6 ms·

What's the supposed rationale for the General Counsel reporting to the CFO in the first place? Isn't a General Counsel supposed to be "general" and not only con

by jey 13y ago

What's the supposed rationale for the General Counsel reporting to the CFO in the first place? Isn't a General Counsel supposed to be "general" and not only concerned with financial issues?

chollida1 13y ago
Just the way the corporate org chart is drawn up. Some companies have every C level executive reporting to the CEO. Some CEO's are big picture people and focus on external issues. This means that the company would usually have most functions reporting to the COO. Sometimes it just makes sense to have a group report to an executive. Consider Groupon, its largest expense is marketing so it might make sense to have the Chief Marketing officer report to the CFO. It can also make sense for financial companies to have the Counsel report to the CFO as they would be doing primarily financial related duties, like compliance. General Counsel is a special case as its a bit of an oddball case for companies where its not a core function and will often report to the COO. IT can often be like the general counsel where it's not viewed as a core function or PnL center and thus report to another C level executive like the CFO or COO.
pitnips 13y ago
There's really no good reasoning. Though many companies may do this, MOST (by far) companies do not.
ironchef 13y ago
For a lot of tech companies the primary area of responsibility of the general counsel is compliance reporting management (which is very closely aligned with CFO office). Outside of tech, there's often a lot more public policy work and critical incident management (which is why I often see them reporting through CEO outside of tech).
metaphorm 13y ago
that rationale is that obeying the law is a financial decision rather than a moral decision. if the (money) price of breaking the law is less than the profit made by breaking the law, then the CFO will decide to do it. this is THE classic example of corporate sociopathy. unfortunately its still the way a lot of companies do business.
- jrells 13y ago
  You're confusing law and morality. I think the correlation is mild.
  - metaphorm 13y ago
    i'm not confusing them at all. not all laws are moral but the decision for a company to obey or disobey a law is still necessarily a moral decision.
- Spooky23 13y ago
  It's not that simple. Running around thinking that CFO = evil sociopath is ridiculous. It's about motivation and accountability. The story in the article is a great example, I don't think the CFO thought that she was breaking the law. It was a practice that she had engaged in previously, it was vetted by a big-5 accounting firm, and benefited the employees. The CFO was widely respected in the industry -- this wasn't some flimflam person or sociopath. When your attorney works for someone else, that other party becomes the client. If you, as a CEO (or an individual) are ultimately accountable for the outcome of your decisions, you want the attorney working for YOU, so that you get unfiltered information to drive decisions.
  - metaphorm 13y ago
    my comment was a response to the question "why do some companies have the GC report to the CFO?". it was not about the company in the originally linked article, which obviously does not use this structure (and for good reason). regarding that CFO from the linked article though, the federal prosecutor seemed to believe she was a criminal, and proved it enough that a jury agreed also and she eventually served jail time. we're not mind readers so we don't know how she felt about her actions, but honestly, it kinda looks to me like she really was a low level sociopath. just because she was surrounded by people who reinforced and validated her behavior doesn't mean she was acting morally.
    - skj 13y ago
      I think this is a misuse of the word 'sociopath'. There are lots of things that are not strictly legal that we do all the time. Some of them result in in jail sentences (eg. possession of marijuana can hardly be called sociopathic).
rayiner 13y ago
Much of what a GC will do in a Silicon Valley company is support the CFO in ensuring legal compliance for finance and accounting. In this context, it can make sense for the GC to report to the CFO. In another sort of company where the legal issues might be more diverse, say a place like Wal-Mart that has complex labor and environmental issues in addition to the financial issues, this structure would be less appropriate.
- cperciva 13y ago
  Much of what a GC will do in a Silicon Valley company is support the CFO in ensuring legal compliance for finance and accounting. In this context, it can make sense for the GC to report to the CFO. I'd say the exact opposite. If the GC is spending most of his time making sure that the CFO isn't doing anything illegal, the GC needs to report to anyone other than the CFO.
  - ericd 13y ago
    Yeah - they need to work together, but it doesn't seem like the GC should be in a position where they're being judged by the person they need to be watching. That's like the ratings agencies being paid by the banks they're supposed to be regulating...
    - rosser 13y ago
      I can't imagine how that could go wrong...
ganeumann 13y ago
Often all or most administrative (read: non-revenue-generating, non-operational) functions for the company fall under the CFO--simply because the finance function is administrative but the CFO pretty much has to report to the CEO. The GC is administrative--as is HR, real estate, etc.--so they all often report to the CFO.
- gumby 13y ago
  Indeed, even in medium-sized companies I/T will often be part of the CFO's department. Fortunately I/T seems to be on it way out, though regrettably slowly.
  - odonnellryan 13y ago
    Just curious, why's that fortunate?
    - deleted 13y ago
      [deleted]
    - gumby 13y ago
      I wrote, "Fortunately I/T seems to be on it way out, though regrettably slowly." Noblethrasher and odonnellryan asked what I meant. I am referring to "I/T" as a corporate computing function within the company, a function which often hiders rather than accelerates the business. I/T typically picks technologies which are easier for I/T. Hence there's a corporate standardization on one mail system, one OS; very strict upgrade cycles etc. This kind of made sense in an earlier era when computing wasn't really integrated into the business processes -- people would be "on email" and if the icons changed an expensive "training program" had to be rolled out because the majority of working people had a passive aggressive learned helplessness towards computers. What happened is that people became more savvy and worked around I/T. First it was the PC: the appeal of the Apple II was that you could buy one, add a copy of Visicalc, plunk it down on your desk, and get work done without dealing with those assholes in I/T. I/T (this is before CIOs etc) fought back (just look at magazines like Datamation from the 1980s to see; I am not exaggerating) and took control of the PC infrastructure. Around 2000 departments would start to put in wifi access points and local file servers under secretaries' desks to just get work done. I/T again was seen as a barrier. Nowadays I/T is freaking out about "BYOD" because people wouldn't put up with the crappy company-issued blackberries etc. But it is making business more efficient and humane. You could see the nails entering the coffin for a long time, but these things take time. When I was at MIT in the 1980s I would get a laugh when I would run across a piece of literature from MIT's I/T department about the computing crucial capabilities they provided to MIT -- because they had nothing to do with the systems we depended on in the research labs which were mature and two generations beyond what I/T offered. And even now, heavily computer-intensive businesses often have disjoint departments and technologies for their customer-facing work and their internal systems (a few huge products like Oracle are rare exceptions).
einhverfr 13y ago
I would expect that the issue is that an aweful lot of work is going to be done in CFO territory in areas like accounting and securities law.
walshemj 13y ago
yes there are far more than just financial issues for a GC to deal with labor law is just one area that is in no way in the remit of the CFO - who basically is just a bean counter.

by jey 13y ago

What's the supposed rationale for the General Counsel reporting to the CFO in the first place? Isn't a General Counsel supposed to be "general" and not only concerned with financial issues?

chollida1 13y ago

Just the way the corporate org chart is drawn up. Some companies have every C level executive reporting to the CEO. Some CEO's are big picture people and focus on external issues. This means that the company would usually have most functions reporting to the COO. Sometimes it just makes sense to have a group report to an executive. Consider Groupon, its largest expense is marketing so it might make sense to have the Chief Marketing officer report to the CFO. It can also make sense for financial companies to have the Counsel report to the CFO as they would be doing primarily financial related duties, like compliance. General Counsel is a special case as its a bit of an oddball case for companies where its not a core function and will often report to the COO. IT can often be like the general counsel where it's not viewed as a core function or PnL center and thus report to another C level executive like the CFO or COO.

pitnips 13y ago

There's really no good reasoning. Though many companies may do this, MOST (by far) companies do not.

ironchef 13y ago

For a lot of tech companies the primary area of responsibility of the general counsel is compliance reporting management (which is very closely aligned with CFO office). Outside of tech, there's often a lot more public policy work and critical incident management (which is why I often see them reporting through CEO outside of tech).

metaphorm 13y ago

that rationale is that obeying the law is a financial decision rather than a moral decision. if the (money) price of breaking the law is less than the profit made by breaking the law, then the CFO will decide to do it. this is THE classic example of corporate sociopathy. unfortunately its still the way a lot of companies do business.

jrells 13y ago
You're confusing law and morality. I think the correlation is mild.
- metaphorm 13y ago
  i'm not confusing them at all. not all laws are moral but the decision for a company to obey or disobey a law is still necessarily a moral decision.
Spooky23 13y ago
It's not that simple. Running around thinking that CFO = evil sociopath is ridiculous. It's about motivation and accountability. The story in the article is a great example, I don't think the CFO thought that she was breaking the law. It was a practice that she had engaged in previously, it was vetted by a big-5 accounting firm, and benefited the employees. The CFO was widely respected in the industry -- this wasn't some flimflam person or sociopath. When your attorney works for someone else, that other party becomes the client. If you, as a CEO (or an individual) are ultimately accountable for the outcome of your decisions, you want the attorney working for YOU, so that you get unfiltered information to drive decisions.
- metaphorm 13y ago
  my comment was a response to the question "why do some companies have the GC report to the CFO?". it was not about the company in the originally linked article, which obviously does not use this structure (and for good reason). regarding that CFO from the linked article though, the federal prosecutor seemed to believe she was a criminal, and proved it enough that a jury agreed also and she eventually served jail time. we're not mind readers so we don't know how she felt about her actions, but honestly, it kinda looks to me like she really was a low level sociopath. just because she was surrounded by people who reinforced and validated her behavior doesn't mean she was acting morally.
  - skj 13y ago
    I think this is a misuse of the word 'sociopath'. There are lots of things that are not strictly legal that we do all the time. Some of them result in in jail sentences (eg. possession of marijuana can hardly be called sociopathic).

rayiner 13y ago

Much of what a GC will do in a Silicon Valley company is support the CFO in ensuring legal compliance for finance and accounting. In this context, it can make sense for the GC to report to the CFO. In another sort of company where the legal issues might be more diverse, say a place like Wal-Mart that has complex labor and environmental issues in addition to the financial issues, this structure would be less appropriate.

cperciva 13y ago
Much of what a GC will do in a Silicon Valley company is support the CFO in ensuring legal compliance for finance and accounting. In this context, it can make sense for the GC to report to the CFO. I'd say the exact opposite. If the GC is spending most of his time making sure that the CFO isn't doing anything illegal, the GC needs to report to anyone other than the CFO.
- ericd 13y ago
  Yeah - they need to work together, but it doesn't seem like the GC should be in a position where they're being judged by the person they need to be watching. That's like the ratings agencies being paid by the banks they're supposed to be regulating...
  - rosser 13y ago
    I can't imagine how that could go wrong...

ganeumann 13y ago

Often all or most administrative (read: non-revenue-generating, non-operational) functions for the company fall under the CFO--simply because the finance function is administrative but the CFO pretty much has to report to the CEO. The GC is administrative--as is HR, real estate, etc.--so they all often report to the CFO.

gumby 13y ago
Indeed, even in medium-sized companies I/T will often be part of the CFO's department. Fortunately I/T seems to be on it way out, though regrettably slowly.
- odonnellryan 13y ago
  Just curious, why's that fortunate?
  - deleted 13y ago
    [deleted]
  - gumby 13y ago
    I wrote, "Fortunately I/T seems to be on it way out, though regrettably slowly." Noblethrasher and odonnellryan asked what I meant. I am referring to "I/T" as a corporate computing function within the company, a function which often hiders rather than accelerates the business. I/T typically picks technologies which are easier for I/T. Hence there's a corporate standardization on one mail system, one OS; very strict upgrade cycles etc. This kind of made sense in an earlier era when computing wasn't really integrated into the business processes -- people would be "on email" and if the icons changed an expensive "training program" had to be rolled out because the majority of working people had a passive aggressive learned helplessness towards computers. What happened is that people became more savvy and worked around I/T. First it was the PC: the appeal of the Apple II was that you could buy one, add a copy of Visicalc, plunk it down on your desk, and get work done without dealing with those assholes in I/T. I/T (this is before CIOs etc) fought back (just look at magazines like Datamation from the 1980s to see; I am not exaggerating) and took control of the PC infrastructure. Around 2000 departments would start to put in wifi access points and local file servers under secretaries' desks to just get work done. I/T again was seen as a barrier. Nowadays I/T is freaking out about "BYOD" because people wouldn't put up with the crappy company-issued blackberries etc. But it is making business more efficient and humane. You could see the nails entering the coffin for a long time, but these things take time. When I was at MIT in the 1980s I would get a laugh when I would run across a piece of literature from MIT's I/T department about the computing crucial capabilities they provided to MIT -- because they had nothing to do with the systems we depended on in the research labs which were mature and two generations beyond what I/T offered. And even now, heavily computer-intensive businesses often have disjoint departments and technologies for their customer-facing work and their internal systems (a few huge products like Oracle are rare exceptions).

einhverfr 13y ago

I would expect that the issue is that an aweful lot of work is going to be done in CFO territory in areas like accounting and securities law.

walshemj 13y ago

yes there are far more than just financial issues for a GC to deal with labor law is just one area that is in no way in the remit of the CFO - who basically is just a bean counter.