Lawyers on Corporate Boards Strengthen Governance

Lawyers bring valuable benefits to a corporate board. Among them are improved governance decision-making, better risk management, and enhanced strategic decisions.

Today, most General Counsel have added risk management and mitigation to their portfolio of responsibilities. GCs are expected to evaluate risk and provide guidance as to the appropriate amount of risk to take, while giving management the necessary latitude to run the business, under the ultimate oversight of the board.

Lawyers serving as directors have, by definition, a different role than the General Counsel of a company. Without conflating these two roles, which are by design separate, lawyers serving on corporate boards can make valuable contributions to corporate decision making by bringing to the table one unique skill good lawyers have – measuring up risk in a way that enables, rather than impedes, prudent risk taking.  

Good lawyers are not “risk factor” lawyers, whose job is to identify the laundry list of things that can go wrong and stop there. Good lawyers are lawyers who can do that and then figure out practical and commercial solutions to enable the business to achieve their commercial objectives in a way that does not present undue risk to the corporate enterprise. The value of having lawyers on corporate boards is that they can hone in on areas of risk in a way that gives the business the runway to execute value-maximizing decisions and at the same time protects the company and its stakeholders.

Lawyers can be especially valuable as board members at companies that operate in industries like healthcare, transportation and defense, which directly touch on human safety and wellbeing and where the lack of appropriate risk management policies and procedures can literally impact life and limb.

Other industries where lawyers are especially well-suited to serve on corporate boards are those historically subject to heavy regulation, as well as emerging disruptive industries, like cryptocurrencies and AI, where the development of a full regulatory framework may lag behind their penetration into daily life. The AI industry, in particular, is one that can benefit from directors versed in thinking like lawyers, given the challenges it will likely bring in terms of reconciling for-profit corporate goals and ethical considerations.

Lawyers serving as directors also bring skillsets relevant to critical corporate situations that span industries. From transformative acquisitions or divestitures, to defending and prosecuting make-it-or-break-it litigation, dealing with an activist shareholder and managing corporate crises, lawyers have seen it all.  

Lawyers on corporate boards don’t just add legal knowledge. They enhance governance by strengthening risk management and ensuring thoughtful, well-balanced decision-making.

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