"The chief legal officer is expected to take leadership decisions"

Interview with Sabine Wadewitz, Börsenzeitung / March 3rd, 2023

Mr. Wittig, how has the job description of in-house counsel changed in recent years?

Expectations have grown; mainly due to three developments. In the past, the primary task of the legal department was to avoid legal risk, through legal advice and contract drafting. Today, active involvement in shaping the entire business is required, from processes to products - which calls for a profound understanding of the business and corporate strategy in addition to excellent legal knowledge.

What else has changed?

In the past, the cost of the legal department was whatever it was - and usually there was heavy pressure to cut costs by reducing staff. Today, the legal department is expected to manage a budget under their own responsibility. This means making decisions on what services to offer, how to increase efficiency, and how much external advice to add - make or buy.

And thirdly?

The typical work product of lawyers, even in the corporate world, was the legal brief; usually long and complicated. Today, legal technology is being used intelligently - in the company's own processes, in information procurement, in consulting, in communication and reporting, and even in self-service portals for the business units. That’s why excellent in-house today also have to have a good understanding of technology and processes.

The general counsel is increasingly being appointed as chief legal officer at board level. With what responsibility?

Excellent general counsels have always been involved in corporate decision-making, but to put it simply, I see the following difference: The general counsel is a trusted advisor to the management board - but not an active co-leader and co-decision maker. The chief legal officer, on the other hand, is expected to make joint leadership decisions on corporate management and strategy as part of the management team. The chief legal officer is primarily responsible for all legal aspects, but also has overall responsibility for leading the company.

To what extent does the position of chief legal officer go beyond the role of a traditional general counsel?

Simply put: The general counsel must provide excellent legal advice and avoid legal risks. The CLO, as a member of the senior management team or what is called the C-suite, above and beyond that is to take leadership decisions that, obviously, have to respect the legal boundaries of corporate activities, but also achieve the best possible business results. For this, it is not enough to have excellent legal expertise, but a deep understanding of the business model and the corporate strategy is also required - as well as excellent communication skills to bring all stakeholders, internal and external, along.

Which internal stakeholders does he primarily communicate and exchange with?

The task of the CLO is a true cross-sectional function in the company because every business activity is subject to the principle of legality. Accordingly, the CLO must be in constant exchange with her colleagues on the executive board, but also with the business units and corporate departments. On the supervisory board, the main contact for the CLO is often the audit committee, but as soon as the company is exposed to substantial legal risks, the entire supervisory board expects to be kept informed on an ongoing basis.

Does it make sense to make risk management the responsibility of the CLO?

In the banking sector in particular, legal risk is regarded as one of the operational risks. This makes it obvious to place the entire risk management in the hands of one person. So we see, not only in banks, that the head of the legal department reports to the chief risk officer, i.e., the CRO also acts as CLO. It is also typical to see structures where one person at the executive board level is responsible for legal, compliance and some other risk management areas, for example insurance.

Questions by: Sabine Wadewitz

Interview with Arne Wittig

Read interview in German language in Börsen-Zeitung, March 3rd, 2023:

Vom Chief Legal Officer werden Führungs­entscheidungen verlangt

Did you find this useful?