Defining the Law Firm GC
A law firm general counsel ("GC") is usually a firm-wide role responsible for advising the leadership team, managing the risks and resolving issues that are common to law firms. In this context, the GC is responsible for compliance matters, such as with respect to tax obligations, the application of conflict of interest rules, client intake processes and requirements, and other risk management matters , including the financial health of the firm and its personnel. A GC may also be involved in addressing ethical questions on legal matters affecting the firm, including litigation involving the firm or its lawyers, supervision of lateral hires or implementing new systems, policies and procedures. Depending upon the size and history of the firm and its GC, the GC also may serve in other roles (such as chief operating officer, head of professional responsibility or partner-in-charge of human resources) and/or have staff members who report to him or her.
Law Firm GC Responsibilities
The primary role of a law firm GC is to manage and mitigate risk. This involves pointing out unforeseen issues, suggesting plans that address them and then having the business acumen to explain the reasons for the actions so that the client is on board and informed. Whether structuring a release language in a contract or deciding whether to pursue sanctions against a partner who did not pull his own weight, the successful GC is the counsel who points out issues before they become an "ugly" situation, then diplomatically guides the firm to a defensible, reasonable outcome.
While risk management is typically at the forefront of the GC’s responsibilities, compliance is equally as important. This can involve the protection of sensitive client data and ensuring your firm is not subject to ethical violations or lawsuits. For example, at a bare minimum:
Your GC should have experience working with each department to understand and address the most common breaches of data security, with an aim towards prevention rather than reactivity. The repercussions of having a third party hack email accounts to steal client data or cyberstalk a partner can be devastating. Your GC needs to help your firm navigate these risk management and compliance concerns.
Ethics, then, includes fiduciary responsibility, reporting obligations and dispute resolution. In addition to protecting sensitive data, the GC works to protect the best interests of the client and the firm. This requires knowledge of common ethical and liability concerns, preclusion and malpractice claims.
For example, the GC might assist when:
Or when
The GC should consider these potential issues when working with you on your formation strategy. He/she should have the business acumen to provide strategic guidance, as well as anticipate questions that will arise because of the structure that was selected. The firm GC will also work with you to establish succession planning to help ensure the firm’s stability in the event of a departure or sudden transition.
The GC needs to play the role of strategic advisor as well, helping the firm target legal areas that need protection, find out where the risk is, and develop strategies to mitigate those risks. For example, the GC may help the firm foresee a major departure and create a plan that mitigates the reputational, financial and risk fallout so the firm can move ahead without disruption. As mentioned above, the GC should work with the firm to create a plan to fill positions internally through grooming, bench strength and acquisition.
Law Firm GC Skills
A law firm GC needs to possess a number of essential skills, including legal expertise, strategic thinking, leadership, and communication. Legal expertise is a must, typically requiring years of previous practice, if not serving as a partner at a law firm. Strategic thinking is crucial because the general counsel needs to have a solid understanding of the overall direction of the firm and district. Leadership is central because the GC is in charge of decision making and managing the board. And communication skills are needed for a number of reasons including conveying complex topics and leading meetings. Specific roles and responsibilities for law firms can vary greatly, as can the need, role and level of the GC. For example, some law firms may have their GC be an attorney with an active billable practice at the same time. Other law firm GCs may not be lawyers, and may not have an active billable practice. Still other GC functions are outsourced on an interim or full-time basis. Not every firm has a GC, and those who do may choose not to fill the position after a departure. Or the firm decides to have multiple GCs, balancing the workload across practices, and delegating specific tasks and responsibilities. Firms prepared to take a long-term approach to the role of the GC may rotate responsibilities among senior management.
Law Firm GC Value Proposition
From my conversations with law firm management, both in-house and external, plus my research into the organizational structures of large firms, it is increasingly clear to me that the role of the General Counsel (GC) is vital to the success and growth of a law firm. Consider first, that with the storm over the horizon for many law firms, the GC will have a clearer, long-term view of the firm’s business and its practices. Most certainly the GC will be considered the voice of reason in the long view of the business side of the firm, weighing the impacts of pricing, revenue generation, practice expansion, client retention, lateral recruiting and practices in the context of the future, not just today.
I offer two examples. In a recent internal meeting at one top 10 firm, the GC warned the practice leaders that in the next downturn, cooperation across all practices and support functions would be essential to survive. He urged each practice leader to work across the firm proactively to identify the risks their practice would face in the next downturn. A perfect example of working strategically to identify and mitigate risks. Most importantly in the example is a method of anticipating the future and working to be better prepared for it. The second example is from the 50+ law firms where I serve on the Boards of Directors or Advisory Boards. As discussed with those boards , the Board of Directors is the governance body that hires, fires and establishes the relationship with the firm’s CEO. Therefore, the GC is the Executive Vice President in most firms. In the best firms managed by GCs, there is an emphasis on managing risk and the profitability of the firm. One of the most important factors in establishing risk management at the highest level in a law firm is the ability of a GC to develop a consistent and reliable relationship with the Boards of Directors. A GC more often than not is at the epicenter of the business side of a firm. The GC is uniquely positioned to be the eyes and ears of the CEO and the Board. Because they are so deeply involved in seeing the future of the firm, and have experiences within the firm that will apply to all strategies, the GC becomes the key member of the C Suite to facilitate action. This visibility, and the perspectives gained, reinforces the GC has a core responsibility beyond the legal function. This vision seems to be a growing consensus among firms, yet at the same time, it seems to be a struggle for many firms to leverage the strategic vision of their GC. It is clear to me that the interaction between the GC and the Board of Directors, the CEO and the practice leaders will drive a firm’s growth in the future. Time and time again, the most successful firms manage the relationships and work in lock step to anticipate the future and adapt to change.
Law Firm GC Challenges
The role of the General Counsel at a law firm is an ever-evolving one, and GCs face a myriad of new challenges every day. For one, keeping up with the constantly changing legal landscape requires constant due diligence on new laws and cases, and establishing the firm’s compliance with mandated changes. Whether the focus is workplace safety and discrimination, professional responsibility and confidentiality, or retail and credit card alignments, among others, attorneys and firms of all sizes must conduct thorough audits in order to ensure compliance, from a legal standpoint, and implementation of these changes throughout their firms.
Another ongoing challenge law firm GCs face is maintaining business and ethics standards while trying to reduce expenses. Whether it be client programs to follow state and local regulations, or new guidelines for compensation, general counsels must find ways to remain within legal and ethical guidelines while implementing cost-reduction programs. If the business of a law firm is to remain relevant, it must evolve just as quickly as the clients they serve.
The Law Firm GC of the Future
The role of GCs in law firms is likely to continue evolving with the trends we are seeing both as it relates to the use of technology in a law firm, and also the trend of increased law firm responsibilities for the risk of certain potential claims. So, rather than a law firm quantitatively measuring "exposure," in the future, law firms may more often be asked to "manage" risk like banks and other financial institutions do.
As law firms are faced with more complex professional responsibility issues, they will become more risk-averse. This may mean having a better understanding of how people in other areas of responsibility at the firm think – clients, partners, associates, conflicts checkers, billing professionals, investigators and more. As a law firm’s GC assesses business practices and makes recommendations, it will be critical for the GC to analyze the risk of the firm’s positioning in the marketplace (or a possible defense to a lawsuit) compared to its exposure to that risk, and work with internal and external stakeholders to monitor and manage when that balance is faltering . GCs will play a critical role when it comes to assuring that the risks of the law firm are analyzed and properly managed, and because of that, GCs will have a greater impact on the business side of the law firm.
The increased use of technology means that law firm GCs will need to have a better understanding of how new forms of technology can affect and/or enhance law firm business practices, which may change the way general counsels business assessments are conducted.
They will also need to work with technology vendors to understand what can be done to enhance the quality of what the technology vendors do, and which can enhance the quality of what law firm employees do, as additional software is purchased and installed. Law firm GCs will need to be able to discuss technology with IT professionals simultaneously being able to look at those issues through a general business lens. General counsels that can do this will be an even more valuable asset to the law firm.
As an aside – this is not just something that applies to the GC position in law firms, it also applies to other positions that may have been traditionally viewed only as "a lawyer’s lawyers" roles, such as head of litigation, intellectual property, employment, regulatory, and/or commercial/transactional practice group.