Legal heads face tough balancing act as they take the lead
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
In today’s complicated policy environment, few business figures are more in the line of fire than the top company lawyer — thanks to rising pressure on companies from input prices, interest rates, and geopolitics.
Whether the title is general counsel, chief legal officer or similar, these executives are at the centre of some of the toughest corporate conversations. Top lawyers are being asked to weigh in on vaccine mandates, cyber security breaches, supply chain struggles, and diversity and inclusion efforts.
That, in turn, is sparking debate about how senior in-house lawyers should balance their traditional role as the company’s legal risk manager with broader responsibilities to enable, lead, and help implement the organisation’s strategy.
At US public companies, lawyers have had a specific duty to report wrongdoing to securities regulators since 2003, and general counsel everywhere take their responsibility as officers of the court seriously.
But they do not want to be involved in business decisions only at the end, to wield a formal power of veto.
Not only does that put the lawyers in the position of being the bad guy, but it also allows business people to escape responsibility for considering the broader impact of their proposals.
“We should not be the department that has just a final veto,” says Maaike de Bie, group GC at European airline easyJet, where she supervises 100 people. “That sounds to me like a position where people come to you at the very end. Whereas, if you are involved from the very beginning in decision-making, you can help shape the decision and make sure . . . it’s both lawful and ethical and the right thing to do.”
At Tyson Foods, the US-based meat processor, chief legal officer Amy Tu argues that “the [GC] role is not simply saying yes or no. It is helping the business understand the risks and finding workable solutions.”
In her case, the search for answers is empowered by the fact that her responsibilities extend well beyond the legal department to include around 5,100 people handling anything from communications to ethics and compliance.
“In my toolbox, I have a government affairs team, a policy team, and a legal team,” Tu says. It means that, when an issue comes up, she can say: “Here are a number of things we could do . . . It’s really about knowing the business, raising the right question and having [the team] brainstorm with our business partners.”
The multiple perspectives were helpful when, in mid-2021, Tyson executives were considering whether it should become one of the first US companies to mandate Covid vaccines for its employees.
Even though more than 150 Tyson employees had died from the virus, only half the workforce was vaccinated at the time. “We just decided, if this country is going to successfully come out of Covid, we have to do our part to ensure that our team members have a safe environment, that their communities are safe, that they understand why the vaccine is safe,” Tu explains.
“The lawyers were very much involved with the health and safety teams, the operations and the business leaders. We were trying to calibrate the risk if people weren’t going to take the vaccine, because a lot of our locations are in states where some people were very much against taking the vaccines.”
By October 2021, more than 96 per cent of the workforce of more than 60,000 had received vaccine jabs.
At consultancy McKinsey, the unique nature of the global general counsel position became immediately apparent to Pierre Gentin. He was brought in to elevate and professionalise the role in 2019, when the firm was recovering from a series of ethical scandals. He is the first non-consultant to become a McKinsey senior partner.
He says there are two components to heading the firm’s 285-strong legal team. “I have ethical obligations as a lawyer. I am, at the same time, one of the partners, but I’m also distinct. I’m in my own place, and I think that’s a good place to be,” he argues.
That does mean he sometimes has to raise difficult questions, but he says the partners appreciate it. “It doesn’t help the organisation for me to be passive. That’s not my personality. If I’m going to be here, I want to make a difference. I want to actually help drive the firm forward,” he says.
Not all in-house lawyers are so lucky. De Bie says that, earlier in her career, she worked for an organisation where the only question the corporate leaders asked was “can I legally do this? Yes or no? They weren’t interested in was it also the right thing to do?”
She remembers: “I did vote with my feet. To me, that was untenable.”
De Bie is much more comfortable at easyJet — even though her period there has coincided with a big cyber security breach and the pandemic.
“The values of the company, and of the people in the company, align with mine and therefore I can be myself,” she says. “I don’t have to push hard, or at all, for people to take the right decisions.”