News & Insights

Directors Governance Center

February 18, 2014

The Relationship Between the Lead Director and GC (LDN Report)

Lead Director Network - ViewPoints

At its meeting on October 2-3, 2013, the Lead Director Network (LDN) discussed the relationship between the lead director and general counsel. King & Spalding and Tapestry Networks published a report providing highlights of the discussion at the meeting on November 6, 2013.

Executive Summary

The GCs Role

The quality of a companys general counsel may influence a directors decision to join the companys board, and directors are keen to provide input when a company selects a new general counsel. Lead directors and GCs described great GCs as trusted, clear, composed, courageous, business savvy, and wise.

In addition to having the core responsibilities of chief legal officers, some GCs also serve as corporate secretary, chief compliance officer, or as a business function leader. Holding these additional titles presents both benefits and drawbacks; for example, serving as corporate secretary gives the GC more time with directors, but can take time away from other responsibilities.

GC and Lead Director Relationship Dynamics

The relationships between the GC, lead director, and CEO are important to a companys performance and a boards effectiveness. Many lead directors interact with their GCs more frequently than with any other member of management, and they look for frequent, open communication. General counsel establish strong relationships with directors by meeting with them outside the formal board meeting cycle. At these additional meetings, everything from board processes to company strategy may be discussed.

Situations that Test the GC Relationship

Lead directors and general counsel identified a number of situations that test their relationship and that require strength and unity of purpose in order to achieve an effective corporate response. Three situational proving grounds stood out for both groups: cybersecurity, shareholder activity, and situations involving disputes and regulatory compliance. Lead directors and general counsel were particularly interested in the decision to appoint a special committee or retain independent counsel for the board, noting that these actions should not be taken lightly, as they can increase friction in the company and the boardroom.