A global survey of in-house legal teams by the Association of Corporate Counsel (ACC) maps out the continuing evolution of chief legal officers and their corporate legal departments. ACC executives Ian Robertson and Blake Garcia give us the story behind the numbers
In the past decade, we’ve seen a steady evolution of the chief legal officer (CLO) role and the corporate legal departments they lead. Not surprising, as the very nature of doing business around the world has changed dramatically in geographic scope, speed and complexity. This evolution only accelerated with the covid-19 pandemic. Organisations adapted seemingly overnight, along with their entire in-house legal teams.
To guide department-level strategy and decision-making, CLOs need a snapshot of how their legal department compares to peers. So, the Association of Corporate Counsel (ACC) partnered with Major Lindsey and Africa to produce the 2021 Law Department Management Benchmarking Report. This report builds on survey responses from 493 legal departments in organisations spanning 24 industries and 30 countries, making it one of the largest and most comprehensive legal department benchmarking surveys available.
CLOS REPORT TO CEOS
The ACC believes it is critical that the CLO reports directly to the CEO. The days of a CLO purely focused on compliance are over. Today, CLOs are immersed in every facet of the organisation including privacy, cybersecurity and environmental, social and corporate governance (ESG) to name a few. With CLOs part of the big picture and increasingly providing strategic guidance on business decisions that calibrate risk with opportunity, a direct reporting line to the CEO is more important – and prevalent – than ever.
In line with other recent ACC surveys, the results show that 80% of CLOs report directly to the CEO. Further, 10.5% report to the chief financial officer, and 4.1% report to the chief operating officer. That said, there is considerable variation depending on company size, industry, or global region. For example, 91.9% of large companies (>USD10 billion in revenue) report directly to the CEO. However, only 76.2% do so in small companies (<USD1 billion in revenue). When looking at the data by global region, in Asia-Pacific, 82% of CLOs report to the CEO, which exceeds the global average and is topped only by Canada, at 87%.
There is also considerable variation in CLOs who assume the role of corporate secretary, with no clear pattern to company size. Just more than half of CLOs take on the role in large organisations, while nearly 70% do so in mid-sized organisations. CLOs that work in IT, professional services and manufacturing take on the corporate secretary role in an above-average percentage of cases, while retail trade (60%) and finance and banking (54.5%) are below the average.
There is also a wide range of functions that fall under the responsibility of in-house legal departments. Of note is ESG, with 29.9% reporting either a direct or indirect reporting line through the legal department. Also, more than 22% of legal department functions include information security or information technology, or both.