that there is no right answer. They need to risk being wrong, which takes courage.”

This also means being able to have a broader view of all potential risks affecting the business.

With key business risks now under the control of the legal function. . . Legal directors are increasingly being called upon to be the ‘master horizon scanner’

Mark Gregory, general counsel and director of corporate affairs at UK engineering group Rolls-Royce, says: “As key business risks are now under the control of the legal function, such as trade sanctions, ESG, cybersecurity and privacy of data, to name just a few: legal directors are increasingly being called upon to be the ‘primary scanner of the horizon'”.

These risks have been magnified by the need to comply with global trade sanctions on Russia and US sanctions on China.

a 2023 survey by the Association of Corporate Counsel, a professional group, found that global regulatory compliance was the number one concern for 66 percent of in-house lawyers.

More than 40 percent of Asian and European legal directors surveyed expected political developments to be their top business challenge, an expectation shared by 32 percent in the US. Tellingly, the survey also found that providing legal advice now only accounted for about 27 percent of the chief legal officer’s role.

For some, the ratio is even lower. The legal director of an international consumer goods company says: “My role now is primarily as strategic advisor to the C-suite. Providing technical legal advice is only 15 percent of my job.”

Wisdom is about mastering past experience; judgment is about looking ahead and making decisions

The Hedley recruiting firm is conducting a study to measure how corporate leadership is changing. “There is a difference between wisdom and judgment,” she says. “Wisdom is about mastering past experience; judgment is about looking ahead and making decisions. Successful general counsel or legal directors increasingly need the latter”.

This is not always so easy for lawyers whose training has traditionally taught them to look back on precedent.

“These days, it’s almost standard practice to put government affairs in the GC realm,” says Leigh Dance, founder and CEO of Global Counsel Leaders, a forum.

But while many general counsels are more willing to engage with their peers and develop their views, he says, they are not necessarily adept at advocating for geopolitical issues: “They need training to broaden their knowledge and improve their communication skills.”

In-house lawyers for Flex, a US electronics design and manufacturing company, have shifted their focus to advising the company in light of recent geopolitical events. “We now combine legal, policy and policy expertise for a holistic approach,” says Scott Offer, executive vice president and general counsel for Flex.

This helps the team make more informed decisions about risk, but also improves the “ability to work with policy makers and better understand the real goals behind rule changes,” he explains.

The team drew on a broader range of advisers, including former government officials and geopolitical risk consultants, to help them assess scenarios over a three- to five-year horizon.

In response to stricter business regulations, for example, Flex’s legal team has added legal and geopolitical expertise to the business and government affairs functions.

Other in-house legal teams have similarly become adept at scenario planning and running drills.

My in-house legal team is part of the global business. . . They often better understand what is happening on the ground

Such exercises reveal which skills and experience are most valuable. As multinational companies navigate escalating trade tensions between China and the US, for example, members of the legal function based in locations around the world are well placed to advise on the nuances of changing situations. quickly.

“My in-house legal team is part of the global business, but has a local context that is invaluable,” says Barbara Levi, group general counsel at UBS bank. “They often understand what is happening on the ground better than any other source.”

In 2011, Kent Walker, then Google’s general counsel, told the FT that his job was to “watch for rounded corners.” At the time, only a few attorney generals were of this opinion. Now chief legal officers who have seen their role grow to touch every part of the business and noted how many business challenges have a legal component are inclined to agree.