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IN MY OPINION

All universities should have a general counsel

In a world of increasing legal risks and fiduciary obligations, it is difficult to understand why a university would do without one.

By CHERYL FOY | AUG 29 2019

All universities should have a chief legal officer, or what is commonly known as a general counsel or GC. This is an executive-level role with primary responsibility for providing strategic legal advice to the corporate entity or organization for whom the lawyer works. Ideally, the GC is a trusted advisor to the president and other executive colleagues, working closely with the chief financial officer to ensure the financial and legal health of the university.

In a world of increasing legal risk, fiduciary obligations and ballooning compliance requirements, it is difficult to comprehend why boards or leadership teams of organizations as complex as universities would not want to avail themselves of the expert leadership of a GC. However, the sector is behind the curve in hiring and in properly understanding the role of general counsel and lawyers. As Harvard scholar, Ben Heineman would tell you, there has been a “revolution” and massive growth in the role of lawyers working inside organizations, but the message hasn’t been widely received within the higher education sector. This needs to change.

What does a GC do?

All GCs are qualified lawyers but not all qualified lawyers can be GCs. The GC plays the unique role of partner to the organization and, according to Mr. Heineman, “guardian of the [university’s] integrity and reputation.” As a partner, the GC, in addition to top notch technical legal skills, must have executive leadership skills, a deep understanding of the entity’s mission, vision, and strategic goals, an ability to influence and work across complex organizations, and a willingness to work as a team member. As a guardian, the GC must have the wisdom and courage to know when to say “no” as the best interests of the organization take precedence over the will and desire of any one employee within the organization, regardless of who that employee is.

The GC is the person who can solve complex problems that have legal implications, who can negotiate cross-functional contracts to support partnerships, mergers and acquisitions, and who can manage legal or compliance projects with cross-organizational impact. This is the person who can manage and direct outside counsel to ensure that the legal work done by outside counsel is efficient, done in a way that reflects the goals and values of the organization, and fairly priced. It is very difficult for a non-lawyer to effectively manager lawyers and complex legal work.

Boards must have clear and unfettered access to the GC

Another central role for GCs is to support the board, president and senior leaders in university governance. Mr. Heineman describes the relationship between the GC and the board as “fundamental” to good governance. Corporate governance concepts and the obligations arising from those concepts are fundamentally legal in nature. GCs are best positioned to understand and advise on the balancing of interests of the wide variety of university stakeholders. As universities are large, complex institutions operating in a complicated compliance environment, and boards are composed primarily of volunteers, there is a particularly strong need for clear and unfettered access to the GC and the support this role provides to the board.

So too, to fulfil professional obligations to the corporate entity, the GC needs clear access to the university board. Lawyers have professional obligations requiring them to keep front of mind that their client is the university. Lawyers must and do take this obligation seriously. The GC has to first try to ensure that colleagues act legally and in accordance with the best interests of the university. If all efforts fail, the GC has an obligation to escalate the matter to the board to ensure that the right thing is done. While it is unlikely that the GC will have to escalate, it does happen. The board should understand that the professional obligations of the university’s GC protect the university, the executive leadership and the board. It is much better that a university be given a chance to right a wrong than be forced to do it in the public eye and in response to a crisis.

Ensuring board access to the GC

The GC often wears many hats. In addition to serving as the chief legal advisor, the GC is typically the secretary and governance advisor. This is a crucial combination of roles that serves the institution, the president and the board well. Many universities (and colleges) don’t have GCs. There are also many that have GCs who have no responsibility for the governance function.

The roles are separated for a variety of reasons. Sometimes the separation is intended to narrow the scope of the GC role to allow the GC to be more effective in providing legal services within the university. When an institution moves to separate the governance and legal functions, it behooves the board to carefully scrutinize the decision to ensure that the move does not compromise the board’s ability to access the GC’s support or the GC’s ability to work with the board to ensure that the best interests of the university are paramount in all decisions.

Similarly, the board should be very involved in the hiring of a GC, and in understanding why a GC is leaving the role. There are many presidents and CEOs who are uncomfortable with the role of the GC as guardian and uncomfortable with the necessary connection between the GC and the board. While it is incumbent on the GC to build trust and relationships with the president and executive colleagues, it is important that the board creates an environment within which the GC can fulfil obligations to the university.

Isn’t it enough that the university has lawyers working in different roles across the organization?

No. The difference between a GC and a lawyer working within a department or functional area is one of perspective and mandate. The GC is a leader focused on legal and governance obligations from strategic and systemic perspectives. While the lawyer working in research knows that her client is the university, her mandate is narrower. She is providing legal advice on a contract or a set of contracts. She requires the guidance and cross-university perspective of a general counsel within which to provide legal advice.

The role of the GC is to provide a framework for legal advice, taking into account the whole university and all of the stakeholders. No individual lawyer working with a limited mandate can offer that important perspective. Nor are these lawyers typically governance experts and do not have the experience or knowledge to appropriately escalate matters to the board or to advise the board as to their general legal and fiduciary obligations. A collection of lawyers without a GC to set the limits of legal risk, legal best practices and strategic focus is akin to a sports team without a coach – the big picture is missing as is a key resource for the university, senior leadership, and the board.

The takeaways for university boards and presidents

There are three key takeaways for university boards and presidents:

  1. If your institution does not have a GC, hire one;
  2. Ensure that the GC reports to the president so that the GC is able to exert appropriate influence and ensure that the scope of the GC role is broad enough that the GC can fulfil the mandate to ensure the legal, compliance and governance effectiveness of the university;
  3. Combine the role of GC with that of secretary responsible for university governance, thereby ensuring the board gets excellent governance advice and legal support and, if not, ensure that there is a direct and clear relationship between the board and the GC.

 Cheryl Foy is university secretary and general counsel, office of the university secretariat and general counsel, at Ontario Tech University.

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