Global survey finds 80 per cent of CLOs report directly to the CEO – up from 64 per cent in 2018
A survey by the Association of Corporate Counsel of 1,007 chief legal officers and general counsel across 47 countries and 20 industries indicates that the role of legal leaders is broader than ever before. The ACC’s 21st annual Chief Legal Officers Survey found that 80.2 per cent of responding CLOs and GCs report directly to the company CEO in 2020 - an increase from 77.9 per cent in 2019 and 64.4 per cent in 2018. Around 75 percent of CLOs report that company executives almost always look to them for input on strategic decisions and risk areas. The same proportion regularly attends board meetings.
“This is the age of the CLO,” says Veta Richardson, president and chief executive officer of the ACC. “What we see is that chief legal officers are increasingly claiming a seat at the CEO’s table and we think it’s wise on the part of the corporation to give them that kind of access.
“The modern chief legal officer has become the officer that’s best equipped to help steer the company through legal and ethical risk management regulatory questions that now dictate business policy and strategy,” she adds. The report also found that compliance and risk are the top two corporate functions that report to the CLO. More than three-quarters of respondents oversee compliance while 36.4 per cent are in charge of risk management.
Responding CLOs indicate that they spend, on average, around one-third of their time providing legal advice. The remaining two-thirds is split almost evenly among four other tasks: managing the law department, attending to board matters and governance, contributing to strategy development, and advising executives on non-legal issues.
“The range of responsibility of the law department continues to expand,” says Richardson. “As companies think more about ESG and corporate social responsibilities, GCs are increasingly being asked to take a leadership role. The CLO is an executive who goes beyond the traditional legal counselling role that is the bread and butter of the position.”
Surprisingly, only 34.7 per cent of CLOs reported that geopolitical events were impacting plans to enter new markets this year, compared to 55.1 per cent in 2017. This shift indicates that companies are becoming more comfortable dealing with and responding to this type of risk, Richardson believes.
A slim majority of CLOs - 52 per cent - believes that the amount of work that the legal department will outsource to law firms will stay the same this year, while one-third believes that the amount of outsourced work will increase.
Many legal departments are implementing new technology to enhance efficiency with more than half of respondents either planning to adopt a new technological solution or having done so recently. In addition, 69 per cent of CLOs expect the use of artificial intelligence in legal technology applications to increase, while just seven per cent regard it as a temporary trend. Meanwhile, just under 30 per cent expect to see blockchain issues accelerate in 2020.
Almost 60 percent of CLOs surveyed believe that data privacy will pose the biggest legal challenges to organizations this year.
“These issues aren’t going to go away,” says Richardson. “CLOs need to remain vigilant to keep their arms around the number of challenges that their companies face and to keep pace with all the changes in regulations.”
