Even as they share the load, risk managers
will still be needed. But like in-house attorneys,
they also may have to take a broader view of their
companies, especially as risk management matures,
said Donna Epps, a Dallas-based partner with
Deloitte Financial Advisory Services.
“Those people who don’t move with it run the
risk of losing the value that they’re bringing to the
organization,” she said.
TEAMWORK BOOSTS VALUE
Successful risk managers already seek input from
across their companies as they develop risk-transfer
strategies, said John Peterson, Chicago-based co-leader of U.S. retail sales for Aon Risk Solutions.
From attorneys, risk managers can learn about a
company’s most pressing legal risks. Attorneys can
learn from risk managers about insurance policies
or other solutions that might help address those
risks, Peterson said.
“That teamwork certainly has proven to be quite
Attorneys also may help in probing the root
causes of recurring claims, added Bryan Jones, global
and Americas head of dispute advisory services for
KPMG in Dallas. To understand the changing role
of general counsel, the consulting firm surveyed in-
house lawyers worldwide in 2012 and 2014.
“General counsel want to contribute value by
not only reacting to claims but also by preventing
them,” Jones said, adding that attorneys are
less risk-averse than the images of old. “General
counsel that we interviewed recognize that there
has to be some risk-taking to run a business. Their
contribution can be to help evaluate and manage
But while in-house lawyers may be pitching in
more often, risk managers still report primarily to
CFOs, controllers and other finance executives.
According to Aon’s 2013 Risk Management Survey,
51 percent of risk management departments
reported to finance, down from 62 percent in 2009.
Nine percent reported to the general counsel,
compared to 8 percent in 2009. Highlighting greater
executive attention to risk management, 12 percent
of departments reported to CEOs, up from 6 percent
DIVERSIFY KNOWLEDGE AND SERVICES
At PubMatic, an advertising technology company
based in Redwood City, Calif., risk management has
been shared by the legal and finance departments,
according to Nadine Stocklin, the company’s general
Besides contributing her legal knowledge, she
also learns as much as she can about the company’s
Twenty years ago, the in-house lawyer might have
drafted a detailed memo warning fellow executives
to steer clear of some legal pitfall — and then
But for general counsel today, a strictly advisory
role no longer suffices. Once stereotyped as risk-averse deal-killers, attorneys are more engaged than
ever in business decisions. As a result, they are just
as likely to be managing risks as urging colleagues to
It’s a trend with implications for risk managers,
who are seeing general counsel take a more active
role in matters ranging from buying insurance to
developing crisis management plans.
“It’s been a sea change over the past couple
decades,” said Vita T. Richardson, CEO of the
Association of Corporate Counsel, an international
membership group based in Washington, D.C.
“General counsel have evolved beyond just being
looked at as someone you go to to ask for legal
The evolution is driven by several factors, boiling
down to the growing complexity of law, business
and technology, according to Richardson and other
observers. Regulations are proliferating both in the
United States and in other countries. And regulators
seem to be taking a more aggressive approach in
areas such as privacy, anti-corruption, antitrust and
Insurance policies are another area of growing
complication, according to Finley Harckham, a
shareholder with the law firm Anderson Kill in
COUNSELORS DE-CODE POLICY
While insurers and policyholders often battle
over claims, the disputes drew more attention after
Superstorm Sandy in 2012, said Harckham, who
represents policyholders. Companies learned that
buying insurance did not mean they’d be covered.
Harckham advises in-house attorneys to
scrutinize insurance contracts and bring their legal
knowledge to bear. “Lots of policies have clauses
which stack the deck in favor of the insurance
companies and against the policyholder, and it’s
important for in-house counsel to evaluate those
clauses before they end up in the insurance
policies,” Harckham said.
While the review might cause friction with risk
managers, who might feel they are being second-guessed, he said, it can help both parties by avoiding
contested claims and unforeseen exposures.
“I have seen it work well and it ought to work
well, because the lawyers can add value to what the
risk manager’s doing,” he said.
Lawyers are shifting out of purely advisory roles to play an active role
in risk management. BY JOEL BERG
RISK & INSURANCE®
• General counsel are taking on more active roles in
• The increasing complexity of law, business and
technology is driving the trend.
• Risk managers and lawyers both add to their value
by working together.
LAWYERS ARE increasingly working with — and sometimes replacing — risk managers to reduce exposures for their companies.
OCTOBER 15, 2014
“General counsel have evolved
beyond just being looked at as
someone you go to to ask for legal
— VITA T. RICHARDSON, CEO, ASSOCIATION OF