Blog

Opinion: Breaking the ‘board barrier’

In-house attorneys are often abundantly qualified to be board members, but often they are overlooked as such

Editor’s note: In-house attorneys are often abundantly qualified to be board members, but often they are overlooked as such. In the edited letter below, John Kahle, vice president, general counsel, secretary and chief compliance officer for Kimball Electronics, a maker of electronics for many industries, wonders why this is. As with many corporate attorneys, Kahle has a financial background, which includes practicing with national and local public accounting firms. He has also served on boards of local and regional economic agencies and has two decades of experience as the director of Indiana Manufacturers Association.

Lawyers have been around the boardroom since the beginning of boards of directors. Their role has been to serve, but not serve on boards. Retired and sitting executives, CEOs, and CFOs have been the directors of choice.

According the most recent issue of Directors & Boards magazine, in the second quarter of 2016, a sampling of 108 public and private companies added 128 directors. Seventy-three percent of those appointments came from the directors’ choice group.  From legal?  A paltry one percent. It’s time to change that statistic for the simple reason that lawyers can bring a lot to the party in the boardroom.

Human nature normally dictates boards need to be facing a crisis before consulting with lawyers. That usually results in higher costs and less-than-desirable outcomes.  It would seem to make more sense to have a lawyer on a board who can make the appropriate legal and regulatory risk assessments when the strategies are being considered, not after they have been implemented and disaster has struck.

That is the traditional reason for engaging lawyers in advance and certainly applies in the boardroom, but that alone is not enough to justify placing a lawyer on a board.

John Kahle, Kimball Electronics

John Kahle, vice president, general counsel, secretary and chief compliance officer for Kimball Electronics

Lawyers must bring other skills to the boardroom if they are to succeed as directors. In my opinion, the most important skill is the ability to broaden one’s horizons beyond just the law.  A board is normally a set of very accomplished individuals with varying skills and backgrounds. They must be able to work together, develop consensus on issues and examine problems from different angles (the proverbial “thinking out of the box”).  These are not skills developed in the legal profession where a fight-to-the-death, attack your opponent, examine minute details after-the-fact mindset prevails.

Beyond a fundamental change in thinking, lawyers must bring some other skills and experiences, which include:

Strategy – ability to analyze and think critically on business strategy issues presented to the board.

Global experience – ability to see the world as an increasingly interdependent organism and how that will impact operations in the U.S. and across the world.

Exemplary ethics – a track record and reputation of simply doing the right thing.

Independence – ability to think for oneself.

Courage – ability to stand firm for principles.

Engagement – commitment to putting in time to add value to the board, and a focus on the good of the enterprise over self-interest.

Personable nature – ability to enjoy the company of fellow board members because the work involves discussing difficult issues, often under the usual stress of time and, or, consequences of a decision.

Fortunately, many of these skills are possessed by lawyers.  Issue analysis and critical thinking are things emphasized in the legal profession.  Lawyers work all over the world.  Ethics are a foundation of the legal profession.

And despite the dismal one percent statistic cited earlier, all is not lost.  There is encouraging data to support the idea of lawyer-directors. The past 15 years, the percentage of large companies with one or more attorneys at the table has increased.  One study found that, on average, companies having a lawyer on the board minimized risk-taking and increased firm value compared to those without a lawyer-director.

When all is said and done, there is really no compelling reason to exclude lawyers from boards.  They possess the skills and traits necessary to be valuable and contributing board members.  While there does appear to be a hole in the dike to allow some legal professionals to drip through to a board seat, it is far from a deluge. But if lawyers keep knocking on the door, there is good reason to believe that boards and management will eventually recognize the great value that can be added to any board by a seasoned, well-rounded lawyer.

Would you like to guest post on our blog? Contact us at [email protected]

Testimonials

As promised in advance, my feature in Vanguard has increased my visibility within the profession and prompted more than a few people I have not communicated with recently to reconnect. One of the Italian law firms I have used in the past is now in the process of interviewing me for an article on their website and tweeting out the feature story. Activity and the number of people connecting with me on LinkedIn has soared, which is great. The Vanguard writers and editorial staff were great to work with—highly professional and made the effort to make the experience both fun and rewarding (they were also respectful of the time pressures and demands all lawyers face). I was very pleased with the experience and the final outcome. Needless to say, I have been very pleased. All in all working with Vanguard has been a very positive experience which generated good publicity for both Shawcor and myself. My sincere thanks.
– Tim Hutzul, General Counsel, ShawCor Ltd.
The piece highlighting my company, Bob Baker Enterprises, Inc., came out fabulous. Our company is in the new and used car sales and service industry. Everyone was great to work with and extremely professional. They produced a high-quality product and have provided expert assistance and guidance post-production of the article.
– Wade Poulson, General Counsel, Bob Baker Enterprises Inc.
I was honored to be the subject of an article. I enjoy reading Vanguard articles and seeing how other attorneys got to their positions and see their jobs. It's also interesting to see how different law firms partner with the subjects of the articles.
– Henry Marquard, in-house counsel, Stanley Consultants Inc.
It was a great honor to be featured in Vanguard Law. Working with every member of the team, from the initial interview with Erin Clark, through production with Victor Martins, writing the article with Taryn Plumb and creating the final content with Dave Gushee, was a true pleasure. Everyone was very professional, enthusiastic and supportive, and their creative approach and positive attitude clearly came through in the final product.
– Kevin C. Rakowski, Senior Vice President, Deputy General Counsel, Compliance with Radian Group Inc.

LATEST EDITION

Summer IV 2023

READ NOW

GET VANGUARD IN YOUR INBOX.

  • * We’ll never share your email or info with anyone.
  • This field is for validation purposes and should be left unchanged.