How to Climb the Corporate Legal Ladder: Advice From the Experts

September 28, 2021

Dan Marcec

As the corporate environment evolves, legal departments are taking on greater responsibility for emerging matters related to ESG, diversity and inclusion, data privacy and security, software and systems integration, human capital management, and much more. With these issues stepping onto center stage alongside typical litigation, compliance and corporate governance duties assigned to the General Counsel (GC), they often require more dedicated leadership from the legal department and its top executive.

John Gilmore, Co-Founder and Managing Partner for BarkerGilmore, and Adam Hearn, Senior Consultant with Meridian Compensation Partners, joined Equilar for a recent webinar to discuss the expanding role of the GC, how that affects compensation, and what it takes for the top candidates to earn their spot in these prestigious positions.

“GC are taking on a lot more, which is increasing their stature, and they have risen above many other senior leadership team roles because of the way they are viewed as strategic advisors,” Gilmore said.

According to a recent Equilar publication, General Counsel Pay Trends 2021, which featured commentary from BarkerGilmore, this rising stature has resulted in an increasing number of GC reported in proxy statements among Equilar 500 companies—the largest U.S. companies by revenue—which was up 8.2% in the past five years. Meanwhile, median total reported compensation for these GC has increased consistently over the past five years as well, growing 15.5% to reach $2.8 million in 2020, compared to $2.4 million in 2016.

Hearn noted that there’s a lot more than meets the eye. While the data provides an important snapshot of what’s happening in the market, ultimately, the structure of the company and the complexity of the individual role is going to drive compensation decisions over size of the company or industry sector.

“The broader the scope of the role, the higher the complexity of the role, the more areas that report to the GC, the more strategic and involved day-to-day and long term strategic role in the direction of the company, that’s where the pay is going to fall relative to a COO or other C-Suite executives,” he said.

How ESG Has Impacted the GC Role

Across corporate leadership teams, executives are being called upon when it comes to ESG matters, and GC are no exception. Where the legal executives’ world differs is that these expanded or altered roles are in addition to already extensive responsibilities related to compliance, risk, HR, data and privacy, or government relations.

“Whether they have overall responsibility for ESG or not, the GC’s role in being an active legal advisor for those issues has increased quite a bit,” said Gilmore. “From transparency of the organization to communications and policies, there are so many different legal ramifications than in the past.”

With that, Gilmore and Hearn both agreed that the skill set that’s most critical to the GC role is not about the subject matter itself, but rather the ability to absorb new information and apply legal expertise to any number of problems, some of which may be completely new or unexpected (see: COVID-19).

In other words, the “general” counsel really needs to live up to the name, discerning where the priorities should be and having the ability to step in and communicate what needs to be done no matter the topic.

“The expertise called for over the past 18 months is not necessarily different than what would have been required any other time,” Hearn said. “The most important skills are communicating effectively, spotting issues, and being cognizant of litigation risk and risk in general—those things GC are trained to deal with every day.”

How to Stand Out in Today’s Hot Job Market

Gilmore reported that he is seeing more activity this year than in the 16-year history of the firm, to the point where BarkerGilmore brought on three new search consultants to help live up to the expectations they’ve set.

The turnover, he said, is due to four main factors:

1. Retirement. GC who have been around a long time and are in a good financial situation are deciding that it’s time to move on.

2. SPAC mergers and IPOs. The record numbers of companies going public need sitting GC with the right experience.

3. Private equity activity. PE firms are aggressively buying companies, and they almost always want a top-tier GC in place because they know the value that person can bring to an organization.

4. Replacement. CEOs are gaining a greater understanding of what GC can bring as a strategic advisor, and if their current legal team isn’t providing that depth, they are willing to make a change.

“It’s not an easy game to get a role at one of these top companies,” Gilmore said. “The one thing that I’m actually quite delighted about is that high turnover is offering a lot of opportunities for people to become first-time GC.”

Turnover is also leading the charge for more diverse talent. Indeed, women held 36.3% of the top GC positions in 2020, about a 50% increase in share from 2016, when more than three-quarters of GC positions were held by men.

“Diversity is a priority for the board and the CEO, and there’s pressure on us, their service partners, to deliver diverse slates of talent where everyone is hitting the same bar,” added Gilmore. “We’re starting to see an equal number of white males as women and minorities that are getting these positions from the outside, and we’ve leveled the playing field where women and minorities have an equal chance.”

Another important factor in expanding the talent base for GC is through the succession pipeline. When an audience member asked about advice for the most effective way to move from a micro-cap or small-cap company to one of the bigger corporations, Hearn said that one strategy could be to take a role that is explicitly slated to succeed the sitting GC, even if it’s a “step down” in title from a GC job at a smaller company.

“If companies are having a harder time filling a role, maybe they’re struggling to fill a few different roles,” said Hearn. “I’ve been in a number of conversations about succession planning and developing talent internally, asking someone to step into a role that’s not at the GC level but with a longer time horizon that they’ll grow into it.”

In the final analysis, any lawyer who wants to be a GC has to come to terms with the ability to become a strategic business partner. Where many fall short is that they’re either good on the corporate end and weaker on the business side, or they’re fantastic with the business but just not as strong in building that advisory relationship with the CEO and the board.

“You really need to have the best of both worlds: Being a business lawyer and being a corporate lawyer,” said Gilmore. “That’s what it takes. Everybody wants to become a GC, but you have to caution people walking into it and ask if they know what they’re getting into, because it’s certainly not the easiest of lifestyles you can choose.”

Contact

Dan Marcec

Senior Editor at Equilar

Dan Marcec, Senior Editor at Equilar, authored this post. Please contact Amit Batish, Director, Content & Communications, at abatish@equilar.com for more information on Equilar research and data analysis.