A Matter of Trust: What Chief Legal Officers Should Know

A value is now invaluable

Trust is a currency of commerce. That’s truer than ever today, with much of the world’s trade taking place among parties in distant locations who may never have met face-to-face. Every exchange may be viewed to some extent as an expression of trust, and the successful ones pile up like deposits in a bank account. In this way, the organization creates a nest egg to draw upon in the event—hopefully uncommon—that something goes amiss.

The nest egg is necessary because the loss of trust can be costly. We looked at three large companies hit by a trust-related scandal that led to regulatory or government intervention. Before the scandal, each of these companies had a market cap of at least $10 billion. Afterward, their market cap declined 20 % to 56 % for a combined loss in total value of roughly $70 billion.

Chief legal officers (CLOs) have always had a key role in the conscience of the enterprise, setting the course for ethics and, often, compliance. Today, as business moves faster and the CLO takes on a larger role in the strategic direction of an enterprise, trust continues to be a fundamental imperative and a growing factor in a company’s success—not only for the organization broadly, but for the CLO’s ability to be effective as a member of the senior executive team. And, while trust may be difficult to touch or see, it can be built.

Know What’s Next