Cops, Counsel, and Entrepreneurs: Constructing the Role of Inside Counsel in Large Corporations

Abstract

Inside counsel to major corporations have accrued more power and status within the legal profession, but continue to struggle for influence and legitimacy within the corporation. In-depth interviews with lawyers and managers in large businesses reveal that inside counsel construct different professional roles for themselves depending on circumstances. We identify three ideal types of such roles: they act as cops (limiting their advice to legal mandates), counsel (combining legal and business advice), or entrepreneurs (giving priority to business objectives rather than legal analysis). The entrepreneurial role and its associated discourse seem to mark a departure from earlier studies of inside counsel. We argue that entrepreneurial tendencies reflect the efforts of corporate counsel to adapt their images and lawyering styles to the prerogatives of contemporary management. Accordingly, inside lawyers limit their gatekeeping functions, emphasize their dedication to managerial objectives, and defer to management's judgments about legal risk. Nonetheless, inside counsel retain their professional identities as lawyers and rarely express an interest in moving into corporate management. Inside counsel are “professionals” who present themselves as enthusiastically committed to corporate objectives.

When Organizations Rule: Judicial Deference to Institutionalized Employment Structures

“…They may create special compliance offices but give officers no authority to change practices; they may charge in-house counsel with monitoring compliance but exclude them from high level organizational decision making (Stone 1975;Edelman 1990;Chambliss 1996;Edelman and Suchman 1999). In some cases, internal legal structures actually help organizations to evade legal constraints through contracts that waive legal protections, dispute resolution that undermines legal goals, and lawyers who collude with managers to put business goals above legal goals (Edelman, Erlanger, and Lande 1993;Suchman and Cahill 1996;Edelman and Suchman 1999;Nelson and Nielsen 2000).…”

“…Managerialization also occurs as organizations build discretion into rules that are designed to implement laws (Edelman, Petterson, Chambliss, and Erlanger 1991;Edelman and Suchman 1999) and when organizations create rules explicitly to evade law (Edelman 1992;Edelman and Suchman 1999;Sutton and Dobbin 1996). In-house counsel can be important players in the managerialization of law as they act as entrepreneur and strategic advisor, helping organizations to use the law to best serve their interests, rather than as cautionary checks on potentially illegal organizational actions (Rosen 1989;Suchman and Cahill 1996;Nelson and Nielsen 2000). Finally, managerialization also occurs through managerial rhetoric or new models of management that infuse legal constructs with managerial ideas.…”

General Counsel Prominence and Corporate Tax Policy

“…As business advisors, GCs are responsible for consulting the CEO on risk assessment, strategic direction, accounting decisions, and the firm's engagement in risky activities (Heineman 2010). As legal advisors, GCs advise the executive team on how to structure transactions in a manner that satisfies regulatory requirements, which reduces the possibility of scrutiny or detection by oversight bodies (Nelson and Nielsen 2000). Finally, as an agent of the firm, the GC can affect the probability and severity of legal penalties through the effectiveness of her advocacy (Heineman 2010).…”

“…From a practical standpoint, GCs advise the CEO and the executive team on strategic and operational decisions, as well as risk assessment, which influences the extent to which firms undertake risky activities (DeMott 2005;Heineman 2010). Furthermore, GCs may use their legal expertise to structure transactions to satisfy regulatory requirements, which could decrease the likelihood of detection (Nelson and Nielsen 2000;DeMott 2005). In this role as advisor, the GC can indirectly influence the daily activities of the tax director and other employees who are directly involved in the firm's tax decisions.…”

How to Stop Harassment: Professional Construction of Legal Compliance in Organizations

“…Lawyers claimed the singular ability to offer precedent-based advice that would stand up in court. Even after lawyers joined the payroll as house counsel (Leicht and Fennell 1996) they acted as consultants on individual cases and contracts-they did not design bureaucratic systems for managing legal issues (Nelson and Nielsen 2000).…”