General Counsel Report 2024 uncovers challenges facing Lleaders

FTI Consulting, Inc. (NYSE: FCN) and global legal technology company Relativity announced findings from The General Counsel Report. The study uncovered substantial changes in how global legal departments are strategising around and preparing for their biggest risks.

The report, which is based on a detailed survey and one-on-one interviews between Ari Kaplan and chief legal officers at large corporations in every major region around the world, revealed contrasting priorities throughout nearly every area of the corporate legal function, including equal enthusiasm and caution regarding technology transformation and investments in hiring amid budget constraints. Notably, 87% of participants expect risk to increase in the coming year and regulatory and global compliance challenges emerged as the number one issue for the first time in the five-year history of the report. In parallel, increases in the scope and scale of corporate risk combined with continually growing demand on legal departments contributed to declining preparedness in every risk category studied.

“Across discussions with corporate legal department leaders, there was a resounding sentiment that the past two years have been the most difficult on record, yet nearly all general counsel are bracing for additional challenges on the horizon,” said Sophie Ross, Global Chief Executive Officer of FTI Technology. “They feel underprepared in every major area of exposure, but they’re also taking significant and decisive action. Legal department leaders are setting new priorities, strategies and functions that allow them to simultaneously brace for the impact of increased regulatory and legal risk, while remaining open to growth, technology advancement and broader company leadership.”

In a series of four installments, the report will cover escalating digital risk and regulatory compliance challenges, key privacy and environmental, social and governance (“ESG”) challenges, legal department technology adoption and legal operations trends.

Key findings covered in Part One include:

• Regulatory issues dominated all other risk areas, with 30 per cent of respondents noting this is their top risk for the coming year, compared to 23 per cent who selected this category in the previous year report.
• While regulatory compliance rated number one among 30 per cent of respondents, nearly all (92 per cent) ranked it among their top five exposures. Data privacy and data protection followed, ranked in the top five by 80 per cent, and other leading issues included implications of advanced technology (55 per cent), ESG (53 per cent), increased number of disputes and investigations (50 per cent) and rising legal spend (43 per cent).
• Forty percent of all respondents said their company is following activity around renewed U.S. regulatory enforcement under “dormant” laws (e.g., Clayton Act, Robinson-Patman Act).
• Artificial intelligence was mentioned in the context of risk management by 20% of participants, whereas it wasn’t mentioned at all in previous years. One general counsel in Australia said, “I am concerned because we are not clear on its outputs and we have created a generative AI policy to create guard rails. We cannot prohibit its use because people love it, but I want to make sure there are guidelines that will not run afoul of regulations or our compliance obligations.”
• Challenges surrounding emerging data from cloud tools, collaboration platforms and chat applications jumped substantially, with 62 per cent of participants stating they had experienced new challenges across disputes, investigations, data protection, governance and compliance, up nearly 20 per cent from the prior year.
• The number of general counsel with some level of concern relating to emerging data sources rose to 93 per cent from 57 per cent in the prior year.

“Managing risk is the raison d’etre for any general counsel, and the data from The General Counsel Report are valuable for gaining insight on where chief legal officers see the leading risks facing corporations today,” said David Horrigan, Discovery Counsel and Legal Education Director at Relativity. “In the U.S., we usually see anticipation for regulatory risk to increase after a new presidential administration takes office. Regulatory risk jumping to the top concern in this off-year — leapfrogging data privacy and data protection in the process — shows the significant impact regulations are having on business today.”

Part One of The General Counsel Report 2024 is available for download here. Subsequent parts of the report will be released in early 2024.

Demographics and Methodology

In July and August 2023, Ari Kaplan personally interviewed 60 leaders serving as the general counsel or chief legal officer of their organisations. Participants were from across North America, Latin America, Europe, the Middle East and Australia, and roughly half work in organisations with more than $500 million in annual revenue.