GCs Enter the Business World
KPMG’s general counsel survey sheds light on the trend that’s turning legal leaders into business leaders
GENERAL COUNSEL LIVE in a new
world. Where once they might have been
focused exclusively on legal issues and challenges, now GC can be expected to provide
executives with strategic advice to help
guide and protect companies from new and
developing risks. Tighter regulations with
international implications, heightened
scrutiny of executive actions and increased
cyber crime and hacking risks, for example,
are now very real business fixtures.
This trend toward a broader role as cor-
porate and business advisors is confirmed
by KPMG’s global and Canadian GC sur-
veys. Risk is at the top of the GC agenda,
and GC are being directly and meaningful-
role is about understanding organizational
objectives and being able to help plan the
best route to achieving them while manag-
ing any associated risks. This is confirmed
by our finding that three-quarters of Cana-
dian respondents are more involved in the
formulation of business strategy than was
the case five years ago.
Data and privacy breaches through loss of
electronically stored information, breached
IT security and cyber crime has become a
very real concern. Like many other risks,
the reputational exposure from a data
breach can be severe, and litigation can be
expected after a loss of data.
A survey by KPMG confirms that the role of general
counsel now centres around risk management
> ALMOST 50 PER CENT OF GENERAL COUNSEL IN CANADA
ARE MEMBERS THE BOARD OR EXECUTIVE COMMIT TEE.
> 35 PER CEN T OF CANADIAN GC REPORT DIRECTLY
TO THE BOARD OR EXECUTIVE COMMIT TEE.
> ABOUT 75 PER CENT OF CANADIAN GC ARE MORE
INVOLVED IN THE FORMULATION OF BUSINESS STRATEGY
THAN THE Y WERE FIVE YEARS AGO.
ly consulted by senior leaders of Canadian
and global companies.
BOARD INTERACTION > Having a seat at
the table is critical. We found that almost
one-half of general counsel in Canada are
members of the executive committee or
board. This compares to 32 per cent of GC
in global high-growth markets.
In addition, a further 35 per cent of Canadian GC report directly to the executive
committee or board. The C-suite are looking for general counsel to offer advice. Their
FACING THE RISK > With risk
at the top of management and
director agendas, it is entirely
understandable that risk permeates the life and perspective of
general counsel in Canada.
In Canada, “risk to reputation” was ranked as the No.
1 risk by GC. Specifically, 53
per cent of Canadian GC saw
reputation risk as being significant, compared to 38 per cent
of global GC. Conversely, only
2 per cent of Canadian GC said
reputation was not a risk area,
Regulatory risk was the area of greatest
concern to general counsel globally, and
was the second greatest risk for Canadian
GC. There is no question that Canadian
regulatory requirements have increased
dramatically in the past decade. Perhaps
more important is the increasing level of
regulatory enforcement. Obvious and very
public examples include anti-money laundering and bribery and corruption.
Technology risks are also significant in
Canada (No. 3 risk) and globally (No. 2).
MANAGING DISPUTES > A central role
for general counsel has always been managing disputes, and as litigation stakes have
increased this remains a very important issue. In Canada, 41 per cent of GC thought
that there are now more disputes compared
to five years ago ( 32 per cent believed that
the volume of disputes was unchanged).
In Canada, the types of disputes expected to increase most significantly relate
to employment matters ( 51 per cent expect
an increase), regulatory issues ( 49 per cent)
and contractual disputes ( 47 per cent). Regardless of the issue, GC in Canada see little likelihood that the number and impact
of disputes will decrease.
With the growth in disputes, the nature
and conduct of litigation is expected to become more complex both in Canada (72
per cent see an increase in complexity) and
globally ( 61 per cent). With an expected
increase in the volume of information disclosed and the number of cross-border or
multi-jurisdictional disputes, total costs incurred on the dispute process are seen to be
increasing by 74 per cent of Canadian GC.
In Canada, the role of GC continues to
change. There is a growing view that GC in
Canada will increasingly be an influential
and strategic advisor to senior management
and directors. With deep company and sector knowledge as well as critical legal experience, GC are seen as a critical component
to a company’s stability and success.
James McAuley is an Advisory Services Partner
at KPMG Canada. www.kpmg.ca/advisory