BoardMatters Quarterly, January 2013
The role of today’s general counsel at the company and with the board
No large company or board of directors is immune from concerns about regulatory compliance, legal risks and good governance practices.
“Our job is much broader than defending our company in litigation.”
The general counsel (GC) often plays an important role in advising management and directors on these difficult issues. GCs help assess risk and build compliance into the overall strategy of the company.
We talked with Deborah Platt Majoras, Chief Legal Officer and Secretary for The Procter & Gamble Company, about her experiences and how she views today’s GC role, including how the GC interacts with the audit committee and board. Following are excerpts from her discussion with Diane Larsen, a partner at Ernst & Young LLP and the Americas Assurance Markets Leader.
| Diane Larsen |
Americas Assurance Markets Leader, Ernst & Young LLP
| Deborah Majoras |
Chief Legal Officer and Secretary, The Procter & Gamble Company
Diane Larsen: Let’s talk about the evolution of the general counsel’s role. What’s changed over time, and how do you see that role today?
Deborah Majoras: My perspective includes my last four years at Procter & Gamble, plus the time I spent in private practice working with general counsels and the nearly eight years I spent on the enforcement side.
In that time, I’ve seen the GC’s role steadily evolve. Today, a general counsel has to be very proactive. We have to try to see around corners and anticipate issues before they arise.
We also have to respond to new demands on the governance and compliance front — and do so without being overly reactive. Otherwise, we can send the company into a tailspin over each and every new external demand that comes our way.
GCs have to be very strong and agile business partners. It comes down to thinking broadly about our legal and governance responsibilities and getting them integrated into the company strategy. Over time, a GC can become a trusted advisor and exercise judgment that may go beyond just pure legal advice and really into what is the right thing to do.
I have heard some people imply that the job of a general counsel or corporate legal department is to “defend whatever it is that the company wants to do.” Nothing could be further from the truth. Our job is much broader than defending our company in litigation.
What we really want to do as general counsels is build good principles and practices into our business strategies and plans so that when new compliance or governance demands come up, we’re already exercising solid practices and are better positioned to be responsive.
How much of your time is spent on regulatory efforts versus traditional litigation?
There is no question that I spend a lot more of my time advising on issues and strategies to prevent compliance issues than I do focused on litigation or government investigations.
During tough economic times, we see less litigation with competitors because everybody has a greater incentive to try to work out the issues. On the other hand, we see shifts in the kind of cases that plaintiff lawyers want to bring. So, it’s not that the litigation isn’t there, but it’s certainly not what I spend the majority of my time doing; we have great lawyers who focus full time on litigation.
Interactions with the board
Diane Larsen: Given your focus on regulatory compliance matters, do you find yourself interacting more with the board and the audit committee?
Deborah Majoras: I do. The board generally, and the audit committee more specifically, have sharpened their focus on compliance issues. They’re asking if we have systems and processes in place to work to ensure good, strong compliance and how we are conducting investigations.
They want to ensure that they and we are focused on the right compliance topics. The board is also more focused on governance issues overall, which is important.
We have several CEOs or ex-CEOs on our board, and they bring the benefit of their own experience in these areas. They help identify questions that should be asked and share their own good practices and successes in dealing with certain situations. Having a knowledgeable group of directors on these issues is very helpful.
Do you regularly attend audit committee and board meetings?
Yes. And I think most GCs today are attending the board meetings and most committee meetings — in particular, the audit, compensation and governance committee meetings. I think it’s a mistake to say that compensation is just an HR issue and audit is just a finance issue. There are a lot of issues and strands here that are tied in with one another.
Also, it’s important for a general counsel to have strong relationships with directors. GCs — especially those who serve as corporate secretary — help to shape the information that flows back and forth with directors, whether it is in committees or in the boardroom itself.
I enjoy very much working with our board. It’s a really talented group.
You recently joined the Board of Valero.
Yes, I’ve only been to a few meetings, but it is interesting. I’ve learned so much from the P&G Board that I can now take to the Valero Board.
It must be an interesting experience going on the other side of the table.
Sure, and it’s a matter of thinking through what your role is. You obviously want to be a good and active board member, but you also need to recognize that you’re not part of the management team. It is absolutely a matter of role-definition.
Diane Larsen: Can you talk a little about board composition and diversity?
Deborah Majoras: I think diversity breeds greater creativity, richer discussions and, ultimately, better decision-making. And when I talk about diversity, I’m talking about it broadly. You have to go beyond physical characteristics, though certainly those do shape our world views and perspectives.
You also have to consider varied experiences and not think of diversity as any kind of counting exercise. In the end, diversity of thinking is the goal.
So, somebody like yourself, a lawyer by trade, is different from the traditional CEO or CFO board member and brings different views.
Yes, that is certainly true. But I want to apply not only my legal and government enforcement experience but also what I’ve learned from my time working with the business at P&G. There are many ways to ensure diverse thinking.
At P&G, out of 10 outside directors, 5 of them are women. Of the males on the board, two are African-American and one was born in Mexico. Like I said, though, we need to go past physical characteristics, and these folks bring a lot of different and rich experiences to the table, which I think the company benefits from greatly.
Can you talk about your relationship with the CFO?
The relationship between the CFO and GC is critical because we deal with so many overlapping issues. I’m fortunate to work with a fabulous CFO, Jon Moeller, for whom I have enormous respect.
We have developed a very cooperative and candid relationship. We consult frequently with each other, and that makes dealing with all of these governance and stewardship issues easier. And when executives have strong, cooperative relationships, it sets the right tone for our organizations.
What makes a great GC?
Diane Larsen: Finally, what do you think makes a great GC in today’s environment? What are the kinds of skills that are most important?
Deborah Majoras: The baseline is legal knowledge and experience, which is necessary, but not sufficient. Beyond that, I think, first and foremost, are strong communication skills. I don’t just mean active communication, I mean active listening.
It is a very important part of being a successful GC. Being responsive and agile, thinking with creativity and having good common sense, which includes people sense and organization sense, also are important.
We sometimes forget that legal issues and having a discussion with the general counsel or another lawyer can make people nervous. What we do is something of a mystery to folks and may cause some fear or concern. We need to be able to put ourselves in their shoes and think about ways to communicate that will be the most effective.
A general counsel also has to have the confidence to be able to stand up and veto something, if need be, and then also the sense to know when is the time to do that.
GCs have to be able to make decisions and judgments, sometimes quickly, without perfect information. But we have to be willing to make those decisions, live with them and move on. If a decision turns out not to be the right one, learn from that, adapt, and again, move on. Things are just moving very, very quickly.
It’s the sort of job where you have to have confidence not only in your own judgments but also in the judgments of your people because, of course, you can’t possibly make these decisions all on your own. We have 365 lawyers and 200 other legal professionals around the world, and I have a lot of trust in them, and that’s key.
Those are some of the attributes that help us do what we do, and as I look at general counsels whom I admire, those are skills that I’ve seen in them.