Regulatory changes such as the EU General Data Protection Regulation (GDPR) are the biggest issues for Chief Legal Officers’ (CLO) for the year ahead. Responding to a survey of 1,275 CLOs across 48 countries, conducted by the Association of Corporate Counsel (ACC), 74 percent of respondents rated them as very or extremely important in the next 12 months.
As GDPR enters into force on 25 May 2018, data breaches and the protection of corporate data also continues to be a major concern. In Europe 39% rated it as extremely important in the next 12 months. The number of people affected by a data breach intensifies the spotlight on how companies – and government regulatory agencies – handle these situations.
Technology developments and their legal implications are also a top priority for 59% of the CLOs. According to the survey, respondents noted that contract, knowledge management, and information governance software have improved performance, efficiency and quality of their law departments.
Impact of Evolving Business Climate on Role of the CLO
As a result of the numerous regulatory shifts transforming the current global business climate, CLOs are increasingly involved in strategic and operational discussions at their companies. In Europe 52% of CLOs report directly to the CEO. This figure is higher worldwide (64%). Likewise, CLOs across Europe, Australia/New Zealand, and the Asia-Pacific region were more likely to say they report to the chief financial officer (CFO).
Among CLOs overall who have a direct reporting relationship with the CEO, 61% work with the CEO, executive team, and board of directors on strategic initiatives — almost double the percentage among those who do not report to the CEO. Thus, there is a rising significance given to the law department when it comes to business decisions and development of corporate strategies. Reporting to the CEO demonstrates the CLOs impact at higher levels of the organisation.
The forecasted growth of law departments, both with regards to budget and staffing, is another sign of the increasing role played by CLOs and general counsel. With regard to their overall department budget 56% expect an increase — 13 percentage points more than the past two years — and 28% plan to add in-house lawyers to their departments. Further, the legal operations function continues to expand as 47% of CLOs have at least one legal operations professional on staff.
From Pure Legal Adviser to Strategic Business Partner
In-house lawyers are continuously seeking ways to go beyond legal-as-usual, such as learning more about the business, counselling the board of directors, or involvement in strategic planning. And what’s clear from the survey’s findings is that the legal challenges of today are becoming a central element of a company’s business strategy.
It is with these challenges in mind, we see a stronger movement from the CLO being solely a legal adviser to strategic business partner. They take a broader view of the external environment — whether figuring out where to invest in-house versus where to outsource to analysing trends and developing a team of people to support their complex role.
When the CLO participates in discussions surrounding business strategy, it signals to the company’s stakeholders that decisions are made with a greater consideration for legal and regulatory risks. Looking ahead over the next five to 10 years, we expect their role in the implementation of business strategies to expand even more in professional stature and influence.
As well as being president of the ACC Europe board of directors, Christopher Murphy Ives is Vice President, Deputy General Counsel, Legal Department Chief of Staff and responsible for Global Sales, EMEA & Americas at Hewlett Packard Enterprise.