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Does Combining Legal and Secretarial Roles Reduce Risk?
Wednesday, September 25, 2024

The California General Corporation Law requires that a California corporation have a secretary. Cal. Corp. Code § 312(a)(2). The CGCL, however, says nothing about a chief legal officer. Indeed, many corporations do not have the position of chief legal officer. Those that do must decide whether to adopt a unitary model in which the same individual occupies both positions or a dual model in which different individuals occupy the positions. In a recent article, the authors explore the question of which model is riskier.

In An examination of legal risk when the Corporate Secretary is the Chief Legal Officer, the authors examined the relation between firms with a combined structure and future legal issues. The authors refer to this combined model as "CLO Duality". In various tests and settings, the authors found that CLO duality is associated with fewer incidents of shareholder litigation and lower regulatory penalties. The authors caution, however, that their ability to draw causal connections is limited. 

There is, of course, a more fundamental question of whether the position of chief legal officer or general counsel should be considered an officer position at all. For example, combining executive and legal advisory responsibilities may in some cases vitiate the attorney-client privilege. It may also engender possible conflicts of interest. Nonetheless, it has been my experience that in-house counsel often desire an officer title as an indicium of their authority.

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