Beyond Legal: The Expanding Role of General Counsel
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janvier 10, 2025
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This article was published in El Confidencial on December 18, 2024.
In Spain, the role of the general counsel (“GC”) has evolved over the past few years from a purely legal advisory role to that of a strategic key player in corporate leadership. The modern demands of this role require a holistic approach that encompasses far more than legal expertise.
The legislative output of governments is approaching record levels in both Spain and the European Union (“EU”). According to a report by CEOE (The Spanish Confederation of Business Organizations), Spain’s official gazettes, including both national and regional legislation, published 1.27 million pages in 2023. In Europe, there were 2,249 legal acts in 2022, comprising 1,041 regulations, 28 directives, and 1,180 decisions — a 3.4 percent increase from 2021, according to the Official Journal of the European Union. This immense legal workload presents challenges due to both the volume and the diversity of topics. According to EUR-Lex and the European Commission, the most common issues addressed by recent EU legislation were sustainability and corporate responsibility, consumer protection, green transition, cybersecurity, digital resilience, energy, climate, labor rights, and social justice.
This wide range of topics directly impacts businesses and is reshaping the evolution of the GC role, as GCs are increasingly tasked with addressing the issues they generate. Lawyers thus cease to be just legal directors; they gain more power. Beyond overseeing legal and compliance matters, GCs must now take on risk management; business strategy; environmental, social and governance initiatives; and the ethical leadership of their organizations. They also face the opportunities and challenges of technology and digitalization, including the responsible use of artificial intelligence and the need to adapt to changes in data privacy laws to anticipate and mitigate potential business impacts.
For some time now, GCs have been essential in mergers and acquisitions — where legal expertise can determine success or failure — as well as in crisis management, including overseeing strategic communications. This transformation of the GC role reflects the complexities of the modern environment, which is characterized by regulatory uncertainty, technological challenges and the importance of sustainability.
Over time, corporate lawyers have acquired a comprehensive, holistic view of their companies. They have learned to react quickly to a wide array of issues in today’s rapidly changing society and to assume the role of all-encompassing advisors or protectors of the company. This has earned them a privileged position alongside CEOs and other top executives. They are seen as problem solvers capable of tackling a wide variety of issues and are particularly valued for the natural conservatism that comes with legal expertise.
Of course, not even today’s GCs possess unlimited knowledge, so they need large, highly trusted teams and substantial budgets. It’s also crucial to have external advisors who specialize in areas undergoing legislative changes, as they help ensure rigor and reduce the margin for error.
In Spain, there are several examples of GCs with pivotal roles within their organization, with some even reaching the highest levels of corporate leadership. This trend is well-established in the United States but is less prevalent in Europe, where CFOs are still the primary candidates for top corporate positions.
However, GCs may have greater potential for advancement, as their ability to interpret balance sheets (typically a CFO skill) often surpasses a CFO’s ability to navigate the complexities of the regulatory landscape affecting the company. Many GCs bring duel expertise in both law and business administration, equipping them with a comprehensive global perspective on the company. Additionally, their career paths often involve working across different departments, so they gain the broad experience needed for the comprehensive vision mentioned earlier.
We are living in times of uncertainty, and such times bring about legislative changes. In fact, 87 percent of GCs at large companies across various sectors predict an increase in corporate risk levels, making regulatory compliance their top concern, according to a survey in the General Counsel Report 2024, prepared by FTI Consulting and Relativity.
In summary, the GC role is evolving into a hybrid of legal and business leadership. Their ability to operate as multifunctional strategists positions them as essential players in ensuring the success and resilience of companies in an ever-changing landscape.
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Date
janvier 10, 2025
Contacts
Senior Managing Director, Head of Spain Strategic Communications
Senior Managing Director