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Why would company executives want their General Counsel to report to the CFO?
The GC reporting structure is one of the most talked about topics among in-house lawyers today. And there is no shortage of opinions on the matter. Much of the talk involves the appropriateness of the GC-CFO reporting structure as opposed to the different reasons company executives may choose this reporting structure in the first place. And while the pendulum has swung back further towards the GC-CEO report, there are company executives who still desire their CFOs to manage their legal leaders.
The default opinion for many lawyers when they encounter a scenario where the GC reports to CFO is that the executives don’t value the legal function. While this is undoubtedly true in some cases, it is not true in all of them. There are other reasons that drive the decision including:
Whether you agree with these reasons or not, the important point to take away from this is that there can be various reasons that drive executives to choose this reporting structure other than thinking that the legal department is chopped liver.
So why does understanding this matter anyway?
As you consider future GC opportunities, and if you’re not a reporting structure hard-liner, you’ll be able to better assess whether the GC-CFO report can change once you join the company. Or, whether you’ll be able to persuade the execs in the interviewing process that a CEO reporting structure is a better way to go. Or finally, you may find the reporting structure more acceptable when weighed against all the virtues of the opportunity (because of your greater understanding as to the reasons behind it). So understanding can give you more clarity as you assess the viability of future GC opportunities.
For you hard-liners out there, the company’s reasons behind GC-CFO reporting structure won’t matter one iota. Any role where the GC reports to the CFO is a non-starter. Period. End of story. Regardless of whichever end of the spectrum you sit, knowing what makes executives tick when it comes to this issue is important and valuable knowledge to have as a legal professional. Because what you may initially perceive as chopped liver could actually end up being pâté.
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