The Legal 500 is a proud member of the Association of Corporate Counsel Alliance, and the latest survey of chief legal officers has been released. Drawn from interviews with 1,007 participants from 20 industries across 47 countries, the CLO Survey gives a unique insight into the current state of corporate legal departments.
‘As the role continues to evolve, CLOs need to think about the future on multiple levels,’ said Veta T. Richardson, ACC president and CEO.
‘Fundamental challenges such as increasing regulations, data privacy and digital transformation are not going anywhere. But today’s most effective CLOs are also focused on being strategic business partners, navigating business and legal risks, and supporting organisations to deliver greater value to their customers.’
The key findings from the report are as follows:
The CLO’s role and reach
Four in five CLOs surveyed report directly to the CEO: A five-year high, which reflects the growing importance for CLOs to have a seat at the executive table.
Compliance and risk are the top two corporate functions that report to the CLO: Over three-quarters of CLOs surveyed oversee compliance and more than one-third are in charge of risk management.
One-third anticipate outsourcing more work to law firms next year: Although departments are pressured to do more with less and insource work, the number of CLOs expecting to outsource more work to law firms remains stable.
The legal department’s value to the business
Business leaders consult with the CLO, but there is still room to advance: While 75% of CLOs report that executives almost always look to them for input on strategic decisions and risk areas, less than half regularly attend board executive sessions.
Compliance, data privacy, and security are the most important issues for businesses: These three topics continue to top the list of most relevant issues with no change from 2019.
The CLO has a multifaceted profile: lawyer and business leader: CLOs spend on average around one-third of their time providing legal advice. The rest is dedicated to managing the department, board matters and corporate governance, contributing to strategy development, and advising executives on non-legal issues.
Leadership and business aptitudes are the most desired non-legal skills for in-house counsel: 62% of respondents expect in-house counsel to demonstrate leadership capabilities. Business management and executive presence complete the top three most desired non-legal skills.
The political and regulatory landscape
New regulations and data protection issues expected to pose the biggest legal challenges: Around six in ten CLOs believe that new industry-specific regulations and data protection and privacy rules are likely to be the cause for future legal concerns, while 36% indicated that mergers and acquisitions will also create challenges.
Companies are ready to face new regulations and mitigate emerging risks: 60% of CLOs are very or moderately confident that their organisation can keep track of changing regulations and 54% believe that they are ready to tackle new risk threats.
Regulatory compliance spend is up: 58% of CLOs indicated that expenditure on regulatory compliance increased in the last year, with accommodation and food services, wholesale trade, and finance and banking reporting the highest percentages across all industries.
Geopolitical events have limited effect on organisational decisions: Around one-third of CLOs indicated that geopolitics triggered changes in the company’s plans to enter new markets, and in insurance and employee safety policies. Overall, the impact of geopolitical events was lower compared with 2017.
The outlook for the legal department
CLOs are implementing new technologies to improve efficiency: More than half of respondents either plan to adopt a new technological solution or have already done so recently. By generation, 48% of baby boomers are keen on adopting new technology solutions compared with 56% of millennial CLOs.
Use of artificial intelligence expected to accelerate: 69% of CLOs expect the use of artificial intelligence in legal technology applications to accelerate, while just 7% believe it is a temporary trend.
Delivering value to customers is now a priority over maximising profits: 50% of CLOs ranked delivering value to customers as their organisation’s top priority over the next five years. Maximising profits came second, with 35%, and investing in employees ranked third, with 10% of CLOs identifying this as their company’s top priority.
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To view the full report, go to: acc.com/clo2020