Lead Director Network, November 2013
On October 2–3, 2013, Lead Director Network (LDN) members met in Washington, DC, with general counsel (GCs) from many of the public companies represented in the network to discuss how GCs can work with their lead directors and boards most effectively.
Over the course of the previous 15 meetings of the network, LDN members have discussed issues that demand effective collaboration between the lead director, board, and GC, but this was the first LDN meeting to address the topic directly. Three key themes that emerged during the meeting are described in more detail in this issue of ViewPoints.
The GC’s role
The quality of a company’s general counsel may influence a director’s decision to join the company’s board, and directors are keen to provide input when a company selects a new general counsel. Lead directors and GCs described great GCs as trusted, clear, composed, courageous, business savvy, and wise. In addition to having the core responsibilities of chief legal officers, some GCs also serve as corporate secretary, chief compliance officer, or as a business function leader. Holding these additional titles presents both benefits and drawbacks; for example, serving as corporate secretary gives the GC more time with directors, but can take time away from other responsibilities.
GC and lead director relationship dynamics
The relationships between the GC, lead director, and CEO are important to a company’s performance and a board’s effectiveness. Many lead directors interact with their GCs more frequently than with any other member of management, and they look for frequent, open communication. General counsel establish strong relationships with directors by meeting with them outside the formal board meeting cycle. At these additional meetings, everything from board processes to company strategy may be discussed.
Situations that test the GC relationship
Lead directors and general counsel identified a number of situations that test their relationship and that require strength and unity of purpose in order to achieve an effective corporate response. Three situational proving grounds stood out for both groups: cybersecurity, shareholder activity, and situations involving disputes and regulatory compliance. Lead directors and general counsel were particularly interested in the decision to appoint a special committee or retain independent counsel for the board, noting that these actions should not be taken lightly, as they can increase friction in the company and the boardroom.