The Evolving Role of General Counsel in IndiaBithika Anand
What are the essential qualities of a good lawyer? Someone who knows and understands the law, prioritizes his work accordingly and delivers the results in a specified time. But in today’s ever changing world, the qualities of a good lawyer are not just limited to the above thresholds. For a lawyer who is a general counsel (GC), possessing the knowledge of law and adhering to time lines is not enough. A GC is also expected to understand the intricate details about the deal, idea or the context and to be completely involved in the functioning of a company.
The role of GCs in the Indian corporate sector has witnessed a drastic change in the last twenty years. With the beginning of globalization and liberalization in the 90s and with the increase in the number of compliances, the responsibilities of GCs have increased substantially. Where on one hand GCs play an important role as members of management teams, on the other they are also responsible for advising on compliance issues of rules, regulations and statutes.
In the late 80s, GCs did not have a very significant role in the corporate scheme of things. They were the people who kept a check on the compliances and played a very little part (almost negligible) in the matters related to strategy, risk or business. Usually, they were planted in the corporate by law firms with the intention of creating a strong relationship with the client.
Over the years as corporate responsibilities kept growing, GC took on more important, responsible roles in the corporation. This led to a vast change in the quality of GC. Outstanding lawyers were recruited to the client, often leading to responsible management roles, sometimes graduating to the board.
Anyone who has been observing the corporate world as an outsider can see that the role of GC has undergone a transformative change. But in the past decade, the transformation of the role has led to a revolution in responsibilities and expectations. The GC of today is positioned within the highest ranks of senior management, while also serving as a legal advisor to the board of directors.
Transition from Cost Centre to Profit Centre
Technically speaking, the partners at law firms and the GCs are all lawyers, but when it comes to putting knowledge into practice, they follow completely different approaches. Since the corporate culture is focused on performance and values, GCs today are well positioned to contribute to organizational performance. They are allocated a large budget for legal fees and they prefer spending it on building the in-house team rather than on outsourcing the services of a firm or counsel. This helps them in controlling legal costs and impacts the profitability of the organization. Finding such ways to generate revenue within the company makes the in-house legal department profit-centric.
The Evolving Role of GC: What does the future hold?
In 2012, KPMG International conducted a survey of 320 GC in 32 countries which reflected on how the role of the GC is changing and the ways in which they are managing the transition. The survey identified that the main challenge was the transformation of GC into business decision-makers. “This transition requires a shift in mindset and behavior from the GC as well as the wider organization, if the value that GC can bring to the top table is to be maximized,” the report said.
Understanding the business issues and providing viable solutions is what is required and expected out of a legal counsel.
The following are the challenges faced by in-house legal teams:
- How to manage the legal risk?
The GC is required to understand the risks and issues involved in a decision from a legal point and further communicate it to the management. This will enable the management to make informed choices and decisions within the acceptable risk profile.
- How to manage efficiency?
Making strategic decisions that maintain an optimum balance between cost efficiency and effectiveness and educating the business about the same is essential for a GC.
- Transition and lack of resources
In private practice, lawyers usually focus on a speciality, whereas an in-house role has a more general profile. This transition coupled with lack of resources and general know-how presents challenges for in-house lawyers in developing markets.
As GCs are being vested with a weighty tome of (ever-growing) responsibilities, they have the opportunity of becoming indispensable. With the laws and regulatory compliances becoming more complex, companies face various risks and challenges. If one can manage the complexity and the risk, one may become a successful GC, but in order to achieve that, they must first understand the dos and don’ts of business. And once this is accomplished, the GC will be able to become the expert of their evolving turf.