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Business Officer Magazine

The General Counsel and the CFO: Partners in Compliance

Increasing fiduciary and compliance responsibilities make collaboration between the legal and business sides of the institution essential to managing all aspects of 21st-century opportunities in higher education.

By Mary Bachinger

Both legal counsel and business officers' roles span the full spectrum of an institution's activities. This makes them critical advisors to the president and to the institution governing board according to Kathleen Curry Santora, chief executive officer of the National Association of College and University Attorneys (NACUA), and Jonathan Alger, senior vice president and general counsel for Rutgers, The State University of New Jersey, incoming president of James Madison University, and current NACUA board chair. For more of the conversation with Santora and Alger, see "NACUA Advises Compliance Collaboration" in the March 2012 issue of Business Officer.

BACHINGER: What have you seen emerge in recent years with regard to general counsel's interaction with institution governing boards?

ALGER: Certainly one of the trends that I've witnessed in board meetings is a growing sense among board members of their fiduciary responsibilities. More than ever, they need to pay attention to internal controls and the processes and policies that their institutions have in place so they can make informed decisions and execute contracts with the best interests of the institution in mind. Board members are looking to the institution's lawyers and chief financial officers for guidance and for assurance that we're paying attention to our compliance responsibilities and adhering to best practices.

SANTORA: Relatively few jobs in higher education span the full spectrum of an institution's activities. Both legal counsel and CFOs fill this role and are therefore critical advisers to the president and to institution governing boards—not only regarding what falls under their particular arenas, but also on the larger issues affecting the institution. Because their work cuts across a multitude of university interests, there is an enhanced level of reliance on these two roles.


ALGER: As recently as 10 years ago, you might not have seen a lawyer or the chief business officer attending meetings about new types of academic initiatives or programs. More often today, both are consistently at the table. Most leaders now recognize that there are legal and business aspects to virtually everything we do as an institution.

SANTORA: These two roles must collaborate on a number of naturally overlapping topics—areas like insurance coverage, risk management, and the full range of issues related to contracting and property management. Compliance-related concerns bring these two roles together repeatedly for matters related to endowment spending, personnel, IT, and purchasing, to name a few.

Because there is such a wide variety of issues over which lawyers and CFOs must remain engaged with one another, they bring a measured and objective view and analysis to projects and initiatives across the institution.

BACHINGER: What does this natural overlap signal for the relationship between higher education legal counsel and institution chief business officers?

SANTORA: Both have an ongoing responsibility to translate complex business or legal topics for campus audiences and to help others understand how these business and legal concepts relate. That ability to communicate across different campus audiences is critical.

ALGER: It is also crucial in this current climate—with the increased focus on accountability and assessment—that we present a united front when working with our presidents and governing boards, with government agencies that regulate our institutions, and with other external bodies, such as rating agencies.

For example, when we talk about increased accountability of organizations with regard to internal controls, it is important to make sure we're following best practices and dealing with the legal challenges and the business needs of the institution. Especially given the increased focus on compliance and regulation, this relationship can help the institution advance and thrive.

BACHINGER: How should this partnership reach out to other institution leaders to advance the overall mission?

ALGER: Lawyers and business officers are not separate from the academic enterprise but are fundamentally part of the success of an institution's mission. Both play an important leadership role as strategic partners and creative problem solvers.

In spite of the stereotype regarding lawyers and chief financial officers as the ones who say no, we can help our institutions get to yes by helping others think through the risks associated with institutional goals.

We are in a position to be most helpful when we're involved on the front end of major projects and initiatives so that we can help our institutions avoid potential problems. That can save an institution a lot of time, money, and reputational risk. I would place a big emphasis on the need to be at the table from the very beginning when an institution is considering new strategic initiatives. We can help identify, assess, and mitigate risks by helping think through the best approaches to emerging opportunities for higher education in the 21st century.

BACHINGER: Has that been your experience?

ALGER: I am fortunate to have a good working model at Rutgers. From the beginning, our president treated me as a full strategic partner on the leadership team, such that I'm engaged in all of the major strategic and policy initiatives facing the university.

That is the model I will look to build in my new role as president at James Madison University—lawyers and business officers should be partners in major policy and strategic initiatives from the beginning. This will maximize their value and will help the institution identify risks and think through options for managing those risks.

BACHINGER: More CFOs are entering this role from outside the industry. On which top two or three legal issues should they focus?

ALGER: There are obvious and significant differences between for-profit environments and the nonprofit higher education context. Understanding the values that are unique to the educational context can take some getting used to for some who come from other sectors. This is the No. 1 thing anyone new to higher education should understand.

This is as true for the general counsel as it is for the CFO. What is our institution's mission? The importance of values, of principles of shared governance and academic freedom, and the need to have procedures and decision-making processes in place that respect and understand those values are critical for every leadership role in higher education.

It's not simply an issue of efficiency, but also of making sure that the right people internally have been included, because sometimes the decision-making process in higher education is as important as the outcome.

MARY BACHINGER is director of tax policy at NACUBO.

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