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Is the GC the Conscience of the Company? Maybe Not

January 24, 2013

Sadly, some of our professional colleagues have lost sight of who we are, and why we do what we do. Regardless of where we work, our bulwark against a loss of independence must be our sense of professionalism. We are and must remain a profession that, in its roots, is engaged in a public service; and which is, as dean Roscoe Pound said many years ago, "no less a public service because it may incidentally be a means of livelihood." (That word, "incidentally," is pregnant with meaning.)

Now perhaps because I had good mentors who gave me more attention than I deserved, I was taught that lawyers always need to be prepared to be fired. I was told that, in any long legal career, there would inevitably be times when a client would fire me, and that I should always be prepared to bear whatever the consequences would be. Over time, there were indeed occasions when clients did not like my advice, times when they simply chose not to follow my advice, and some few occasions where I was never clear why they switched lawyers. But in all these situations, I always went back to the definition of what it means to be an attorney. The very word "attorney" has its roots in the concept of agency, the lawyer being a special kind of agent in the areas defined by our professional rules. The client is the principal and the lawyer is the agent, with the principal free to discharge the lawyer for good reason, bad reason, or no reason.

In my time at IBM, I have been privileged to work with two extraordinary CEOs, and I had this very conversation with each as we began our relationship. I explicitly confirmed that my client was the company, and that the CEO was free to fire me for good reason or no reason, with notice or without, at whatever time they decided they would like a different lawyer. To them, it communicated that I understood clearly who was the principal. And for me, it was a declaration of independence of sorts, demonstrating that I had no expectation other than that I would give them my best effort and advice, and that I would do so fully prepared for whatever the consequences might be. In neither case did we ever touch on the topic again.

My second point is that at times in-house lawyers act as if they do not believe they can be independent. Every day we see examples where an allegation or claim arises, and in-house counsel or the board retains external counsel to do an "independent investigation." Now there are certainly times when an outside counsel may be advisable and even necessary because of the demands of a regulator, or in light of unique issues of perception, or where management finds the in-house staff to be feckless. But there are also many cases where the general counsel should be fully prepared to manage the inquiry herself, make the tough calls herself, and take on the responsibility herself.

I analogize this to the judicial doctrine of a court's duty to sit; and while the analogy cannot be stretched too far, I think general counsel have a duty to do our jobs in highly charged and controversial matters. Indeed, in tough times our obligations may be at their greatest. There have been any number of high-profile issues involving questionable CEO behavior in recent years, and while in many cases the tasks were quite rightly outsourced to external counsel, there were also a good number where a courageous general counsel managed the situation herself, and let the facts determine the results.

The long-term best interest of the client should provide the guiding principle for how matters of this type should be handled. Obviously if the general counsel were implicated or involved in any way, the decision to go outside would be clear. But all too often we see a reflexive referral when allegations of corruption are made. It is easy to say that a task demands an outside voice, when what it really needs is a courageous voice—one prepared to grapple with difficult issues and to live with the consequences of doing so.

Let me move to my third point and describe traits that make for a successful senior in-house lawyer. A good place to start is recognizing that body of literature, both thoughtful and substantive, that has arisen in the past few years regarding in-house lawyers in general, and the general counsel in particular. We must of course acknowledge the work of Ben Heineman—work that almost by itself forced both business leaders and their lawyers to acknowledge the special characteristics of the role of the in-house lawyer. These thought-provokers have argued quite rightly for a broad acceptance of the general counsel as a full partner at the leadership table in public companies. Heineman's arguments are surely familiar, so all I will note is his basic assertion that the first question a general counsel must address is: Is it legal? And the general counsel then needs to be a full participant in the follow-up: If it is legal, is it right?

But no general counsel takes his place at the senior table merely because of his title. Like everything else in the profession, a place at the senior table is earned over time by developing trust. The topic of how trust is earned is a rich one, worthy of another discussion, but let me offer up four basic rules for earning your place as an essential adviser to your company:

1. Never lose your discipline or your willingness to get your fingernails dirty.

It can be tempting for a general counsel to stay at a level of 30,000 feet, and live in the world of "it depends." Tempting, but wrong. A modern general counsel must be prepared to be the master of the pertinent facts. If you have as good a grasp on the facts as possible, you can leave the world of "it depends" and use your maturity and judgment to give the client meaningful advice.

2. Always make sure to separate your legal advice from your business advice.

The client deserves your very best legal advice, in crisp fashion and with only so much detail as necessary. Then offer your nonlegal advice, again in clear terms, taking care never to conflate or confuse the two. When these two become intermixed, the legal advice moves from the realm where it must be listened to, to another realm where your voice is robbed of its uniqueness and becomes but one of many.

3.Always be objective in your analysis, but never confuse your objectivity with independence.

This is a point I touched on earlier, but it bears repeating. As an in-house lawyer, your opportunity to offer objective analytical advice may well be unique among your peers. You are, by training and position, able to examine an idea from all sides. Your advice must always be cold-blooded as regards the facts, accepting them for what they are and never assuming they are what you wish them to be. You must maintain this objective foundation, even though you are not independent in the sense that you do in fact represent your client, and must do so with zeal.

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