Focus On
Ben Heineman

Changing role of corporate general counsel explored at innovation conference

Tuesday, May 16, 2017 @ 6:08 AM | By Tom Venetis

Today’s general counsels need to think of their role as being that of a lawyer-statesman and not as a silent partner within a company.

Ben Heineman

Ben Heineman Jr.

That was the takeaway from the opening keynote given by Ben Heineman Jr. on May 15 at Lawyering in the 21st Century, a one-day legal innovation forum hosted by LexisNexis Canada and the Legal Innovation Zone at Ryerson University.

Heineman, a former senior vice-president/general counsel for General Electric from 1987-2003, and currently senior fellow at the Belfer Center for Science and International Affairs at Harvard University, said that since the 1970s the role of the general counsel has changed. The role has changed from being a line item on a corporation’s budget to where general counsels are now tasked with handling key corporate and legal issues on a global scale.

“The general counsel has become the primary counsellor to the CEO and is replacing the senior partner,” said Heineman. “General counsels have become members of senior management, on both law and business decisions, and on execution risks and opportunities.”

He said today’s general counsel helps companies not only adhere to the spirit and letter of the law, but also are the key proponent in helping companies adopt global ethical standards that bind the company and its employees, and help companies balance private and public interests.

To help achieve this, a general counsel now must become a lawyer-statesman, working with the CEO to ensure that legal and ethical norms are followed at all times. Heineman said that this requires buy-in from the CEO who places a high value on a company following legal and ethical rules as much as it follows the pressures for profitability. He gave the example of his former boss, Jack Welch, who as CEO of General Electric stressed that there would be no cutting ethical corners for commercial reasons and that integrity would never be compromised just to meet the financial targets of the company.

“That is a simple statement, but when you think about all the scandals that had come from how people cut corners, that is a profound statement,” added Heineman. “The essence of the lawyer-statesman is to ask, ‘Is it right?’ We should be focused on purpose, not just on process, consequences not just on acts and on the long term and not just the short term ... and that you are often dealing with problems that go beyond the technicalities of the law.”

He said that this will sometimes mean having to push back against what a CEO may want. Often that will not be easy, and sometimes general counsels have failed at that. He gave the example of companies such as Enron, Worldcom and Siemens where the general counsels failed to halt actions that eventually led the companies into legal and ethical pitfalls.

“We cannot simply do what our business leaders ask us to do,” he emphasized. “There is an enormous wall of shame of lawyers who were feckless in not standing up to the CEO. We can never ignore the law, to think of the law as an economist does or to think of things from a cost benefit analysis alone.”

He also suggested that to help lessen the chance of that happening general counsels make it known they are available to a company’s board to talk to them about difficult issues or decisions. This can often check the impulses of a CEO who knows the board can go to the general counsel for advice.

Sometimes, that is not possible so general counsels have to make a hard decision: to either continue in their role or to leave.

“In a law firm you can fire a client,” said Heineman. “You can’t fire a CEO. A CEO can make your life hell and they can denigrate you and limit your scope. So you need a shared vision with the CEO of the role of the general counsel. While you can do diligence on the front end about the CEO, at the back end you need to be able to quit. Yes, you may lose a fair amount of money, but you have to be prepared that when the going gets tough and your integrity is in question or threatened, you have to be prepared to leave.”

LexisNexis Canada has entered into partnership with Ryerson University's Legal Innovation Zone with the intention of charting and evaluating important emerging trends in legal innovation in Canada and around the globe. The content of this page is not subject to approval by LexisNexis Canada or Ryerson University's Legal Innovation Zone.