3 Big Trends Facing Legal Departments in 2023

This blog post was originally published on February 6, 2023, on the ACEDS blog here.

If the first half of 2022 was about a return to normalcy and the consolidation of some of the pandemic-wrought changes in workplaces, the second half of the year showed that there was still plenty of potential for disruption as cyberthreats and stricter enforcement of privacy and other regulations. Given these trends, it’s no surprise that legal departments at big businesses are more concerned than ever about cybersecurity, regulatory compliance, and data privacy.

One of the most important resources documenting these trends—and offering insights into how leading legal professionals are responding to them—has been the Association of Corporate Counsel (ACC) Chief Legal Officers Survey. The 2023 Chief Legal Officers Survey report highlights what leaders of large business’s legal teams see as the big issues, priorities, initiatives, and challenges facing their organizations in the coming year. This year’s report, the result of a survey of almost 900 participants from organizations spanning 20 industries and 35 countries, representing companies with annual revenue from under $25 million to over $50 billion, is once again one of the largest surveys of CLOs conducted.

Trend #1: Legal departments are on the front line of converging business disciplines.

Legal departments are about far more than just litigation these days. CLOs are intimately involved in all the issues and decisions around running the business. Over three quarters of CLOs report directly to the CEO, and a substantial majority almost always attend board meetings, operational meetings with business leaders, and consult on key business decisions. CLOs are also gaining oversight over more corporate functions. At least 20% of CLOs oversee compliance, privacy, ethics, risk, government affairs, ESG, and cybersecurity response–up 4% from last year for the disciplines of privacy, risk, and cybersecurity response.

These changes owe a lot to the fact that core elements of privacy, cybersecurity investigations, and regulatory compliance workflows resemble tasks that legal departments have traditionally owned–namely e-discovery. To meet the requirements of these disciplines, organizations must understand what data they hold, where they hold it, preserve or dispose of it if and when required, search it for relevant information, review it, redact it, and produce it on demand. With privacy regulators increasing the frequency and severity of enforcement actions, and no sign of cybersecurity threats abating, organizations need oversight of these areas from thoughtful, risk-aware executives–namely, CLOs.

Trend #2: Legal teams continue to invest in e-discovery technology, as they bring more elements of the process in house.

E-Discovery and civil litigation have always been the bread and butter of in-house legal teams. While they may not be as trendy as some of the CLOs newer responsibilities–they do identify cybersecurity, data privacy, and regulation and compliance issues as the top three “important issues” for their businesses–they are still core elements of CLOs’ remit. E-Discovery is one of three areas, including data privacy/protection and regulatory issues, where CLOs foresee a need for additional resources.

One form this increasing investment is taking is acquiring e-discovery technology. Four percent more CLOs plan to invest in legal technology in 2023 than did in 2022, bringing the total to 11%. Although many organizations have already invested in e-discovery technology, traditionally this investment has been on the early stages of the process (namely legal holds). Independent research has shown that investment in document review technology has more than doubled, from 29% to 69%, in the last two years. Considering the proliferation of use cases for document review, like internal investigations and data subject access requests under GDPR and CCPA, as well as litigation, such investments are a straightforward way to control costs and meet regulatory requirements.

Trend #3: The tenets of legal operations–wise investment in technology and process optimization–remain critical to successful legal departments.

While legal operations (and its professional practitioners) have been a key element of legal departments for over a decade, they show no sign of fading in importance. When asked to identify their department’s top three strategic initiatives, CLOs listed legal operations as the top initiative, with 70% of respondents, followed by two other initiatives geared at increasing efficiency and meeting budgets (right-sourcing legal services and cost minimization).

Almost 60 percent of respondents have at least one legal operations professional in their department–a stable percentage over the last three years, but substantially higher than the 21% that did in 2015. Interestingly, while the percentage of departments with a legal ops professional remained stable, the number of dedicated legal ops professionals in responding departments has dropped over the last three years, from 5.9 per department in 2020 to 2.4 in the 2023 survey. The drop at companies over $1 billion in revenue is even starker, from 12.6 in 2020 to 4.9 in 2023. Perhaps these legal ops professionals are too efficient for their own good!

Dig into the complete 2023 ACC Chief Legal Officers Survey for more insights!