The difficult role of General Counsel

ricsIP Draughts has been reading the independent review by Alison Levitt QC into goings-on at the Royal Institution of Chartered Surveyors. It is not pleasant reading.

As the review notes:

[it] was commissioned following the publication of a number of articles which alleged that the Royal Institution of Chartered Surveyors had tried to suppress a critical internal report into its finances and then unfairly dealt with those who had sought to explore the issue.

IP Draughts thanks Professor Richard Moorhead for drawing his attention to the review, and for his commentary on the role of lawyers in the events described in the review.

The review describes cash-flow problems, an unfavourable audit report by external auditors which was not disclosed to certain RICS committees, and the sacking of four non-executives who asked awkward questions. Alison Levitt refers to a dysfunctional organisational structure, and a management team that was engaged in a power struggle with members of the RICS Council and its committees.

Some of the descriptions of management keeping the Council in the dark and even being patronising to its members, are alarming but plausible. Over his career, IP Draughts has encountered some management teams that have seemed to treat their governance structures as an irrelevant nuisance.

All of this makes IP Draughts pause, as he is about to start a four-year term as a member of the Law Society Council. The Law Society is a representative, professional body, as is the RICS. In its favour, the Law Society has reformed its governance arrangements in recent years. He has yet to discover whether those reforms have worked.

One aspect of the RICS saga that Richard Moorhead focuses on is the role of RICS’s General Counsel. The review gives IP Draughts an impression of someone who saw their role as supporting senior management, rather than the “controlling mind” of the organisation, which Alison Levitt considered to be the Council.

Is it surprising that an in-house lawyer would consider their role as one of supporting the Chief Executive rather than the non-execs in question – people viewed as “trouble makers” who were asking difficult and inappropriate questions? IP Draughts is not remotely surprised, particularly if there is a strong-willed CEO and a weak chairman. This issue is magnified if the governance structure is unclear and not fit-for-purpose.

The review also discusses the role of a senior partner from FieldFisher, who was providing much of the advice to senior management, including advice that was rebranded as coming from the General Counsel. The General Counsel had worked at FieldFisher for several years before becoming GC.

One of Alison Levitt’s recommendations to RICS is that its General Counsel or head of legal should not be someone who previously worked at RICS’s external solicitors. This throws the spotlight on a practice that IP Draughts has come across many times before.

All of this confirms to IP Draughts how important it is for a General Counsel to have clear lines of communication with the governing body of the organisation, and to work for a CEO who respects and supports the GC’s independence.

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