Regulation puts the lawyers in charge

Complex and heavy regulation has many consequences. One of those is to put the lawyers in charge.

General counsels see regulation as the biggest risk facing their companies today, according to a new report.

The report, released this week by KPMG, surveyed 320 general counsels in 32 countries and provided excerpts from 16 additional interviews with the general counsels of large global organizations. It was KPMG's first survey of this kind....

The general counsels' experience dealing with regulators and identifying potential problems is, in turn, elevating the top lawyers' role within corporations, the report said. Corporations increasingly are using the GC as a "barometer" who can and should participate in overall strategic operations.

Lawyers are by their nature risk averse, company lawyers even more so. Between the "internal controls" mandates in Sarbanes-Oxley and the huge surge in regulation and liability in recent years, we are increasing the authority of lawyers within enterprises that have anything to lose. The resulting cultural change is making especially larger companies less willing to take risks. Since the taking of risk is essential to economic growth, job creation, and prosperity in general, we ought to ask whether the consequences are worth the price.