CLO survey points to daunting challenges facing legal chiefs in 2023
A chief legal officer (CLO) survey finds in-house counsel is managing a higher volume and variety of work amid cost pressures; many are refocusing on legal ops and legal tech tools to help alleviate the strain.
At a glance, the top finding in the 2023 Chief Legal Officers Survey by the Association of Corporate Counsel (ACC) and Exterro is good news. The survey found chief legal officers (CLOs) continue to be viewed as business partners:
“The vast majority of CLOs now report directly to the CEO (77%), a result that has remained stable for the past five years and has seen a large increase from 64 percent reported in 2018. This percentage is higher in the US (81%) compared to those in companies outside of the US (66%).”
Indeed, there is a lot of positive news in the findings. Yet as we dug into the survey data, we also began to see some mixed blessings. Below are three reasons why.
1. CLOs are tasked with more legal work to do
As was the case with the same survey a year prior, CLOs and their legal departments are experiencing growth in work volume. For example, two-thirds (66%) of respondents said “Industry-specific regulations are the issue that most CLOs believe will cause the biggest legal challenges for their organizations.” Similarly, about six in 10 (59%) expect that data protection privacy rules will add to the workload – up from 55% last year.
Regulations for specific industries and privacy tend to be net-new matters for legal departments. New rules are put in place to deal with emerging complexity in business – and that adds to the existing workload many legal departments already managed.
2. CLOs see a wider variety of work too
The survey shows a range of business functions report to the top legal officer. As one might expect many CLOs oversee compliance (78%), privacy (51%) ethics (47%) and risk (44%) but a significant number also have purview over:
- Government affairs – 29%;
- ESG/CSR – 23%;
- Cybersecurity response – 20%; and
- HR – 18%.
Further “between ten and 15 percent of CLOs have responsibility for corporate affairs, corporate facilities, administration, environment, health, and safety (EHS), information governance, and internal audits.”
In aggregate, the survey reflects about a dozen different functions that CLOs can find reporting to them. This is an important point because it indicates it’s not just the volume of work that is growing, but the of variety work – which can spread existing resources a little too thin.
3. Pressure on headcount and outside counsel spend
Despite the growing volume and variety of work, CLOs are experiencing pressure on both internal and external resources.
For example, with respect to headcount, the survey found:
“Most legal departments expect their staffing numbers across all job categories to stay largely the same in 2023, which is consistent with previous editions of the survey, though what is significant this year is that fewer CLOs expect staffing increases across all positions. [emphasis added].”
To be sure, some CLOs do plan to do some hiring, however, the numbers are uniformly lower than last year:
- 38% plan to hire lawyers in 2023, down from 45% last year;
- 25% plan to hire paralegals in 2023, down from 29% last year; and
- 16% plan to hire privacy professionals in 2023, down from 19% last year.
The survey also showed a “slight downward trend in the number of CLOs that expect to outsource more work in 2023 compared to last year.” While “38% of CLOs expect to send more work to law firms” that number is down 3%. “Similarly, 22% expect to send more work to alternative legal service providers (ALSPs)” which is down from 24% last year.
Streamlining and automating legal processes
Our take on the survey suggests CLOs are streamlining processes by redoubling their efforts to build out legal operations teams and invest in legal tech. As ACC President & CEO Veta T. Richardson and Senior Director of Business Intelligence Blake E. Garcia, Ph.D. put it in the report’s introduction:
“This year, fewer CLOs expect to hire additional legal positions, less work is expected to be sent to outside counsel or other service providers, and most are focused on advancing legal operations and cost minimization strategies.”
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The ACC polled 892 participants “spanning 20 industries and 35 countries from” legal departments ranging from $25 million in annual revenue to more than $50 billion. The full report can be downloaded here: 2023 Chief Legal Officers Survey.