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Three things that an in-house counsel needs to consider in 2022.

 

Time to become strategic advisors:

In-house legal departments have evolved from a responsive, focused legal advisor and risk manager to a trusted strategic advisor who actively participates in overall business operations and decision making. Internal departments are increasingly advising management and the board of directors on income generation initiatives, job and employment issues, corporate social responsibility and regulatory compliance. The results of the ACC CLO 2021 study confirm this evolution.

Moreover, the CLO study reported that while on average, in house counsels spend 28% of their time providing legal advice, they also spend a significant amount of time advising and managing, contributing to strategy development, and advising other leaders on non-legal matters. Subsequently, the report suggest that senior management is almost always required to contribute to business decisions.

As strategic partners, in-house legal departments are expected to prioritize Diversity, Equity and Inclusion (DEI) programs and Environmental, Social and Corporate Initiatives (ESG). These issues become of paramount importance to organizations.  Therefore, in-house counsel should consider some notable trends in governance that will be implemented in 2022. For example, in-house counsels that represent a FTSE client will need to adopt a strategy that reflects the aims of BEIS, which announced that the government would support a new five-year independent audit to monitor the female representation of FTSE 350 CEOs, with a focus on leadership positions and board members. Furthermore, they need to be aware of a new inter-firm collective, the Legal CORE, which was formed to increase ethnic minority representation in private practice by collectively leading action through the legal sector and focusing on retaining and promoting talent from different ethnic backgrounds.

Time to undergo complete digital transformation of operations:

The Covid-19 pandemic and its transition to remote or mixed workplaces have significantly increased the demand for legal technology, with video conferencing, virtual hearings, electronic document sharing and electronic documents becoming the norm. Moreover, it turns out that this digital transformation will continue for a long time, and in-house legal departments plan to invest in new legal technology solutions. Recent public opinion surveys, including Bloomberg Law’s 2021 legal technology survey and 2021 ACC CLO survey, show that in-house legal departments plan to invest more in contract management, case management, records management, document management, electronic signatures, and electronic billing software.

Time to litigate:

Many companies with a global presence face new litigation waves initiated by legal professionals who have developed elaborate strategies to advance their litigation, including choosing jurisdictions and using online marketing to attract potential litigants. The trend is exacerbated by the burgeoning financial litigation sector, which currently has over $ 11 billion to fund claims worldwide.

Many parties use financing because it provides coverage for their litigation costs, allowing them to plan for security and a potentially fungible portfolio of assets. Candidates choose financial solutions because they provide immediate relief from risk and legal costs in exchange for some growth constraints. Often these claims take the form of mass proceedings similar to class actions. Recent examples include antitrust violations as seen recently with Amazon who were fined nearly $1.3 billion by Italian regulators who accused the company of breaking antitrust laws by giving special perks to third-party merchants who use Amazon’s warehouse and delivery system.

Thus, in addition to preparing to defend their employer from legal action, the in-house counsel will need to adopt a forward looking and proactive approach to legal risks. More investments should be spent on hiring more lawyers within the in-house legal department in order to anticipate the areas of regulation and participate in public discussions on these issues. This will allow companies to achieve regulatory compliance and have additional safeguard against an impending legal action made against them by a competitor or other undertaking in the relevant sector.

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Written by Jason Connolly