As the demands on business leaders' performance and accountability grow, senior executives face a widening array of issues and stakeholders. Beyond their employees and clients, executives must also engage with industry regulators, media observers and the general public. However the challenge doesn't end there. The ultimate test for any business leader, executive or founder is to balance these responsibilities whilst also protecting and developing their own personal interests.
Personal planning for business leaders
In order to manage their exposure to risk, time-poor founders and senior executives need to see all sides of a multidimensional puzzle, particularly when their corporate governance and management structures are heavily focused on the company's interest. "Clients obviously understand their businesses better than we do. So while they're focusing on business horizon-scanning, we can help them on personal horizon-scanning ," says Ceri Vokes, a private client and tax lawyer based in London.
Ceri helps her clients to prepare for the future and create durable planning structures: "That will mean talking to people, understanding where their business is likely to grow, understanding who's in their family and what issues are on the horizon – whether that's children reaching 18, or business sales in the offing, or a likely divorce or fallout with a relative. What we try and do is anticipate those problems for clients and then put in place strategies to prevent those problems from occurring at all."
While they're focusing on business horizon-scanning, we can help them on personal horizon-scanning.
Common issues include assisting founders with the most tax-efficient way of exiting a company and using their capital to fund other initiatives, such as setting up foundations or investing in new businesses. Other key areas include navigating and financing a founder's departure; or drafting a prenuptial agreement to protect a company from a potential future divorce – an area that is often overlooked but can have substantial impact. Succession planning is another area that top executives and founders often fail to consider adequately – particularly in early-stage ventures – yet which can have significant impact from both a business and personal perspective in the longer term, as businesses mature.
Ann Wicks, an employment attorney in Withers' San Francisco office specialises in assisting founders. She recounts the case of a co-founder of a crypto company who sought to exit the business and donate to a foundation. This process required a severance agreement, intellectual property advice to establish the grant program, and founding documentation for the new venture. Additionally, tax advice was essential, followed by a prenuptial agreement. The founder's extended family also needed immigration advice and property services. This array of needs arose while the founder was simultaneously building and exiting multiple companies.
Strong teams and good advice
Supply chain challenges, climate change, policy shifts and digital innovation are but a few of the issues altering the commercial landscape on a near weekly basis. Whilst business leaders might be tempted to bury their heads in the sand, strong leadership is vital to steer companies through uncertainty, managing the risks to their businesses, and to themselves.
Getting the right senior team in place is therefore a top priority, says Matilde Rota, a Milan-based litigation partner who advises on regulatory, compliance and environmental and human rights risks across a wide range of sectors. "Now more than ever, I believe that a board of directors should be composed of different specialties," says Matilde. "It is really crucial to have proper diversity across the board of directors because of the different expertise that is now required for a business to move forward to be more green, for example, or in compliance with directives and local legislations."
You look at the law, you look at the guidance, and you try to thread the needle the best you can to comply with everything.
Attitudes to environmental, social and governance activities are changing rapidly, as are rules around financial misconduct and trade laws in some countries, leaving leaders with difficult decisions to make.
"The key is you always comply with the law, that's the starting point," says Ann, who regularly assists senior executives with their business decisions. "You need to consider: what does the law require? What do the regulations and case law interpreting that law require? Has there been a shift in law that needs to be taken into account? Then you look at the law, you look at the guidance, and you try to thread the needle the best you can to comply with everything while staying true to their mission and goals."
As the rules and requirements vary widely around the world, compliance is more complex for companies operating across jurisdictions, or executives who are working abroad – with Withers' global team frequently called upon to navigate cross-border issues. Ann notes that US executives operating in Europe are frequently not prepared for the stringent EU laws around data privacy; while employees travelling from Europe or Asia to roles in Silicon Valley are frequently shocked by California's labour laws, which mean anyone can be fired at any time.
Preparing for reputation protection
Beyond legislation and regulation, leaders must also manage financial and reputational risks to their business and themselves. Top executives facing accusations around financial or cultural misconduct, for example, can quickly find themselves answerable to not just investors, but also the public. "From a reputational point of view, even if there may be downturns in enforcement because of either political priority or potential deregulation or growth initiatives, there is always the risk it becomes a news story," warns Natalie Sherborn, a partner in Withers' white-collar defence and investigations team in London.
This is particularly challenging amid falling trust in institutions, driven in part by social media chatter. "There's a sense that poor behaviour continues, often with the knowledge of senior management, that is not being addressed," adds Natalie, who represents clients in relation to investigations, financial criminal matters and other serious conduct issues. "So when it does surface, it has the capacity not just to bring down the individual bad actor, but also to seriously impact the company or the institution."
Amarjit Kaur, litigation and arbitration partner in Singapore, describes a previous case when Withers was called on to advise the C-suite of a financial institution whose CEO had been dismissed for misconduct. "That's a very big gap to fill, so it's critical to have business continuity plans, which include succession plans," she says. "You need to ensure that every senior executive already has a succession plan in place, with a designated successor or, at the very least, a capable deputy. In these cases we can draw up exit and non-disclosure agreements as well as supporting leadership teams on planning their next steps. Done correctly, the organisation not only recovers from the crisis - it often emerges stronger."
Where a crisis does arise, Withers' lawyers will put together an action plan that outlines how to respond or manage the threat to operations, finances or reputation, with the aim of minimising harm and restoring operations. The team can also help to prepare for problems before they arise. "Advance preparation can be key to weathering a reputational storm ," advises Amber Melville-Brown, global head of Withers' media and reputation management team. "If you've done your homework in advance, you will have thought about all the issues that have arisen or may arise, and you will be prepared to react and respond accordingly."
Advance preparation can be key to weathering a reputational storm.
Amarjit, who advises clients on employment and crisis management issues, agrees that considering all eventualities is key to acting quickly and carefully when the time comes. "Savvy founders and business leaders have good crisis management teams in place, which include legal, external, financial advisors and PR, depending on the situation," she says. "It's absolutely crucial to have these systems and teams in place, because very often it's about how fast a response can be arrived at, and how competently and efficiently, because that makes all the difference. The companies that emerge strongest through crises are those that game-plan different scenarios in advance."
Good crisis management is about more than just a company's reputation; founders and senior executives also need to look out for their own interests. "Many businesses are now driven by the personalities in charge – so their professional and personal lives intertwine, meaning that personal reputation management is often as important as business and professional reputation management," adds Amarjit. When it comes to individuals, a good crisis management plan not only minimises damage but also helps set you up for any future ventures.
While it's tempting to ignore the uncertainties of the future, taking proactive measures to prepare for what's to come can not only reduce risks but also enable better decision making, foster growth and create new opportunities. "There are different ways of approaching uncertainties in the business, financial and crisis management worlds," Amber concludes. "But one thing is for sure: knowing the right way to respond in any given set of circumstances is absolutely essential."
The Pioneers
In our latest conversations with pioneering individuals, in partnership with the Financial Times, we explore leadership and progress with Ben Goldsmith who is championing investment in conservation, Michelle Mitchell, CEO of Cancer Research UK who shares her determination to beat the disease, and Giacomo Fanin on a new chapter for his family business, investing in technology to revolutionise food and agriculture.
Read on for insights on philanthropy and leadership in a changing world.
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