Who Let You into the House?
29 Pages Posted: 6 Dec 2011 Last revised: 12 May 2012
Date Written: December 6, 2011
Recent Congressional corporate governance initiatives have reallocated to independent directors the functions of hiring and supervising the work of certain “gatekeepers,” and some have proposed such a reallocation with respect to general counsel, as a means to address cognitive biases and capture by senior management that may prevent inside counsel from identifying and preventing corporate misconduct. That proposal, however, does not sufficiently account for the positive effect on corporate conduct arising from a close relationship of trust and confidence between general counsel and the CEO or other senior managers. Eliminating such a relationship is likely to undermine access to internal information and the willingness of corporate actors to respond positively to counsel’s efforts to promote legal compliance. In contrast, steps short of reallocating oversight of the general counsel to independent directors are likely to promote independent judgment on the part of general counsel without unduly undermining those benefits.
Keywords: general counsel, gatekeeper, corporate governance, attorney-client, in-house counsel
JEL Classification: K20, M13, M14
Suggested Citation: Suggested Citation