Introduction
The role of the chief legal officer keeps expanding. In addition to fulfilling their traditional responsibilities as legal counsel and business advisor, chief legal officers today are also called on to inform and drive high-level strategy and corporate objectives.
Between September 2020 and August 2021, there was a 53% hiring increase in chief legal officers as a share of overall C-suite hires, making the chief legal officer position the fourth fastest-growing executive position in the United States. At the same time, though, corporations are cutting their budgets. That means chief legal officers have more to do and fewer resources to support them, so they must find new and creative ways to succeed.
In this post, we’ll review the role of a chief legal officer and how that role has expanded over the years. We’ll then discuss the importance of upskilling and the skills that chief legal officers must possess in 2023 and beyond as well as how they can build stronger relationships with their chief financial officers (CFOs). Finally, we’ll explain how modern technology can help chief legal officers perform their duties more efficiently.
Contents
What are the responsibilities of a chief legal officer?
How have chief legal officers become more influential over the years?
The skills every chief legal officer should develop in 2023
How chief legal officers can build strong partnerships with chief financial officers
How modern technology can help chief legal officers optimize their workflows
What are the responsibilities of a chief legal officer?
A chief legal officer is a senior executive who manages an organization’s risk profile, corrects legal and regulatory compliance issues, oversees legal matters, and supervises the legal department. A CLO is also responsible for developing overall business strategy, demonstrating corporate compliance and good governance to shareholders, and providing guidance to the organization as a whole.
A chief legal officer works with the board of directors, in-house counsel, and others in the course of their duties. As an organization’s highest-ranked legal professional, the chief legal officer should directly report to the chief executive officer (CEO) or chief operating officer (COO).
Is the chief legal officer role the same as general counsel?
Not necessarily. While most organizations will designate their top legal role as one or the other, particularly large legal departments may require both. When that occurs, the chief legal officer typically interfaces with the board and the C-suite, while the general counsel leads the legal team and solely focuses on legal and regulatory compliance and governance.
Chief legal officers wear many hats in their companies today, but they were not always so influential. Let’s take a look at how chief legal officers have become an increasingly integral part of corporate ecosystems.
How have chief legal officers become more influential over the years?
Chief legal officers have always been considered important figures in the corporate world, serving the dual roles of business and legal advisor, but they’ve become more influential as the nature and demands of their position have expanded significantly. The chief legal officers of today are considered indispensable leaders and strategists who influence their companies on a grander scale in addition to fulfilling their advisory roles.
Research shows that the average company wants its chief legal officer to spend 60 to 70% of their time forming legal and business strategies and acting as a catalyst for change and only 30 to 40% of their time safeguarding the company from legal and other risks and overseeing operations. Yet chief legal officers report that they spend less of their time, just 38 to 51%, strategizing and catalyzing. The remaining 49 to 62% of their time is still devoted to safeguarding and managing operations. These figures reflect a significant disparity in what companies want from their chief legal officers and what their roles actually require.
The increased reliance on chief legal officers to make more big-picture contributions to their companies may be attributable to the following factors:
· the “age of information” has led to greater access to information and public scrutiny, which has exposed corporations to more reputational harm and increased the need for a strategic approach to risk management and damage control;
· the COVID-19 pandemic has presented novel business and legal challenges that require special attention;
· increased government regulation of business has required more extensive compliance oversight;
· environmental, social, and governance (ESG) issues—such as diversity, equity, and inclusion (DEI)—have become a more central part of the corporate landscape, creating a desire for additional advice, insight into the company’s new programs, and regular updates on the company’s progress; and
· shrinking corporate budgets have led to an increased need for individuals to take on more responsibilities to avoid the need for additional hiring.
These developments have made chief legal officers indispensable and allowed them to exert greater influence over their organizations’ business strategies and operations.
What does it take to be an excellent chief legal officer? Let’s look at the core skills involved.
The skills every chief legal officer should develop in 2023
Chief legal officers have complex, multifaceted, and interdisciplinary roles. Keeping up with new responsibilities requires that even experienced chief legal officers must continually learn new skills to remain competitive. That’s what upskilling is all about.
Upskilling is the process of developing new skills, especially with respect to modern technology and evolving roles. Upskilling is helpful for any legal professional to stay relevant, but it is especially important for the success of chief legal officers.
To advance their companies’ interests as well as their careers, a chief legal officer should be able to:
· solve problems creatively;
· communicate clearly and effectively;
· demonstrate strong leadership skills;
· link the legal department’s goals to the company’s strategic business goals;
· facilitate interdepartmental communication so the entire organization can meet those goals without incurring legal risk;
· leverage artificial intelligence (AI) technology to analyze patterns in spending, performance, and matter outcomes and identify areas for improvement;
· understand and apply relevant laws, rules, and regulations;
· manage the company’s risk profile by detecting potential legal issues before they arise;
· exercise good judgment in legal and business matters;
· provide alternative strategies and novel ideas to address legal and business issues; and
· manage and recruit other legal personnel.
Even a chief legal officer who has all of these qualities must work well with others to succeed. One of the most important bonds a chief legal officer can forge is with their company’s chief financial officer.
How chief legal officers can build strong partnerships with chief financial officers
A strong partnership between a chief legal officer and a chief financial officer is essential to a company’s success. But before we get into that, let’s take a step back to consider what a chief financial officer does.
A chief financial officer is responsible for safeguarding the business’s assets, maintaining accurate bookkeeping, and running all financial operations efficiently. A chief financial officer can also help their organization perform better by applying a financial lens to solve other problems.
Because financial accuracy and legal compliance are deeply intertwined, integrating the two systems is imperative. For example, a chief legal officer can develop a business strategy that satisfies all legal needs but isn’t financially sound. That’s why chief legal officers need chief financial officers’ knowledge and expertise, and vice versa.
Here are four ways chief legal officers can build strong partnerships with chief financial officers.
1. Maintain frequent and in-depth communication
Solid communication is key to any working relationship, but communication becomes especially important for individuals who operate in separate spheres. To build and maintain a strong partnership, chief legal officers and chief financial officers must communicate regularly and work together to strategize and identify potential accounting and compliance issues. Identifying and mitigating issues early on is crucial for avoiding legal, financial, and other setbacks, especially when the company is at a critical juncture such as launching a new product line or completing a merger or acquisition.
2. Combine areas of expertise to build systems
Working together to build systems is another way for chief legal officers to strengthen their relationships with chief financial officers. For example, chief legal officers and chief financial officers can create and implement monitoring and reporting systems to promote compliance. These systems can help a company protect its bottom line by avoiding enforcement actions and fines—such as those levied by the Federal Trade Commission (FTC)—as well as lawsuits and reputational damage.
Chief legal officers and chief financial officers can also collaborate in areas such as ethics, helping their companies define and implement workable and financially sound ethical standards.
3. Prioritize honesty and integrity
Solid communication and effective collaboration require absolute honesty, even when that means telling a colleague something they don’t want to hear. For example, a chief legal officer may have bad news concerning legal landmines that exist in a financially sound business venture that the chief financial officer is advocating for. When both parties prioritize honesty and integrity, they can receive feedback as helpful advice instead of gamesmanship or professional sabotage.
By telling the truth and maintaining integrity, chief legal officers and chief financial officers can minimize risks to their companies and set a good example for others to do the same.
4. Demonstrate mutual respect and support
Even when chief legal officers and chief financial officers must be brutally honest about each other’s ideas and endeavors, they must lead with mutual respect and support to build and maintain a strong relationship. This means that chief legal officers and chief financial officers should act as partners within the grand scheme of their organizations, rather than competitors. They can do this by actively listening, deferring to each other on their respective areas of expertise, and making themselves available for discussions as needed.
From meeting the expectations of chief executive officers and boards to collaborating with other executives like chief financial officers, chief legal executives have a lot on their plates. Luckily, modern technology can help chief legal officers streamline their daily workflows and maximize efficiency.
How modern technology can help chief legal officers optimize their workflows
The right tools can revolutionize the way chief legal officers gather and review information, streamlining their daily workflows so that they can work faster without sacrificing effectiveness.
IPRO specializes in creating solutions that make the lives of corporate legal professionals easier. For example, IPRO’s AI Enhanced Analytics platform allows users to rapidly search and analyze relevant data in place, easily add new search terms and data sources, and effortlessly replicate searches using convenient templates. The platform can also reveal patterns in spending and performance, helping to mitigate risk and identify areas for improvement. To learn more about IPRO and AI Enhanced Analytics, get in touch with us or schedule a demonstration.
