Alex Hamilton-Baily, Partner in the Legal & Professional Services Practice at Odgers Berndtson, explains why more lawyers could and should become non-executive directors.
Becoming a non-executive director (NED) has never been much of a career option for UK lawyers. This hasn’t been for a lack of ability on their part, but arguably the entrenched views of most boardrooms. Historically, in the UK, boards have taken the somewhat unfair view that lawyers “just do lawyering” and that if they want legal advice, they’ll bring in the general counsel or they’ll pay for it. Engagement with the broader corporate issues, they believed, was best left to those from general management, functional leadership, and financial management backgrounds. But that belief is beginning to change.
In the US, it is quite typical to see a former senior lawyer at the board table. In our executive work, we sometimes talk to our clients about the ‘US style’ GC and how that skill set is now increasingly prevalent in the UK. That is, someone who can act as a conciliary to the CEO; an individual who can contribute to key commercial decisions; understands the business holistically; uses their knowledge of the law but sees the wood for the trees; is able to synthesise regulatory issues with a wider commercial and market viewpoint; but who also has the analytical and intellectual rigour of a lawyer. For senior legal professionals, particularly those working in-house in large PLCs, recognition of these skills has opened up the opportunity to sell their skills to the UK boardroom.
Influence Of Corporate Governance, Risk, And ESG
The current board appetite for former lawyers is, in part, due to growing pressure in corporate governance, risk, and ESG. For many businesses, the issues in these areas increasingly have some form of legal, governance, or risk underpinning them. On top of this, there is the tidal wave of corporate M&A activity which also has a significant legal element. Senior lawyers often possess a deep understanding of large corporate transactions, good governance, and functional risk and compliance – which are often highly sought-after generalist skills within the boardroom. Arguably, lawyers have a far greater strategic view of top-level corporate issues, than say someone from a marketing, sales, or digital leadership background. Combine this with a highly forensic mind that can interrogate large volumes of paperwork and draw out key insights from a morass of information (who else could enjoy wading through a bank’s board pack?), and you have someone who is highly suited to a NED role. Of course, this experience can also be gained in private practice, and there is a growing precedent for retiring partners to join the boards of those companies operating in their core sectors and practice areas.
Demonstrating Strategy-Level Experience
That’s not to say that lawyers can just walk into a board position, however. Before applying to a role, lawyers should be able to demonstrate that they have significant strategy-level experience under their belt. In private practice, this can include leadership roles in the growth and development of a law firm, but it can also include client work such as guiding a business through an IPO, through a merger or acquisition, through a period of retrenchment, or major regulatory change. Dealing with corporate-wide issues like ESG and I&D are also non-negotiable skillsets. Boards will expect any candidate to, for example, have contributed to an I&D strategy, delved into the sustainability requirements of a supply chain, developed corporate governance in line with changes to the code, or been centrally involved in an equivalent strategic issue. This does, of course, give those lawyers working in-house an advantage, primarily because of their experience as general executives. But senior private practice lawyers can become deeply experienced in these firmwide issues as well.
Experience Outside Of A Legal Practice
Not all lawyers will be in a position to gain the above experience. Where this is the case, experience outside of a legal practice can be used as evidence for board suitability. This can include taking on unpaid roles such as becoming the trustee of a charity, or pro-bono consultative work in sports or the arts. These roles provide the experience of being a trusted strategic advisor away from their day job. They are also a potential route to building a network that results in hearing about a NED role – board positions are not always in the public domain so this can be hugely advantageous. Likewise, gaining experience as a paid or even unpaid consultant for private businesses can be a way for lawyers to gain exposure to wider corporate issues like ESG and I&D before they consider taking on a NED role.
Finally, it’s worth being aware of the fundamentals of NED positions. Board directors need a solid grasp of performance measurement and management, oversight frameworks, and management controls. The leadership and problem-solving style in the boardroom is consultative rather than directional. Because of this, board members will expect a board candidate to demonstrate how they’ve acted as an advisor through thick and thin, not just as a deal doer or case manager. And they are looking for someone who is curious about the wider macro and micro socio-economic pressures the business is faced with, not just specific areas of governance.
Ultimately, board members are collaborative, they problem-solve through robust questioning, think about the business holistically, and are there to advise and guide rather than lead a business. What better role is there for a lawyer?