The relationship between chief legal officers and chief financial officers is key to risk management and growth sustenance in a company, according to “The Power Partnership: Optimizing CLO-CFO Collaboration for Business Success” report published by the Association of Corporate Counsel in partnership with global executive search, leadership advisory, and talent management firm Odgers.
The report indicated that communication is vital to building a robust CLO-CFO relationship, with 81 percent of respondents reporting that communication between legal and finance was “highly effective” per the ACC’s media release. Moreover, 85 percent of CLOs said that collaboration was key to improving organizational integrity and stability.
Meanwhile, CFOs wanted legal to be a strategic partner that spotted “offensive opportunities” spurring revenue and generating financial value, according to the ACC. CFOs favored having regular scheduled meetings about key initiatives to facilitate a pattern of information sharing and proactive strategic alignment.
Findings showed that 77 percent of CLOs are confident in CFOs’ understanding of how compliance risks can affect a company’s finances. CLOs built trust and bolstered collaboration between the legal and finance divisions by educating their finance peers on non-compliance consequences and by bringing a solution-oriented approach to concerns.
“In today’s complex and fast-moving global economy, the partnership between CLOs and CFOs is proving essential to driving sustainable business growth,” explained Veta T. Richardson, ACC president and chief executive officer, in a statement. “When finance and legal leaders collaborate, they bring complementary perspectives that help organizations unlock value, manage enterprise risk, and scale with confidence.”
Richardson noted that the effect of a strong CLO-CFO relationship was especially significant in large companies and in organizations where the CLO coordinates directly with the CEO. This highlighted “the importance of visibility, alignment, and trust across the executive team,” Richardson said.
“When financial strategy is integrated with legal foresight, organizations are better positioned to mitigate risk, seize strategic opportunities and drive sustainable growth,” said Conrad Woody, the managing partner of Odgers’ Washington branch. “As the role of the CLO evolves to include revenue enablement – through operational efficiency, proactive counsel on corporate governance, geopolitical risk, and opportunity spotting – forward thinking CFOs increasingly seek legal leaders who possess a deep understanding of the company’s financial architecture. This kind of operational fluency allows legal and finance to function as strategic partners, creating long-term enterprise value.”
“The Power Partnership: Optimizing CLO-CFO Collaboration for Business Success” report obtained feedback from CLOs through a global survey and from CFOs through interviews. The report can be accessed here.