How GCs Can Leverage Legal Expertise to Create Strategic Value for the C-Suite

General counsel play a critical role in protecting a company’s value, yet the legal departments they lead are often overlooked as drivers of strategic value creation. We know that general counsel can strengthen corporate governance, reduce credit risk, and prevent insider trading. Meanwhile, corporate areas under their oversight—from document management systems to portfolio compliance—can be transformed into strategic assets. General counsel can embed legal insight into core business strategy, serving not just as guardians of risk, but also as trusted advisors of the C-suite.

The Strategic Value of a Competitive Advantage

Traditionally identified in the domain of management, Michael Porter defines strategy as deliberately choosing a different set of activities that deliver a unique mix of value to the marketplace. Some refer to the “holy grail” of strategy as achieving a sustainable competitive advantage—a lasting edge that allows a company to outperform its competitors in a specific area of its operations. Most importantly, these capabilities and resources cannot be easily matched by competitors, enabling the competitive advantage to remain while competitors struggle to catch up.

Legal expertise can serve as a sustainable competitive advantage, enabling firms to unlock and capture value that might otherwise be overlooked. A sustainable competitive advantage from legal knowledge requires both executives and legal experts to collaborate closely together on important business decisions.

Close and trusting relationships between general counsel and other C-suite executives facilitate optimal decision-making so firms can take more efficient risks and lower the risk of legal liability. Conversely, executives that tell counsel to “stay in their lane,” leave significant value on the table, manage risks less effectively, and reduce the chance for close partnerships to grow.

Pathways to Strategic Value

Fulfilling the promise of strategic value from legal knowledge does not happen overnight. General counsel and other legal professionals must honestly evaluate the organization’s current attitude toward legal knowledge and take clear, proactive steps to transform the legal function into a vital strategic asset. This generally requires four key steps to make this competitive advantage a reality.

1. Secure buy-in from top management: The CEO and other key executives must be supportive of embedding legal knowledge as a central and strategic asset to the organization. This includes not only expressive support but also allocation of budget and resources to get the job done. Empowered by top management, general counsel and their allies must dismantle any law-avoidant incentives in the organization and rewrite rules to mandate compliant conduct. Eliminating attitudes that legal mandates are merely optional is a necessary precondition to ensure the company maintains minimum compliance with the law.

2. Establish processes and policies: Once buy-in is established and incentives toward rule-breaking are removed, general counsel must implement processes and policies that encourage compliant conduct. This requires building a standards-based approach to rules where all employees recognize what is expected of them and can consult objective and transparent standards from which to benchmark their conduct. A well-organized and accountable regulatory system supports these standards, ensuring they are effectively communicated and implemented across all relevant stakeholders. This bureaucracy also enables legal requirements to be integrated into organizational policies, enabling employees to appreciate not only what is illegal, but also understand how compliant conduct applies to day-to-day business realities.

3. Promote access and cooperation: With well-defined mandates supported by clear and accessible company policies, general counsel can promote collaboration and open communication between legal experts and the firm’s managers. Legal experts should be included in the early stages of key decision-making processes to avoid last-minute objections by counsel. This access also includes building cooperation between legal experts and managers so that there is mutual appreciation for each other’s role and perspective in the decision-making process. Managers learn that legal experts have an important risk-mitigating function, and legal experts embrace ways to solve business problems instead of reflexively rejecting them on legal grounds. This creates trust and cooperation that is essential for strategic value to thrive.

4. Develop culture and mindset: After buy-in is in place, clear policies are implemented, and law-business partnerships established, the final step is to establish a culture and mentality that embrace law as a strategic asset. Management guru Peter Drucker once said that “culture eats strategy for breakfast” and building a consensus-based, clearly defined, and durable legal culture is essential for legal strategy to thrive. This culture recognizes legal knowledge as a co-equal function with other business domains, and values that knowledge as a source of strategic value. This culture is deeply ingrained enough to be sustainable over time and resilient in the face of economic, political, and other disruptions that could challenge the organization’s values. In this way, legal experts become full strategic partners, and contribute ideas and solutions that generate value for the firm in ways that rivals cannot easily match.

General counsel are the keepers of legal knowledge in the firm. General counsel who strategically deploy that knowledge can manage legal risks more effectively, better prevent misconduct before it happens, and outflank rivals when legal changes create new opportunities. Legal knowledge is one of the last great sources of untapped competitive advantage in organizations. General counsel who skillfully combine law and strategy unlock a storehouse of value creation that is easily overlooked by others.