Five New Year’s resolutions for in-house counsel

Okay, it’s that dreaded time of year when we make many promises to ourselves that we have no intention, or perhaps ability, to fulfill. However, it is also the time of year when we more realistically reflect on the last year and think about what we can do better or what lessons we have learned as we enter the New Year wiser, stronger, and ready to tackle 2007’s challenges.
In that vein, here are some ideas for New Year’s reflections and resolutions for general counsel. From my perch as chairman of the Association of Corporate Counsel (ACC), I see and hear a lot of great ideas and am inspired and instructed by the practical life experiences and guidance of ACC’s thousands of members.
Therefore, I thought I would dredge up a few things that were particularly meaningful for me from 2006 and offer them up to you for 2007 with the hope that one or more “resolutions” will be applicable to your experience and address your clients’ future needs.
1. Get better acquainted with the company’s finances and the red flags of financial fraud or potential failures. As an in-house lawyer, you probably make it your business to know your company’s business, but if there is anything the last year or two have taught us, it is that we all need to be more financially fluent, regardless of how well we know our clients’ industries. And for many of us, that is a challenge.
ACC recently published an excellent article on the flags to look to detect financial fraud (see http://www.acc.com/protected/pubs/docket/nd06/house.pdf). We are also recommitting to spend more time on financial skills education for members. This issue is getting top attention from me.
2. Examine new ways you can gain additional access and build more solid relationships with your board – especially those members on the audit, compensation, and disclosure or risk committees. I suspect if you asked any general counsel currently in the cross hairs for their role in counseling on such topics as executive compensation/options practices, or disclosure concerns, they would echo this advice. Too many in-house counsel assume the board somehow knows this stuff, or that others in management are providing comprehensive background information.
This can be an extremely risky assumption. Make sure management receives regular, comprehensive updates on these important topics. Spend as much time (virtual, via reports, and in person – including in executive sessions) with board leaders. Management does not need to feel this is a betrayal if you cast it as an effort to ensure bridge-building and better communications and information flow. Do not wait until the board meeting to implement improved communication and board orientation on such issues. Make your communication and check-ins a regular occurrence all year long.
3. Auditors, Auditors, Auditors! Can’t live with them, can’t live without them. So many of ACC’s members are increasingly frustrated about their company’s, and particularly their legal department’s, relationship with its auditors. Ever since the fall of Arthur Andersen and the advent of new PCAOB rules regulating the accounting profession, things have been going from bad to worse for many in-house lawyers in their auditor relationships: not negotiable and sometimes unreasonable retention terms; requests for the CLO to sign the 404 certifications; auditors’ refusal to accept responsibility to even indemnify for their own work; and increasing demands for access to “source documents” protected by the attorney-client privilege.
The crucial relationship between auditors and your company’s leaders will likely continue to be a sore spot marked by what seems unreasonable behaviors, and so, more and more general counsel are looking at ways to facilitate a better relationship and ensure that audit requests don’t end up creating litigation liability through waivers. The ACC recently issued a “white paper” on best practices in privilege protection that includes an entire section on the relationship with auditors: http://www.acc.com/public/attyclientpriv/pragpract.pdf).
4. In a tumultuous time for global departments and companies with multinational interests, how does the CLO and the legal department help the company navigate their expanding business needs in jurisdictions far from home? There are very few of us who do not have some aspect of international practice creeping into our daily counseling requirements. Perhaps you work with suppliers or customers in multiple jurisdictions, or perhaps you have facilities and employees around the world.
The reach of your business and the reach of those other jurisdictions’ requirements into your company’s four walls can be a daunting prospect for lawyers just barely keeping up with “home” jurisdiction regulation.
The ACC is working with departments that focus on counseling and compliance in many jurisdictions around the world to provide you with ideas to consider as you contemplate the increasingly “global” concerns raised by your company’s business needs. Resources like ACC’s Virtual Library can provide guidance on managing the provision of global legal services and the expanding legal requirements of today’s multinational business.
5. Lawyers as Gatekeepers. We have all heard the term “gatekeepers” in reference to in-house lawyers. It carries an aura of dread because there is a perceived responsibility to predict and prevent client conduct we would have difficulty even imaging.
However, I have learned this year, albeit grudgingly, there may be ways to embrace this role and turn it into an attribute far more positive than at first blush. We all recognize the need to do more to assure the company’s legal health, but figuring out how to perform that role, while maintaining a focus on our traditional ethical and professional responsibilities (such as confidentiality), and assuring the independent “cool”-ness of our legal advice from the heat of the C-Suite’s passions (without becoming irrelevant or disconnected) is quite a navigational challenge.
So, I’m working on my ability to stay connected to management but keep a firm grasp on my role in assuring the company’s focus on risks to the company’s reputation. I am actively thinking about how I can do more to “see around corners,” applying a 20/20 hindsight analysis to prospective actions and trying to anticipate what my managers and my leadership need in order to do their jobs in a fashion that is consistent with my “culture of compliance” goals.
These five resolutions will more than keep me busy. What about you?
I wish you the happiest New Year and the courage and good heart to meet all of the challenges of in-house practice in the next year and beyond.
Of course, if we at ACC can lighten that load a bit, please do call upon us. You can access any of our resources or reach ACC staff and leaders through our website at www.acc.com.
Richard T. White is the 2006-2007 chairman of the board of the Association of Corporate Counsel, and senior vice president, secretary and general counsel of The Auto Club Group.