Lawyers on Boards—Going Beyond the ‘Legal’ Label

Those who aspire to be on boards should downplay their legal credentials; the emphasis should instead be on one's skills and experience in business, management and leadership.

In recent years, the legal industry has been subjected to a host of disruptive forces that have seen a change in the way lawyers practise the law: From having to compete with new legal service providers who are non-lawyers to adopting technology in the delivery of legal services.

But lawyers are not the only ones adapting to change. Many other professions like accountants have also ventured into new and adjacent areas of opportunities such as strategy, sustainability and business consultancy services. In so doing, they have made the transition to boards of listed companies as non-executive directors a relatively easy one. Likewise, leading figures from business, politics and academia have also made this transition from their professional capacities to governing on boards.

For lawyers, however, admission to boardrooms still seems to be less of a norm and where they are welcomed, it is often limited to a legal advisory role.

Given that boards these days embrace diversity, the question is why there are not many more lawyers on boards as directors.

If one were to look at the FTSE 100 companies, only a handful have lawyers serving as non-executive directors. Anecdotally, there appears to be a negative mindset among public companies in the United Kingdom regarding lawyers serving as directors. The stereotypical lens through which lawyers are viewed is one of skilled legal experts but not necessarily able to bring business insights or offer commercial views other than presenting the applicable legal considerations and issues only. Lawyers are often perceived (unjustifiably) as presenting different sides of an argument and leaving the relevant decisions to be ultimately made by someone else.

In Germany and the United States, this throws up a very different picture: more than half of DAX 40 firms and Fortune 100 companies have lawyers on their boards.

Part of the explanation may be cultural: in the case of German companies, they tend to appoint advocates as directors as it is easy for them to go to a lawyer on the board for legal advice. In the US, where it is renowned for its highly litigious environment, coupled with the fact that many in the US attend law school before pursuing a business or in-house legal career without any intention of formally practising law in a law firm setting, lawyers are welcomed on US boards.

From an intellectual capability perspective, lawyers have the ability to be focused, concise and articulate. Those who excel at their craft have the gift of dealing with complexity, a large amount of facts and data, and make sense of it all—the proverbial ability of ‘separating the wheat from the chaff’ and having discernment of what is ‘critical in a sea of grey’. Those who lead and manage law firms certainly bring a business perspective and commercial acumen to the boards that welcome them.

Likewise, in-house lawyers who work for corporations have the exposure and experience of working closely with business in understanding financial considerations and strategic issues. The fact that in-house lawyers have risen to top business roles in US corporations validates this capability.

Powerful Perspective

One could make the case that lawyers are well-suited for boards given their clarity of thought, good judgement and gift of persuasion, contribute much to the success of boards.

Their ability to help make well-informed decisions and judgment on legal, regulatory and societal matters that face today's boards, is a value not to be ignored.

The training that lawyers receive easily provides them the courage and sensitivity to challenge a company's management on business issues that are raised to the board, not dissimilar to their ability to question the application of established paradigms and precedents in a courtroom. Done with charm and wit, this can bring a very powerful (and persuasive) perspective to boards.

While law is often criticised as ‘looking backwards’ for its heavy use of precedents, and the way law it is practised has remained largely unchanged through the annals of time; the modern commercially-minded (and successful) lawyer can, in fact, contribute to strategy and address current and future opportunities, and threats to businesses. This comes from the first-hand experience of seeing the many challenges to the legal industry and business generally.

In extolling the value of having lawyers on boards, there is also a need for chairpersons and directors to develop a greater acceptance of lawyers on their boards. Often boards look at lawyers as a ‘service on demand’—to be sought only when there is a legal issue. An argument can be made that just as accountants and finance talents are readily inducted into boards, for their financial insights, the same can be said for legally trained directors on boards to bring a governance, compliance and regulatory perspectives to a company’s board.

Perhaps the primary issue of why there are not as many lawyers on boards stems from many of them flashing their legal expert status as a qualifying ‘entry ticket’ to boards.

The key to unlocking entry to boards probably lies in the hands of lawyers and in-house general counsels. Those who aspire to be on boards should downplay their legal credentials and help directors and chairpersons to look beyond the legal label: In some respect, one needs to stop wearing the legal badge. The emphasis should instead be on one’s skills and experience in business, management and leadership.

To put it bluntly, being a good lawyer is not sufficient. One needs to go beyond that. In this regard, the transition to boards may be easier for general counsels who have been close to the board and strategic decisions of a company. Their exposure over the years helps provide insights into how boards think and the issues/concerns they resonate with. The fact that boards like Google, PayPal and Twilio have current or former general counsels on their boards validates this point.

So why aren’t there more lawyers on boards?

There is a need for lawyers to disrupt and re-invent themselves—going beyond the law. New-generation lawyers who have business acumen and financial literacy, are tech & digital-savvy, and have a view that goes beyond just the law will succeed in this transition to the board.

The future belongs to lawyers who successfully transform from being just legal advisers to individuals who can provide business insights, strategic counsel and management leadership.

They will be an asset that is welcomed on any board.

Jeffery Tan is the Group General Counsel and Chief Sustainability Officer of Jardine Cycle & Carriage, a member of the Jardines Matheson Group. He is a member of the Singapore Institute of Directors’ Advocacy & Research Committee and also serves on the board of the Singapore International Chamber of Commerce.