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Contra Heineman, do some CEOs mistrust high-powered law departments?

Ben Heineman, writing in Corp. Counsel, Vol. 15, Nov. 2008 at 92, asks “Are the CEOs in large and medium-size international companies … willing to invest in in-house legal departments?” He views global, specialized and sophisticated legal departments with high-quality lawyers – sort of like he viewed General Electric’s department, come to think of it – as admirable counterweights to the globe-straddling, huge and powerful law firms.

My hunch, despite having spent 20 years advocating for law departments, is that CEOs do not want the legal department to be too much of a powerhouse. It has its place and that place is not to control the company. Law serves business, it does not lead it, and like all staff units it responds to and supports business decisions. GE did not reach greatness because of its legal talent, nor has its recent slump been due to inadequate legal guidance.

In terms of commercial success, the market is bigger than the law, so to speak, and CEOs who bother to think about the legal function probably want competent lawyers but not super-stars who have pretensions of being better business minds than their clients.

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