The General Counsel as a Business Enabler
The journey from being the custodian of legal documentation to having a seat at the table of strategy discussions requires a Business Enabling GC. Adeola Adebonojo explores how the GC of today can emerge from the shadows of the support business function into the light, placing them at the heart of the business’s strategic operation…
Whether you are a first time or seasoned General Counsel (GC), you know that applying the law and mitigating your company’s risk is a basic requirement of any legal department and in turn its leadership mandate.
However, the days of those requirements being your team’s main purpose are long gone. The GC of today wants the legal team to “add value” and no longer wishes it to be seen as a mere cost centre and support function. The big question, however, is how does the GC of today emerge from the shadows of the support business function into the light, where he or she is at the heart of the business’s strategic operation?
Having spent the last seven years of my career in a legal leadership role (including being GC for a private equity portfolio). I emerged acutely aware that for a GC to flourish and to be much more than the head of a support function, the GC needs to bring a lot more to the table than legal education and training affords us. Our legal expertise is a given and is not necessarily what we are required to excel at as GC. Today’s GC is required to understand the business it serves, its strategy for growth, its value creation model and the stakeholder dynamics to help better position the organisation to safely navigate its journey to success.
The journey from being the custodian of legal documentation to having a seat at the table of strategy discussions and being a part of the thought leadership that helps to shape and drive the vision of the company, requires you to be what I call the Business Enabling GC.
I should point out that you are not expected to become an expert in any of these areas but it is necessary to become familiar with them, comfortable even.
WHY are we here?
Understanding your company’ vision is crucial, it explains why your company exists. Understanding this aligns you with your key stakeholders’ goals and objectives and provides opportunities for you to provide creative legal solutions, you might otherwise miss, allowing you to fast become that trusted adviser you deserve to be. However, remember that with many organisations this is a big shift in the current dynamics and so you need to navigate this with skill and wisdom. Spending a fair bit of time with your CEO or executive committee can be a good starting point. If the CEO is your line manager, then exploit that level of access, and get some face time with him or her to understand the expectations the business has of the legal team. Now, don’t be surprised if the response appears reticent, because having a ‘tete a tete’ with the legal head is likely to be less common than with other members of the C-suite, i.e. CFO or COO. The traditional role of legal means that it is not often in the limelight. Understand the expectations of the leadership team and build that relationship, one that encourages frequent and open dialogue. If however, you are not in direct reporting line to the CEO, then ensure that your manager appreciates that as legal head, it is crucial that you have first-hand access to a custodian of the company’s vision.
Where is the VALUE?
What are the KPIs for value creation in your company?
In other words, how is “value” created in the company? Depending on the kind of company, a KPI of value could be the multiple of Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) generated during a period, the company’s profitability, or even the strength of the brand of the company. EBITDA is one of the measures of a company’s value and is one of the most widely used tools of measurement when determining the value of a company. Gone are the days of simply looking at whether a company made a profit in a given year. Consider companies like Twitter, Snap Inc or Uber, these firms are yet to make a profit but are incredibly valuable as a brand. Whatever that measure is for the company; it is crucial to understand where the measure for value is and to steer the legal function to assist in creating and protecting that value.
Numbers tend not to be the instinctive grazing territory for lawyers. In fact, “fight or flight” tends to come to mind when most lawyers are accosted with numbers. For most lawyers, looking at a spreadsheet is a “no-no”. However, understanding the numbers and what they mean to the company is crucial to getting an overall view. Today’s GC must be able to read and understand the profit and loss statements or management accounts, among many other figures. The numbers will give you an oversight of the company’s health and might explain to you why a clause in a contract which would ordinarily be unattractive is excusable to win that client.
Missing the FOREST for the trees
Lawyers are trained to focus on details, which later in one’s career can affect the ability to think strategically. It is not odd to hear colleagues vent that “the lawyer just can’t see the big picture”. As the head of the legal function, the holistic view is critical. Focusing only on the ‘right position’ for the company at all costs can be counterproductive. In this, context is key; sometimes a decision needs to be taken which is based on potential opportunities. Take the acquisition of a smaller less known organisation by a giant player. On face value, the big companies legal department may feel it has the power of negotiation on its side and may take a tougher stance based on principles than it would if it realised that this small and currently inconsequential company is the bedrock of the big company’s new strategic direction. As the GC, it is your role to understand these nuances and provide the relevant guidance.
What’s your PRICE?
What is the companies pricing model for the goods and services it sells? This question should not be confused with the prices quoted in a sales orders in everyday transactions. The GC needs to get to grips with the pricing strategy. Leaving all “commercial” discussions to the sales team is no longer an option, the GC should not try to drive these discussions, but at least be a vigilant passenger on the journey. Knowing how the company has arrived at a price for the services or why certain discounts are applied or what margins have been taken into account in a deal provides key intel on the pinch points of the company. This kind of data becomes invaluable when the sales team wish to extract further value from a contract by renegotiating it before it is due for renewal, for example.
These are “grown-up” considerations we need to be aware of as leaders of the legal function, helping us understand the drivers for certain behaviour and assists alignment with the objectives of the company. For these insights spend time with the sales teams or leadership, understand behaviour motivators and the role becomes more impactful.
WHO are the players?
Understanding your stakeholders is key to success of any GC. It provides a view of where the pressure and influence lie. In a start-up, for example, the most important stakeholders are likely to be the shareholders. Stakeholders will have differing needs and pressure points. The GC should be aware of the various interests of the stakeholders and know how to manage them in conjunction with the business. Considering where they fit in the lifecycle of the organisation, i.e. are they new to the party or have they been around from the beginning? How many board members do they have? What is their goal for the company? All these provide a valuable lens from which the GC can adjust his or her dealings with them as appropriate.
The way FORWARD
To help on the path to becoming a Business Enabling GC, the GC needs to start disentangling from tasks within his or her comfort zone. Getting involved in the nitty-gritty of a negotiation or constantly being involved in BAU matters will not provide the range and freedom for strategic engagement. Of course, there will be times and circumstances where full attention on BAU matters is required. However, this should be the exception, not the norm. See yourself as a point of escalation for these matters not the port of call and remember that you are a business enabler and delegate accordingly; a measure of your success as a GC is not just how well you manage upwards, but also how well you manage downwards.
‘But I am sole counsel for my company’ I hear someone shout. Then you should be having discussions about what kind of legal head is required to drive the vision of the company. The company might need someone to be that tactical, ‘firefighting’ legal head and that information is yours to consider. If on the other hand, they want a business advisor, working hand in hand with the business and enabling it to meet its objectives, then the type of legal leadership required will need to be re-evaluated.