Heyrick Bond Gunning, S-RM's CEO, spoke with three leading general counsel from across the US and UK, spanning a range of industries. We have distilled insights from their decades of experience to provide aspiring, new, and experienced general counsel with advice and guidance when working with corporate intelligence and investigations firms.
Claire Chapman is General Counsel at UK-based outsourcing firm Capita plc. She joined in 2018, as their first general counsel. She was previously general counsel and company secretary of the Daily Mail and General Trust, where she led the transformation of the company’s legal division as the trust’s first-ever legal executive. She left the media group in 2017 after almost five years.
John McCarthy is General Counsel of Wicklow Capital, a Chicago-based principal investment firm. Previously, he was general counsel of GETCO, a market maker and algorithmic trading firm, and KCG Holdings, an NYSE-listed global financial services firm. He spent his early career at the US Securities and Exchange Commission.
Emma Sharma is Chief Administrative Officer and General Counsel at Valiant Integrated Services, a US-based solutions and critical services firm supporting client missions in complex environments around the world. She has held senior legal and management roles with Motorola, Business Objects (now part of SAP), and Capgemini.
AN EXPANDING REMIT AND CHANGING THREAT LANDSCAPE
Today’s general counsel are playing a leading role in business strategy, alongside their legal responsibilities.
'Information security and cyber security are front of mind in terms of risks I need to anticipate and manage. Then of course there is privacy, strategic and turnaround risk, and regulatory risks are always present. Reputational risk runs through everything. We have created a responsible business practice guide that we validate our business against, which includes reputation, ethics, company fit, as well as financial measures.' – Claire Chapman
As the threat landscape continues to evolve, it is important that they maintain a bird’s eye view of the issues and challenges that may present themselves and understand what they need to do to prepare.
'It is easy to fall into always working on the back foot, being reactionary, responding once something has gone wrong. General counsel need to get on the front foot. Look at the sorts of problems a company has faced, such as IP theft, and the financial impact it can have.' – John McCarthy
Having a trusted stable of external advisors is critical for these challenges to be addressed effectively. Clearly understanding the challenges and potential threats that their business might encounter enables a general counsel to anticipate the specialist skills needed to address them.
'My remit now includes legal, financial services risk and compliance, medical and healthcare and more besides. It is a considerable workload, making the contributions of external advisors particularly important and needing to reflect a breadth of experience and specialism.' – Claire Chapman
SOURCING EXTERNAL ADVISORS – WHAT iS THE BEST APPROACH?
So, what is the ideal approach for choosing who to work with? Selecting advisors can happen in a number of ways, including:
The general counsel’s relationship with the board is critical to their success and effectiveness, and this includes knowing how best to discuss recommendations against specific needs with them. Recommendations from the board can be driven by personal preference and familiarity, rather than by objectively looking at how to get the right support for the specific issue at hand. Claire Chapman explained:
'When I started, a number of external advisors came via preferences and recommendations from the board and external counsel. But with time, trust and confidence has been built up. Typically, now, I make more of my own recommendations on the appropriate advisor.'
Likewise, external counsel is another crucial relationship for the general counsel, but there can be a downside to a board or external counsel-led only approach to recommendations. As John McCarthy explained:
'It can be easy for a general counsel to fall into a situation where they are led by the nose, with external counsel making recommendations based on their own relationships, and the board can be beholden to their recommendations. It can take away the independence of the general counsel, and you end up not getting the most appropriate outside help to solve your problem.'
It is clear that trust and relationships need to be developed, and general counsel have to familiarise themselves with board and external counsel recommendations, along with growing and championing their own stable of advisors. So, what does a more mature position look like? How might discussions with the board and external counsel grow, and how might a general counsel leverage their own contacts? Emma Sharma said:
'When it comes to bringing external advisors in, I will take advice from external counsel, but it is very much advice, and not them making the decisions. I always have a steer in whether we bring in support, and who that might be, including who to avoid, if there has been a bad experience or weakened relationship.'
A more established relationship with the board and external counsel will naturally leave more space for decision making by the general counsel as a trusted advisor. Striking the right balance gives the general counsel much needed independence, alternative perspectives, and ultimately a better chance of bringing in the right people for the job.
SELECTING AN INVESTIGATIONS FIRM? THINGS TO CONSIDER
When it comes to external investigative support, our general counsel have clear criteria to help them assess whether new or existing relationships are up to the task at hand and who is best placed to support.
Skills and experience
'I start with credentials – are they well informed, have they got a good track record, do they know what they are talking about? Can they give me advice that is understandable and actionable? Have they got the knowledge and experience that an external law firm does not have or cannot use? These are all important for me around disputes and investigations work.' – Claire Chapman
'I need the best. It is incredibly important for my relationship with the board that the external investigations firm I recommend is rock solid, with strong credentials. When faced with a crisis or time-sensitive issue, there is no time for ‘amateur hour’. I need to have the best and brightest team working on the problem. And you know, a lot of board members would have held general counsel roles, so there is no bluffing them when it comes to investigative specialists.' – John McCarthy
'Ethics is another key factor when thinking about investigations. I need the external advisor to do what is necessary, but I need them to be ethical and know where to draw the line. Certain activities could spook the market and in turn, our stakeholders and regulators, which I obviously want to avoid.' – Claire Chapman
'They need to have a deep understanding of the problem I am facing, the answers I need, the pressures around cost, and be nice people to work with.' – Emma Sharma
'I look at their ability and willingness to understand my business and challenges, to really get stuck in and put the client first.' – Claire Chapman
'In previous roles, I held big budgets and signed-off on legal work totalling as much as USD 50 million. An external intelligence firm needs to make sure their pricing is right for the market and reflects their capabilities.' – John McCarthy
'If I am working with trusted external counsel, then I am happy to let them manage the coordination with external suppliers and whichever part of the business or region is relevant, with regular check-ins so I am always apprised.' – Emma Sharma
'In terms of strategy, I want to be involved in some way, inputting and signing-off. But, when it comes to execution, that is usually something for a specific team, division, or regional office to deliver with the external advisor.' – Claire Chapman
'There were times when I found myself immersed in an issue, including those involving board members. Some of these investigations would come close to the top of the tower – texts, emails, and so on, involving board members. So, I would be very engaged in every aspect of an investigation.' – John McCarthy
'I really like a ‘no-nonsense, no bluff’ approach from the firm and its people. With Covid, we have had to work around a pandemic and lockdowns, but as we come out of that, I have noticed some lethargy around client service. Yes, cost is a factor, but relationships are more important, and that is what I value most.' – Emma Sharma
'Do I like them? Can we sit in a room and have a normal conversation and ‘get’ each other? If we are working on a sensitive matter, I need to have confidence that I am working with real people who are on the same page.' – Claire Chapman
IN CONCLUSION: FAILING TO PLAN IS PLANNING TO FAIL
If ‘your network is your net worth,’ the other saying to remember is ‘failing to plan is planning to fail’. When something goes wrong, it is already too late to start thinking about introducing potential advisors to the board. People are under pressure, and naturally turn to familiar faces and existing relationships.
Decide now to grow and reinforce your network and anticipate and address risks before something is sprung on you and the firm. The advice given here is based on the decades of experience shared by the panel:
'Take the initiative, look at the challenges, and address them proactively. Bring in an investigations specialist. Show the board that you, as a general counsel, are being proactive to protect the company before something bad happens. The board will love you for that, and they will invest to make it happen. Again, it reinforces your credentials and builds your relationship with the board.' – John McCarthy
'I will turn to trusted contacts around investigations. Certain types of investigations can be distracting, so it is best done by a specialist supplier. They can also be time consuming. The other benefit is that with internal investigations, it is important to be able to approach and deal with it from an independent, impartial starting point, which external providers can do.' – Emma Sharma
'The ideal situation is when I can make a recommendation to the board, and say, look, I have known and worked with this firm for 20 years, they have protected these companies, they are the best.' – John McCarthy
THIS ARTICLE IS PART OF S-RM’S LATEST REPORT ‘IN THE EYE OF THE STORM: INTELLIGENCE AND THE CHANGING ROLE OF THE GENERAL COUNSEL’.
DOWNLOAD THE FULL REPORT HERE.