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The Hatfields and the McCoys: CCOs and GCs?

ccogcssEvery company has its share of internal politics, rivalries and tensions.  No organization is free from internal strife.  For a company to be successful, you need talented, ambitious and intelligent people.

It is hard for a company to avoid internal struggles, turf wars and competition among rivals.  It is part of the healthy energy which drives a company forward.  Occasionally, internal jockeying can be damaging to a company.  It can divert too much energy and constrain efficient company operations.  Senior management has to monitor these forces and make sure they are channeled in a collaborative way.

CCOs have a tough job.  It can be made tougher when they have a difficult relationship with the company’s general counsel.  It reminds me of two children trying to get along in the same sandbox.  They can work together to create a successful castle with all the bells and whistles or they can stick to their own corners and build their own smaller, less attractive, castles.  In a worst case scenario, the children can destroy each other’s castles in a fit of jealousy and rage.

The challenge is to harness the talents and resources of both the general counsel’s office and the CCO’s office.

There is a very important reason why the government and the compliance industry has pushed companies to separate the compliance function from the legal office in a company.  The government does not want to see a general counsel wearing two hats – as a chief legal officer and a chief compliance officer.  The reason is fairly obvious – they have two different sets of responsibilities.imagesCASYJ2PQ

The general counsel supervises the legal staff and provides critical support to the company to define the legal framework within which the company operates.  A CCO designs and implements a corporate compliance program, relying on the general counsel’s framework, to ensure that the company stays within the legal framework defined by the general counsel.

A CCO’s skill set is distinct from a general counsel’s.  It is based on understanding management and compliance tools which are necessary to promote, implement and monitor corporate compliance.  A general counsel is not typically equipped to design and implement compliance systems needed to minimize risk.

While they have separate responsibilities, the general counsel and CCO need to work together and collaborate on compliance.  They have distinct but closely related functions.  They cannot work well without each other, and they should never try to operate separately from each other.

If this basic relationship is unhealthy, a company should immediately take steps to bring the two offices together.  It is hard for general counsels to give up some of the reins to CCOs, but the benefits of collaboration have to be emphasized.

ccosandgcsEvery CEO needs to take a moment to address this issue, hopefully by bringing the parties together and underscoring a no-tolerance view for provincial fights and lack of cooperation with each other.  Those companies which are committed to ensuring success should make it clear to each party that part of an evaluation of their respective performances will hinge on cooperation and collaboration.

The importance of an effective relationship between a general counsel and a CCO is too important to leave to personalities.  Frankly, there is too much at risk.

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