The role of General Counsel (GC) is growing in importance and has become a stepping-stone to titles like Chief Risk Officer and CEO. Risk and compliance are still important to the success of an organization. But there’s more to being the Chief Risk Officer or CEO. In this series, we are looking at examples of General Counsel succeeding and failing. We also investigate how to add value across an enterprise with contract management technology.
Due to business, executive, and legal challenges, it’s been a tense couple of months for a major US airline. The company announced in September that its CEO and two other senior executives stepped down. The New York Times reported that the resignations were related to a federal criminal investigation into whether the airline was trading favors with the chairman of the Port Authority of New York and New Jersey. Reports suggested that the alleged quid pro quo involved the airline agreeing to operate money-losing flights to the Port Authority Chairman’s vacation-home airport in return for improvements to their hub in Newark, New Jersey.
In wake of the news, United Airline’s board of directors appointed a new CEO. Sadly, barely a month into his new role, the CEO suffered a heart attack. In these difficult circumstances, the board of directors turned to the company’s general counsel, Brett Hart, to serve as interim CEO. Hart’s promotion from general counsel to interim CEO caught the attention of many. Beyond being an outstanding attorney, what had Hart shown the board of directors to give them the confidence to promote him to acting CEO?
The Chief Risk Officer and key business advisor
General counsel know that the role of high-functioning legal teams has evolved. Simply managing risk, while still critically important, is not enough. General counsel and their teams are now expected to actively support their company’s strategy. This trend is true across a wide array of functions. Human resources, finance, and procurement executives are all expected to demonstrate their value in supporting a company’s business. Companies like United Airlines clearly see the value in having forward-looking, business-focused general counsel.
The Harvard Business Review identified this trend a few years ago in the article “The New Path to the C-Suite,” written by a Harvard business professor and two senior leaders at the executive search firm Heidrich and Struggles. The three observed that legal teams were quickly shedding the image of being sleepy domains that simply reviewed documents, oversaw regulatory compliance, and dealt with the occasional rogue employee. Instead, the authors suggested that general counsel were becoming a company’s chief risk officer. This means being a key part of business deals from the very beginning — not just providing a legal stamp of approval at the end.
Today, this transition is nearly complete. General counsel globally are increasingly thought of as business leaders with a legal perspective. As the Harvard Business Review article predicted, general counsel are trusted advisors to their C-suite peers and are even becoming CEOs themselves. Two recent, prominent examples of the rise of the attorney- turned-executive include Julie Sweet and Thomas Sabatino. Sweet, the former general counsel at Accenture, was recently tapped as the CEO for North America. Sabatino moved from the general counsel role at Walgreens to become a senior executive vice president and chief administrative officer — as well as general counsel — at Hertz. Sabatino now oversees legal, compliance, human resources, labor relations, communications, government affairs, community relations, real estate, facilities, and security. In Hertz’s announcement of Sabatino’s appointment, Hertz’s CEO highlighted that it wasn’t simply Sabatino’s legal acumen that was intriguing, but his history of “leading significant corporate functions.”
And this echoes back to Brett Hart at United Airlines. Unsurprisingly, in United Airline’s official announcement of Hart’s promotion to interim CEO, his legal background was only one of the highlights. In addition to serving as United’s general counsel, Hart had oversight of corporate real estate, customer experience, corporate security, community affairs, contact centers, and food services. Hart was an attractive option for the board of directors because he had ably demonstrated his ability as a business leader. He not only understood risk, and how to intelligently manage it, but he also had a deep understanding of the company’s business and strategy, and how to deliver.
This article was originally published by ACC Docket and is provided to you free with their permission. Learn more about ACC Docket, and read more features and articles written by in-house counsel, for in-house counsel, at www.accdocket.com.
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