26 June 2017 by Connor Simms
Organisations are increasingly splitting the general counsel and company secretary roles, says Connor Simms
A recent survey of general counsel and company secretaries within UK private and listed groups has highlighted that 68% could be classified as ‘incidental company secretaries’. In other words, company secretarial work forms a small part of a wider legal role. If you look at the data from seven years ago, when the figure was 84%, the reduction seems to indicate an emerging trend that aligns itself neatly with the increasing profile of the company secretarial profession.
For those general counsel who inherit the company secretarial role, many admit to having very limited working knowledge or experience of the company secretarial function. Within smaller listed and private groups, the work tends to cover basic statutory compliance, board support and meetings administration. Here the work is not too onerous and lawyers are generally more than happy to service the board and keep the administrative house in order as part of a wider legal role. There may be an element of learning on the job, however, most companies will provide appropriate training to ensure the right level of support.
The larger and more complex a company becomes, the more the demands on the company secretary. In these environments it is common for the general counsel to service the board, attend the main board meeting, and provide high-level legal and governance advice to help the company meet its strategic objectives. The day-to-day statutory and governance duties are typically dealt with by an accomplished deputy company secretary who, in turn, may manage a team of ICSA part and fully-qualified staff.
With governance right at the top of the UK corporate agenda, we have noticed some interesting changes. Increasingly organisations are splitting the general counsel and company secretary roles to create two distinct teams. This is particularly evident within regulated industries such as financial services.
This creates more opportunities at group level for career company secretaries and diverts the reporting line away from the general counsel towards the CEO or chairman. New issue IPOs are favouring career company secretaries, although those with legal backgrounds arguably have a slight advantage as the remit within these companies often incorporates basic legal duties.
The ratio between legal and company secretarial duties is levelling out. Lawyers are sitting up and taking notice of the career opportunity that being the company secretary brings, not least a seat at the board table. So perhaps it is not surprising there has been a noticeable increase in the number of in-house lawyers achieving ICSA qualification via the CSQS Fast Track programme, demonstrating genuine commitment and focus to the role.
The number of enquiries from private-practice lawyers actively looking to refocus their career towards an in-house company secretarial role has risen 130% in the past two years alone. However, the transition from lawyer to company secretary is not always easy. Lawyers face intense competition from ambitious career company secretaries who offer unrivalled depths of experience and a lower risk profile to their legally qualified counterparts.
In a changing market, career company secretaries should not rest on their laurels. The legal, regulatory and governance frameworks are increasingly interconnected. Dual-qualified lawyer/company secretaries present a compelling option to those companies with an increased focus on governance to provide the right balance of support without the need to split the function and increase headcount.
Many ICSA qualified companies secretaries have a law degree or equivalent. Some companies offer the opportunity to qualify as a lawyer in-house as a way of retaining top talent, something almost unheard of 10 years ago. For those aiming high, this offers some future security against a rising tide of lawyers securing the coveted number one role.
Incidental or otherwise, company secretaries continue to adapt to shifts in the market in the long-held belief that the position should be separated from, but closely aligned with, the legal function.