Why the rise of female general counsels matters
The future of the United States banking industry will be determined by multiple factors: adaptability in responding to the technological revolution; competition from outside the regulated banking industry; the sufficiency of cybersecurity defenses; legislation, regulation and supervisory expectations; and overall reputation with customers and the broader community.
There is, however, no factor more important than promoting more women into banking’s executive ranks.
Banking needs more women executives, not because of any social or political philosophy, but because the industry must be led by the most capable individuals — those with the highest IQs and EQs, the best judgment and the deepest commitment. As a matter of incontrovertible logic, if women are not represented in executive positions in at least a rough proportion to their percentage of the population as a whole, the industry will have failed to access the best available talent. Indeed, studies have shown that more women in decision-making roles correlates with superior corporate performance.
Any banking organization will fall well behind its peers if its talent pool is circumscribed by its unconscious biases or by a reputation that discourages the most talented individuals from seeking it out as a place to develop their careers.
The one executive position at large financial institutions where women are most representative is general counsel. Today, nine of the 30 largest bank holding companies, 30%, have a female general counsel. This includes two of the five largest institutions: Stacey Friedman at JPMorgan Chase and Karen Seymour at Goldman Sachs. Additionally, such major nonbank financial institutions as AIG, Prudential and Vanguard have female general counsels.
The promotion of women to the general counsel position can serve as an important model for the financial services industry as a whole. If women can occupy this most critical, demanding and sensitive of positions, which requires interfacing with a wide variety of the financial institution’s constituencies, there is no other executive position that is “unsuited” or out of reach.
In today’s modern financial institution, the general counsel is called upon to provide advice and sound judgment to management and the board on a wide array of issues: laws and regulations that are unique in their complexity and emanate from multiple legislative bodies and regulatory authorities, regulatory relations, political issues, human resources, risk management, cybersecurity and crisis management.
In addition, the general counsel must manage both the financial institution’s legal department and its outside law firms. The internal legal department can be as large as several hundred professionals and additional support staff. A large financial institution will often use scores of outside law firms, and the general counsel must oversee these firms in terms of skill sets, soundness of advice and cost.
Moreover, the general counsel job is a true 24/7/365 position. The general counsel is constantly on call on all these matters — and more. Because a number of larger financial institutions are multinational or truly international in scope, the general counsel must be fluent not necessarily in language, but in international outlook. And the general counsel must be capable of enduring a back-breaking travel schedule to accommodate the institution’s operations.
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The general counsel’s position is also demanding because the legal department has a unique role in the risk and compliance structure of a financial institution. All larger institutions have adopted, and the regulators expect, a “three lines of defense” approach, consisting of the business lines, controls and audit. Each other segment of the institution fits, relatively neatly, into one of those lines. The legal department alone sits apart, with a vital role to play in each line.
There is no clear explanation why more women have achieved leadership positions in legal departments than in other areas of financial institutions. It does demonstrate, however, that a concerted effort to attract, retain and promote women to the highest level can be successful.
Of course, women have also achieved the most senior executive positions elsewhere in the financial services industry, including chief executive officers Beth Mooney at Key and Ellen Alemany at CIT, along with Hope Hardison, Wells Fargo’s chief administrative officer, Cathy Bessant, Bank of America’s chief technology officer, and Jane Fraser, the CEO of a major Citigroup division. At JPMorgan Chase, women in leadership roles represent almost 50% of the operating committee.
Yet, female general counsels have achieved a level of representation that is unmatched — but not for long if the industry’s future is to be secured.
H. Rodgin Cohen's BankThink post is part of a series that also features Bob Jones, the CEO of Old National Bank; Keith Mestrich, the CEO of Amalgamated Bank; Kathryn Petralia, the chief operating officer and co-founder of Kabbage; and LeeAnne Linderman, a former executive vice president at Zions Bancorp.