THE GENERAL COUNSEL REPORT 2023

Global Legal Departments

Alleviate and Respond to
Critical Pressure Points

A Joint White Paper from FTI Consulting, Inc. and Relativity

1
The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

Risk is now at the center of every conversation in the modern legal department.
Over four consecutive years of study in the annual General Counsel Report, in-house
counsel have expressed how they’ve been required to evolve and reinvent their roles.
Once seen only as risk mitigators, they have become strategic business partners and
have taken on an array of new responsibilities across a widening risk landscape.
Discussion of these changes in the general counsel’s role has been a cornerstone
throughout every edition of The General Counsel Report.

FTI Technology and Relativity engaged Ari Kaplan
Advisors to continue the annual study of in-house legal
department trends, challenges and best practices for 2023.
Between August and September of 2022, 30 chief legal
officers from a range of industries and global geographies
were interviewed about their roles. Their responses were
compared to year-over-year analysis to illustrate the
current state of the in-house legal department, how it has
changed and what general counsel are focused on for the
year ahead.
In a three-part series, The General Counsel Report 2023:
Global Legal Departments Alleviate and Respond to Critical
Pressure Points will reveal in-depth insights across hot-
button issues including:
Increasing risk, demand and uncertainty: Pressure
is increasing across nearly every legal function. One
respondent said, “The general counsel is now more of a
secretary of state for the CEO. There is a sense that a crisis
can pop up in a geopolitical way that we [hadn’t thought]
about.” More than three-quarters of respondents said they
are experiencing a strain on legal department resources,
budget and/or capacity.

Legal departments become a hub for ESG and diversity:

More than 50% of respondents ranked environmental,
social and governance (ESG) as one of their top five legal
risks. Some cited the fact that ESG is impacting the
allocation of resources and that the general counsel is
responsible for ensuring ESG coverage, consistency and
compliance across the entire organization. Many discussed
their role, successes and challenges in driving forward
diversity and other ESG-related initiatives.

Flexibility, automation and specialization have become

integral to legal department success: Participants
highlighted several ways that the Great Resignation has
affected their law departments, ranging from flexibility
and compensation to management styles and employee
engagement. More than two-thirds said their organization
has specifically considered the role of automation and
advanced technology in enabling a higher standard of
professional quality of life to alleviate capacity demands
and increase retention.

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Part 1: Demand + Risk Turn Up
the Heat on In-House Counsel
The risk landscape continues to expand in scope and intensity. Last year, we
reported that risks keeping general counsel up at night had increased in areas
including compliance, regulation and technology “modernization,” while concerns
relating to employment issues and data privacy and security remained somewhat
steady. This year, the survey identified a swath of new risks, and more respondents
listed more risk areas than in previous years.

While many respondents talked about the challenges of

responding to greater scrutiny and risks across regulatory
compliance, information security and data privacy, the
unknown factors stood out as particularly concerning in
this year’s report. As lawyers and other corporate executives
work to reinforce stability and establish predictability,
persistent uncertainties that stand to intensify regulatory,
geopolitical, social, economic and operational risks are
plaguing many leaders.
Alongside the increase in risk and uncertainty, capacity and
budgets are strained for 79% of legal departments. Demand
is increasing across nearly every legal function, with 100%
of that strained group indicating they are experiencing
increased workloads and pressure across ESG, business
strategy, risk management, crisis and breach incident
response, data privacy and compliance monitoring. And
these areas with 100% agreement were not the only areas
listed by the majority as drivers of increased demand.
“Never Enough Resources”
More than seven unique areas were unanimously agreed
upon as drivers of rising demand for legal departments.
Most general counsel agreed that working over capacity
is not uncommon for legal departments, which many
respondents attributed to the fact that the legal department
is still often treated as a cost center. As one said, “It is more
of an issue that there are never going to be enough people
to do all the work, so it will be a strategy of triage, which
has perpetual time and resource constraints.” Still, the tone
and scale of the increasing demand was different in this
year’s interviews than in years past.

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

WHERE IS DEMAND RISING FOR LEGAL DEPARTMENTS?

Compliance monitoring 100%

83.33%
Contracting 16.67%
100%
Data Privacy
62.5%
Disputes 37.5%
100%
ESG 66.67%
Evaluating new technologies / 75%
third-party providers 25%
66.67%
Governance 33.33%
Incident response 100%
(e.g. crises, data breaches, etc.)
33.33%
Internal investigations 66.67%
50%
Regulatory investigations 50%
Other business strategy and risk 100%
management activities
0% 20% 40% 60% 80% 100%

Increase Decrease

INCREASED ACTIVITY FOR LEGAL DEPARTMENTS

Antitrust investigations 6.67%

Class action litigation 26.67%

Compliance violations 10%

Contract management demands 46.67%

Data breaches 23.33%

Disputes/civil litigation 13.33%

DSARs 10%
Fraud/corruption/employee
16.67%
misconduct
Government investigations 10%

Internal investigations 23.33%

IP theft/misappropriation 16.67%

M&A activity 33.33%

New regulations/laws requiring policy
60%
refreshes/new headcount
Privacy violations and/or notifications 30%

0% 10% 20% 30% 40% 50% 60%

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

“There are never enough resources and Meanwhile, respondents reported increases in numerous
types of matters that fall on the legal department. Notably,
there are a lot of late nights.” only roughly 6% said they are not seeing increases in any of
the areas listed. Areas with the biggest upticks included:
For example, some respondents acknowledged that the
world, and in turn the demands on the legal department, are − 60% are seeing an increase in new regulations that
fundamentally changing. Another reported challenge was require policy refreshes and additional headcount.
organisations moving faster than their legal departments,
− 47% are experiencing more contract management
with one general counsel noting, “We are experiencing a
demands.
strain this year in particular because of our explosive growth
rate. There is more work, and with cyber issues and disputes, − 33% noted a rise in M&A activity.
we have needed to ask for a supplemental budget.” − 30% reported increases in privacy violations and
notifications.
Another said, “We feel a lot of pressure to keep our
headcount and budget flat, but the requirements and − 27% mentioned increases in class action litigation.
demands on services from the legal department, and their
quality, is steadily increasing. We see more cases in our case
management system for the same amount of revenue. We
see more cases in regulatory matters and in data privacy and
data protection, but the pressure by the business to keep
expenditures flat is ever-present. We do not see a decrease in
revenues, but we do see that it is harder to create them.”

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

Risk Approaches the Boiling Point

When asked about their top risks, 40% or more of general counsel discussed regulatory
change, compliance, data protection and global and/or geopolitical uncertainty as concerning
risk areas. Respondents also ranked their top five risks, with 33% listing data protection first,
followed by 23% who advised that regulatory compliance is at the top of the list and 20%
who selected data privacy. A majority (57%) included ESG issues among their top five risks.
Information and data governance also ranked high among the majority (53%).

At least 40% of general counsel expressed

concern over geopolitical uncertainty, TOP FIVE RISKS RANKED
*Reflects total percentage of respondents that ranked
global and economic instability and/or each area within their top five risks.
regulatory change.
Data privacy 70%

Data protection 80%

Other risk areas participants mentioned include
Environmental, Social, and 57%
reputational matters, shareholder lawsuits, commercial Governance (ESG)
interruptions, privacy violations, data breaches, Implications/risks/ethics/
employee movement and supply chain disturbances. compliance of advanced 27%
technology (such as AI,
“We are being disrupted by supply chain issues,” noted metaverse, blockchain, etc.)
a respondent. Another added, “Macro challenges will be Increased data volumes
the biggest risk in the next year or two; every company impacting e-discovery and 10%
other workflows
should scramble to show more profitability, and that
Increased number of
effort has a lot to do with what legal does in moving disputes/investigations
40%

from growth to profitability.” Information/ data governance 53%

Regulatory compliance 83%

In looking at year-over-year discussions of top risks and
Rising legal spend 69%
concerning issues from previous editions of The General 0% 20% 40% 60% 80% 100%
Counsel Report, a general theme of ramping pressure
is evident.

RISKS YEAR-OVER-YEAR
*As indicated by qualitative responses. Multiple responses allowed.
2021 2022 2023
Privacy, data protection, Privacy, data protection, Privacy, data protection,
security and/or data risk
65% security and/or data risk
46% security and/or data risk
56%
COVID-19 business and Compliance and Compliance and
workforce implications
19% regulations
36% regulations
40%
COVID-19 business and Uncertainty, instability
IP loss 16% 17% 40%
workforce implications and geopolitical concerns
Technology Employee and
modernization
3% employment issues
26%

ESG 20%

Supply chain 13%

“The general counsel is now more of a Social and reputational
secretary of state for the CEO; there is a sense risks
10%
that a crisis can pop up in a geopolitical way COVID-19 business and
3%
workforce implications
that we didn’t think about.” Technology
modernization
3%

IP loss 3%

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

One respondent summed up the enormity and diversity of

ARE YOU CONCERNED ABOUT THE IMPACT
challenges in saying, “The entire data privacy sector is still
OF UNSANCTIONED USES OF EMERGING DATA
an immense risk. The sanctions landscape for trade with
SOURCES WITHIN YOUR ORGANIZATION?
Russia is becoming more challenging to manage, and it
has become more common for other countries, such as
China, so it is a landscape that is evolving rapidly. We are
all seeing the triple squeeze — from inflation, attrition
and non-availability of skilled personnel, and the sluggish 43.33%
supply chain — which is directly impacting the legal No
43.33% 56.67%
department disproportionately.” No Yes
56.67%
Yes
Emerging Data Sources in the
Hot Seat
Another issue discussed was the impact of emerging
data sources on litigation, investigations, governance,
and more. Risk relating to emerging data sources such as HAS YOUR ORGANIZATION EXPERIENCED
collaboration platforms and cloud file-sharing tools, first ANY NEW CHALLENGES ASSOCIATED WITH
arose as a topic of conversation in The General Counsel EMERGING DATA SOURCES?
Report 2022, when more than one-third of general counsel
indicated high levels of concern with regard to dealing
with the explosion of emerging data. This concern
increased by more than 10 percentage points over the last
year as the data footprint has continued to expand. 44.83%
Yes
44.83%
One respondent said of this risk area, “It is a huge
55.17% Yes
discovery mess and has prompted us to look for more
No
55.17%
legal hold and Slack-related discovery tools. There is
no doubt it has caused a sprawl of enterprise data onto No
mostly insecure personal devices used for remote access.
It has caused us to change policies in terms of how to
access systems. It has also caused us to invest in new
technology to monitor.”

“There are increasing sources of data, and in a

remote environment. It is harder to understand where
those sources are…It is very hard to understand the
governance about what you control and how to contain
all of your data.”

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The State of Preparedness
Levels of legal department preparedness for the
increases in risk and demand varied widely across key
areas. Notably, feelings of preparedness to handle risks
relating to data privacy and cybersecurity increased,
while preparedness for risks relating to emerging data
sources decreased slightly. Respondents indicated they
feel reasonably prepared to respond to increased volumes
in litigation and investigations, but few expressed
confidence that their organizations are “very prepared” in
any of the critical categories.
60% of general counsel say they rely on
outside providers and/or law firms to help
manage their growing risk profile.
Given the evolving nature and growth of technology,
73% highlighted that the risks relating to AI and other
advanced tools, including the use of unsanctioned AI-based
applications, is a key threat for which most organizations
are not prepared, with almost three-quarters of the
participants rating it at a one or two out of five. “It is not
in our business DNA to deal with AI and other advanced
technologies; it is hard to be prepared if you cannot
anticipate the challenges,” explained one leader. “We
have not figured out how to address it because we are not
familiar enough with the emerging technology and the
development is far ahead of any regulation,” said another.
Moreover, 80% believe they are unprepared, or at best
minimally prepared, to handle certain advanced technology
risks, like blockchain and cryptocurrency issues. “I don’t
think in-house counsel even know what those things are;
A Joint White Paper from FTI Consulting, Inc. and Relativity
there is a lot of change happening in the cryptocurrency
sector,” said one general counsel. “There is a fear the
volatility suggests that many organizations are avoiding it,”
added another.
“The implications of advanced technology
reflect the number one threat we have over
the next 20 years. If you add quantum
computing, there is no single [entity] that
can manage this risk.”
Together with the 87% of the respondents assigning a three
or four to the level of vigilance for regulatory compliance,
10% also assigned a five, indicating that it is one of the
three areas where some respondents noted maximum
alertness. Still, the dynamism of this field makes conformity
a challenge, and many acknowledged the imperfections
associated with compliance. To that end, the numbers
suggest a greater level of cautious optimism than the
commentary, which highlights more direct concern among
the participants. “You never have enough resources or time;
we are all treading water and playing catch-up in regulatory
compliance,” advised one participant. “There is uncertainty
coming, and there are plenty of companies that are unsure
of which regulations apply to them,” added another.
This was somewhat of a resounding sentiment, with
additional commentary that, “Many companies take the
position that they are not going to track the evolution of
every bill before every state legislature. Rather, they will
wait and then determine the risks of non-compliance.
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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

LUKEWARM READINESS
On a scale from 1-5 with 1 being “not prepared at all” and 5 being “very prepared,” how prepared are companies to handle the following issues?

Not Prepared Minimally Moderately Very

Prepared
at all prepared prepared prepared

Blockchain/crypto 38% 45% 17%

Cybersecurity 7% 50% 43%

Data privacy regulation 7% 43% 50%

Emerging data sources 10% 30% 37% 23%

ESG requirements 21% 41% 31% 7%

Increased volume of disputes/ investigations 3% 23% 50% 23%

Regulatory compliance 41% 48% 10%

Risks relating to AI and other advanced technologies
including instances of known applications as well as 17% 57% 23% 3%
“shadow AI,” the use of AI-based applications not known
or sanctioned by IT

YEAR-TO-YEAR COMPARISON: RISK PREPAREDNESS

Based on weighted averages on 1-5 scale, with 1 being “not prepared at all” and 5 being “very prepared.”

2020 2021 2022 2023

Data privacy laws and regulations 4.02 3.29 3.27 3.43

Emerging data sources 3.77 3.00 2.90 2.73

Cybersecurity 3.23 2.94 2.59 3.37

AI and machine learning related tasks 2.67 2.10 2.10 2.13

Blockchain and cryptocurrency 2.32 1.75 1.79 1.79

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

The landscape on privacy and data protection makes it
difficult to stay ahead of it. Companies are not at the place
of anticipating these regulations and operating in a state of
readiness.” Another lawyer explained, “[Data privacy] is a
dynamic area in which it is hard to stay current and staff for
given the expertise required.”
“You are never going to be 100% compliant,
so it is blocking and tackling.”
“The general risk is growing with the needs
of the business; as the business challenges
change, the corporate legal department will
need to adapt and develop new capabilities.”
To help their organizations level set and alleviate some of
these critical pressure points, general counsel are working
closely with executive leaders and their organizations’
board members to communicate risk and drive strategy.

Emphasis on Data Privacy and Security TO WHAT EXTENT ARE YOU COMMUNICATING
RISK TO THE BOARD?
Though none of the participants assigned a five to indicate
that companies are very prepared for either cybersecurity or No regular
data privacy regulation, 93% revealed that most companies communication
are at least somewhat prepared for these risks, assigning a
three or higher to each. 7%
13%
There is a perception that cybersecurity is a recognized risk 1-3 times 33%
area that most companies are addressing. “It is being taken per year Bi-monthly,
more seriously and companies are doing what they can to monthly or more
address it, including implementing systems to protect their frequently
data and hiring third parties to help them,” said one general
counsel. 37%
Quarterly
Despite these expressions of confidence and assurances
of preparedness, many conceded the high stakes and
ambiguity in this area. “The landscape is changing so
quickly, and an organization can never be fully prepared,”
said one participant.
They are also embracing their role as integral leaders on
As for data privacy preparedness, European ties, increasing important issues such as ESG and diversity, and fine-
investments and general familiarity with this subject are tuning their legal departments to optimize the use of
reasons that many gave for assigning a three or four, out specialists, automate where they can and establish resilient
of five, to characterize their overall vigilance. “This is a hot adaptability.
topic, so everyone is paying attention to it; there are entire
departments built around data privacy regulations now,”
said one participant.

Pressure Valves
Legal department leaders are responsible for an increasing
array of initiatives that combine several disciplines,
including business acumen, legal strategy and a talent
for adaptability. Each area for which they are responsible
has the touch point of risk. While managing risk is a
fundamental responsibility for law department leaders,
the rapidly shifting business climate, striking uncertainty
and the heightened focus on compliance in privacy, data
security, regulation and ESG have turned up the pressure.

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Part 2: Legal Departments Become
a Hub for ESG and Diversity
In 2023, environmental, social and governance (ESG), and diversity, inclusion
and belonging (DIB), are persistent as major focal points in business and
society at large. For chief legal officers, they present a range of opportunities,
responsibilities and risks.

Among the 79% of respondents who said they are ESG AS A BUSINESS PRIORITY
experiencing increased risk and/or strains on capacity
within their legal department, 100% listed ESG as a key area
driving rising demand. Additionally, 57% listed ESG among
their top five risk areas for 2023. Many of those who didn’t
rate ESG as a leading risk indicated it is still important to
their organization, with one general counsel stating, “ESG
is not necessarily a legal risk, but it is a priority.” 40%
No
In terms of DIB progress, most general counsel feel that
60%
their organizations are headed in the right direction. In
rating their maturity, 47% said they are either very strong Yes
or making positive strides, while the rest were evenly split
between feeling that their efforts were either moderately
developing or moving slower than they’d like.

In both categories of ESG and DIB, though, it’s evident

that general counsel have become integral influencers, and
that the legal department often serves as a hub for critical
decision making and planning in these areas.

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

An Intersection of Risk and Values

Discussion of ESG matters was more common this year than in any of the prior years of
The General Counsel Report. In fact, 60% of the participating general counsel noted that their
organizations are concerned about ESG as a business imperative.

It’s an imperative for so many because companies are being
measured in this area, and the quality of their efforts are
increasingly linked to their business success. “Investors will
screen a company for ESG risk, and if you don’t score well
enough, they will not fund the company; customers are
also increasingly asking ESG questions on RFPs, and if you
cannot check all the boxes, you cannot succeed,” advised
one law department leader.
“ESG does not reflect a significant risk
if you deal with it.”
For legal, this is critical because in-house counsel is
often responsible for verifying much of this information.
Legal teams discuss ESG during board meetings, allocate
significant sums to address it and assess their organization’s
position. “We make sure that the legal team is looking at
the evidence of the claims that are being published, and
also audit social media to assess the messaging,” said one
general counsel. “We are not preparing for it because of
the scrutiny; rather, we are preparing for it because of the
mission of our business,” noted a peer.
Still, many are acutely aware that their efforts are indeed
increasingly subject to external scrutiny. “We invest a lot
of effort into it and are very concerned about our ESG
ranking,” said one lawyer. “We are a young company and
there is a demand for the company to be social advocates
and make an impact; it is a company image and employee
interest issue,” said another.
For some, the logistics of navigating ESG are more
confusing than embracing the fundamental values
associated with it. “The challenge is organizing the data;
we are not concerned substantively, but we want to
assign what we are doing into ESG categories,” said one
respondent. Another said, “I am concerned that we don’t
fully appreciate the extent of what ESG means aside from
diversity and inclusion.”

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

Approaching a Future State

In terms of the state of preparedness for ESG requirements and risks, chief legal officers
expressed limited confidence. When asked to rate preparedness on a scale from 1-5 (“not
prepared at all” to “very prepared”), responses resulted in a weighted average of 3.24. Only 7%
said they were “very prepared” and 31% said they were “moderately prepared” — most responses
fell somewhere above “not prepared at all” but below “moderately prepared.” There was also a
general admission that the level of preparation for complex risk factors such as ESG may vary
depending on an organization’s industry, size and data management needs.
Regardless of the sophistication of their approaches, However, the wide range of areas that ESG covers presents
though, many general counsel have direct responsibility a challenge in driving and measuring transformation
for ESG messaging and activity. “There is an ESG office throughout an organization. “ESG is tricky, because
within the legal department to coordinate,” advised one what ESG is for one organization may not be the same to
lawyer. “We created a sustainability office that reports into another, so until there is a uniform score card, addressing
the general counsel and has a chief sustainability officer,” ESG will be inconsistent,” said one respondent.
offered a colleague.
Several advised that they are either expanding their
Particularly as regulators increase enforcement on ESG and team or upgrading systems to enhance compliance.
crack down on greenwashing, general counsel expect to be One respondent said, “We are hiring more ESG-focused
pushed to the forefront of these matters. One respondent specialists and those familiar with technology and
said, “Companies are starting to get in trouble for some analytics.” Another added, “We do many things that
of the statements they are making, and therefore, need to support ESG, which we are not properly tracking. We are
prepare more.” focusing on improving our tracking mechanisms.”

Regarding preparedness to address increased scrutiny

over ESG activities, improvements around compliance,
monitoring and reporting resonated in many conversations.
“We are in a period where companies will better understand
what ESG is and is not, as well as how to navigate these
things; the general counsel‘s office is well prepared to help
companies with inconsistent, inaccurate and incomplete
disclosures on ESG, because it is so top of mind by leaders
and shareholders,” advised one participating lawyer.
“When I think about ESG, it doesn’t impact
spending, but it impacts the allocation of resources
and the general counsel needs to ensure coverage
across the entire organization…Everyone wants to
talk about ESG and you need consistency…so the
increase in the need to be vocal on these topics will
increase the need for legal review.”

ESG RISK READINESS ACTIVITY ACROSS THE ESG SPECTRUM

*Ratings on a scale of 1, “not prepared at all,” to 5, Respondents categorized activities the legal department
“very prepared.” is engaged in across all areas of ESG. Based on qualitative
Very Prepared responses, multiple responses allowed.
7%

21% 21%
41% Slightly Environmental
Somewhat Prepared
Prepared 48%
General 14%
31%
Social
Moderately
Prepared 17%
Governance

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Inclusion Begets Diversity
Since 2020, when resounding public outcry for social
justice was heard around the world, many chief legal HOW WOULD YOU DESCRIBE THE
officers were called to take a more active role in their MATURATION AND PROGRESS OF YOUR
organizations’ DIB initiatives. In the years since, general COMPANY’S DIB PROGRAMS?
counsel have made important progress in increasing DIB Based on qualitative responses.
within their departments, and across their organizations.

“It is easy to hire for diversity but more

challenging to develop for inclusion…we focus
on diversity over time as a way to measure
inclusion. Diversity is only successful if it brings
inclusion so we want to see increases in
diversity over time...”
This year, when asked which of their DIB programs are
most effective in recruiting, retaining and promoting
diverse candidates and employees, the participants
provided a range of suggestions. These included guest
speakers, extensive training, internship programs to
promote diverse hiring, leadership councils, roundtable
discussions and employee resource groups. The approaches
were varied, but the dedication of legal teams to driving
advancement in this area was nearly universal.
“There is more awareness, which translates into
improvements and progress,” noted one legal department
leader. “The company hired a chief diversity officer in 2021,
and has requirements for diverse candidates on panels for
hiring consideration; we also have all of the language in our
job listings reviewed by an AI tool to contain contemporary
language that is respectful,” added another. “We have a
good diversity profile and there is a willingness to support
it as a company value,” echoed a peer.
27%
Neutral
47%
Strong
27%
Slower than
desired
“We are a beautiful reflection of our society,
which makes me very proud.”
For several organizations, creating communities to support,
empower and develop diverse talent is a fundamental
strategy to promote progress in this area. “Our employee
resource groups are effective because they encourage and
support groups of employees which self-identify as part of
a community and encourage them to come together; this
helps them to have the time, space and courage to give
voice to their concerns, and then allows management to
address them,” advised one general counsel. “We formed an

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

“We have increased headcount

GENERAL COUNSEL RESPOND TO
and our systems.” CAPACITY STRAINS
What strategies are you implementing to support the
Participants also emphasized the need for greater legal department?
specialization in corporate legal departments to
accommodate rising risks. Nearly half (47%) said they are Hiring generalists 20%
hiring specialists within the legal department to support Hiring specialists 47%

specific efforts and needs. Key responses on this point Increased budget 23%
included: New roles/ more headcount 43%
Relying on law firms 60%
− “We will be looking for a new hire with a litigation Relying on outside
60%
background.” service providers
Technology 53%
− “We have a new hire focused on privacy and data 0% 20% 40% 60% 80% 100%
protection, which you need to bring in-house.”
Multiple responses allowed.
− “We have all started wearing extra hats in the legal
department and assigning a range of responsibilities
to different members of the team, so we need to find
professionals willing to take on additional duties.” 47% are hiring specialists into
the legal department
Hiring and providing better training for their teams is a
priority for many, with 43% of respondents indicating that
they are adding new roles and/or staff members to support The approach of leveraging existing talent beyond their
their department. All the while, they continue to face original remit was another example of the need for
competition for talent. flexibility within the legal department. One respondent
said, “We are looking at the roles that we have and are
“We have seen a drastic increase of 25-30% in compensation evaluating whether they could be supplemented or re-
requirements for in-house attorneys,” noted one general purposed; if they cannot, then we would add professionals
counsel. Another explained, “The legal teams and to the team, but that is not an option now given budgetary
compliance teams need to be operational and stretch out constraints.” Another added, “I have converted a paralegal
beyond just being lawyers; it is a different skillset than they into a legal operations professional and an attorney into a
traditionally have, so law departments need to provide compliance specialist.”
better training.”
employee resource group focused on empowering women A Stabilizing Force
in manufacturing, and are being much more intentional
about promotion with an eye toward diversity, inclusion Legal departments sit at the heart of their organizations,
and belonging,” added another. and their influence has dramatically expanded in
recent years. With that, they have taken on a range of
When asked to describe the maturity and progress of their responsibilities across ESG and DIB issues, from risk
DIB programs, the participating general counsel split into management, to communications, to value setting, to
three categories. One group characterized their programs refining recruitment strategies and implementing best
as advanced while another recognized the need for growth practices. As demand increases across these and an array
while celebrating recent progress. The remaining group of other areas, general counsel have a big task, but also
acknowledged that their programs are in the early stages an opportunity to continue serving their organizations as
and need additional support. impactful strategic leaders.
“In a very short period of time, the organization
has changed significantly and it has seen a strong
progression,” one lawyer said. “We are far along; we are
a beautiful reflection of our society, which makes me
very proud,” added another. “We are far ahead of many
other global organizations, from the board to all of our
employees,” said a third.

For others, there is still a strong need for improvement.

“We don’t have an intentional strategy,” admitted one.
“As a global business, we need to prioritize diversity and
inclusion,” added a peer. “We are not there yet and have a
way to go; we are honest about how important this is to us,
but we have not yet achieved our goals and that resonates
with diverse candidates,” noted another.

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Part 3: General Counsel Embrace Flexibility,
Automation and Specialization
The events and employment trends of the past several years have affected
legal departments in myriad ways. Chief legal officers have had to adapt their
approaches to operations, talent retention, technology use and overall department
management. In the wake of, and amid, health and safety concerns, business
continuity challenges, global supply chain disruption, economic turbulence and
an unprecedented war for talent, general counsel have continued to grapple with
rising legal and regulatory pressures, alongside resource constraints.

As revealed in Part One of The General Counsel Report,

the vast majority of respondents conveyed that their
legal departments are experiencing a strain on capacity,
resources and budgets, often as a result of the growth that
their organizations have driven over the past two years.
One general counsel said, “It always seems that we are
slightly understaffed and require additional resources to
accommodate the company’s growth.” Another said, “We
are a growth company despite our size, so there is a lot of
pressure not to spend, but still grow.”
In terms of gauging the impact of rising demand against
actual costs, 63% of respondents could broadly quantify the
effect that their top risks have had on their spending, mostly
in rough percentages. For example, one leader said, “In the
last year, the legal budget has increased by one-third due
to different risk priorities and the growth of the company.”
Another shared, “The spending on our top risk has increased
by at least 15%.”
This delicate balancing act of boosting output while keeping
budgets conservative has led most legal department leaders
to accept flexibility as the vital ingredient to their success.
Enabling Perpetual Change
and Improvement
This requirement to adapt continually is manifesting in the
legal department across adoption of advanced technology,
employee engagement, compensation frameworks and
outsourcing decisions. For example, 67% of respondents
said their organizations have specifically evaluated the
role of automation and advanced technology in enabling
a higher standard of professional quality of life, alleviating
capacity demands and increasing talent retention. “We
are open to using much more technology to make our
department cover more issues,” said one legal department
leader.
“Deploying AI for contract management and
e-discovery is exactly the type of strategy that
will increase the professional quality of life in
our legal department, and we will continue to
identify use cases…”

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From the Inside Out
In contrast (or in addition) to repurposing existing professionals and strengthening
specialist capabilities, many participants revealed the need to increase their
spending on external resources to support their portfolio. To better manage
increasing and intensifying risks, 60% said they continue to rely heavily on law
firms and outside service providers.

“We are allocating more internal time and external spend company, which has a rigorous and uniform approach
with law firms and providers to address the increasing that a specialized team manages; the company monitors
risk landscape,” advised one general counsel. “As a global it closely, and it is a significant area of concern,” said one
company, there is a limit to how much we can do internally, general counsel.
so we are leveraging outside resources, and our outside
counsel costs have increased,” echoed another. Some also use software to support management of outside
resources. “It needs to be automated, because for most
“We are always trying to find efficiencies in how we work enterprises, there is a long tail of vendors,” explained one
with resources that we already have; in many ways we respondent. “You need to define your vendor requirements
want to use data across the organization to see where we and use a proper vendor management system; we recently
are spending our time to identify which matters require a launched an application that includes all of our outside
lawyer’s support and where we can use other resources.” providers around the world and rates them on various
factors to establish some control on how those vendors
Given the high-stakes nature of the legal department’s position themselves,” said a peer.
reliance on external tools and providers, general counsel
are also focused on vendor risk management. Ninety-seven
percent of respondents said their organization has some type
of vendor risk management protocol. However, approaches
vary significantly, and 20% said responsibility for these
“We see more money going
programs does not sit within the legal department, but towards vendors and outside
rather with an enterprise-level risk management team, the
IT department, a supply chain group or the purchasing unit. counsel that help us
Those chief legal officers who have oversight apply
manage risks.”
varying levels of scrutiny, from incorporating vendor
risk management into their compliance efforts, to simply
requiring that vendors generally adhere to all applicable
laws. “Vendor risk management is a high priority for the

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

Strategic Technology Investments

Technology is another important piece of the puzzle for legal departments under
pressure, with 53% noting their departments have implemented or is planning to
implement new technology in response to increased risk and demand.
Largely, chief legal officers see technology not as a
replacement for headcount, but as a way to enhance the AUTOMATION OFFERS PROMISE
performance of their teams. One said, “We have more Are you considering automation as a solution to
data in the law department than we ever had before, so support professional quality of life?
we are developing a data lake with algorithms; we are also
partnering with law firms to access and expand that data
lake.” Another said, “We have changed how we ticket legal
and compliance requests; I’ve gotten better at thinking
about how to automate legal tasks.” 33%
No
Investment in technology to improve contract
management processes was noted as a focus area for many 67%
respondents. For the coming year, 67% said they have Yes
budget allocated toward contract tools. “We have invested
in contract management and are continuing to do so,” said
one leader. “We have invested in contract management
because it allows you to use your internal lawyers and
legal staff more efficiently, or to hire an internal contract
manager,” said another.

Several, however, cited the expense of new tools and the buying new tools, we want to use what we already have.”
need to maximize the value from prior investments as “We are not investing in new technology, but are expanding
barriers to procuring additional technology in the next our use of the tools that are in our existing portfolio,”
year. For example, one general counsel said, “Instead of echoed a colleague.
The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

LEGAL DEPARTMENT DISTRIBUTION OF WORK

How much time do you spend on each of the following areas?
0-10% 11-20% 21-30% 31-40% 41-50% 51-70% Above 70%

Compliance monitoring 61% 26% 13%

Contracting 3% 21% 24% 17% 14% 17% 3%

Data privacy 59% 35% 6%

Disputes 56% 22% 17% 6%

ESG 75% 25%

Evaluating new technologies/third-party providers 80% 20%

Governance 53% 41% 6%

Incident response
75% 19% 6%
(e.g., crises, data breaches, etc.)

Internal investigations 93% 7%

Regulatory investigations 91% 9%

Other business strategy and risk management activities 43% 35% 13% 9%

Workloads Across a Wide Spectrum
As workloads have shifted and law department
leaders have enlisted help from internal and external
professionals, much of the focus is now on contracting,
with one-third of the participants reporting that they
spend at least 40% of their time in this area. Half spend
more than 30% of their effort on these issues. “There is
an increase in transactions related to contracting, and
that is where many organizations are hiring,” explained
a participant. “We have scaled our sales team so we
are doing more with contracting, but we are trying to
templatize our efforts to spend less time and be more
efficient,” added another.
Most are otherwise spending 10-20% on compliance
monitoring, data privacy and information governance,
among other tasks. “We seem to be spending more time
on vendor disputes or more litigious employees,” said one
general counsel.
the previous two years of The General Counsel Report,
there appears to be a more engaged conversation about
future use. Separately from the general counsel who said
they are looking at automation as a solution for capacity
constraints, 57% said they expect to increase their use of
AI over the next few years.
“Law firms have for years been using AI in
document review, and it is a matter of time
for that to expand to the corporate legal
department. Though, you still need a human to
offer judgment and wisdom, as you cannot have
a machine do everything.”
THE FUTURE OF AI
Do you believe you will increase the use of AI in
the coming years?

Uncertainty Remains Around

Artificial Intelligence 33%
No
In previous year editions of The General Counsel Report,
enthusiasm around artificial intelligence has been mixed. The 67%
responses this year indicated a continuing uncertainty — both Yes
in openness to the technology and in how it is perceived.

This year, 20% advised that they are using some type of
AI, with a specific focus on either contracts, e-discovery
or privacy. While this number is steadily down from

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

One respondent said, “We are using preliminary

AI USE YEAR-TO-YEAR
and primitive AI to extract key terms in our contract
management system.” Another said, “If we have litigation, Are you using AI for any legal function?
we will of course use AI, but we are not using it generally
for contracts or any other standard matters.” “We are
leveraging AI in some of our privacy systems to find 20%
personally-identifiable information that we may not have Yes
mapped,” offered a third.

In terms of future use cases for AI, respondents offered 2023

examples such as vendor management and contract
creation, as well as escalating the areas in which they are
80%
already using it. “We are a data-driven legal team and No
validate our decisions based on data, so we expect our use
of AI to increase,” said one lawyer. Another respondent
predicted, “In the next five years, the world will look very
different, with greater automation, and legal departments
will be more like business advisors and much less like
27%
contract drafters.”
Yes

“A number of the enterprise-wide

programs we have implemented over the past 2022
three to five years have focused on freeing 73%
people to focus on more substantive work and No
reducing the need for administrative support.”

However, some were skeptical that progress will occur

quickly or seamlessly. “We are not standardized enough
to apply AI or advanced tools to our legal work; also, the
programs that I have seen have not appeared to be valuable 33%
enough to make an investment,” offered one general counsel. Yes

Professional Distancing
While most general counsel concede that their teams have
thrived while working remotely over the past few years,
45% advised that their organizations have experienced new
challenges associated with remote work. “We anticipate
an increase in the risk of data management because of less
oversight during the 50% of the time that the legal team is
not in the office,” said a participating lawyer.
“We are still learning what hybrid work
means and should mean, including the tools
and strategies that work to engage employees.”
In fact, 30% advised that prolonged remote and hybrid
work have directly influenced how they address their
regulatory compliance and data privacy risks. “Whenever
you operate remotely, it adds risk similar to people working
in transit while traveling; the bigger risk is in effective
communication and collaboration,” summarized a leader.
2021
67%
No
Several organizations are also experiencing more human
resources issues alongside remote work — issues that often
fall to the legal department.
“The biggest challenge is to determine whether we should
allow employees to work from anywhere in the country
given the need to comply with laws across the nation as
opposed to in our local jurisdiction,” said one participant.
“It is hard to manage performance given that you are trying
to balance trust of employees with overtly monitoring and
proctoring what they do. Ensuring that people are doing
their jobs and that managers are following up regularly
is an issue,” added another. “We’ve had an increased
number of employee relations issues in the form of claims

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of discrimination or treatment that require internal
investigations, which turned out to be miscommunication
because we are missing interpersonal, in-person
communication,” explained a colleague.
There has also been an experience loss from more
senior professionals who have decided to retire, with a
corresponding reduction in standards to accommodate
the competitive market for talent. One general counsel
said, “We have a very high turnover rate, which means you
are constantly recruiting for positions, so the onboarding
process is twice as long because there are not enough
seasoned employees to offer on-the-job support and
embedded corporate knowledge.”
Many of the participating general counsel applaud
their organizations for maintaining profitability and
productivity throughout the pandemic. Still, they
recognize the difficulty in re-establishing a work schedule
that accommodates the seemingly universal interest in
having the freedom to work remotely, but capitalizes on
collaborating in person in a central office. Many agreed that
training in a remote work environment continues to be an
obstacle as well. “Professional development is more difficult
remotely,” advised one general counsel. “It is a challenge
for newer employees to the business or junior employees to
integrate and learn,” noted a colleague.
Conversely, some leaders are prioritizing the hiring
advantages of offering a flexible schedule, particularly as
many employees have resisted a full return to in-person
work. “We have only benefited from the remote and hybrid
work environment, especially given the ability to hire
talented individuals in many locations,” said one.
“We realize the teams can be more distributed and you can
go where the talent is, rather than limit them to specific
locations,” noted a colleague. “Our employee base would
not support in-person work full time,” said another.
These conflicting dynamics remain unsettled and will
continue to be an issue that chief legal officers must
navigate in the years ahead.

“It is a case-by-case strategy based

on the job function and character
of the employees.”

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

Adapting to a New Way of Working

The participating general counsel shared their tactics for engaging their
teams, increasing productivity and building culture in a remote and hybrid
environment. Their ideas range from enhancing communication and offering
more time off, to increasing one-on-one opportunities and restructuring the
provision of legal advice.
Many endorsed adapting one’s management style to
support and accommodate others, regardless of their
location or the organization’s policies. Some are also Conclusion
implementing structural changes to streamline the
workflow within the legal department. Despite all these Beyond the challenges of rapidly evolving and
initiatives, however, any strategy needs to be customized increasing risk, shifting employee preferences are
and tailored to the specific population, location and line directly influencing change in legal department
of business. talent retention and hiring, as well as technology
use across legal functions. Despite trepidation
Key comments on this front include: associated with the deployment of AI, there is
growing interest in leveraging new tools to enhance
− “It has become more important for managers to be the quality of life for in-house counsel. Legal
connected to their teams on an individual basis; department leaders are clear that they want to
general counsel and managers need a higher EQ than facilitate innovation for their organizations, meet
before the pandemic.” expectations, and at the same time, support their
teams in a meaningful way. They recognize the
− “I have been much more rigid about having one-on-one need to be adaptable, creative, collaborative and
and full team meetings on a set schedule.” compassionate, and that those values are necessary
to achieving continuous improvement.
− “About nine months ago, to address the fact that there
are more legal issues than resources, we created a micro- All of this culminates in a resounding legal
rotation portal where someone can see the different department management philosophy of flexibility.
projects available to encourage legal department As one general counsel aptly said, “To be realistic, as
professionals to get more involved.” a lawyer in-house, you cannot get in the way
of progress.”
− “We have a ticketing system that we are using more
often to accommodate the business and responding to a
need from any location; the ticketing system solves the
remote work challenges and the need to measure and
create metrics associated with the performance of the
legal department.”

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The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points

Methodology
From August 2022, through September 2022, Ari Kaplan personally interviewed 30 leaders serving as the general counsel or
chief legal officer of their organizations. Forty percent work in organizations with more than $1 billion in annual revenue,
and 60% work for companies with more than 1,000 employees.

INDICATE YOUR ORGANIZATION’S TOTAL ANNUAL Total number

TOTAL NUMBERof employees?
OF EMPLOYEES
REVENUE

16.67%
$1.1 billion to 26.67%
$5 billion 1,000-4,999
16.67%
$5.1 billion to 23.33%
$10 billion $251 million to
36.67%
$500 million
Fewer than 500
13.33%
Less than 20%
$100 million 10,000+
6.67%
13.33%
13.33% 10%
Greater than 5,000-9,999
$10 billion
3.33%
$101 million to $501 million to 500-999
$250 million $1 billion

WHICH OF THE FOLLOWING BEST DESCRIBES YOUR ORGANIZATION’S PRIMARY BUSINESS ACTIVITY?

Advertising and marketing 3.33%

Banking, insurance, or finance 6.67%

Construction 3.33%

Consumer products 3.33%

Energy and utilities 3.33%

Higher education 6.67%

Life sciences 3.33%

Manufacturing 20%

Real estate 3.33%

Retail 3.33%

Technology and telecommunications 40%

Transportation 3.33%
0% 10% 20% 30% 40%

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