Many CEO’s think of their legal departments as the team that follows behind the business leaders, cleaning up messes and taking care of tedious paperwork. General counsel can and should do both of those tasks for the business, but they should also have a seat at the table when it comes to setting strategy. That’s right, setting strategy.
Move away from the stereotype of the lawyer who always says no. Modern in-house counsel assumes they will be partners in the growth and development of the corporation. In-house legal department goals and objectives should align with the overall corporate strategy and vision blueprinted by the CEO.
Here are some of the critical types of decisions general counsel should be helping corporate executives discuss from the ground up.
The type of corporate entity selected and where it is set up can be the key to having sufficient liability coverage and significant tax advantages. As the company grows, especially into new geographic regions, the corporation’s legal team should be instrumental in devising a plan for where, and where not to, expand and how to prepare to be successful once the company gets there. Success doesn’t just mean generating profit, it also means avoiding risk and loss.
Get the legal team into regular sessions with the finance department to craft an ongoing tax strategy. CEO’s might have reasonable expectations as to what the company’s profits and losses will be for the year, but forecasts are just that. If 2020 taught the business world anything, it was that nothing is certain. Bad tax planning can have huge ramifications. If your legal and financial teams are in the habit of constant monitoring and rearranging of the company’s tax liabilities, based on up-to-date financials, there will not be a last-minute scramble at the end of the year to correct the course.
Mergers and acquisitions are a delicate dance. From the initial discrete inquiries, to the introductory non-disclosure-agreements to feel out the prospects of mutual benefits, all the way through to closing the deal, the in-house legal department should be fully aligned with the business leaders initiating the deal. Again, because the corporate structure of the company matters, in-house counsel may be instrumental in pointing the business leaders to the types of acquisitions and mergers that will help the company mitigate risk long-term.
Some of the biggest unrealized profits in a company’s sales arsenal are strong contractual terms and conditions. The corporate sales team will typically want the terms to be client friendly, making it easier to make the sale and hit their goals. However, things like strong cancellation policies and limitations on liability can be the difference between a contract ultimately making a profit or not, if things do not go as envisioned.
Hiring, managing, and paying employees requires both intelligent tactics and adherence to legal requirements. To start, as the company decides when to add job postings or open new positions, the legal department can help hone the wants of the department hiring to align with the overall risk management strategy of the company. For example, asking how the new hires will impact succession planning can be a difficult, but essential exercise. The legal team should participate in setting up pay scales and pay structures, to ensure fairness and compliance with payroll laws.
The overall best practice for directing the in-house legal department’s goals and objectives is to remember that lawyers are experts at risk management. Every department within an organization creates and manages risk, whether recognized or not. General counsel can, and should, be included in risk management decisions like negotiating the terms of the company’s insurance policies.
Employing people means having operational and reputational risk. Hiring outside vendors means taking on third-party risk. Advertising and marketing can open up reputational, fair-trade, and consumer protection risk. Simply existing as a corporate entity has regulatory compliance risk. The list goes on.
CEO’s need to look at every aspect of business operations with in-house counsel, to determine where the risks are and how to handle them. In-house lawyers training is in risk mitigation, but also strategic thinking and problem-solving. If the general counsel team isn’t part of a CEO’s corporate decisioning team, that CEO has untapped potential just down the hall.