Legal – the business partner ensuring responsibility

Responsibility and sustainability go hand in hand. Both are about long-term solutions and doing things properly – not just for the company's own sake, but also for its stakeholders and society at large. The modern legal department possesses unique competences to support the company in fulfilling its responsibility and ensuring sustainable solutions, so that strategic and commercial decisions are made with due responsibility to the company's stakeholders, objectives, and surrounding society.

Keeping pace in today's hyper-regulated society requires a diversity of competences in a company, and many of these competences are available from the legal department.

In-house legal counsels must have fundamental legal competences and be able to put them to use across different areas of law. They must continuously stay updated on new legislation, guidelines, and trends.

However, it is even more important that legal counsels can think independently and beyond merely the issue at hand, incorporating all relevant parameters in their proposals for solutions. They must possess astuteness and the ability to assess different options taking account of all relevant circumstances without being influenced by their own biased views. Proposed solutions must consider all necessary angles – legal, commercial, and practical – to properly clarify the specific topic.

Legal also has a role to play when it comes to the company's overall strategy and commercial objectives.

If, for example, Legal's focus is on delivering not only legally correct solutions but also solutions that support other departments in achieving their commercial KPIs, Legal generally takes on a more value-creating role.

If the company makes sure to include strategic risks in Legal's general work with risk assessments, the risk reporting will become more holistic. Ultimately, this provides the top management with a broader foundation for its decision-making.

And if the outcome of negotiations is measured against the achievement of commercial objectives, it will, at the same time, increase the commercial value of Legal's work.

Through the above actions, Legal can assume the role as a business partner to the rest of the business. That is taking responsibility.

The legal department must be structured in the best possible way considering the company’s needs to be able to take on this responsibility.

It’s possible to automate work processes extensively, thereby freeing up time and resources for other tasks. Legal takes responsibility by first looking inward and then reaching out to the rest of the company.

Thus, Legal becomes a partner creating strategic and commercial value for the rest of the business. And therefore, it would be an obvious choice for the top management to keep Legal close by.

Legal being close to the management and to major decisions may also have a positive impact on corporate culture. It underlines management’s focus on areas such as risk and compliance, and it can set the tone for the rest of the company. In coming years, as many companies are required to implement new ESG regulations, it may also contribute positively to the corporate culture that Legal (often in the form of the Head of Legal) is available next to the top management.

If Legal takes part in discussions of both strategic and significant operational decisions, the basis for the decisions made will not only be characterised by legal considerations but also by ethical and other relevant 'public policy' issues. The Head of Legal has a background bringing a diversified and unique voice to the decision-making table.

A legal department is good at handling conflicts and potential breaches of applicable rules or internal policies. But another of Legal’s most significant contributions to the company lies in the ability to prevent and perhaps even avoid such situations. If Legal is involved in discussions about strategy and major commercial issues before decisions are made, it will be easier for the legal counsels to help the company assess and avoid the risks related to non-compliance.

Thus, Legal's involvement in management discussions helps minimise company risks in various contexts. If Legal is not only used to cleaning up after the occurrence of a violation but is also consulted as an advisor and sparring partner in connection with significant decisions, Legal can help prevent violations. This could also have a positive impact on the company – not just in terms of compliance, but also concerning corporate culture.

It also helps to show that the company takes its obligations vis-à-vis its stakeholders, including society at large, seriously at management level.

As the leader of the legal department, the Head of Legal represents the company's compliance with both applicable legislation, internal policies, and ethical obligations. Therefore, the Head of Legal is in a good position to influence the company's culture in a direction characterised by ethics and integrity. However, this is possible only if the Head of Legal has a sufficiently influential position. A positive signal is sent to the rest of the organisation that management is committed to promoting compliance in a broad sense if Legal is represented when important strategic and other commercial decisions are made.

Legal's work with a risk-based approach can also be used to assess, understand, and navigate in relation to the interests of other stakeholders. These include customers, end-users, the environment, and the parts of the surrounding society affected by the company's activities.

In recent years, customers, end-users, and the general public have become more aware of the roles played by companies in society and of companies’ impact on local communities. Negative impacts are quickly subjected to public criticism, even if the law hasn’t been violated. The population’s moral standards have become an instrument that companies must also learn to master. In a changing society with constantly shifting trends, public judgment of certain activities may rather fast hit companies that haven’t taken sufficient preventive action.

In these times, it is therefore an even greater advantage to have Legal on board when setting the course. Decisions may have serious consequences. A risk-based approach by the legal counsel may prevent or even result in a complete avoidance of certain issues. A Head of Legal who knows the company and its stakeholders will be an important asset in discussions about strategic and commercial decisions. With Legal close to important decisions, the company sends a strong message to all its stakeholders (both internal and external) that the company focuses on both compliance-related and ethical issues as well as other legal risks.

The involvement of Legal in these types of decisions has therefore become more important in recent years – both to ensure compliance with legislation and to protect the company's reputation.

It tells a good story with great branding value about the company's interaction with society.

Even more importantly, it helps the company actually make a difference. Both in terms of regular compliance issues and the entire ESG agenda and other soft values that may have a significant impact on the society of which the company is a part.