New Survey Confirms General Counsel Taking on Expanded Role in Management

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Recent results from an Association of Corporate Counsel/National Association of Corporate Directors survey of more than 700 General Counsel and Corporate Directors show the groups agreeing their liability for misconduct is increasing and the role of corporate counsel is expanding to include general business management since enactment of Sarbanes-Oxley. The announcement comes two weeks before ACC’s annual meeting, which will explore the changing role of General Counsel.

The Association of Corporate Counsel (ACC) released the results of its most recent survey “General Counsel as Risk Manager” of more than 700 Corporate Directors and General Counsel. In an effort to further understand the impact of Sarbanes-Oxley, ACC and the National Association of Corporate Directors (NACD) collaborated to better understand implications for industry, the profession and board-management relations. The chief finding from the survey shows that General Counsel and Corporate Directors believe their liability for their organization’s misconduct has increased now some two years after enactment of the Sarbanes-Oxley corporate governance legislation.

The survey also found that responsibility for ensuring ethical business conduct is shared between senior management, Corporate Directors and General Counsel who traditionally have not been the focus for fiduciary liability. Over eighty (80%) percent of Corporate Directors responding to the Risk Manager survey thought General Counsel have a great deal of responsibility in ensuring good corporate governance. This is an increase of almost thirty percent (30%) over last year’s findings of the same topic. “Our most recent survey demonstrates that Directors and General Counsel alike believe the business landscape is growing more complex with increased risk and liability. It further demonstrates that both groups are looking for better ways to assess risk and minimize liability. Involving General Counsel in more management decisions is a forward thinking approach to managing organization-wide risk,“ said Fred Krebs, President of ACC.

The Risk Manager survey is the second conducted by ACC, in conjunction with NACD, to develop its clearinghouse of information to inform best practices for its membership, which is comprised of publicly traded, privately held companies and non-profit organizations. The first survey conducted last year provided baseline information to begin trend analysis about the full term impact of Sarbanes-Oxley. The results come as ACC prepares for its annual meeting in Chicago, October 25 – 27, entitled The New Face of In-house Counsel, which will feature workshops that address many aspects of the expanding role of general counsel. “Our members have long viewed risk management as a partnership between senior managers, General Counsel and the Board. These findings corroborate that our members along with General Counsel are constantly looking for more effective measures to ensure good governance,“ said Roger Raber, President of NACD.

Other key findings include:

  •     Sarbanes-Oxley Benefits Corporate Culture. General Counsel and Corporate Directors agree paying closer attention to all aspects of company activities has made favorable changes in organizational management. More than 80 percent (80%) report that stricter board management resulted in improved relations between senior management and Board of Directors.
  •     Whistle Blowing Encourages Good Corporate Governance. Sixty-two percent (62%) of those responding believe the whistleblower provision improved the climate of discussion between Corporate Counsel and Board of Directors. In keeping with the trend toward General Counsel as a more integral member of the business team, support for the General Counsel reporting up the ladder to the Board of Directors after repeated ignored attempts by senior management to ensure compliance remains consistent from last year’s survey.
  •     Improved Relations with the Organizational Stakeholders: Board of Directors, Senior Management and Regulators. Findings further demonstrate support for General Counsel attending board meetings at all times to better manage company-wide risk with more than seventy percent (70%) of respondents casting an affirmative vote.

The results of the survey substantiate earlier anecdotal evidence of a new trend toward more engaged and proactive “decision making” practices that involve General Counsel during early stages to help navigate today’s business complexities and escalating risks.

The Association of Corporate Counsel is the in-house bar associationSM, serving the professional needs of attorneys who practice in the legal departments of corporations and other private sector organizations worldwide. The association promotes the common interests of its members, contributes to their continuing education, seeks to improve understanding of the role of in-house attorneys, and encourages advancements in standards of corporate legal practice. Since its founding in 1982, the association has grown to more than 16,000 members in more than 50 countries who represent 7,500 corporations, with 45 Chapters and 12 Committees serving the membership. Its members represent 49 of the Fortune 50 companies and 98 of the Fortune 100 companies. Internationally, its members represent 45 of the Global 50 and 83 of the Global 100 companies. For more information, please visit http://www.acca.com.

The National Association of Corporate Directors (NACD) is an independent not-for profit membership organization devoted exclusively to improving corporate board performance. Founded in 1977, NACD conducts educational programs and standard-setting research, and provides information and guidance on a variety of board governance issues and practices. Membership is comprised of individual directors and entire corporate boards from U.S. and overseas companies ranging from large publicly held corporations to small, private, and closely held firms. NACD is the publisher of the Directors Monthly newsletter. For more information, visit http://www.nacdonline.org.

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