Is Compliance Becoming More Powerful than Legal?
Has Compliance leap-frogged the Legal function to have greater importance today in the eyes of corporate leaders? This topic generated a lively discussion last week among heads of legal and compliance at 20+ major global companies, gathered for the Global Counsel Leaders Circle meetings in Brussels. While points of view varied energetically, participants agreed that:
- The balance of power and integration between Legal and Compliance functions varies widely from one company to another, based on industry, history and corporate culture.
- Aggressive regulatory enforcement and proliferation of regulation has undoubtedly driven growth in importance of the Compliance function globally.
- Leaders of multinational corporate legal functions have solidified their influence and impact within their companies by succeeding as trusted advisers to executive leadership.
- There is an evolving interplay of corporate approaches to manage three often distinct functions – legal, risk, and compliance. Where we will arrive is unclear, and difficult to envision or predict today.
Some find that the Chief Legal Officer’s seat in the Boardroom leads to an implication that he or she is not independent, and this in turn has led some regulatory officials to request that the Chief Compliance Officer report directly to the Board Chairman. Some worry that the Legal function may lose resources as so many companies focus more today on cost controls and compliance risks than on the commercial transactions that have typically been the bread and butter of Legal.
Global Counsel Leaders Circle members and guest speakers agreed that whatever the structure, they employ a number of practices to ensure healthy teamwork between Legal and Compliance. This coordination is especially important in remote operations of the company around the world, where Compliance staff often have other job responsibilities as well, and in-house lawyers cover broad territories.
The Global Counsel Leaders Circle is an invitation-only forum of high-level corporate counsel in global organizations, providing an exclusive platform for valuable exchange on issues of importance to the company and law department leaders’ professional development. This membership-only group meets in person about three times annually and often virtually, through ongoing dialogue, briefings and benchmarking. The agenda is decided by members and moderated professionally. ELD International provides programming and administrative support to the Leaders Circle. Contact me for more information.