DEMAND: general counsel seen as independent and guardians of corporate governance

In-house legal teams are playing an increasingly central role in overall business strategy, with nearly three-quarters of heads of legal now attending board meetings, a best practice survey of multinational companies in Europe has revealed.


The research - conducted by publisher PLC in conjunction with management consultancy Hildebrandt International - found that although the head of legal is also a director in just 9% of companies (down from 18% in a similar survey in 2003), some 65% of general counsel regularly attend board meetings.


The survey also revealed that more than half of general counsel report directly to the chief executive officer or managing director, up from around one-third in the previous survey. One in five general counsel reports to the chairman, and most of the remainder report either to the finance director or another director.


The survey claimed that the fall in the numbers of general counsel who are also directors reflected the need for in-house lawyers to be seen as independent of the board and to act as guardians of corporate governance.


Carol Williams, head of legal and company secretary at Northern Foods, told the Gazette that she sees her role as adviser to the board. 'I'm an observer, but one that's tasked with providing advice on the functioning of the board, compliance and the rest,' she said.


Sapna Bedi, head of legal at estate agency Your Move, said the involvement of general counsel in board proceedings is particularly important in public limited companies, where corporate governance is a major issue. She added: 'Enron and other similar corporate meltdowns have highlighted just how crucial the right advice can be.'


Jonathan Bellis, co-head of Hildebrandt's law department team, said the results for Europe showed a 'remarkable consistency' with those of a similar study for the US.


However, Mr Bellis added that legal spend as a percentage of turnover is twice as high in the US as it is in Europe, at 0.43% and 0.2%, respectively.


Some 57 companies took part in the PLC survey. Other key findings included nearly half of respondents (45%) expecting their internal budget to increase by more than 5% in the next year. This compared to 29% who said they thought external costs would increase by the same figure.


Jonathan Rayner