In Part 1 of this blog series, we discussed how the role of the general counsel is evolving corporate governance. Now we focus on the board itself to consider best practices for achieving a stable, productive relationship with the general counsel.
First and foremost, boards must keep in mind the delicate balance of interests being juggled by the GC. The general counsel has come to be a true partner of the board and the CEO, yet the GC ultimately serves as guardian of the company. Navigating this tension was the purpose of Ben Heineman, Jr.’s recent book: The Inside Counsel Revolution: Resolving The Partner-Guardian Tension.
Best Practices for Boards & General Counsels
What can corporate board members do to ensure a mutually beneficial relationship? Ultimately, both parties share a common goal—that is, serving the company’s best interest and increasing shareholder value. So, how can boards best leverage today’s general counsel in their evolving role?
1. Remember the Partner-Guardian Vision
According to Heineman, the board must share the GC’s vision of the partner-guardian or lawyer statesman. In other words, the board should continually be asking two questions in sequence: (A) Is it legal? (B) Is it right for the company?
The second question, Heineman notes, is weighed against the standards of performance, integrity and risk. The board must communicate and share this partner-guardian vision to the CEO, so that all parties are aligned in the decision-making process.
2. Include the General Counsel in Board Culture
A personal relationship between the board and general counsel has become increasingly important. Board members must ensure that the GC is included in all of the board’s cultural and education events, from dinners to trips and trainings. Personal relationships are an essential building block to trust and cooperation, and the board-GC rapport is no different.
3. Take Part in the Hiring (or Firing) of the GC
Although it is ultimately a CEO decision, the board should be involved in the selection of the general counsel. The board plays an important role by providing checks and balances on the reasoning behind a GC’s hiring or termination.
4. Establish Private Meetings
Finally, boards should organize private meetings with the general counsel twice a year. This is something that the board must initiate, stresses Heineman. If instituted by the general counsel, the GC is at risk of losing the CEO’s trust. Much like the board requests private meetings with outside or internal audit, they should initiate the same touch point with the general counsel to ensure board members are briefed on everything that’s happening.