3 trends GCs must address in 2023
This year, Gartner says, in-house legal teams are going to feel the pinch of ongoing disruption, flat budgets, and information-related regulation.
Last week, Gartner risk and compliance practice director of research Raashi Rastogi said that at a broad level, resources for law departments are going to remain flat in the wake of modest budget increases brought on by rising personnel, technology and service provider costs, lawyer exhaustion and record-high attrition, and an environment of cost-consciousness with some industries implementing hiring freezes.
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Meanwhile, she said, the demand for, scale, and complexity of legal work are increasing due to more time spent managing disruption, new information-related regulation, and changing risk appetite.
In the face of such marketplace circumstances, Gartner outlined three key trends that general counsel of all stripes will have to address in 2023, if they are to best support their businesses.
Disruption weighing on exhausted law departments
According to a survey conducted by Gartner in mid-2022, in-house lawyers are expecting to spend double the time in 2023 managing business disruptions going forward than they did pre-pandemic.
These disruptions include the ongoing Russian invasion of Ukraine, supply-chain shocks, high inflation and the spectre of recession. There is also, Gartner went on, “intense societal pressure” that is redefining what is expected from businesses in terms of their social and environmental practices.
As a result, law departments must define a “disruption response service” — that is, a process that defines how/whether to support a disruption, and how to allocate resources to it.
“Legal needs to identify and invest in the activities that drive disruption response, such as keeping on top of regulatory changes, changing risk appetites more frequently, educating business partners on new risk considerations, or coordinating response with business partners when having to deal with abrupt changes such as sanctioned entities,” Gartner wrote.
Budgets for law departments may not face cuts
Gartner does not think that there will be big budgetary changes this year.
Law departments are one of the business functions “least likely” to face cuts, it posited while adding that it is also the least likely to see an increase.
“In such turbulent times, it’s easy to see budget stability as a good thing, but burgeoning workloads, personnel costs and fast-rising costs for legal service providers mean that lawyers will still have to find ways to do more with less,” it submitted.
“Legal departments may not be facing cost cutting at the moment, but the macroeconomic environment is making businesses very cost-conscious,” said Ms Rastogi.
“Cost consciousness can quickly become cost cutting if economic conditions worsen.”
Expanding information-related regulation
Elsewhere, Gartner noted, societal pressures around privacy and the rapid evolution of artificial intelligence have “forced regulators to move very quickly”.
Privacy legislation, such as GDPR, has enormous implications for business and is being echoed across most jurisdictions. Gartner is predicting that three in four of the world’s population will be covered under modern privacy regulations by 2024, up from just 20 per cent in 2021.
“Lawyers will need a strategy for adapting to new legislation faster than ever,” advised Ms Rastogi.
“Understanding how their organisation is exposed to new regulations, and how to evaluate potential disruptions will be critical for all organisations in the coming years.”