As legal and business landscapes continue to undergo significant transformations, Chief Legal Officers (CLOs) are grappling with multifaceted challenges internally, externally, and often on a global scale. From increasing financial pressures and regulatory concerns to the often-rapid integration of new technology, CLOs in companies large and small, and across industries have a lot to navigate.
Now in its 25th consecutive year, the Association of Corporate Counsel’s 2024 Chief Legal Officers Survey (CLO Survey) offers unparalleled insights into the complexities of what CLOs are facing. Based on CLO responses spanning 20 industries and 31 countries, several key takeaways emerged.
Balancing act: Cost-cutting mandates and law firm rate hikes
CLOs are no strangers to the pressure of doing more with less. A substantial 42% of CLOs report receiving cost-cutting mandates in their legal departments over the past year. CLOs expect fewer staffing increases in 2024 compared to last year across all legal department positions, partially due to these cost-cutting mandates. Simultaneously, 58% have been impacted by law firm rate hikes, with 23% finding these increases challenging to manage. These financial pressures have prompted a strategic reassessment of resource allocation and operational efficiency.
Sleepless nights: Top concerns keeping CLOs awake
Overall survey respondents, and those from Europe, agreed that regulations, enforcement, privacy, and data security were the top two concerns keeping them up at night heading into 2024. That said, in the context of so much happening in the world, it was interesting that third on the list for CLOs in the EMEA and APAC regions was issues of talent retention and maintaining and growing their workforce, compared to only 19% of their American counterparts. Finally, while cybersecurity threats ranked third among global respondents, these managed only sixth on the list for European CLOs at 23%. As business becomes increasingly interconnected globally, seeing these nuances of what CLOs are facing in certain regions can be eye opening.
Mitigating data risks: Focus on data breach prevention
Data breaches loom large on the horizon of CLO priorities, with 34% citing them as the most significant data-related threat to mitigate in 2024. Despite this, only 9% expressed being “very confident” in their organization’s ability to counter emerging data risks. In response, 40% plan to institute new processes to bolster their defenses. With so much attention being paid to data privacy and cybersecurity protections, this persistent lack of confidence to defend against and respond to attacks remains concerning. Partially to blame may be a continually changing regulatory landscape. 33% of CLOs pointed to changing regulations and lacking a clear understanding of obligations as the biggest obstacle to their organization effectively responding to privacy, compliance, and litigation requirements.
Strategic imperatives: Operational efficiency emerges as top priority
Operational efficiency takes center stage as 40% of CLOs rank it as their department’s top strategic initiative for the coming year. “Right-sourcing” of legal services (15%) and talent management/retention (10%) follow suit. The majority (59%) have experienced an increase in workload over the past year, emphasizing the critical need for streamlined operations. In an effort to improve their department’s overall efficiency, 45% of CLOs shared that they plan to invest in new technology, a 4% increase compared to 2023. Another option identified is better internal communication, with 27% saying that greater collaboration with their organization’s operations department would improve business outcomes.
Embracing AI: A positive outlook
A noteworthy 67% of CLOs expressed optimism regarding the impact of artificial intelligence (AI) on the in-house legal profession, with European CLOs more likely to feel positive about this new technology than their American counterparts. The potential applications best suited for AI garnering the most attention among European participants are drafting documents (43%) and document analysis (26%). This contrasts with the views of their peers elsewhere in the world, where they believe the value of this technology more strongly lies in document analysis. CLOs in the information technology industry are the most positive about AI, with 77% expecting it to positively impact the in-house profession.
These key findings from 669 participants from organizations spanning 20 industries and 31 countries underscore that the role of Chief Legal Officers in 2024 is marked by a dynamic interplay of challenges, strategic priorities, and evolving responsibilities. As corporate legal departments continue to adapt, CLOs find themselves not just legal stewards, but integral advisors and business strategists of their organization’s direction, embracing technological innovation, managing risks, and shaping the future of legal leadership. Learn more about additional key findings from the 2024 ACC CLO Survey here.
Author
Veta T. Richardson
Association of Corporate Counsel, Washington D.C.
President & CEO