August 12, 2022

Volume XII, Number 224

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GC or CLO - Or Both? When The Two Titles Can Co-Exist

One question that frequently arises in the context of a legal search is whether the newly minted head of an organization’s legal function should take on the title of General Counsel or Chief Legal Officer. Similarly, the other related question that we sometimes receive is whether a company should have both a Chief Legal Officer (CLO) and a General Counsel (GC). The answer tends to be a solid “no, but….”

Most companies will take the position—and we would agree—that having a CLO and a GC within the same department is confusing to both insider and outsider stakeholders. It’s unclear who is actually “running the show” and where the proverbial buck stops. A General Counsel reporting to a Chief Legal Officer will generally not feel like they are a real General Counsel and is unlikely to accept such a partnership unless succession is contemplated in a defined period of time. The title “General Counsel” tends to mean the individual who is running the legal department and interfacing with the board, not someone with a reporting relationship to the person who is actually running things. When someone who is a GC but who reports to a CLO hits the external market, their candidacy tends to not be perceived as positively as a “stand-alone” General Counsel.

However, there are some caveats, which tend to significantly overlap, where having both titles makes sense.

Division of Responsibilities

First, in some cases, the legal department is large enough (say, 30+ lawyers) that a CEO wants to have both a CLO and GC. The CLO would work closely with the board, CEO and the other members of the executive team (i.e., CFO, COO) and would spend the majority of their time managing those relationships and concentrating on “big picture” issues such as corporate strategy, organization growth and creating culture. The GC, on the other hand, would have the entire legal team report to them and would be the one managing the day-to-day legal function. In this scenario, the GC is answerable and reports to the CLO. While this arrangement is likely to still be confusing, it may be successful by allowing the CLO to separate him or herself from thorny and time-consuming legal quagmires and also allowing another top lawyer (the GC) to spread their wings, provide oversight of a very large legal function, and not worry about some of the complex politics and nuanced personal interactions that can occur in the C-suite.

Succession Planning

Second, having both a CLO and GC may be a way for a company to find an external successor for the head of the legal function. For instance, let’s say a company has 10 lawyers, and the current GC is in his or her early sixties and has announced that they are only one or two years away from retirement. The company may decide that hiring for a Deputy General Counsel won’t attract the talent that they need for what is almost certainly going to be a GC position in less than 24 months. But the current GC doesn’t want to leave yet, and none of the other lawyers are remotely ready to take over. As a result, the company runs an external search for the GC successor, gives that person the GC title, but makes him or her report to the former GC/now Chief Legal Officer for only 12–24 months. In this scenario, despite the fact that it is awkward, everyone is content and the arrangement is successful for a finite period of time.

Retention

Finally, a CLO/GC partnership could be an attempt by the company to retain their senior lawyer because he or she has a certain skill or ability (usually a technical one, such as knowledge of a complex regulatory scheme) that the company has not yet been able to replicate in another lawyer and they are not prepared to lose this person. As a result, they might agree to a CLO/GC arrangement for a period of time. Similarly, if a company has a long-time General Counsel who has built a very strong rapport with the Chief Executive Officer, we have seen situations where the CEO asks the GC to stay with the company through the CEO’s retirement—but they also want to internally promote the individual who is going to be the future head of the legal department. The GC becomes the Chief Legal Officer and a Deputy is named the General Counsel. Again, this could work if it is for a short stint.

Again, we don’t recommend this titling nomenclature for 98 percent of legal departments. But, in certain cases that are unique to the individuals and the organization, we can see how it might be successful. The most important things, as always, are looking after the interests of the company and its stakeholders, managing the legal role and making sure “balls are not dropped”, and then finally taking into consideration the motivations and interests of the specific people who are involved.

©2022 Major, Lindsey & Africa, an Allegis Group Company. All rights reserved.National Law Review, Volume XII, Number 45
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About this Author

Michael Sachs Major Lindsey Africa Chicago
Partner

Michael Sachs is a Partner with In-House Counsel Recruiting, based in Chicago. He specializes in placing lawyers at all levels—from junior counsel to general counsel—in corporate and university legal departments. Over the years, Mike has spearheaded critical searches in numerous industries, including healthcare, energy, financial services, consumer products, pharmaceuticals and medical devices, manufacturing and higher education. His clients have ranged from Fortune 500 companies with very large law departments to privately owned organizations with small legal teams and...

312-896-8566
Managing Partner

Lee Udelsman is the Managing Partner of our New Jersey office, formerly was Managing Partner of our New York office, and is a leader in the firm's In-House Practice Group where he focuses on recruitment and retention for in-house legal departments across the U.S. and internationally. Since joining the firm in 2005, Lee has partnered successfully with hundreds of companies on matters ranging from legal department optimization, including legal spend, compensation benchmarking and use of alternative legal resources, to recruiting high performance legal teams to support the...

212-201-3986
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