Hugh C. Welsh, president & general counsel of DSM North America, moderates a discussion on why general counsels will be vying for the title president or CEO
By Daria Meoli
The role of the general counsel has evolved well beyond even the current title of art “chief legal officer”, to include becoming a strategic and operational business adviser to the CEO, CFO, and the board. This access to the corner office raises the key question of “what’s next” for many general counsels (GCs).
CFO Studio’s sibling, General Counsel Studio, recently invited general counsels from New Jersey and New York area companies to share opinions over dinner on whether the “next natural progression” for GCs is to ascend even higher in the corporat enterprise. The General Counsel Studio Executive Dinner was held at Blue Morel Restaurant, at the Westin Governor Morris Hotel in Morristown, NJ.
“We’re seeing the best general counsels becoming so diverse in their roles that they are already COOs in many respects,” said Andrew Zezas, host of General Counsel Studio, publisher of CFO Studio magazine, CEO of Real Estate Strategies Corporation, and the evening’s host. “More and more, we are seeing general counsels intentionally progress into the role of CEO or president.
The topic was a personal one for discussion leader Hugh C. Welsh, president and general counsel of DSM North America. “I think it’s natural for a lawyer to assume the role of president of the company,” said Welsh. “In this fantastic profession of ours we get the benefit of learning everybody else’s job. In the context of what we do everyday, whether it’s writing commercial agreements, handling regulatory matters, [or working on an M&A], we have to learn about all the other roles within a company. Over time, you get pretty good at other peoples’ jobs. Before you know it you’re a general manager.”
M&A work, for example, helps a general counsel to “become a strategic thinker for the company,” Welsh continued. “You spend a lot of time with the operating businesses and you get a sense of what their strategic direction is, what their long term goals are. You also end up spending a lot of time with the board. So, in addition to learning everybody else’s job up and down in the operations, you get a really good sense of where the company is going. That’s the role of the president.”
Many of the other participants echoed Welsh’s description of a GC as a general manager. Craig Bleifer, vice president, general counsel and secretary at Daiichi Sankyo, added that for a CEO to be successful, he should be able to think like a general counsel. “The CEO is making the call,” said Bleifer. “As general counsel, I deliver advice the CEO needs to make an informed decision on behalf of the corporation. As lawyers we are trained to think from a neutral place. If a CEO can make a call from that same neutral place, the better the job he or she will do for the company, owning the weight of any potential risk.”
One of the inherent traits of a GC is the ability to keep a level head during difficult conversations. “I think one of the values that general counsels add is the ability to fairly assess situations and not be afraid of conflict,” said Adam Ratner, vice president, associate general counsel and assistant corporate secretary at Jackson Hewitt Tax Service. “We handle conflict completely differently than our colleagues. Things that stress them out don’t worry me one bit. If there is a tough conversation that has to be had, we know there are ways to handle that. It’s a tactical skill that will continue to be useful when crossing over from a general counsel role to a presidential role.”
GCs Positioning Themselves for the Next Step
According to Welsh, general counsels have to create opportunities to demonstrate their ability to think strategically.
Rebecca A. Levy, general counsel at Summit Medical Group, volunteered to take on an initiative well outside her role, which resulted in plenty of face time with her company’s board of directors. “We’re a for-profit business, but as health care providers we have a passion for helping the community. We often get requests from people who want to donate time and money,” said Levy. “In the past, we did not have a vehicle for this. About a year ago, we decided to start a Foundation so we are better able to provide charitable services to the community.” Levy is secretary of that foundation and actively demonstrates her ability to be a big picture, strategic thinker to the top executives at her company, advising them on both for-profit and not-for-profit matters.
Experience in certain areas essential to running a business, such as talent management and motivation, may be difficult for a general counsel to demonstrate, but Welsh’s own career shows that this perceived deficit is not insurmountable.
Ready for Risk?
Are general counsels too risk averse by nature to be effective presidents or CEOs? Those gathered at the General Counsel Executive Dinner felt, generally speaking, that the GC’s view of risk could help him or her make more sound decisions in the chief role. “We train lawyers to be risk mitigators, so they can recognize risk and offer solutions that will mitigate that risk and enable the company to grow properly,” said Welsh.
Striking the balance between risk and growth may not always be perceived as strategic thinking by a CEO or board member. “When you have a CEO going full steam ahead on something and you have a solution that slows the train down, he might not want to hear that,” said Eric Winston, senior vice president & general counsel at INTTRA.
Michael A. Prokop, Esq. added, “In many companies, there is such enormous pressure on the guy behind the big desk to make quarterly numbers, it’s tough to hear a general counsel point out legal issues with his business strategy.”
When GCs decide to pursue a business role, it may be difficult to get others within the organization to view them as more than the safety belt. “Not letting legal get in the way of business can be a challenge,” said Mark, general counsel at Bluestar Silicones North America.
One guest asked Welsh how becoming president changed the way he views risk as a GC. “I believe that one of the reasons I was hired to do this job, in addition to having institutional knowledge of the organization, was that I was extremely entrepreneurial as a lawyer,” said Welsh. “I think our board had confidence that I would continue to be innovative in that sense, and mitigate the risk as we went along because of my experience as general counsel.” The roles and their required ways of thinking “work together, hand in glove. While I was a bit of a gunslinger even before becoming general counsel, my view of risk has since changed. When I was just a lawyer, it was always somebody else’s decision. I could come up with six different ways as to how we could get to a solution, but it was always somebody else’s decision. Now, as president, the buck stops with me. So, in some ways, I may be a little more risk averse now. “
How Results-Oriented Are GCs?
Equally important to demonstrating a willingness to accept risk, the guests agreed, is being able to yield results — and showing that to the board and other executives. “As the general counsel I look at decisions through the prism of the business person, because I wear many different hats in my company,” said Maria Chiclana, senior vice president, general counsel, and secretary at American Standards Brands. “The challenge is persuading a businessperson that legal can add value to the overall strategy. There’s value in M&A work, there’s value in IP work, value in licensing work, but you have to be able to quantify that based on results. You have to say to the business side, ‘Tell me how you can help us deliver the results.’ “
Welsh said he believes there will be “more and more GCs assuming the president’s role going forward.” He said, “I really believe it’s because of all of the operational experience that a general counsel gets working with the HR function, working with the regulatory groups, and working with manufacturing groups. Who else in the company has the capacity to touch every aspect of the internal value chain?”
For CFO’s looking to ascend to the top spot, don’t rule out your GC as tough competition.