The role of the general counsel is changing. It has evolved from a standard legal standpoint to a more business-active role. At Advanced Energy, a global leader in reliable power conversion solutions, Tom McGimpsey handles the positions of general counsel and executive vice president of corporate development with caution and clear communication.
What are the three major trends you see in the changing role of the general counsel?
Providing a legal answer today isn’t enough; you have to provide the business with several solutions. They have to be clear, concise, and actionable solutions. Over the past 10–15 years, business knowledge has become critical. First, companies are looking for general counsels that have business experience, an MBA, or experience managing a functional role within the company. The second thing I have seen is that general counsels are now being considered for executive positions. In May 2010, the ABA did an article and noted that nine of the Fortune 50 CEOs were actually lawyers. The third trend is international: Today, there are very few companies that can afford to be US-centric, so they are growing their products internationally. Accordingly, their businesses have to be in emerging markets. If you don’t have international experience, you’re limiting yourself in terms of the value you can add to a business that’s growing.
How does your engineering background come into play in your role as general counsel?
Having an engineering background and being knowledgeable about power electronics absolutely has helped out—no two ways about it. There isn’t a week that goes by where I’m not in a discussion with engineers or with product-marketing people, where we’re talking about our products, how we improve them, and how we protect the IP. It allows me to effectively understand the situation quicker and act more effectively. It’s allowed me to provide value faster than someone who wouldn’t have that background.
How do you balance your job requirements as legal counsel and as a business executive tasked with corporate development?
I do it very carefully and with clear communications. If I’m acting as general counsel, I make it clear to the company that I am providing legal advice, and my role is to keep the company compliant with laws and regulations. On the other hand, as the executive in charge of strategic corporate development and mergers and acquisitions, I am responsible for profitably growing the business by acquiring the right companies or assets, all in alignment with our corporate strategic plan. In my business role, and as a best practice, I engage outside counsel to provide the company with separate independent legal advice on any transaction that I am running from a business perspective. I have to be careful to make sure that the other members of management know exactly what my role is—legal or business—when I speak or present, and to not confuse the purpose of the message.
When you’re heading a project as the executive of corporate development, do you find your mind wandering into the general counsel mind-set?
My mind-set naturally gravitates to risk analysis. However, in my business role, I must look at ways to expand into new markets and grow profitably. Companies make money by accepting some reasonable level of business risk when they bring new products and services to market. No business case is perfect, and you are constantly running and rerunning financial scenarios to see if the investment will pay off. Luckily, business school training helps you bring discipline to the process so that you can critically look at a business opportunity, weigh the risks and mitigate them if possible.
Is there a downside of holding both positions?
The sheer volume of work and the speed of decision making can be challenging at times in my business role. It requires a bit more agility and speed than the role of general counsel. Legal disputes, litigation, contracts, and sorting out intellectual-property matters, for example, simply take longer. Exploring business opportunities and deal-making is more fast-paced especially when you are competing against other companies that have their sights on the same target.
Is it a good idea for people who are looking to get into those positions at a company to do something that they are familiar with product-wise?
For the most part, general counsels are being recruited from companies in similar markets. For example, if you have some background in financial services and you’re becoming general counsel for a financial-services company, you have a leg up on just about everybody. You understand the language without having it translated multiple times. I analogize it to languages and countries: if you know Spanish you’re going to operate better on the ground in Spain or other Latin countries.