"Only 8% of GCs act solely as a legal counselor and manager of legal risk."
As COVID-19 and related factors reshape the business landscape and open new opportunities for mergers, acquisitions and market expansion, GCs are being called on to do more, and to add more value on executive and governance teams. In a recent survey by executive search firm Barker Gilmore, "market expansion" was the second-most frequent answer on how GC roles are evolving. A full 70% of the CEOs surveyed stated that their ideal GC acts as a strategic business partner.
Yet, only 55% of CEOs reported their GCs fully assuming this role as a valued member of the leadership team. Yet with the right tools, a strategic, forward-thinking GC can close the gap and take on a more proactive, opportunistic and dynamic role with their board and business.
By leveraging the efficiencies of entity management software'including the operational power of a centralized corporate record'savvy GCs are reshaping their positions within their organizations.
The Convenience and Confidence of a Centralized Record
A GC's oversight of legal issues and compliance across a company's jurisdictions offers a valuable and uniquely holistic perspective into operating landscape and risks, costs and opportunities. Often these pieces of data exist across disparate offices, departments and databases, with duplicates raising the question of which version is most current and accurate. A centralized corporate record helps GCs navigate this landscape by creating a "single source of truth."
A centralized corporate record is a single system that stores data and information for tax, legal, finance and compliance business units. Additionally, it consolidates all the forms, documents and data for a corporation's subsidiaries. Think operating licenses, corporate registrations, signing authorities and other vital information.
Using a single source of truth, GCs and their legal departments have relevant data in one place, with the right controls. Consistent data collection and reporting across entities eliminates duplicates and builds trust in the data, further building a GC's confidence to serve as a strategic advisor.
"When you have a single source of truth, it makes your life so much easier if you are the chief legal or compliance officer."
-Samantha Wellington, SVP, Chief Legal Officer and Secretary, TriNet
The Time-Saving Value of Entity Management SoftwareA centralized corporate record delivered through entity management software further supports GCs in their evolving strategic role. By automating and streamlining compliance and governance processes, entity management software reduces manual labor and cycle time for the legal team'and frees up a GC's time for higher-level tasks like serving as a strategic advisor to the board and CEO.
"You're using your time in a more optimal way that enables you to cast your attention to higher-value elements."
-Samantha Wellington, SVP, Chief Legal Officer and Secretary, TriNetFor the forward-looking GC, time devoted to strategy is time well spent. When Gartner surveyed 97 GCs from around the world earlier this year, respondents reported that:
- Effective GCs spend 48% more time on strategy and 43% more time offering business guidance
- Effective GCs are 51% better at executing corporate initiatives and 50% better at identifying emerging risks
- Understanding business partner challenges improves GC performance by 39%
Sharper, Swifter Guidance on M&A Opportunities
"Post-COVID, we reasonably expect a once-in-a-generation sea change in the market landscape and potential target companies that come available,' one acquirer told Harvard Business Review.
GCs equipped with full visibility of their corporate structure can advise their companies throughout the M&A process, from opportunity evaluation through post-merger integration.
Take, for example, due diligence. Each M&A opportunity starts with an intensive review of corporate records, stockholder information, litigation history, financial information and more. The COVID-19 crisis has amplified concerns such as supply chain security and crisis-related termination rights which previously were considered low priority.
"Diligencing a company without a centralized system is incredibly difficult."
-Samantha Wellington, SVP, Chief Legal Officer and Secretary, TriNetWith a centralized record and entity management system, GCs are able to quickly access information across hundreds, even thousands, of data points and see how a potential acquisition fits into the broader picture. They can thoroughly advise how an acquisition affects their company's legal standing, operations, finance and compliance—and spot red flags well ahead of time.
Greater Visibility for Market ExpansionNew jurisdictions mean new rules and requirements, and they introduce a host of questions:
- What are the legal and regulatory costs of entering a new jurisdiction?
- How would the company's compliance obligations change?
- Would it be more advantageous to establish a new legal entity in this jurisdiction or enlist a local partner to act as the company of record?
A centralized corporate record and robust entity management system helps GCs answer these questions. Not only does it put all the relevant data in one place with the right controls, but it provides for good governance practices—for example, building policies, measurement and reporting systems; assessing risk; and assigning ownership and accountability. This empowers GCs to proactively advise on opportunities for organic growth and ensure more confident, efficient compliance when the company does decide to expand into a new jurisdiction.
Over time, an entity management solution enables a GC and legal department to:
- Standardize data collection and reporting
- Complete applications and reporting faster and more accurately, with less stress
- Reduce manual labor and cycle time
- Fuel good governance practices across jurisdictions and business units
This empowers GCs to help their companies be more agile in the face of change and more strategic when growing sustainably into the future'and to claim their own seat at the table where these strategic decisions are being made. Instead of heading up the 'Department of 'No,'' GCs can now lead the 'Department of 'Yes, and Here's How.''
A single source of truth is critical to any strategic growth initiative. See why in our free white paper, "Driving Strategic Growth with a Centralized Corporate Record."