Winmark and Clyde & Co recently published the 2017 Looking Glass Report.
The 2017 report focuses on risk management in the context of a risk landscape which is “increasingly complex, uncertain and difficult to read” – and highlights the role of the GC in assisting their organisation to respond to this changing environment.
The report’s findings, based largely on a survey of 100 in-house legal leaders and 18 Board directors, are an interesting snapshot of how GCs and the Board perceive the GC’s role in key areas – and reveal points of significant divergence.
Perception of risk is similar; perception of how well GCs handle it is not
The report finds that while GCs and directors had a similar perception of the risks affecting their organisations (with the majority of both groups expecting economic, technological and political risks to have a high or very high impact in future), they disagreed on how effectively GCs manage uncertainty: 68% of GCs rated themselves as good at this task, but only 38% of directors agreed.
It concludes that either directors are unaware of how well GCs are performing, or that GCs are overestimating their own abilities.
There is consensus on some of the factors driving change in the GC role; but GCs attribute far more importance than the Board to others
The survey found that directors and GCs agreed that legal and regulatory change was the largest driver of evolution in the GC’s role, and that cost pressure and competing demands from the business followed (although, in each case, GCs rated the importance of these factors higher than directors).
However, the two cohorts’ views of certain other factors affecting the GC’s role diverged significantly:
- ‘Internal business model innovation’ was identified by 47% of GCs but only 22% of directors.
- ‘Ability to work anywhere/anytime’ and ‘Changing legal career paths’ were identified by 35% and 23% of GCs respectively, but in each case by only 6% of directors.
- ‘Demographic changes’ was a factor picked by 6% of GCs, but by not a single director questioned.
GCs may understandably be more aware of the increasing interest that junior private practice lawyers have in changing to an in-house role than the rest of the business. The report suggests that this is the result not only of the financial crisis’s impact on the legal jobs market, but also of a “generational shift”, with younger lawyers being more attracted by the greater flexibility and work-life balance that an in-house role can offer, alongside the prospect of better quality work than might previously have been the case.
However, the impact of internal business factors on the GC’s role seems to be underestimated by directors. Overall, these figures suggest that the wider business is unaware of how the GC’s job profile – and that of the wider legal team – has evolved in recent years, and does not adequately understand the effect of its own requirements on the GC’s position.
Interestingly, more directors (28%) than GCs (23%) named ‘Ability to unbundle and outsource legal services’ as a factor affecting the nature of the GC’s role, suggesting that not only does the business have a stronger impression of this phenomenon’s impact on the legal function than might be warranted, but also that the rise of alternative legal service providers (ALSPs) has not yet had a transformative effect on senior lawyers’ working methods.
How GCs spend their time – and what the Board think they are doing
GCs and directors broadly agreed on what some of the most important aspects of the GC’s role were, with almost identical ratings given to the importance of ‘consistent high quality service delivery’ and ‘securing legal and regulatory compliance’.
However, the report’s findings were that while 100% of GCs considered that their role entailed being ‘trusted advisor to the Executive, CEO and Board’ and ‘aligning the legal function to business strategy and context’, only 88% and 81% respectively of directors agreed – and on both of these tasks, the Board scored GCs’ performance significantly lower than the GCs did themselves. The GCs surveyed may see their function as being a partner to and enabling the business, but it appears that not all directors yet share this view.
The difference in perception is more striking when it comes to views on the GC’s role in ’empowering the business through training and self-service tools’: only 13% of directors considered this an important aspect of the job, while 65% of GCs considered it to be. As the report’s authors note,
“[i]t appears that Board directors see the GC role as relatively narrow in focus, compared to how GCs see themselves.”
This mismatch in the level of priority attributed to aspects of the GC’s role is also evident in the answers to the question of how GCs spend their time. Directors believed that GCs spend a third of their time ‘responding to internal legal requests’ while GCs said they spent only a fifth of their time doing so. Conversely, GCs said that they spent 26% of their time ‘working on strategic projects for the wider business’, while directors put the figure at 15%. GCs also spent almost twice as much time managing their department as directors thought they did.
Here too, the report’s authors suggest, the disparity may be due either to a lack of visibility of the GC’s activities or a lack of awareness on the part of the business of how the GC’s role has changed in recent years.
The very model of a modern Counsel (General)
The report goes on to discuss further aspects of the GC’s role within the business and in managing external counsel – and to describe different models for the GC’s relationship with both those groups (when it comes to the business, are you a ‘butler’ or a ‘co-driver in a rally’, for example?).
However, the findings above are not only an interesting illustration of the extent to which trends that have gained a lot of coverage in the legal press are in fact affecting the GC role, but may also be taken as a reminder of the need for the business and its legal team to communicate with each other in order to understand what each of them is trying to achieve and to align their strategies.
Practical Law’s In-house resource centre has numerous resources relevant to the issues raised in the Winmark survey responses, including: