In search of the essence of General Counsel

In this essay on the Essence of General Counsel Ken Grady demonstrates his piercing insight and authority born of years of observation and reflection.

Like many of you, I have worked with general counsels for most of my career. I chose to go to a boutique firm when I graduated from law school so that I could practice law, not just research. The firm had a very nice roster of clients and I worked on complex patent and securities lawsuits and large transactions. As many lawyers have discovered or re-discovered in recent years, small law firms have advantages. One, for me, was the chance to work directly with senior executives, including general counsels.

After several years, I moved to a large law firm, became a partner, and continued working with general counsels, though I’ll admit the size of the clients grew as my practice switched to the large law firm. I moved in-house after many years, which took me from the role of agent to principle and made the general counsel my boss instead of the client. After many more years, I  became the general counsel, a role I held at three Fortune 1000 corporations. So, it is with some interest that I ask the following question—what is the essence of a general counsel?

A brief history of general counsels

I am not the first to ask the question. We can find discussions about what it takes to be a general counsel and what qualities make a good general counsel going back over decades (here is a recent one). Even though the question has come up many times before, asking it again periodically helps us frame where an important part of the legal profession is going and takes us further into what general counsels need to do their jobs well.

General counsel have been around since the latter part of the 1800s when industrialization was taking hold. The railroads hired in-house general counsel, and many lawyers aspired to those positions. They general counsels wielded great power, made a lot of money, and were leaders in the bar. During the first half of the 1900s, the position waned a bit. For a time, a general counsel typically was a lawyer from the law firm that had the closest relationship with the corporation. A lawyer who wasn’t cut out to become a partner, or perhaps a partner who needed a different direction, was helped into a general counsel position by his firm. The role was somewhat administrative and often involved many ministerial corporate secretarial duties.

There were exceptions. The most well known was Nicholas deBelleville Katzenbach. Katzenbach was, as far as I know, the first general counsel of the modern era. Katzenbach attended Phillips Exeter Academy, then Princeton. He enlisted in the U.S. Army Air Corps during his third year at Princeton (right after Pearl Harbor), became a navigator, was shot down and spent two years in POW camps. After the war, he returned to Princeton and graduated cum laude (receiving some academic credit for having read approximately 500 books while he was a prisoner). He then went to Yale Law School and was an Articles Editor on the Yale Law Journal. He received his LL.B. cum laude and spent two years at Balliol College, Oxford University, as a Rhodes Scholar. He spent many years teaching law and serving in various government roles. President Johnson appointed him U.S. Attorney General and from there he became Under Secretary of State. After this already stellar career, he became general counsel of IBM. (Although not central to this discussion, Katzenbach did not stop there. After retiring from IBM, he continued his career adding a number of notable roles to his already stunning resume.)*

Katzenbach was clearly a different type of general counsel. He had wide ranging accomplishments in academia, government, and private practice. The general counsel position at IBM was not a safe place for him to ride out his career. In fact, he, along with lawyers from Cravath, Swaine & Moore, fought one of the most notorious legal battles of the 20th century: the government’s antitrust lawsuit against IBM.

The next person most recognize as a modern general counsel is Ben W. Heineman, Jr. Heineman is the former general counsel of General Electric. He was hired by Jack Welch. Many mark Heineman joining GE as the beginning of the late 1900s tipping point for general counsel in corporations. It became the trend for corporations to hire general counsel who had very successful careers outside corporations, like Katzenbach and Heineman. Corporations brought on board successful law firm partners and individuals who had senior positions in government. The corporations did more—hiring partners and other highly skilled lawyers to staff the in-house departments led by the legal “stars.” Although it would take years to become evident, this change marked the point where the balance of power between principle and agent—client and law firm—began shifting back in favor of the principle.

Law departments have grown in size, though with many ups and downs. Today, in many large corporations, the size, sophistication, and successes of the in-house legal team equal or exceed those of many law firms. Very recently, as law departments started growing again, corporations have been pulling back work from law firms creating an interesting shift in the operations of the legal industry. General counsel have become major players and many have become CEOs. But that brings us back to my question—what is the essence of a general counsel?

What we already know

The general counsel role has evolved organically across many corporations, many hiring philosophies, and many needs over the course of many years. No one sat down and put on paper the specifications for “general counsel” and then asked everyone to work to those specs. In fact, general counsel has meant many things within any corporation, and from corporation to corporation, across time.

I am not aware of any rigorous studies covering what we mean—or more importantly, what corporations mean—when they say “general counsel.” Perhaps the major recruiting firms involved in locating candidates for these positions or the Association of Corporate Counsel have done in-depth studies. If not, it would be an interesting research project.

From my own experience, the definition of who a general counsel is and what he or she does seems to have amorphous edges. I have been contacted for help filling general counsel positions that were nothing more than glorified retail leasing counsel jobs (and much of the work the “general counsel” would do was handled by legal assistants at the large landlord companies). While the role might be titled “general counsel,” the substance was more akin to what a junior paralegal might do. I have been recruited for jobs that clearly fit anyone’s reasonable definition of general counsel: report to the CEO, member of the executive committee, responsibility for worldwide legal affairs, oversight of multi-jurisdictional in-house legal teams, responsible for a substantial legal budget, corporate secretary, and so on. And of course, I have received inquiries that fall at various points along the line connecting those positions. In other words, “general counsel” meant what the hiring party wanted it to mean at a given time.

Apart from the hiring party’s definition, there are certain features other parties want to fit into the general counsel’s job description. If the corporation is traded on a public exchange, regulators want to hold the general counsel responsible for the legal affairs of the corporation. Sometimes, they want to go further. The public also expects a general counsel to exert some “legal authority” over the corporation. Opposing parties may believe that the title “general counsel” gives a person a certain amount power within a corporation, even though the CEO doesn’t quite see it that way.

So far, I have focused on what many parties may implicitly or explicitly build into a general counsel’s role. Another way of looking at the issue is from the inside out—what do general counsels themselves think they should be able to do. Again, this varies widely, often depending on the education, training, skills, and aspirations of the person holding the job. Some want to be great administrators, some want to be leaders within their industries, some just want to do interesting legal work. General counsels range from caretakers to activists, from struggling legal technicians to potential Supreme Court Justices. As with any other position in corporations, the range of the role varies as widely as the range of individuals filling the role.

Is there value in the task

I still have not answered the “what is the essence of a general counsel” question and I am not going to proffer a definition here. I think that what was accurate still is accurate—the definition will vary from enterprise to enterprise and from time to time. I’m sure there are some basic requirements we could set, and perhaps we should do so. Having a basic definition of “general counsel” could assist corporations, recruiters, and candidates. The extras are what each enterprise needs at a given time beyond the basics. But, rather than focusing on answering the “what is the essence” question, I’m going to focus on how and why.

We could look to the medical profession. The profession has minimum standards for doctors. But, the medical profession has certifications that tell the world a doctor has some expertise beyond the basics. A doctor certified by the American Board of Neurological Surgery has passed exams intended to signal to the world that the doctor has expertise in her field beyond being a competent (or even premiere) doctor. A board certified neurological surgeon brings more to the operating table than a general surgeon.

The legal profession could do something similar, such as create a certifying process for “general counsel.” Some states already have certification processes for legal specialties and if you want to prosecute patents before the U.S. Patent and Trademark Office, you need admission to a specialized bar (requiring both a certain level of education in the sciences and passing a test). Our “board certified” general counsel presumably would have more of whatever those doing the certifying feel a general counsel should know.

Another approach is the one that recruiters and corporations seem to favor. It involves a mix of simply being a lawyer who has had “success” in other roles (lawyer at a certain level in government positions, partner in a law firm) and a minimum number of years practicing law (the recruiting equivalent of billable hours—valuing time over content).

Why go to the bother? From the profession’s standpoint, establishing minimum criteria is a way of saying that lawyers are experts on what it takes to do the job well. For example, lawyers may say that it really doesn’t matter whether the general counsel candidate has five years’ or fifteen years’ experience practicing law, but it does matter if the person can’t read and understand a balance sheet. A person who has not been certified could still be hired as a general counsel, but over time corporations may gravitate toward hiring only those who have the certification.

Certification programs have other potential benefits. Certifying lawyers on what it takes to be a general counsel could help clients solidify what they want out of their general counsel. Do they want a senior strategist, an expert administrator, a tactician, or something else? Seldom will a corporation find someone highly skilled in all areas. Unfortunately, corporations often do not focus on what they really do want, and so they may get a good lawyer but not the lawyer they need as their general counsel.

Obviously, candidates could benefit by making sure they fill in the gaps that will help them as general counsel (or at least get certified). During the dot com craze in the late 1990s, it seemed that anyone with a law license could become a general counsel of a startup, and indeed that often happened. Almost overnight, corporations with hundreds of millions of dollars in funding were relying on a lawyer one year out of law school who had spent that year putting together venture capital funding documents to advise the corporation on anything from employment law to international trade structures. Unpleasant things happened. It would have been nice to have general counsels who knew and could do a bit more.

I don’t want to leave this essay with anyone thinking I am arguing in favor of board certified general counsels. I am not sure whether certification, or even attempting to establish basic criteria, is the right way to go. I think the question deserves more thought, just as the question of the evolving market for legal services deserves more thought. Although I started with the question, “what is the essence of a general counsel.” I think the answer is bound up with a bigger question many are trying to answer today, and that is “what is the essence of a lawyer.” It is this second question that bedevils many today, and the answer to that question will stand behind what we really need as general counsel.

* While not taking anything away from what Nicholas deB. Katzenbach achieved, he had what some might call a running start. His father graduated from Princeton, became an instructor in political economy at Princeton, and then attended and graduated from Harvard Law School. His many accomplishments included a successful law firm (where Nicholas worked for a while) and serving as Attorney General for the State of New Jersey. Nicholas’ mother served as the first female president of the New Jersey State Board of Education. Nicholas’ brother served as Deputy Assistant Secretary of Defense for Education and Manpower Resources under President Kennedy. See Edward L. Katzenbach, Wikipedia.

Acknowledgement

This essay by Kenneth Grady first appeared on December 22, 2016 on the SeytLines blog and is re-posted on Dialogue with Ken’s kind permission.