Part one of The General Counsel Report 2024 has been released, and for the first time in its five-year history, it has expanded its pool of participants to include commentary from legal department leaders in the US, Canada, Latin America, the UK, Europe, the Middle East, and Australia.

Regulatory compliance, data privacy and data protection were reported as the top three risks among respondents. Contrastingly, increases in the scope and scale of corporate risk combined with continually growing demand on legal departments contributed to declining preparedness in every risk category studied.

In addition, the number of general counsel with some level of concern associated with emerging data sources (collaboration tools, chat applications, file shares and other similar cloud-based systems) rose to 93 per cent in 2024 from 57 per cent in 2023.

The report, which is based on a detailed survey and one-on-one interviews with chief legal officers at large corporations in every major region around the world, also revealed contrasting priorities throughout nearly every area of the corporate legal function, including equal enthusiasm and caution regarding technology transformation and investments in hiring amid budget constraints.

FTI Technology global chief executive Sophie Ross said that although post-pandemic changes have changed the landscape for in-house lawyers, most are expecting more changes in 2024.

“Across discussions with corporate legal department leaders, there was a resounding sentiment that the past two years have been the most difficult on record, yet nearly all general counsel are bracing for additional challenges on the horizon,” she said.

“They feel underprepared in every major area of exposure, but they’re also taking significant and decisive action. Legal department leaders are setting new priorities, strategies and functions that allow them to simultaneously brace for the impact of increased regulatory and legal risk, while remaining open to growth, technology advancement and broader company leadership.”

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In a series of four instalments, the report will cover escalating digital risk and regulatory compliance challenges, key privacy and environmental, social and governance (ESG) challenges, legal department technology adoption and legal operations trends.

Within part one, regulatory issues dominated all other risk areas, with 30 per cent of respondents noting this is their top risk for the coming year, compared to 23 per cent who selected this category previously.

While regulatory compliance rated number one among 30 per cent of respondents, nearly all (92 per cent) ranked it among their top five exposures. Data privacy and data protection followed, ranked in the top five by 80 per cent, and other leading issues included implications of advanced technology (55 per cent), ESG (53 per cent), increased number of disputes and investigations (50 per cent), and rising legal spend (43 per cent).

Artificial intelligence was also mentioned in the context of risk management by 20 per cent of participants, after not being mentioned at all in previous years.

In the report, one general counsel in Australia said: “I am concerned because we are not clear on its outputs, and we have created a generative AI policy to create guardrails. We cannot prohibit its use because people love it, but I want to make sure there are guidelines that will not run afoul of regulations or our compliance obligations.”

Challenges surrounding emerging data from cloud tools, collaboration platforms and chat applications also all jumped substantially, with 62 per cent of participants stating they had experienced new challenges across disputes, investigations, data protection, governance and compliance, up nearly 20 per cent from the prior year.

Relativity discovery counsel and legal education director David Horrigan said these challenges also relate back to regulatory risk moving forward.

“Managing risk is the raison d’etre for any general counsel, and the data from The General Counsel Report is valuable for gaining insight on where chief legal officers see the leading risks facing corporations today,” he said.

“In the US, we usually see anticipation for regulatory risk to increase after a new presidential administration takes office. Regulatory risk jumping to the top concern in this off-year – leapfrogging data privacy and data protection in the process – shows the significant impact regulations are having on business today.”

Subsequent parts of the report will be released in early 2024.