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Is it the right of a Board of Directors to evaluate and replace a general counsel?

An article in Corp. Bd. Mbr., Vol. 12, 2nd Quarter 2009 at 38, suggests that Boards of Directors should assess the legal talent of the general counsel and replace that top lawyer if that is necessary. A partner at a large law firm, quoted in the article, recommends that board members “pay attention to your management team’s skills too, including those of your chief legal officer.” If they are not equipped to handle the issues ahead, “you may need to find a new team.”

It is not my understanding that a Board, on its own, can unseat a general counsel (See my post of Dec. 12, 2007: Boards with 18 references.). The CEO should hire, and if necessary fire, the top legal officer. No doubt the views of key Board members shape the CEO’s decision, but they don’t supersede it (See my post of March 1, 2007: a view that the Board should select and pay the chief legal officer.).

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One response to “Is it the right of a Board of Directors to evaluate and replace a general counsel?”

  1. Deborah Vitale says:

    As an attorney and CEO of a publicly-traded company, the thought of having a Board of Directors involved in the day-to-day legal affairs of a public company is frightening and, in my opinion, downright dangerous. This does not mean that a Board of Directors should not be familiar with the performance of any and all persons performing legal work for the company, but only the CEO has the authority to retain, compensate and fire employees and outside venders, including legal counsel. I can attest to the fact that it is impossible to run a public company by committee. When a Board gets involved in the day-to-day management of the company, the Company always ends up with problems. Inasmuch as I have heavy litigation experience, perhaps I am in a situation somewhat removed from the average CEO. However, I also have extensive experience as a CEO and, in my humble opinion, the CEO needs to take charge of all aspects of an operation, especially the selection of legal counsel given the number of hours they may end up working together in this day and age! Finally, I would agree, as a matter of law, that a Board normally does not have authority to retain legal counsel. This authority normally falls to the CEO under most corporate Bylaws.