Legal Departments Have More on Their Plates in 2023
By Tim Rollins
This blog post originally appeared on the EDRM blog on February 13, 2023 and is reprinted here for Exterro blog subscribers.
Every year, the Association of Corporate Counsel (ACC) conducts an in-depth survey of chief legal officers (CLOs) and general counsel (GC) at major US and global organizations. The 2023 ACC CLO Survey, sponsored by Exterro, the exclusive ACC Alliance Partner for E-Discovery, Data Privacy, and Cybersecurity Compliance, continues to be one of the largest surveys of CLOs and GCs in the industry, this year polling 892 respondents, spanning 20 industries and 35 countries.
While many trends have remained consistent for the past few years, this year’s survey detected some insights that in-house legal leaders should pay attention to. What are some of these big trends, and what are their implications for CLOs, GCs, and their legal departments?
CLOs Manage Growing Areas of Responsibility.
The vast majority of CLOs hold significant executive responsibilities in their organizations. Seventy-seven percent of top legal officers, a proportion that has been largely stable for several years, report directly to their CEOs, and a strong majority say they “almost always” attend board meetings and consult with fellow executives on key business issues.
For several years, CLOs have seen their responsibilities increase, as they move beyond managing legal matters and departments, gaining oversight over disciplines like regulatory compliance, cybersecurity response, risk, and privacy. At this point, at least 20% of CLOs oversee their organizations’ compliance, privacy, ethics, risk, government affairs, ESG, and cybersecurity response efforts.
Privacy, Regulatory Compliance, and Data Privacy Are Critical Business Issues.
These additional responsibilities are not minor additions to legal’s portfolio; they are business-critical issues. In the 2023 survey, respondents pegged cybersecurity, regulatory compliance, and data privacy—three areas CLOs are increasingly responsible for—as the most important issues to the business. When asked to rank 16 issues on a scale of 1 (not important) to 10 (very important), they all scored above 7.9 with nothing else ranking above a 6.5.
When asked about the top legal challenges to businesses, the results were similar. Sixty-six percent of respondents said industry-specific regulations, followed by 59% citing data protection/privacy rules, a 4% increase from last year that may well be reflective of regulatory agencies’ tendency to flex their muscles more and more frequently. CLOs don’t see that trend as likely to change, either, with two-thirds saying they expect privacy-related enforcement actions to increase in 2023, up from 60% in 2022.
Why are legal leaders the best candidates to be making key decisions in these areas? Because they have the skills, background, and mindset to weigh risks, make wise decisions, and avoid existential “bet-the-company” threats.
While Hiring Is Decreasing, Technology and Operations Offer a Path to Efficiency.
Unfortunately, despite these increasing responsibilities, legal leaders aren’t immune from larger business trends; CLOs do not expect headcount to grow significantly in 2023. When asked about hiring trends, fewer CLOs expect to increase hiring across six different position categories in their departments compared to last year. A similar trend seems to be present in the realm of outsourcing work as well, with 3% fewer CLOs planning to send more work to law firms and 2% fewer sending more work to alternative legal service providers.
But how can one reconcile increasing responsibilities with more restrictive headcounts? The only possible way to square that circle, of course, is through significant increases in efficiency using process improvements or technology. This no doubt is reflected by the fact that legal operations is the top strategic priority of 70% of respondents’ legal departments. (Interestingly enough, the next two priorities were right-sourcing legal services and cost minimization, two more euphemisms for cutting costs.) A significant minority of respondents, 41%, planned to invest in new legal technology solutions.
The fact of the matter is this: whether discussing traditional legal priorities, like e-discovery and civil litigation, or new ones, like privacy compliance and cybersecurity response, optimized processes, supported by technology, are the path to success for legal departments and their leaders.
For more insight into these trends, download the complete 2023 ACC CLO Survey today!