7 Essential Functions Of A Corporate Lawyer
A company or corporation is a complex organisation that consists of multiple business, legal and financial concepts, devices, and relationships all rolled into one. The corporation, for example, is an agreement by the founders and the shareholders to set up a legal entity that’ll conduct their business operations. The corporation is also the employer of its worker, as well as the recipient of investors’ money.
The corporate lawyer has to make sure all these legal aspects of a corporation’s existence are adequately managed and serviced. The corporate lawyer performs a lot of roles and functions. If you have a growing enterprise or you’re an executive officer of a large corporation operating out of Idaho, you might have to consider discussing your company’s issues and concerns with Expert Corporate Lawyers. Here are some of the essential functions of a corporate lawyer:
1. Review And Evaluation
A corporate lawyer provides review and recommendation support to the executive officers of the corporation. The corporate secretary is often, though not always, a corporate lawyer. They provide support and advice to the leadership of the corporation such as the Board of Directors and the executive officers.
Aside from the day-to-day operations and regular activities of a corporation, most corporations interact with other corporations to explore the possibility of making deals and agreements. For example, a car manufacturing corporation with an assembly plant may receive a proposal from an electric battery manufacturing corporation to co-produce an electric vehicle. Another example is when an aeroplane and turbo engine manufacturer proposes to a car manufacturer to co-produce a flying car or electric hovercraft. These proposed business deals aren’t part of the day-to-day operations of a corporation. They’d be beyond the scope of ordinary corporate housekeeping.
These kinds of corporate activities would require a corporate lawyer to go over the legal documents involved in the business deals. From the first letter which contains the business concept or pitch, these documents are usually sent to the corporate lawyer to be reviewed. The corporate lawyer has to review all the legal aspects involved in such co-production proposals. One of those aspects is the legal entity or business organisation that’ll undertake the co-production if the proposed deal does push through.
One of the most inglorious but essential functions of a corporate lawyer is housekeeping. In corporate law, this refers to the responsibility of the in-house legal team to make sure that all the legal documents issued by the corporation and signed by its officers are in good order.
Housekeeping typically refers to documents that involve the day-to-day operations and regular activities of the corporation. Some examples involve the review of the company’s procurement contracts. When the corporation has to buy computers and other IT equipment, it’s going to ask suppliers to submit quotes and supply proposals. These proposals would most likely have to be run through the corporate counsel.
When the contracts have been prepared, they have to go through the corporate counsel to be reviewed. The corporate lawyer goes over the terms and conditions of the contracts to study their legal implications for the corporation. The corporate lawyer has to study the contracts before they’re submitted to the chief executive officer (CEO) or other appropriate executive officers of the corporation for signature.
Other types of contracts that have to go through regular housekeeping are employment contracts, personnel expenses, and the hiring of other personnel and consultants. Most corporations already have ready-made contracts for all the contractual positions in their organisational structure. The budget for these positions was most likely previously approved by the Board of Directors in earlier Board Resolutions.
But when the human resources department (HRD) successfully hires and signs up a new employee, the employment contract of the new hire will have to be submitted to the corporate lawyer for housekeeping. The corporate lawyer and their staff will have to go over the contract and the attached documents to make sure that everything is in order and doesn’t violate any company policy or employment regulation. Once cleared, the employment contracts will be sent to the President or appropriate manager for their signature.
Aside from asking corporate lawyers to review the business deals and negotiations being done by the corporation, corporate lawyers also perform advisory roles and functions for the leadership and executive management of the corporation.
The main difference between a review and advice is that the scope of review covers the task of studying legal documents and instruments which have already been prepared and drafted. The text of the documents is almost done and the documents themselves are almost complete. But these documents have to be sent to the corporate lawyer so they can study the legal implications and ramifications if the corporation’s leadership and executive officers were to sign their consent and agreement to such documents.
On the other hand, the Board of Directors, as well as the executive leaders of the company, may ask the corporate lawyer to provide them with legal advice before they make a decision about the affairs and matters affecting the corporation. An example of this is when there are legislative proposals to pass new laws which would affect the operations and sales of the company. These things may not yet be contained in a legal agreement, but they’d certainly have an impact on the corporation’s viability and profits.
In the given example, the Board of Directors might be summoned to attend congressional sessions about proposals to give economic and financial incentives to manufacturers of electric cars. Before they go, they can ask the corporate lawyer to give them legal advice on what they can talk freely about when they speak.
Another example is when the government passes a new law that increases the employment benefits and mandates hazard pay for hospital employees and other healthcare workers who perform frontline roles in the COVID-19 containment and management services of the hospital. The hospital’s executive leadership and administration might ask the corporate lawyer to give them advice on the legal implications of such a new law to the operations and employment policies of the hospital.
4. Opinion And Interpretation Of Pertinent Court Rulings
A corporate lawyer also performs the function of a resident jurist of the corporation. They’re often asked by the executive leadership and management of the corporation to render their legal opinion and interpretation of pertinent court rulings, which might have an impact on the business and financial interests of a corporation.
The main difference between review and advisory is that review often entails specific legal documents and instruments covering specific tasks, activities, and transactions, which aren’t part of the day-to-day activities of the corporation. Advisory functions may involve providing advice about hypothetical scenarios or situations which haven’t yet arisen but may come up in the near future because of certain developments in the business industry or government regulations affecting the corporation.
On the other hand, the function of the corporate lawyer to provide their legal opinion and interpretation usually pertains to the legal developments in the judicial system. An example would be when a court decides on a case that doesn’t involve the corporation but covers certain issues which might have an impact on the business and financial interests of the corporation.
A specific example of this would be when a state Supreme Court hands down a ruling which affirms punitive damages imposed on a chemical production company for causing environmental damage to a certain community and life-threatening illnesses to the neighbourhoods surrounding its manufacturing plant. A chemical manufacturing corporation that isn’t involved in the case might ask their corporate lawyer to give them a legal opinion on the possible effects and implications of such a ruling to their core business interests and operations.
5. Corporate Governance
A corporate lawyer may also be asked to perform the essential function of providing legal guidance to the corporate governance matters of a corporation. Corporate governance is concerned with the overall legal and policy framework of managing the corporation, including oversight of the operations and performance of the various aspects, departments, teams, and units of the corporation.
As part of corporate governance, a corporate lawyer might be tasked to review and evaluate the articles of incorporation as well as the constitution and by-laws of the corporation. There might have been earlier or recent changes in the statutes, government policies, and regulations affecting the industry to which the corporation belongs. It’s highly important that the basic legal documents of the corporation remain compliant with the statutory requirements and policy regulations of the government. An example of this is when the government passes a law that requires corporations to protect the private and confidential information of their patients, customers, or clients, as is the case of the passage of the Health Insurance Portability and Accountability Act (HIPAA). A hospital corporation has to review its basic corporate governance documents to make sure the accountability of its leadership and executive officers are aligned with the provisions of the HIPAA.
The corporate lawyer has to review the governance documents of the corporation to make sure that the accountability and legal effects contained in the law are reflected or given effect in its own basic documents. The corporate lawyer may propose any changes which may have to be done to comply with such laws and regulations. An example of this is the basic documents of the corporation governing the rights, roles, functions, and responsibilities of their employees. Another one is if the state or federal government passed a law or executive measures mandating all corporations to make sure their employees have the option to work from home.
The law might contain provisions prohibiting the corporation from laying off or firing workers who insist on working from home. The corporate lawyer may be tasked to make sure that the corporation’s HR policies don’t violate the law. The corporate lawyer may also prepare and draft new management policies and memoranda that set forth the adjustments in the corporation’s policies towards their employees and workers given the government policies and regulations.
6. Regulatory Compliance
Another essential function of a corporate lawyer is to make sure that the corporation complies with all the regulatory measures required for the economic sector or industry to which the corporation belongs. This is different from the earlier task of ensuring that the corporation is compliant with HIPAA or updates in the employment laws of the state where the corporation has a physical office or presence.
Unless the corporation is a hospital or healthcare institution, the HIPAA isn’t a core regulation that governs the core interests of the corporation. But if the corporation handles protected healthcare information (PHI), then it still has to comply with the HIPAA rules. Regulatory compliance refers to the obligation of the corporation to comply with the basic laws and specific regulations mandated for all companies operating in the industry to which the corporation belongs. For instance, a corporation manufacturing health machines, equipment, and devices has to comply with both federal and state regulations for their industry. They have to submit their products for inspection by the federal authorities to make sure these comply with the minimum standards set by the medical authorities and experts. Pharmaceutical companies have to seek approval from the Food and Drugs Administration (FDA). Mining companies have to comply with environmental laws, policies, and regulations.
7. Due Diligence
A company receives not just a concept proposal or investment pitch from another corporation. There are times when it receives detailed investment or merger proposals from other corporations, sometimes from foreign investors or overseas corporations. There are detailed investment proposals that contain technical details and plans that can’t be given just a cursory review of their legal ramifications.
The corporate lawyer may be tasked to conduct due diligence on the investment proposal of another corporation. An example of this is when a foreign investor proposes to a corporation to develop through a joint venture agreement (JVA), a piece of real estate owned by the foreign investor. Such a proposal can’t be satisfactorily evaluated just by looking at the legal documents and draft contracts.
The corporate lawyer may have to go to the country of the foreign investor where the piece of real estate proposed to be developed is located. A prudent corporate lawyer would conduct thorough due diligence of the project proponent. The corporate lawyer would also request copies of the audited financial statements of the project proponent. The corporate lawyer would also have to conduct a background investigation about the standing of the foreign investor in its own business community. Some corporate lawyers would even request bank statements and the projected cash flow and earnings of the proposed project.
The corporate lawyer performs multiple essential functions in a corporation. Among the functions of a corporate lawyer are to ensure corporate housekeeping, review and evaluate contracts and legal documents, provide advisory support to the corporation’s executive leadership, and render their opinions and interpretations of pertinent court rulings. Corporate lawyers also guide corporate governance, ensure regulatory compliance, and manage due diligence.