Bloomberg BNA: Top Legal Trends in 2015, Predictions for 2016

Originally Published in Bloomberg BNA | Oct. 20, 2015 | By Paul Mandell

In today’s complex and competitive global business environment, legal executives, including General Counsel, Chief Compliance Officers and Chief IP Counsel, are considered strategic partners to the CEO, the Board and the rest of the C-Suite. These corporate leaders must be ahead of the curve in anticipating and protecting against future concerns that their companies may face — both legal and non-legal. As 2015 enters its final months, legal executives can benefit from reviewing some of the top issues executives faced over the past year and identifying key issues upon which they should be prepared to focus on in 2016.

Since 2012, my company, Consero, which hosts sector-specific events for senior professionals, has been conducting surveys of our Forum participants, including at our events for the legal sector. As 2015 draws to a close, it is helpful to take a retrospective look at the major concerns that were reported in these surveys during 2015.

Here are some of the top findings from Consero’s 2015 legal surveys for Chief Compliance Officers, Chief IP Counsel and General Counsel, as well as a few key predictions of challenges that executives may confront in 2016.

From Supplier Risk to Technological Infrastructure, Chief Compliance Officers Grappled with Diverse Concerns

In 2015, Chief Compliance Officers faced an increasingly complicated business landscape. Confronted with a growing volume of global regulations and internal corporate compliance policies, these executives revealed that top areas of concern included supplier risk, bribery/corruption, training program efficacy and perceived insufficiencies in corporate technological infrastructure.

1. Increased Concern About Supplier Risk:

Increased use of third parties brings greater risks. At the start of 2015, a survey of CCOs revealed both higher use of third-party suppliers and an accompanying rising concern for the adequacy of those suppliers’ focus on risk minimization.

First, the survey found that 44 percent of surveyed executives said the number of suppliers they were using had increased in the past 12 months. At the same time, the survey found a vast majority of participating executives — 70 percent — felt that their suppliers’ focus on minimizing risk was insufficient. That percentage has increased since 2013, when 52 percent thought suppliers were insufficiently focused on minimizing risk.

2. Ongoing Focus on Bribery/Corruption and Compliance Training:

The new year began with executives identifying bribery/corruption as a perceived top area of risk. According to Consero’s January 2015 survey of Chief Compliance Officers, 30 percent of executives named bribery/corruption a top area of risk at their company, followed by fraud (19 percent) and intellectual property (12 percent).

When surveyed in April, a group of Chief Compliance Officers again reported that corruption and bribery remained top risks. These executives also reported that they were responding to the risk with requisite training, with two-thirds (67%) saying bribery and corruption training was mandatory at their companies for all managers.

3. Worries About Insufficient Technology Infrastructure:

As the role of the Chief Compliance Officer has become more important and challenging, companies require enhanced technological resources to address demands. However, an April survey identified technological infrastructure as a potential trouble spot, with just 20 percent of surveyed executives saying they believed their company had the proper technology infrastructure necessary to meet the needs of their compliance operations.

 

What Can Compliance Officers Expect in 2016?

Companies will likely continue to seek to accelerate growth by tackling new markets. As a result, Chief Compliance Officers will feel the strain of managing compliance issues in these new markets, including supplier risk, bribery/corruption and effective compliance training.

Chief IP Officers Focused on Foreign Threats and a Changing Approach to the Patent Process in 2015

While compliance executives grappled with issues such as supplier risk, training programs and thwarting corruption, their colleagues in intellectual property management expressed concerns for a different set of issues.

Top concerns among Chief IP Counsel included foreign threats, the impact of the AIA on the patent process, dissatisfaction with IT departments and the level of resources at their department’s disposal.

1. A Need to Focus on Foreign Threats:

Consero’s June survey of Chief IP Counsel found executives were split on whether their companies were sufficiently focused on foreign IP threats, with 51 percent saying the focus on global threats was not adequate. Furthermore, an overwhelming majority (89 percent) of those surveyed felt that foreign governments were not doing enough to mitigate IP threats and thefts. In addition, half of surveyed executives did not believe their companies were sufficiently familiar with global patent laws.

2. Executives Expressed Dissatisfaction with IT:

IP Counsel also expressed their dissatisfaction with their interaction with IT. Sixty percent of Chief IP counsel said they were not satisfied with the IT department of their organization.

3. Adapting to AIA Means Changing Approaches to the Patent Process:

A survey of Chief IP Counsel in the life sciences found that, in early 2015, as the two-year mark approached since the America Invents Act (AIA) had gone into effect, more than three-quarters (78 percent) of Chief IP Officers said the AIA has altered their approach to the patent process. Furthermore, the AIA has made the process for Post-Grant Review and Inter Partes Review more complex for 68 percent of respondents.

What Can Chief IP Officers Expect in 2016?

The protection of intellectual property in foreign markets is crucial to success in today’s global environment. It will remain critically important for Chief IP Counsel to strengthen their focus on foreign IP threats and theft in 2016, particularly given the lack of confidence these executives expressed in 2015 regarding the efforts of foreign governments to mitigate such threats.

GCs Confronted Data Security, Resource Availability and M&A Due Diligence This Year

Expected to be a key partner in the success of the overall business operation, the modern General Counsel must be both highly informed and highly versatile. In 2015, top concerns reported by General Counsel of Fortune 1,000 companies included data security, resource availability and M&A due diligence.

1. Data Security a Top Priority:

Data security was a prominent concern for General Counsel. In June 2015, Consero’s survey of General Counsel of Fortune 1,000 companies revealed that, despite high-profile data hacking scandals like those experienced by JP Morgan and Sony, 60 percent of General Counsel said their companies still lacked the proper preparation for a possible data breach.

As such, data privacy/security was listed as a top priority among 21 percent of General Counsel, behind compliance and ethics at 27 percent. When GCs were asked about their top area of risk in the coming months, data privacy/security came in third behind regulatory compliance and operation risk.

However, despite the high level of concern, the threat remained just a threat for most survey participants. A significant majority of executives (70 percent) reported that their companies had not experienced a cyber security breach in the last 12 months.

2. GCs Strapped for Resources:

Resource availability was a reported problem. Fifty percent of General Counsel noted that they did not have access to sufficient resources to manage their departments effectively.

3. M&A Due Diligence a High Priority:

When asked how the volume of M&A due diligence performed by their departments had changed over the past 12 months, 36 percent reported an increase, while 51 percent reported no change, indicating continued and increased focus on mergers and acquisitions.

What Can GCs Expect in 2016?

For General Counsel, 2016 will bring an increasing focus on cybersecurity. The scope of these cybersecurity will require a heightened level of collaboration, and 2016 should see legal executives increasingly collaborating with their colleagues in IT and throughout the C-Suite.

Another area of focus will continue to be M&A, especially for GCs in the healthcare sector. As hospitals seek to adapt to the changes of the Affordable Care Act, legal executives in the healthcare industry will be under continued or increasing pressure to pursue M&A.

The Bottom Line: Legal Executives Must Keep a Step Ahead

Now more than ever before, legal executives must remain one step ahead of the issues their companies will face. As they look forward to tackling 2016’s challenges, they should continue to monitor the work of their peers at other institutions, and leverage survey results and other data and best practices to lead their companies toward better corporate performance.