The Governance Relevance of the ACC Chief Legal Officers Survey

By Michael W. Peregrine


Chief Legal Officer Legal Risk Sarbanes Oxley

The Association of Corporate Counsel’s (ACC) annual survey of chief legal officers (CLO) should be required reading for the board’s governance and audit or compliance committees. In speaking to the structure, concerns, and focus of the corporate legal function, the survey helps inform the board’s important duty to exercise oversight of that function.

The 2024 ACC Chief Legal Officers Survey offers insight into the top areas of concern of almost 700 CLOs in various industry sectors, at companies of different types, and at companies of varying revenues around the world. Over the years, it has established a reputation as a key reference point for in-house corporate counsel in terms of shared interests, concerns, and accepted administrative and practice standards. For the very same reasons, the survey should be considered an important reference point for the board when exercising its specific legal affairs oversight functions.

The obligation of the board to exercise oversight of the corporation’s legal affairs can be traced, at least formally, to the evolution of corporate responsibility principles in the wake of the Sarbanes-Oxley Act more than 20 years ago.

That seismic law created a greater awareness of how properly designed board monitoring can support the in-house counsel’s critical role in exercising professional judgment and promoting corporate legal compliance. The law also clarified how such monitoring can protect in-house counsel from forces that could marginalize their resources and undermine their judgment, to the detriment of the corporation.

The survey’s relevance to boards arises from its comprehensive data on the structure and hierarchical importance of the in-house legal function, the issues confronting that function, and the vertical reporting relationships that are critical to supporting the effectiveness of that function. These are the types of things that the board should know if it is going to be serious in its related monitoring and measuring of legal affairs effectiveness. Areas of board focus from the survey may include the following:

Pressing legal concerns: The board’s risk oversight monitoring will be enhanced by an awareness of what survey respondents identified as most likely to “keep them up at night.” This includes regulations and enforcement (53%), privacy and data security (41%), cybersecurity threats (37%), and retaining talent (28%).

The “do more with less” phenomenon: Fifty-nine percent of respondents indicated that their workloads either significantly or somewhat increased in the past year, which stresses the importance of assuring proper resources for the legal function. At the same time, 42 percent of respondents reported operating under new cost-cutting mandates and 58 percent reported that their department has been impacted by law firm rate hikes with most departments either maintaining or decreasing current lawyer staffing levels.

Additional management duties: The administrative responsibilities of the CLO continue to expand with more than 58 percent of respondents serving as the direct manager of at least three additional company functions. Most common among these was corporate compliance, with almost 70 percent of respondents indicating that compliance staff reports to the CLO. Other functions that seem to report to the CLO with a material consistency include, in declining order, privacy, ethics, and risk.

Risk mitigation: The board’s risk oversight agenda will benefit from an awareness of survey observations on the specific threats that CLOs will focus on in their mitigation efforts in 2024. Top among these are data-related threats (34%), closely followed by privacy and regulatory enforcement (32%), and other security-based threats (24%).

Interaction with the business: The data reflective of the CLO’s integration into the regular operational activity of corporate leadership is particularly important. The more CLOs are involved in business operations, the more likely they are to recognize, and help address, the legal and compliance pressures managers face. The survey results demonstrate this in several different ways:

  • Attendance at board meetings: Unfortunately, the percentage of responding CLOs who regularly attend board meetings dropped for the first time in several years from 82 percent to 76 percent year over year. The decline is a yellow warning flag given the importance generally attributed to having legal counsel attend board meetings. The indication that almost 25 percent of respondents do not regularly attend board meetings is particularly worrisome.
  • Interaction with executives: A similarly disturbing indicator is the decreasing percentage of CLOs who responded that they regularly meet with business leaders to discuss operational issues and risk (i.e., from a high of 76 percent in 2020 to a low of 64 percent in 2024). The suggestion is that the interest of CEOs in involving the CLO early in the development of operational tactics and the evaluation of risks is declining.
  • Consultation on business matters: The sharp decline in the percentage of CLOs indicating that they are regularly sought out by their executive groups for input on strategic business opportunities is also concerning. The percentage dropped from a high of 73 percent in 2020 to 48 percent in 2024, which suggests that 62 percent of responding CLOs aren’t regularly consulted by their leadership on strategic business interests.

The CLO’s role and reach: The board may also be interested in survey data that track the CLO’s integration as a regular member of the senior leadership team. The survey results show this integration in several different ways:

  • Job title: Use of the title “chief legal officer” is steadily increasing, from 21 percent of respondents holding the title in 2022 to 28 percent in 2024. Boards should understand how the title is interpreted within their organizations and whether it serves to extend greater responsibility and a higher position on the organizational depth chart than that of “general counsel.”
  • Additional roles: The percentage of respondents who also serve as corporate secretary declined 5 percent in the last year. Boards may want to inquire as to the practice at their own companies, since the position usually carries with it significant governance responsibilities and the CLO is ordinarily an ideal fit for this role.
  • Reporting to the CEO: A favorable governance indicator from the survey is that the percentage of CLOs with a direct reporting relationship to their company’s CEO has remained constant over the past six years, with results ranging from 81 percent to 84 percent. The ability of the CLO to have a formal reporting and communication relationship with the CEO is a strong indicator of corporate responsibility.
  • Reporting to the board: The percentage of CLOs with a separate reporting relationship to the board of directors has remained flat over the last three years, ranging from 51 percent to 53 percent, which is disappointing from a governance perspective. This result is contrary to the core governance principle that the CLO also serves the board as its primary legal advisor (absent conflict).

The ACC is a highly respected organization, and its annual CLO survey is viewed favorably by many legal and business leaders. It offers governing boards a detailed snapshot of the key issues CLOs face. Of course, no survey—regardless of its level of credibility—should be the sole basis on which the board conducts its internal diligence on the effectiveness of the corporate legal function. Nevertheless, the survey is a reliable source of information to the board with respect to the operation of that legal function and may prompt further discussion between the board and leadership of its internal legal function on matters of resources, scope of responsibilities, vertical and horizontal reporting and coordination, and closer engagement with management.

Michael W. Peregrine
Michael Peregrine is a partner at McDermott Will & Emery.