Chief legal officers (CLOs) are losing sleep over ethics and compliance issues, according to research on corporate legal departments.

Regulatory challenges are also keeping CLOs ‘up at night’, more than two-thirds of respondents said in the Association of Corporate Counsel’s Chief Legal Officers 2016 Survey.

Nearly a third of CLOs reported that their organisation had been targeted by a regulator for enforcement or investigation in relation to an alleged violation.

The report states that as companies expand across jurisdictions, ‘managing legal affairs becomes complex, as does keeping abreast of the regulatory climate in each location’.

One in five CLOs had experienced a data breach in their organisation in the last two years. Healthcare was the most heavily affected industry, followed by educational services and telecoms.

The growth of the in-house sector shows no signs of slowing down.

More than a third of CLOs had recently added lawyers to their team, with 14% reporting ‘significant’ increases in staff headcount.

CLOs in Europe, the Middle East, Africa and the Latin American/Carribean region outpaced other regions for additional recruitment.

The report states that budget cuts can be a ‘predictor’ for staffing trends, with 41% of CLOs expecting external budgets to decrease by more than 10% and predicting that the amount of outsourced work will fall.

Nearly a fifth of respondents who expect a reduction in outsourcing to law firms or legal service providers intend to increase internal headcount.

Meanwhile, in a statement of policy, oversight regulator the Legal Services Board said frontline regulators will have to produce a ‘sound evidence base’ should they wish to reform regulatory arrangements for in-house lawyers.

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