In-house statistics that stand out from 5 different legal survey reports
A survey of GCs finds that 57% say their boards have an increased appetite for risk – this post summarizes this survey and several others to curate statistics of interest to in-house legal leaders.
If 10 views are better than one, a hundred views might be better than 10. At a high level, that’s often a value proposition for conducting a survey.
It’s also one of the reasons we’ve fielded several of our own legal industry surveys and have reviewed many, many, many more. On those grounds, we’ve recently poured over five additional surveys of in-house counsel and summarized the findings below.
We’ve made it a point to highlight a statistic or two from each survey that we think will be of your interest. There are also links to the underlying report for those interested in delving further.
1. GCs say company boards have a growing tolerance for risk
Directors on company boards have more tolerance for risk, according to the 2022 Corporate Governance and Board Management Survey by Gartner, which polled 125 GCs.
One key finding that stands out is this:
- “57% of boards are increasing their risk appetite, while only 18% have lowered their risk appetite.”
The analyst firm cautions that this increases the probability of risk events occurring. This means GCs and business leaders will be contemplating the appropriateness of flagging such events for a board’s consideration.
The problem is that just 38% of organizations “use formal risk escalation triggers to decide when a risk, opportunity or other event warrants board attention.” Further, those triggers have likely changed, given the increased appetite for risk.
Gartner recommends that GCs work with the C-Suite and board to identify thresholds that would trigger an escalation of a risk event for the board’s attention.
2. More risks, new risks; same legal budget limits
In-house teams face four strategic challenges, according to a survey of 169 legal, risk and compliance professionals in the UK, EMEA and APAC regions. Those challenges are:
- 68% said managing risk appropriately;
- 60% said prioritizing large work volumes;
- 40% said achieving the first two priorities within budget limits; and
- 30% said managing “unprecedented and novel issues.”
“Astute GCs are meeting this dual-pronged challenge by ensuring that their team’s service delivery is fit-for-purpose, not gold-plated,” LOD Group CEO Tom Hartley said as cited in the Global Legal Post. “This isn’t to suggest the balancing act of mitigating risk and getting your work done is easy – it’s a tightrope that requires both legal and commercial experience to know where to focus your efforts.”
This reflects what we see in the market and hear from customers: legal departments are aiming to manage more risks – many of which are new – while also striving to control cost growth.
3. Half of corporate legal budgets are allocated to in-house resources
Corporate legal departments are “spending more internally than externally,” in 2022. The ACC polled 427 legal departments across 24 industries and 26 countries and found 54% of legal spending will be allocated to in-house resources this year.
The ACC notes smaller organizations, which it characterizes as any company with less than $1 billion in revenue, spend more on legal internally. Meanwhile, larger legal departments, those within a company with $1 billion or more in revenue, still spend most of their legal budget with outside counsel.
“Smaller organizations reported spending 57% of their total spend in-house and 43% outside on this survey. The largest organizations – those classified as those with $20 billion or more in revenue – are sending 54% of their legal budget to outside service providers and spending 46% in-house. There were also two cohorts in the middle that border on the 50% mark.”
However, this same survey has flirted with the same tipping point in prior years. So, as a benchmark, it’s extraordinary that half of legal spending will remain in-house. This brings new meaning to the notion of buying power among clients.
Read more: 2022 Law Department Management Benchmarking Report by the ACC and Major, Lindsey & Africa
4. Ethics and outside counsel selection
Winning cases might have enabled clients to turn a blind eye to ethical lapses among their law firms, but that’s changing, according to Sean West, a co-founder at Hence Technologies. The legal tech startup commissioned Coleman Parkes to interview 150 GCs in the US and UK about this topic.
“97% of corporate counsel leaders told us they would take action if they discovered a law firm they were working with did not meet their ethical or values criteria.”
And later, he colors in the statistic:
“More specifically, just under half (47%) said they would stop using the firm and move to another firm, 29% opted for asking the law firm to make improvements, without a specific timeline, and 21% would ask for similar improvements with a specific timeline. Only 3% said they would do nothing.”
It seems doing well, and doing good, aren’t mutually exclusive.
5. Legal as the keepers of ESG initiatives
“In-house legal teams are the keepers of their organizations’ ESG initiatives, with 90% of respondents reporting that the legal department leads a material portion of ESG initiatives.”
That’s according to a survey by Morrison Foerster (MoFo) in partnership with Corporate Counsel. The survey polled 79 “legal department leaders with titles including general counsel, chief legal officer, or vice president of legal to study the extent to which ESG policy and compliance development, implementation, and reporting falls to corporate legal departments.”
When the survey asked respondents to identify their top three priorities – here’s how the answer stacked up:
- 72% said diversity, equity and inclusion (DEI);
- 61% said climate change; and
- 52% said board oversight of environmental issues.
“This is a time of enormous opportunity for the role of in-house counsel to lead the ESG transformation and reshape their role beyond compliance and disclosure,” said Susan Mac Cormac, chair of Morrison Foerster’s Energy and Social Enterprise + Impact investing practices in a statement.
“This survey is showing us that companies across all industries are focusing on getting ESG disclosures and compliance right. However, as the benefits of ESG continue to grow for partners, investors, employees, and consumers, in-house counsel should lead the change in thinking about ESG, less as a box-checking exercise and more as an analytical and strategic tool for managing risk throughout their organization and driving value creation.”
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Stay tuned: we're currently putting the final touches on our next survey which we aim to publish soon. In the meantime, why not discover our previous reports.