As David Epstein said in Range, “In a wicked world, relying upon experience from a single domain is not only limiting, it can be disastrous.” Your business's board and advisors should come from a range of backgrounds to make better decisions as well as generate solutions. Boards typically have representation from business management, business operations, finance, and investment. While many who sit on these boards are attuned to the business in terms of their duties and what the business does. The best boards are ones which members are allowed to respectfully work with and challenge one another to come up with better solutions. Many boards also face the problem that the members are too close to the business to be objective with their decision making. That is where having a broad range of backgrounds to draw upon in the boardroom is advantageous. To that end, having a legal advisor or an attorney specifically hired to advise or sit on your board is a great way to introduce that range and boost your boards processes in multiple ways.
As an Outsider to the business an attorney would not be so close the the company that their objectivity would be compromised. They also are educated to examine and work through problems in a completely different way than most business leaders. A good corporate attorney should be attuned to the risks, governance, and compliance needs of a business from a perspective most business people to not have. Business and profits exist not in the absence of risk but in the tolerance and acceptance of risk. Having a better understanding of risks can lead to better decision making, but having an understanding the envelope of how certain risks specifically interact with a business's path can take strategy and decision making to a whole new level.
It should be noted from the outset that placing your current company attorney on your board can be problematic because there could be inherent conflicts with their role acting as counsel, as well as a director. That being said, hiring an attorney who understands business and law specifically to sit on your board, or be a board advisor, as their only role is a brilliant use of flat fee legal, and or fractional general counsel attorney services.
Your Board's Role
Your company’s board generally is tasked with specific duties to help a business function and provide guidance to the management team. Most boards have these major functions:
Recruitment, supervision, retention, evaluation and compensation the company managers. Recruiting, supervising, retaining, evaluating and compensating the CEO, and other C-suite managers is probably one of the most important functions of the board of directors.
Provision of the overall direction for the organization. Boards are typically tasked with not only providing the mission, vision, and goals but also the strategic functions and direction for the company.
Establishment of policies and maintenance of a governance system and company policies. The board develops policies to guide its own actions, as well as the actions of the manager.
Fiduciary duties to protect the organization’s assets and member’s investment and interest in the company. This includes but is not limited to the company’s PPP (Property (land and other assets), Plant (equipment and facilities), and People).
The board of directors also has a monitoring and control function. This means that the board must keep informed as to what is going on within the company and communicate regularly with the management team, as well as meet regularly. Control and monitoring also means the board is in charge of the auditing process and hiring the auditor.
Each one of these areas has a legal and procedural component, as well as a need for identification and implementation of workable solutions for not only the board but the underlying business. Attorneys are aware of pitfalls in these areas as well as strategies to avoid potential problems. Great business attorneys know where law and business meets and look for workable solutions which leverage current realities with legality and proper governance. Training in the law is about thinking like an attorney, how to assess a problem given a set of facts, determining which rules are bright lines and which ones are grey, and what courses of action can be taken given the rules in place. This type of thinking is not only relevant but vital for boards, its vital to strategic action and direction.
Your Board Makeup
There are certain human attributes companies should have or be looking for in their board member makeup, including:
Creative problem solvers and innovators
People who are not afraid to ask hard questions and challenge assumptions
Strategic thinkers
People who provide diversity of thought from an age, gender, race, background, or educational perspective
Members who have sales experience
Members who have marketing experience, and not just digital marketing.
People who have industry experience
Members who have been through or ran successful capital-raising initiatives
Financial experience, from all areas
Leadership Experience, especially those who know how to grow and cultivate leaders
People who have experienced failures, nothing teaches better than failure
Why An Attorney?
Generally, attorneys have skills or experience in these areas from many angles, from compliance, to lawsuits, to working with employees on all sides of these issues to working as advisors to businesses navigating a whole host of issues. The experiences they could draw from are broad and they could be invaluable to a board as members or advisors.
Currently, there are existing services to help businesses find board members and/or advisors to assist in the navigation of complex problems which today’s marketplace presents. These services typically are arranged by hourly rates for the experts with a depth of knowledge in one specific area brought in as advisors. But this model desperately needs to go by the wayside. Boards may need to consult with an expert here and there, but for day to day operations management needs breadth as well as some depth, and it needs something predictable from a budgetary perspective. If your company is in crisis mode and in need of guidance by a board member or advisor watching a clock for pay should be the last thing on anybody’s mind. Also, for quick questions which could avert bigger problems, nobody should hesitate to pick up a phone for fear of getting charged by the minute. Flat fee services are the only answer for this.
How Would This Be Different To Inside Counsel?
The role of inside counsel has been that of day to day advice as well as the drafting and review of legal documents and working through legal issues with and for a company's management team. This trusted hand is there to help mitigate some of the day to day business risks all managers face. Inside counsel's duty is to represent the organization, not its managers or the employees. The duties of confidentiality as well as the duties of the company attorney representing the business (such as informing those who you are negotiating with that they are the company's attorney and their role, especially those who do not have counsel on the phone). This role is aimed at the legal issues that arise from day to day operations of the business. With the new generation of flat fee fractional general counsel attorneys for startups and growing businesses this type of legal representation have become more common.
This would differ from using the same type of flat fee fractional services to hire an attorney FOR the board, or for a board advisory role separately and specifically. Something where the attorney’s duty isn’t that of an attorney client relationship, but as a voice with a background in law to assist in better decision making. Their role would be as a counsellor for the board, the same way management teams benefit from a general counsel attorney they would work on the strategic direction of the business and the potential ramifications from a legal perspective on company direction. They could have insight into the day to day legal issues and be able to communicate how broader movements might affect the organization. This type of relationship will also allow for better communications with the company attorney from the board in terms of execution.
The flat fee model also creates an opportunity for venture funds or investors who have an extra board seat or a contractual board advisory position. This is an ideal solution for anyone would desires oversight of investment into a business. Either in the form of an extra set of eyes, or in the form of a trained business attorney working with the board to make better decisions for the company on behalf of their client while also managing cost.
With services like Auxana businesses can now find attorneys who are not only business minded but are there to solve problems and work through issues, instead of watching the clock for billable time. Your fractional flat fee counsel doesn't have to "practice law" to be a valuable addition to any board.
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