It is trite to say that the obligations of in-house legal departments and general counsel have expanded substantially in the last few decades. While initially seen as in-house lawyers, in-house counsel today have many roles and responsibilities that go beyond the conventional practise of the law.
Today, the role of an in-house counsel includes compliance, risk mitigation, and strategic decision-making. On Feb. 23, I had the pleasure of speaking alongside Alison Burton of RBC at the sixth annual In-House Counsel Summit, moderated by Lynn Korbak and organized by the Law Society of Upper Canada. Our topic of discussion was “How Your Legal Team can be Instrumental in Advancing Corporate Social Responsibility.” Some will be quick to respond that CSR is not within the responsibilities of the legal team. While that may have been accurate in the past, the panel felt that CSR is increasingly important and, in many ways, now also fundamental to our role as in-house counsel and/or GC of a company.
To begin with, it is important to understand the definition of corporate social responsibility. CSR is generally understood as the concept “that organizations have moral, ethical, and philanthropic responsibilities in addition to their responsibilities to earn a fair return for investors and comply with the law.” Practically speaking, just meeting legal statutory requirements is the role of compliance; CSR means going above and beyond that, to recognize the obligations a company has to its shareholders and broader stakeholders (employees, society, environment, etc.).
To understand why CSR is so important to today’s in-house legal departments, we can contrast the role of various departments, such as sales versus the in-house legal department. Whereas sales targets range from month to month or quarter to quarter, the legal department is the gatekeeper ensuring that the quest for short-term gain does not create risk or compromise long-term sustainability. The role of legal is best described by the definition of sustainable development, which is “meeting the needs of today, without compromising the needs of tomorrow.” An extreme example will help illustrate this point.
Outsourcing parts manufacturing to the lowest bidder may create short-term cost reductions, but the effect of doing business with a supplier that is in violation of international norms or laws can have a long-term serious adverse impact on the brand, both nationally and internationally. Sometimes, even meeting minimal legal requirements may not be enough. The legal department is in the best position to determine the risks created by certain positions and, at times, best positioned to take a leadership role with regards to protecting and advancing the corporate brand.
The points above are supported by a paper published by the United Nations Global Compact called a “Guide for General Counsel on Corporate Sustainability”. This paper highlights four key factors that make legal departments best suited to take on this role. They are:
The critical but independent role of in-house counsel within organizations: This is important, especially in times of pressure by shareholders, as there may be an incentive by business to cut corners or push the envelope. Legal can ensure that, while aggressiveness in cutting costs and seeking efficiencies is acceptable, the conduct does not go to such an extent that it creates risk and non-compliance.
General counsel generally have a voice and seat at the board table, meaning that they can raise and advance CSR issues and considerations at the time of strategy development.
Legal departments understand the legal and regulatory environment within which businesses operate.
In-house counsel are best able to consider both short- and long-term risk mitigation and value creative objectives in decisions made by the business partners.
Finally, but most importantly, in-house counsel, as a result of their unique situation within the business, can be leaders and advocates for change and CSR within their organizations and within the community.
At the presentation, we discussed some of the initiatives that the legal departments at Nissan, Morneau Shepell, Deloitte, and TD Bank have spearheaded within their respective companies and within their communities. Some of these initiatives included:
• Running book clubs to encourage participation of women in networking events;
• Becoming active players in organizations such as Legal Leaders for Diversity;
• Allowing and encouraging lawyers to become involved with pro bono initiatives to assist our communities with contract, employment, real estate, and immigration law issues;
• Consider and advocate for supplier’s diversity programs in determining who gets service agreements;
• Having the legal department participate in team- and community-building exercises through becoming involved with organizations such as Habitat for Humanity, the local food banks, etc.;
• Running mentorship programs within the workplace and within the community.
Consequently, the role of in-house counsel can be seen as not merely limiting risk and protecting a brand but rather it can play an important role in advancing and strengthening the brand and long-term value of the organization. As the role and influence of in-house counsel grows, the role is moving beyond being seen as an in-house lawyer toward being seen as the guardian of the company’s short- and long-term sustainability.