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Monday, October 3, 2022

Chief Legal Officer vs. General Counsel: Determining Which One Fits Your Company’s Needs

Just about every company needs legal assistance from time to time. Smaller companies may require only the aid of an outside law firm that they hold on retainer, while mid-sized and large companies usually need in-house counsel. 

When hiring in-house legal counsel, knowing what role you need your new executive to fill can be challenging. Generally, you have two choices: a chief legal officer or general counsel. 

This article will discuss the differences between these roles and how to determine which one meets your organization’s needs.

General Counsel vs. Chief Legal Officer: What’s the Difference?

When deciding whether you need general counsel or a chief legal officer, it’s critical to understand the differences between each position.

General Counsel

A general counsel handles a company’s everyday legal needs. They’re available to answer questions concerning potential business strategies, legal actions, and general compliance. 

Typically, a general counsel acts on their own. They don’t manage a team of lawyers on the company’s staff. Instead, they’re the point person for all legal questions. If they can’t directly answer a legal question about the business, they’ll seek outside assistance from a law firm.

A general counsel will act as the company’s representative with regulatory agencies. They’ll also support company management in potential litigation and risk mitigation efforts. 

The daily responsibilities of a general counsel include:

  • Responding to internal and external legal inquiries
  • Attending monthly, quarterly, and annual executive meetings and providing input
  • Defending the company during litigation
  • Ensuring that the organization remains in compliance with laws and regulations
  • Communicating with outside regulatory agencies on behalf of the organization
  • Reviewing sales contracts or other legal documents of the organization
  • Overseeing compliance activities like establishing new locations for the company or handling the legal aspects of a company restructuring

The tasks of a general counsel will vary from one organization to another. Some smaller companies may only need a part-time general counsel. Larger businesses may need multiple general counsel associates to oversee specific functions of the company.

The average salary of a general counsel varies depending on the individual’s responsibilities, location, and company size. On average, a general counsel earns $362,490 per year.

Chief Legal Officer

A chief legal officer oversees all of the functions of a company’s legal department. Typically, companies hire a chief legal officer when multiple individuals work as counsel or compliance officers in an organization.

A chief legal officer manages the entire legal department while acting as a strategic business partner with other executives. They offer advice during crucial business decisions that impact the organization’s future strategy. 

For instance, the chief legal officer will likely play a vital role if an organization decides to go public or acquire smaller businesses. 

Key responsibilities of a chief legal officer include:

  • Managing all legal counsel within the organization
  • Advising other executives on critical strategic business decisions
  • Acting as the public-facing executive in legal matters
  • Protecting the business from potential lawsuits and litigation
  • Maintaining relationships with outside legal advisors and law firms
  • Assisting in the development of general management strategy
  • Leading corporate compliance efforts

While a general counsel acts as a legal advisor to the organization, the chief legal officer participates in strategic management decisions. They’re available to support the CEO’s vision for future business development and significant operating decisions. 

The general counsel may fill a single role separate from the executive team, but the chief legal officer bridges the gap between the legal department and the C-suite.

The average salary for a chief legal officer is $362,480, similar to that of a general counsel. However, salaries vary depending on the responsibilities of the chief legal officer and the organization’s size.

General Counsel vs. Legal Counsel

Some organizations choose to hire both general counsel and legal counsel. The general counsel typically oversees all legal counsel in a company. 

Usually, multiple legal counsel positions are necessary for businesses with operations in numerous sites, product and service offerings, and specific concerns like hiring processes and insurance mitigation.

A legal counsel focuses on one area of the business. They don’t advise executives on multiple legal concepts, but instead, they’re in charge of a narrow set of responsibilities that vary depending on company needs.

Typical responsibilities of a legal counsel include:

  • Ensuring compliance within a given area of the business
  • Maintaining communication with outside agencies and law firms 
  • Overseeing legal assistants and paralegals
  • Reviewing documentation, contracts, and legal precedents 
  • Mitigating the risk of lawsuits and legal fallout

A legal counsel usually works hand-in-hand with individual departments. For instance, they may review all sales contracts before making a final agreement with a significant customer. 

The general counsel or chief legal officer will oversee the activities of all legal counsel. They’ll assign responsibilities to the legal counsel and review outcomes to ensure a smooth process within the legal department.

On average, a legal counsel earns $119,696 per year. However, factors such as experience, qualifications, and the location and scope of their responsibilities impact salaries.

Chief Legal Officer vs. General Counsel vs. Legal Counsel: Which One Is Right for Your Company?

Deciding which legal executive is right for your company depends on the company’s needs. 

An organization seeking a strategic business partner to help develop company strategy will likely need a chief legal officer. A business that wants someone to oversee its legal department or act as an advisor may be better off with a general counsel or legal counsel.

Choosing a legal professional to handle compliance and regulatory matters is crucial to every business, and the role largely depends on the company’s needs and objectives. 

A chief legal officer is best for organizations whose future strategy requires the input of a legal expert. A general counsel is appropriate for companies whose operations are steady but need ongoing legal assistance.

Whichever role you decide on, it’s important to make sure that the legal executive’s objectives align with your company’s needs. Hire someone with the qualifications and experience necessary to impact your organization positively.

Contributed by Cowen Partners Executive Search

Cowen Partners is the nation’s executive search firm, enabling companies to harness the power of human capital to fuel their success. Cowen Partners gives our clients access to the top 1% of human capital to create opportunities that accelerate their growth and market share. With Cowen Partners, clients can grow at scale, create value, and drive results with world class talent. Our clients are both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 1000 companies or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite and include VP and director level leadership roles. With our proven processes and guaranteed results, we have successfully placed hundreds of candidates in industries including technology, healthcare, manufacturing, retail, financial services, and private equity.

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