The state of corporate legal departments and the role of the Chief Legal Officer

The Association of Corporate Counsel (ACC) and Exterro survey shows the ever-increasing role of Chief Legal Officers (CLOs) as key business partners.

In addition, respondents are increasingly assuming responsibility for their company’ privacy function, expanding their legal operations capacity, and (in one department out of three) planning to hire new lawyers.

The survey also provides insights to the response of in-house legal departments and insights to future plans in the context of the COVID-19 pandemic.

“The ACC CLO Survey once again provides insights into the ever-increasing depth and breadth of CLOs’ responsibilities and overall importance to organizations,” said Veta T. Richardson, president and CEO of ACC.

“2020 accelerated the evolution of this role, forcing CLOs to support their businesses’ operations through a global pandemic, the international reckoning with racial injustice, and both the new socially distant and online workplaces. Sadly, none of 2020’s challenges will magically disappear in 2021, but ACC has seen how the global in-house community learned and grew from those challenges.

“The integral ways CLOs are helping their organizations adapt and move forward shows that the numerous challenges of the past year have only amplified these times as the ‘age of the CLO.’”

“The 2021 CLO Survey confirms what we see every day in the organizations with whom we work – that converging market forces in legal operations, privacy, compliance and cybersecurity response are driving an evolution of the role of the CLO.

“The successful Chief Legal Officer going forward will have much broader responsibilities and will require a new strategy to proactively and defensibly manage their legal governance, risk and compliance (GRC) obligations while maintaining and ensuring data integrity throughout their business processes,” said Bobby Balachandran, CEO at Exterro.

The age of the Chief Legal Officer

The survey affirms we are in the “age of the CLO.” With 78 percent of respondents reporting to the CEO, the overall trend remains very positive. Further, while CLOs still spend around one quarter of their time providing legal advice, they also spend a significant amount of time on board matters and governance issues, contributing to strategy development, and advising other executives on non-legal issues.

The survey found that 46 percent of CLOs are responsible for their company’s data privacy function, reflecting the growing integration of legal in business strategy and technology policy.

In the order of functions reporting to the Chief Legal Officer, only compliance (74 percent) outranks privacy. CLOs are also increasingly engaging with environmental, social, and governance issues. This includes diversity and inclusion (D&I). A full 72.7 percent of CLOs expect diversity and inclusion specifically to accelerate in 2021.

Encouragingly, even despite COVID-19, 32 percent of law departments plan to take on more lawyers in 2021, a slight increase over 30 percent from 2020. Interestingly, 49 percent of those departments that expect to add lawyers in 2021 also anticipate sending more work to law firms and other legal service providers.

Legal operations continues to grow as well. Sixty one percent of legal departments now employ at least one legal operations professional. This is a 6.7 percentage point increase over last year and a 39.4-point increase since 2015. Twenty-one percent of departments now employ at least four legal ops professionals signaling clear and consistent growth in the role.

Five main points

• In a continuing trend, the Chief Legal Officer is a key business partner to the C-suite and board. CLOs regularly participate in board meetings, are often asked to provide input on business decisions by leadership teams on operational and risk areas. They only spend 28 percent of their time on strictly legal work.
• Many legal departments plan to hire new staff, despite the pandemic – in fact, law departments plan to hire two percent more lawyers in 2021 than in 2020. Twenty percent of departments plan on adding paralegals and 12.7 percent expect to hire additional legal ops professionals.
• Legal operations is now imperative. Sixty-one percent of legal departments have at least one legal operations professional on staff, the highest percentage observed since ACC began tracking this metric. Thirty-eight percent of CLOs say their department’s most important strategic initiative involves legal operations.
• Data privacy continues to impact organizations, with 80 percent expressing concern over changing data privacy laws in the jurisdictions where they do business. Ninety percent expect data privacy concerns to accelerate.
• ESG and D&I are central to strategy, impacting third-party relationships, supply chain standards, and investor and stakeholder relationships. Many CLOs are taking new measurable actions, internally and externally, to build equity and inclusion practices into staffing and operations.