ACC reveals what’s keeping CLOs up at night

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The Association of Corporate Counsel (ACC) 2019 Chief Legal Officers survey has found that sustainability, disruptive technologies, privacy laws, data security and protecting a brand’s reputation are among the issues expanding the influence and prestige of the chief legal officer (CLO) in companies around the globe.

Feedback from 1,639 CLOs in 55 countries also found that the proportion of CLOs who report directly to the chief executive officer (CEO) has jumped from 64% to 78%.

A leap of 14 points in one year in this critical CLO reporting metric demonstrates that, “the age of the chief legal officer,” is established, and on a strong foundation, the survey reported.

The survey also showed that CLOs are assuming positions of greater influence within their enterprises, and taking on roles beyond that of technical legal adviser. Nearly 70% of CLOs surveyed indicated that the executive team almost always seeks their input on business decisions. Last year, that level was 11 percentage points lower.

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Tanya Khan

“From sustainability to data protection, the issues pressing on businesses are growing in urgency and complexity,” Tanya Khan, vice president and managing director, ACC Australia and Asia-Pacific, told Asia Business Law Journal. “The CLO and his or her legal team are uniquely qualified to advise the CEO and the board of directors on how to chart a path forward, taking the law, ethics, culture and risk tolerance into account. This year’s survey leaves no doubt that we are experiencing the age of the CLO, and that companies are awakening to the significant role their CLO can and should play.”

Reputation topped the list of influences on business decisions for the Australia-Pacific region, while new regulations topped the list in Asia. Political issues will have the largest impact on company decisions in Australia-Pacific, the survey reported. Over half of all CLOs surveyed in the Australia-Pacific region reported that disruptive technology will influence business decisions at the company level.

Twenty-two percent of respondents in Asia viewed taxes and tariffs as a driver of business decisions in their company. Whistleblower issues were also rated of greater importance by in-house counsel in Asia, where 57% say the issues are very or extremely important, compared with 26% in the Australia-Pacific and 22% in Europe.

Globally, respondents who most often predicted increasing in-house counsel staffing are from Canada (41%), Asia (39%), and Australia-Pacific (36%). Those in the US are less likely to foresee an increase in in-house counsel this year (30%).

When it comes to legal operations staffing, CLOs in Asia have the highest percentage, reporting an increase in legal operations professionals for the upcoming year (39%) followed by Europe (16%).

Some results presented by regional segments had relatively low sample sizes or were skewed toward a small number of countries in the region. Japan (64%), India (19%), and Hong Kong (10%) accounted for 93% of responses in the Asia region.

Other significant findings from the survey include:

  • CEOs are most likely to ask the CLO about growth, while boards are more focused on asking the CLO questions about risk or compliance;
  • The majority of CLOs expect department budgets to stay the same, but 45% of CLOs expect their budgets to increase in 2019. This is down slightly from 56% in the 2018 survey;
  • As CLOs solidify their place in the C-suite, they increasingly oversee corporate functions other than legal. Compliance is the most common corporate function reporting to the CLO, but beyond this legal-adjacent function, one in four CLOs oversee government affairs, and one in five oversee human resources;
  • Two in three CLOs regularly attend board meetings (68%). CLOs who report to the CEO are more likely to state that they almost always attend board meetings (75% v 47%).
  • Forty-seven percent of respondents anticipate M&A activity in 2019.