Are you an lawyer in non-public apply or within the public sector or already in home for an organization, and are contemplating or already obtained a proposal to be Chief Authorized Officer (CLO)? In that case, this text was written for you.
The Chief Authorized Officer (CLO) is the highest-ranking authorized govt in an organization, tasked with managing authorized threat, making certain compliance, overseeing company governance, and serving as a strategic enterprise accomplice to the CEO and board of administrators. In contrast to the standard Basic Counsel, whose function could also be restricted to authorized operations, the CLO performs a pivotal function in defending the corporate and guiding it ahead.
So, if you’re supplied a brand new job as CLO, it’s sensible to hunt and procure a Chief Authorized Officer employment settlement, and to barter the phrases in order that it displays that elevated standing, scope and contribution, whereas defending you from the authorized, reputational, and profession dangers inherent within the place. On this article, I stroll you thru a number of the key areas each CLO ought to take into account together with your negotiations over your govt settlement phrases.
Title and Duties: Will You Really Be C-Stage?
Your title and reporting line is just not mere formality — they outline your inside authority and exterior status. If the supply is for Chief Authorized Officer, it’s essential to be certain that your CLO settlement designates you as Chief Authorized Officer, not simply Basic Counsel. Being “Basic Counsel” with no seat on the C-suite desk could undermine your affect over company governance, technique, and threat administration. The CLO title higher displays your place as a strategic advisor. Verify you might be listed in firm supplies, governance paperwork and exterior communications as a C-suite govt.
Additional, your reporting line should go on to the CEO, not the CFO, COO, or CHRO. Something much less weakens your independence and dilutes your affect in cross-functional and board-level issues.
Negotiate readability round company secretary duties (e.g., making ready board agendas, minutes, governance charters), particularly if you’re anticipated to be the first liaison with the board or audit committee.
Scope of Position: Your Authority, Responsibility & Duties?
It’s sensible to not accept the standard “duties related to the place or as assigned by the CEO.” It’s significantly better so that you can stake out your territory with phrases in your CLO settlement that set out with readability the scope of obligations. These could embody many or many of the following:
- Industrial contracts: Do you lead negotiation and enforcement of buyer and vendor agreements?
- Compliance and inside controls: Are you chargeable for drafting and sustaining the corporate guide, inside insurance policies, code of conduct and authorized procedures?
- HR authorized help: Will your workforce deal with employment regulation, investigations, and whistleblower claims?
- Company governance: Do you function Company Secretary, with duties to the board and shareholders?
- SEC compliance and disclosure: If the corporate is public or planning an IPO, do you oversee 10-Ks, 8-Ks, proxy statements, and so forth.?
- Litigation oversight: Are you managing exterior counsel and litigation budgets?
- Oversight of M&A due diligence and integration
- Information privateness and cybersecurity regulation
- Environmental, Social, and Governance (ESG) reporting
To finest place your self for achievement, you’ll want to reinforce these obligations with requisite authority, entry, and sources. Ambiguity on scope typically results in conflicts — significantly round board reporting, ethics issues, and authority in delicate investigations. Defining your lane protects each your credibility and your job safety.
Assist for Your Operate / Constructing the Proper Authorized Staff
Because the CLO, you’d be anticipated to guide throughout numerous domains — company, industrial, IP, litigation, employment, regulatory, securities. Out of your background, a few of these will probably be in your wheelhouse, however for others you will have assist. Thus, you will need to acknowledge your strengths and decide gaps in your background the place you will have assist. To carry out your duties efficiently, you will have to barter for:
- Authority to recruit in-house attorneys, paralegals, and compliance officers and to construction the authorized division as wanted. In case you’re inheriting a authorized division, search settlement on reorganization or enlargement rights so that you’re not caught with a construction that received’t meet your objectives.
- An outlined authorized price range for out of doors counsel.
- Entry to authorized tech platforms for contract lifecycle administration, e-discovery, and compliance.
In your settlement, search commitments on headcount, hiring autonomy, and authorized ops price range, so that you’re not held chargeable for dangers with out the instruments to handle them.
Conflicts of Curiosity, Together with Transition from Non-public Observe
In case you are shifting from one in-house place to a different, then you will have to honor fiduciary duties and enforceable restrictive covenants owed to your previous employer. In case you do have such covenants, it is crucial that these be totally disclosed and acknowledged by your new employer in your new CLO settlement.
Probably greater points come up over conflicts of curiosity if you’re becoming a member of from non-public apply. In that case you need to pay attention to moral obligations, shopper conflicts, and lingering fiduciary duties, together with:
- Consumer conflicts: Do you might want to disengage from sure shoppers on account of aggressive points?
- Non-solicits or non-competes: Are you barred from hiring employees or bringing shoppers with you?
- Persevering with obligations: Do you owe duties to your former agency, together with discover or winding down?
You’ll want to take into account tail insurance coverage protection or indemnity for providers carried out previous to becoming a member of the corporate if any unresolved issues carry over. Moreover, in your CLO settlement, you’ll want to embody phrases that do the next:
- Make clear that the corporate acknowledges and helps your transition,
- Embody indemnification for any third-party claims tied to your good-faith transition,
- Handle any restrictions on bringing employees or shoppers.
CLO Compensation, Termination and Severance
In taking a CLO place, you’re taking on a C-suite function, and it is best to count on, negotiate for and obtain a C-level compensation package deal.
As addressed in a number of of my different articles revealed earlier in CEOWORLD journal on C-level compensation, your govt pay package deal ought to embody a signing bonus that makes you complete to offset misplaced earnings, bonuses or fairness, plus compensates your transfer to a brand new state of affairs. It must also embody an annual bonus tied to particular, achievable metrics beneath your supervision in addition to firm efficiency. Lastly, a key component of your package deal needs to be firm fairness together with RSUs, restricted inventory, inventory choices or phantom inventory, and/or different long-term incentives.
As additionally addressed in a number of of my different articles revealed earlier in CEOWORLD journal on govt termination and severance, you wish to shield your self from political fallout and shifting floor. As a CLO, you might end up in conditions the place your skilled integrity or authority is challenged — whether or not on account of management modifications, inside politics, or shifting company priorities. That’s why it’s important to incorporate well-defined termination and severance protections in your settlement.
Your settlement must also embody reliance-based severance triggers. If the corporate reduces your duties or fails to supply the authority, sources, or departmental help promised on the outset or alters course in a means that considerably reduces your bonus alternative or devalues your fairness — successfully undermining the phrases you relied on when accepting the place — it is best to have the appropriate to resign for Good Cause and set off severance. These protections are important for preserving your independence {and professional} standing — particularly when your function is to implement the very authorized and moral requirements which will create friction contained in the group.
In conclusion, once you take a place as CLO, you’re not simply reviewing contracts or managing litigation, you’re taking on a a lot greater function. You’re a guardian of the corporate’s integrity, a strategic advisor to the CEO, and a gatekeeper for threat. Your Chief Authorized Officer employment settlement ought to mirror that accountability — and shield your profession accordingly. Earlier than accepting a brand new CLO function, work with an skilled govt employment lawyer to barter a CLO settlement that displays your stature, safeguards your profession, and allows you to do your job with independence and integrity.
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