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Brave New Law: Maintaining your social licence to operate in a crisis

18 January 2024

Change is happening at an unprecedented pace in the modern age. For businesses this means the potential for increasing crisis events. As ESG is an increasing focus for companies, their shareholders, and their consumers – an aspect of a crisis which is more crucial than ever before is maintaining a social licence to operate.

The social licence to operate refers to the level of social acceptance by society and key stakeholders of a company’s ability to operate with approval from those stakeholders. It is about the social permission as well as the legal and regulatory permission to operate, and the social licence may diverge from the permissions granted by laws and regulations. This leads inevitably to situations where companies are not breaking the law per se, but have flouted what is generally viewed as acceptable behaviours.

For the General Counsel and their teams this means that an understanding of law and regulation is no longer enough to be a truly trusted advisor to the company.

In our Brave New Law session on this topic, much of the focus of conversation was on the range of issues which the General Counsel must focus on which are not specifically legal, but which have risk factors that could spiral out of control into consequences with significant legal and regulatory ramifications. What was also evident was the importance of being able to see the longer-term aspects of the situation, whilst being able to deal with immediate issues.

Given the social aspect of the social licence – the human factor is fundamental to decision making that needs to be informed by the wider picture, and understanding the need for human emotion, including humbleness when appropriate. As digitisation and artificial intelligence becomes more central to business, human competencies will become increasingly fundamental, and this will be especially evident in a crisis.

The role of the General Counsel

The role of the General Counsel is multifaceted, however the throughline is uncovering and understanding all the facts. Even outside of a crisis the modern General Counsel must prioritise the wider picture – however this is even more compelling during a crisis. This is why your talent development strategy is imperative – ensuring that you have the correct people who can manage tasks with minimal direction. One leading European General Counsel who restructured her team upon entering the role noted that her guiding principle for this was ensuring that she had built the correct team for a potential crisis, long before any crisis occurred.

In the same manner, having a broader crisis team with key roles assigned and remit understood is imperative before a crisis hits. If this hasn’t been planned, it needs to be an immediate priority as it will save time and potential risks as the crisis unfolds.

The General Counsel needs to ensure they are part of this team. This is where being viewed as a broader business partner who understands all the nuances of business risk, not just legal risk, will ensure the General Counsel is seen as a crucial part of the crisis response team.

The human factor

It could be easy to be completely reactive during a crisis, however the General Counsel and the crisis team should prioritise coming out of the crisis and look ahead to the future. Having a sense of where you want to end up will be beneficial as you align key people around current actions and messaging.

An early human response will help to minimise this risk – don’t be afraid to apologise. Have empathy and a victim centred approach, rather than corporate defensiveness. Ideally organisations should follow a ‘people first’ doctrine at such times. Even in the face of perceived provocation, you must strike an empathetic tone and consider human needs, bearing in mind how communications will impact on groups and/or individuals impacted by a crisis. 

The need to look ahead rather than just respond in the moment, will need to be informed by an understanding of where you want the organisation to be going forward. Has the crisis been the motivation for a much needed culture review? Were there leadership behaviours that needed to be addressed? The need for a human focused viewpoint is not merely emotive, but can be aligned with the need for financial stability. A crisis may mean a publicly traded company’s share price plummets – particularly if, as was the case in our fictional session scenario, doubts emerge about senior leadership.

Conversations need to be had as soon as possible as to what the role of leaders should be, particularly if they are the focus for the crisis.

For the General Counsel, given the potential for pressure being put on key personnel – keeping the Executive briefed and ensuring they clearly understand your remit regarding providing company advice will help navigate personality clashes. Also ensure there are records and clear communications around such interactions as they may be required for future investigations.

Bringing it all together

The overview lawyers have of the organisation is a major part of why you and, by extension, your team will be invaluable: have you communicated that effectively to key stakeholders prior to the crisis? Central to that is a business first mindset – that is not in contradiction to being an officer of the court, indeed in today’s environment it needs to be much more, as being complaint with law and regulations do not ensure sufficient social licence.

For individual General Counsel self awareness of your own ethics will be a defining factor to navigate the course. Two leading General Counsel recently defined this as never being afraid to go to work each day and be fired for what you believe is ethically right!


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Author: Dr Catherine McGregor

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