The Risk Landscape for Legal leaders: 2025 and Beyond

Episode Notes

Transcript

Announcer:

Welcome to The Legal Report from Robert Half where industry leading experts discuss current hiring and practice management issues impacting the legal profession. Robert Half is a premier provider of talent solutions for the legal field. The Legal Report from Robert Half is here on the Legal Talk Network.

Jamy Sullivan:

Hello everyone and welcome. I’m your host, Jamy Sullivan, executive director of the Legal Practice Group For Robert Half. I’d like to welcome back to our program Chad Volkert, global Solutions leader at Protiviti. Chad brings more than two decades of legal optimization and executive management experience to his clients and the US and around the world. He advises C-suite leaders in-house counsel and law firm executives on legal department transformation, talent strategy, litigation and eDiscovery, contract management, data privacy m and a, as well as broader strategic business solutions. Chad, it’s great to have you back on the program. I’m excited to have you here today and to share your insights with our audience.

Charles Volkert:

Jamy, great to be with you. It’s been too long and certainly appreciate the kind invitation to come back to the show and looking forward to our discussion.

Jamy Sullivan:

Excellent. Always great to have you back here, Chad. Alright, so in this episode we’re actually going to dive in and have Chad and I explore Protiviti new executive perspectives on top risks survey. We’ll talk about what’s keeping chief legal officers and general counsels up at night from economic uncertainty and workplace changes to big questions around data privacy, AI as well as global instability. Chad, before we take a deeper dive, can you give us a bit of an overview of what the report is, who it actually surveys and why it matters?

Charles Volkert:

Absolutely Jamy. This is the 13th annual global survey from Protiviti with insights from over 1200 board members and C-suite executives. It’s exploring 32 macroeconomic strategic and operational risks both near term and in our definition of that, that’s two to three years and long-term, which is a 10 plus year horizon. There’s a special focus that we’ll talk about in this edition of the perspective on how chief legal officers and general counsels and their teams are navigating today’s complex risk landscape.

Jamy Sullivan:

Well, there’s certainly a lot to discuss in the report, so let’s go ahead and jump in. Now, according to the survey, the number one near term risk for CLOs and GCs is economic conditions, including inflationary pressures. My first question to you, Chad, is how might economic uncertainty directly affect the legal department’s role within an organization?

Charles Volkert:

Well, Jamy, I mean obviously not only here in the United States, but globally, there is a lot of turmoil around economic conditions and we certainly know that that impacts the C-suite across the board, but as in-house council leadership looks at that, you’re thinking about economic volatility, which tightens budgets, inflates costs, and complicates operations overall. So legal departments are looking to do more with less while they ensure compliance, managing risk and other reputational fallout, there’s a heightened involvement in strategic decisions due to legal implications of cost cutting, restructuring and shifting markets. And so they are in deep conversations with their C-suite colleagues, most notably with the CEO, the CFO, the COO, talking about those implications as they’re moving forward.

Jamy Sullivan:

On that note, then, Chad, can you talk about the increased complexity that CLOs and GCs face in their roles and how are they really adjusting those strategies so that they can manage legal financial as well as reputational risks and facing economic instability?

Charles Volkert:

Well, you think about how long we’ve been talking Jamy and have known each other, I mean it was just a short time ago, whether that was five, maybe 10 years, that the chief legal officer and general counsel’s office many times could operate almost on an island unto themselves worried about risk exposure for the company, maybe reporting into the board, but with the changing landscape out there right now, they are expected to be proactive business partners like never before, not just legal advisors. And so their conversations are now happening multiple times a day with other C-suite executives as they’re partnering together to manage, quite frankly overlapping legal, financial, technical reputation and cultural risks. And they’re adjusting by aligning more closely with risk management, data governance, governance functions of the organization overall in advising even on the changing landscapes of ESG and DEI that are happening both here in the US as well as globally.

Jamy Sullivan:

Indeed, you mentioned culture, so I want to take a deeper dive there as the second on the list of operational risk in the survey is challenges in sustaining culture due to changes in the overall work environment and we know that can mean remote work, hybrid teams as well as how employees expectations continue to shift. So how does company culture and how has it risen to the top of the risk list for COS and GCs? Why do you think that has become such a significant concern?

Charles Volkert:

Well, I think it was always a concern, but it was certainly elevated a lot because of the remote working environment, what can happen working remotely that occurred during COD and how that impacts overall culture of the organization. I think we continue to see organizations that lead with ethics first and values and virtues not having as many concerns and other organizations that maybe didn’t have that as prominent at the front have some catch up to do in and around how they’re handling dilemmas internally from an ethical standpoint, what are they doing regarding compliance? How do they impact and make sure that employee behavior is in line with their overall culture that they’re looking to continue or aspire to along with legal concerns that may arise with the employee base. Obviously it goes without saying that a poor culture, a culture that is not based on ethics and values and virtues equals higher risk of misconduct, regulatory breaches and reputational damage.

Jamy Sullivan:

Well, you make a great point that that’s always been a concern, but the last five years culture has definitely changed with, again, remote and hybrid work and how we’ve had to respond. So pretty significant impacts if you have port culture as you just mentioned. So maybe the follow-up question, how does a weakened corporate culture increase specifically legal and compliance risks for an organization? And then could you even provide some steps that CLOs and GCs can take to mitigate these risks?

Charles Volkert:

Sure. Jamy, what I think is interesting is we’re doing a lot of advisory work with organizations across the full spectrum of the C-suite on how to drive additional areas of opportunity within culture with their staffs, and certainly we see a weak culture that can result in lapses in compliance, the increased misconduct, the regulatory scrutiny maybe by bad actors or bad processes. And so legal leaders must really work diligently to embed governance frameworks and promote ethical standards within the organizations, even in a world of distributed teams across the globe, let alone not all in an office at any one time with many organizations because of the remote work. Some of the suggestions or maybe even what we would call key tools is making sure that you really solidify your policy training, you create those playbooks, you have an effective rollout, you focus on top-down influence, right?

At the end of the day, if your leaders are not imparting these cultural values that you’re looking to drive within the organization, then no one sort of mid company or even new hires coming into the organization are going to be guided by the right principles and then having a consistent cultural message during change events that could be change events that are positive like a merger and acquisition or that could be change events of some sort of natural disaster, some sort of issue within the organization from a regulatory standpoint or a corporate investigation. And you have to make sure that your messaging during those change events is really, really laser focused on how to pull the company through.

Jamy Sullivan:

Great points, Chad, and I think really helpful to our listeners for sure. I want to switch gears here and go to the number three and the number five that are on the lists just because they’re closely related. So I thought we could maybe address both of them together. Number three is the near term risk of being increased labor costs. And then number five is the ability to attract, develop, and retain top talent while managing shifts in those labor expectations and addressing succession challenges. So quite a bit to unpack there, but maybe we start with the rising labor costs and how have these increased costs really specifically affected the legal department and what legal risks have you seen associated with them?

Charles Volkert:

Well, Jamy, I really love all of these easy questions. You’re giving me some good ones and ones that we need to continue to look at and as they evolve going forward, but certainly rising labor costs increase pressure on the legal budgets and HR strategy as I mentioned before, and it brings legal exposure in areas like wage and hour claims, pay equity and overall benefits, especially around litigation and some of the other aspects that increase labor costs really drive. And so I think it’s important again to mention that the legal department needs to be attached at the hip with hr. Many times they are, but revisit that plan as well as with the financial team to really have your arms around how these things are impacted in the marketplace, what it means if litigation occurs, how to stop litigation before it happens, what is the cost of doing business as they say, which may be more preventative than downstream when the fire is already happening.

Jamy Sullivan:

Definitely, well as we’re going to most likely continue to see this labor shortage and rising costs ongoing more broadly then. So not just legal leaders but the C-suite, et cetera, they’re facing those challenges. Can they even attract the talent that they need on their team? Can they retain the talent that they need on their team? So how does this issue increase legal risks? Same question, basically, how is that increasing risk and what again are some steps that they could take from the CLO or the GCs perspective to really address this issue in talent?

Charles Volkert:

Sure. I would say this continued high demand for great talent across really all professional services, as you know with Robert Half Jamy, but certainly in the legal space that I can speak to, increases costs and makes retention difficult. I would say especially in these high, high demand areas like privacy, the AI governance, some of your more sophisticated legal functions, if you’re a very litigious organization based on what you do or what you make, that can be a real cost where you need deep expertise. And so top dollar needs to be paid to attract and retain those individuals and build out really a function for them to thrive within your organization. Legal risks rise again from poorly managed workforce transitions, misclassified roles, and even succession gaps. And so I would recommend to chief legal officers and general counsels, they need to prioritize workforce planning and support flexible talent strategies, right?

At the end of the day, how do they partner effectively with their outside counsel and how do they partner effectively with alternative legal service providers, consulting firms, really in what is now a fantastic looking triangle that that sort of three headed dimension on how to provide solutions and come up with legal work, who’s doing that work, how that functions really needs to be thought out because you can’t just keep hiring and hiring. You don’t many times need a full-time individual. Law firms are looking to create flexibility for their clients as well. And with the consulting firms out there that can provide AI and other technology optimization and enablement tools as well as some deep experts within the consulting field that obviously don’t practice law, but are there to support the in-house council and at their outside council firms, you can really find a great blend to provide those solutions going forward.

Jamy Sullivan:

Well, I like the exact verbiage that you use of prioritize workforce planning and something I’ve even seen, you mentioned AI tech, how are they implementing that into their organization is a great way to attract and retain talent and then also upskilling the current talent that you have. Those are some other strategies that we’ve seen that really work. So great points that you’ve made, and hopefully our audience will take away some thoughts there on what they can do really bucket it all into this. Number three and number five was the hot topic of succession planning. And I hear this one come up quite a bit as it relates to a senior legal leader is retiring or decides to exit, so succession planning becomes a really critical point in that strategy. How can legal leaders address these gaps and also reduce the risk of operational or legal disruptions if somebody does leave our exits?

Charles Volkert:

Well, you’re exactly right, Jamy. I mean, as the generational divide continues, you will have a number of senior legal professionals retiring from the profession or stepping back from full-time work, and that creates a significant knowledge gap. And to your point, operational disruptions. And we see organizations think about succession planning from the CEO level many times COO level, the CFO level, but less thought I have seen over the years in my experience has been given to that chief legal officer in the general counsel role many times. And so that lack of succession planning, if that is occurring at a particular organization, certainly increases the exposure around compliance failures, inconsistent legal decision making and lack of stability with key legal decisions that may need to be relayed to other C-suite members or work hand in hand with trusted outside counsel and the legal consulting firms that they work with.

I would suggest a couple of simple things. I think fairly straightforward, develop internal pipelines, mentorship programs and documentation of critical processes. This is easier. The last one is easier than ever with tech optimization, the way we track internal data, but coming in and doing a data map, building out a playbook of what is happening within the legal department, especially around the senior leader who may be thinking about stepping into retirement is crucial. I’m working with a company right now that has an unbelievable general counsel. I mean, absolutely fantastic, but retirement is only a year or so away, and the number two on the team is not someone that the CEO sees stepping into that GC role. So what do you do right now with a year left? How do you begin to embed somebody? Look for somebody? I certainly would encourage them to do an overlap timeframe. You have to go outside the organization, you have to hire somebody. There’s going to be an increased cost maybe for a six month or 90 day overlap, but I tell you that will pay huge dividends Jamy down the line because you will not have the failures and the gaps if that general counsel retires without an individual ready to step in to his or her shoes.

Jamy Sullivan:

Well, I wish that I had one year to go to retirement, but you just laid out some really good solutions to think about because I know I have this come up a lot of the times, the conferences that we go to and what are some good ideas around succession planning. So thank you for sharing all of that.

Charles Volkert:

One last thing I’d mention there, Jamy, is you’re thinking about rounding out the top five near term risks. I just wanted to point out number four is focused on ensuring privacy and compliance with growing privacy and identity protection risks and expectations. And as privacy laws grow more complex and AI adoption accelerates, legal departments and legal leaders face a triple threat, the privacy AI and ethical oversight with rising concerns around fairness, transparency, data protection, you name it. And so I just wanted to call that out because we touched briefly on privacy and the need around having experts with privacy ai, but that’s not going away. That is only accelerating. That is a lot of work we do both for in-house counsel and law firms is coming in and advising and consulting with them around this data protection and the various legalities of privacy and how to use AI ethically and effectively. I would just have our listeners keep that in mind for all of the other topics that we’ve been discussing.

Jamy Sullivan:

Excellent. Well, clearly there is certainly no shortage of risks that our chief legal officers and general counsels are currently navigating right now. When we come back, we’ll wrap up and talk a little bit more about that data privacy aspect and then prepare for how can legal leaders really face those challenges on a long-term horizon. But first, let’s take a quick break.

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Jamy Sullivan:

Welcome back to The Legal Report from Robert. Half my guest, Chad Volgar and I have been discussing the evolving risk landscape for legal leaders as outlined in the Protiviti 2025 executive perspectives on top risks survey. Just before the break, we started to talk about the number four near-term risk that was specifically around ensuring privacy and compliance with growing privacy and identity protection risks and expectations. So building on that, Chad, let’s now turn to the major concern at the intersection of AI and data privacy. With the accelerated adoption of AI and its reliance on personal data, how can legal executives ensure transparency and fairness in AI driven processes?

Charles Volkert:

Jamy, what’s interesting about this question is my conversations with CEOs and chief operating officers, they’re putting a lot of pressure on the in-house council at their organizations to really focus on this area rightfully, and I think as we attend events like the Association of Corporate Council and other in-house council events, this is a key topic. And so the general counsel’s office must establish oversight for AI usage, especially for personal data and automated decisions. They need to build defensible policies for fairness, explainability, and audibility and legal teams must be able to table as an AI governance framework evolve, get into the think tanks and the design thinking around that with their technology colleagues and other members of the organization that have input there.

Jamy Sullivan:

Very good. We know that one’s not going away. It will continue to evolve as we see that acceleration of ai. Maybe finally, if we could shift the focus, and I specifically wanted to ask you about the public sector and how AI is being used at the government level, and maybe you could share concerns that potential legal executives have about AI being used by the government to analyze public data, especially regarding personal data and fairness as we’ve been discussing.

Charles Volkert:

Absolutely Jamy, and I think this is going to continue to evolve as well. Some governments now use AI to analyze public disclosures and flag potential ethics issues. And so certainly executives and legal executives are worrying about accuracy, context and fairness in those algorithms. And the assessments, the risk of reputational damage or misinterpretation of sensitive and sometimes confidential information calls for the engagements with regulators. And so this is going to be something that we’re going to continue to have to follow, and the legal professionals both in-house as well as advising them from a law firm and a consulting perspective are going to be all over this and continue to look at ways to ensure the security and confidentiality of the data through the use of ai, whether it’s being used outside or inside the organization.

Jamy Sullivan:

Great points, Chad, and as you said, it will be an evolving topic for years to come, for sure. Well, now we have covered some of those immediate challenges. Let’s shift to the big picture and look at some of the top macroeconomic strategic and operative risks that legal leaders are thinking about long-term. The top macroeconomic risks over the next 10 years for chief legal officers and general counsels has been coined as geopolitical shifts, regional conflicts and instability in governmental regimes. Chad, why are the geopolitical shifts so difficult to manage and how can legal leaders adapt to these changes while they’re still ensuring compliance and protecting their overall organization’s reputation and operations?

Charles Volkert:

Well, Jamy, you think about just the evolution of business and how many organizations now deal with a global footprint either in offices, supply chain products, you name it, right? Information, governance, privacy. I mean, the list keeps growing and growing. And so even companies that may only be doing business in the United States by selling their product or dealing with clients may be impacted by these unpredictable and dynamic geopolitical shifts around the globe. This is going to affect your contracts, your supply chain, your regulatory exposure and ethics. I mean, this is a huge growing area of advisory services that I know we and many others are providing to clients because every day is different, let alone the tariff discussions that we’re now having in and around this and how that impacts and modifies really everything that is coming through an organization if you’re impacted by that and understanding the different in-country policies and laws, and I think the legal departments, those chief legal officers must scenario plan, ensure contractual agility and track shifting legal regimes.

This contracts piece is key Jamy because at the end of the day, if you can get out ahead and make some modifications around your contracts proactively in what I call a friendly environment versus as that contract is expiring or renewing, which is much more adversarial many times based on changes in pricing and terms, you’re going to help your organization do that. We’re using a lot of ai, proprietary AI to enable companies to be able to quickly move through contracts and be able to spot these areas that need to be updated. And I would encourage the organizations to get out ahead of that. And finally, as the role expands to include geopolitical advisory and crisis relationships, that’s a legal strategy that needs to be kept in mind and really driven by the chief legal officer in the general counsel’s office.

Jamy Sullivan:

It’s an interesting landscape and quite a bit that is involved when you address it that way. And as we keep saying, it will be an ongoing topic for our audience. So really great insights from the survey on that particularly. And then also the survey. It really addresses that top strategic risk, if you will, listed as ease of entrance of new competitors or other changes in the competitive environments. I’m a little bit more can curious about this topic is what is the definition of new competitors and what are some of the key legal and strategic risks that they present to those already established organizations?

Charles Volkert:

Well, on the first question, Jamy, I would say these new competitors refer to startups, tech disruptors, foreign entrons, and quite frankly, often all of these or some of these have little regard for regulatory norms or are disrupting the marketplace and are not being held to the same regulatory standards as maybe the incumbents. You think about what that means from legal risk, that increases IP theft concerns, antitrust concerns, rapid shifts in compliance expectations, just to name a few, let alone going after an organization that might be stealing or taking advantage of you with litigation claims. And that can be very, very costly. So I think the in-house counsel leadership and the C-suite need to defend assets. They need to focus on how do they adapt faster. They need to be thinking with that crystal ball, what could be coming from a competitive landscape and guide competitive strategy. And again, because of all of that being co-mingled, so to speak, Jamy, the entire C-suite has to be involved in those type of discussions inclusive of the legal counsel at that organization.

Jamy Sullivan:

Well, those are all significant impacts, and it actually then leads to my final question regarding the top operational risk of cyber threats. What do you foresee as the key legal ramifications of cyber attacks over the next decade? And part two, how should legal leaders prepare for potential regulatory litigation as well as governance challenges that they will face

Charles Volkert:

Jamy? We could spend an entire show on this topic alone, and I could bring some great expert colleagues, but I would mention just a couple of things. When cyber attacks first happened, it was thought at that time, this is an IT problem, right? But at the end of the day, cyber attacks now lead to regulatory investigation, shareholder lawsuits and reputational crisis. The more data there is and the more data is now being exposed with cyber attacks causes a cascading effect throughout the entire organization and other organizations that might be impacted as well. So legal teams must help shape incident response plans, data governance, and cross border compliance. I remember just a few years ago with breaches that we would support here at productivity. Many times we were only dealing with it. Now that first phone call many times comes from legal, and there is a large group of very senior executives on that call from all different departments talking about how to handle this type of a situation. And again, my suggestion always is do your testing, do as much upfront as possible to try to prevent these and stay away from the larger issue. But by 2035, general councils will be central to digital risk and cyber resilience strategies. That seems far off, but at the end of the day, they’re already being actively involved, as I mentioned, and that’s just going to continue to accelerate.

Jamy Sullivan:

Well working hand in hand, you’ve said it a few times that the gc, the CLO really has to have a seat at the table working hand in hand, as you mentioned with it, but the entire C-suite on any number of these risks that we’ve talked about today. So all valid points, very compelling insights and excited about the survey data that you’ve shared today. Chad,

Charles Volkert:

Hopefully it was helpful to our listeners. I know these are big topics and ones that we will continue to stay on the front edge of in order to drive our best advice out to our clients.

Jamy Sullivan:

Indeed, my guest today has been Chad Volkert, global Solutions leader at Protiviti. Chad, once again, it’s been great having you back on the program. As you said, it’s been too long, so we always look forward to having your insights. And actually before we close out, how can our listeners access the executive Perspectives on Top Risks Survey and how can they get in touch with you?

Charles Volkert:

Jamy? Once again, thank you so much for having me on the show. It’s always great to be with you. They can certainly go to our website, www protiviti.com, that’s P-R-O-T-I-V-I-T-I, or they can certainly reach out to me. I always welcome that they can call me at three zero five seven nine four one nine three or send me an email at Charles Do Volkert. That’s as in Victor [email protected].

Jamy Sullivan:

Wonderful. Thanks again, Chad and listeners, you can reach me at Jamy, JMY dot Sullivan at Robert Half dot com. And special thanks to all of you, the listener. If you enjoyed this episode, we’d love for you to rate us on your favorite podcast platform and follow Robert Half and the Legal Talk Network on X and Facebook. Also, be sure to visit Robert Half dot com for more insights and resources. Join us again for the next edition of The Legal Report from Robert Half right here on the Legal Talk Network as we dive into key trends shaping the legal field and legal careers. Until next time, be, be well.

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