The Prediction for 2023? More Unpredictability

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The Shift: The Prediction for 2023? More Unpredictability

For general counsel and their legal departments, it’s been another demanding year. They have navigated a tight labor market, economic uncertainty, geopolitical challenges and increasing risk stemming from a number of operational, reputational, regulatory, legal and financial factors. In this environment, it’s difficult to meet the challenges of the day, let alone plan for new ones on the horizon.

That is why when I ask legal department leaders about the one thing they would wish for when ringing in the New Year they (half-jokingly) mention a year of calm and consistency. In all seriousness, they would love just one year of predictability when it comes to risk, revenue growth and, yes, budgets.

However, although they may be toasting to that wish as the clock strikes 12 on Jan. 1, it looks like 2023 will be bringing in as much unpredictability as it can muster—including added pressure to their budgets with possible law firm rate hikes that are coming down the pike.

The Conversation

But it is not all doom and gloom. Sarah Rosser, General Counsel and Executive Director of Lenovo says that the past few years of social and economic upheavals have helped her feel a bit more prepared to face unpredictable situations.

“I think we’ve learned it’s important to accept complexity and uncertainty, and to adapt to these situations as they arise as much as we can.”

Carolyn Herzog, chief legal officer of software development company Elastic, said that utilizing resources in a smart way across the business is critical.

“We’re all going to be working with limited resources. We have to connect our resources in the most effective, efficient way. That reality will make interactions with other parts of the business tricky.”

According to Jerry Bui, Managing Director, Digital Forensics & Investigations, you need to be proactive and not be caught on your heels.

“Whatever the New Year brings for legal departments, data and digital risk will be at the forefront. Even amid turbulence and persistent uncertainty, legal teams can prepare by implementing proactive programs, making smart technology investments and strengthening information governance.”

The Significance

The unknowns around the economy, evolving regulatory and geopolitical landscape and rising stakeholder expectations means that legal chiefs will need to be flexible, agile and exhibit strong leadership in 2023.

“With the volatile macroeconomic environment, it’s even more important for us to be strong leaders, to be authentic, candid and as transparent as we can be to keep people engaged and be willing to help rally people around the highest priorities,” said Michele Lau, chief legal officer of GoDaddy.

Because GCs are all working off a budget, they must also determine the most important things they’re trying to achieve in order to demonstrate value to the business.

“We really need to leverage our teams but also our communities for help,” Lau said.

In addition, the unpredictability is affecting the job market. Top in-house lawyers looking for new jobs are ratcheting down their appetite for risk, favoring stable, less flashy companies as economic headwinds buffet the tech industry and venture-backed startups.

Recruiters say candidates also are seeking more of their compensation in cash instead of stock options. Options can soar if a company hits it big. But many recent grants have slid underwater, amid falling tech stock prices and declining valuations at startups.

“Those fly-by-night, Series A companies people would quit their law firm jobs for—no one is quitting for them now,” said Sean Burke, founding partner of the boutique legal recruiting firm Whistler Partners. There’s definitely right now a huge shift toward prioritizing security and maybe going with a resume builder that has a higher base salary or stock at an actual public company, and not options,” he said.

The Information

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The Forecast

With economic uncertainty, companies will have to do more with less. But at the same time, they’ll have to make sure employees feel engaged and included. With bandwith stretched, now may be the time for companies to invest in technology to boost efficiency, according to Michele Lau, chief legal officer of GoDaddy.

“The knee-jerk reaction is obvious ways to cut costs” and the technology investments are often the first to get cut. The problem with that is that that means that we may be continuing to do manual processes, and it’s not sustainable to continue to do those without more headcount, and you’re not getting more headcount,” she said. “So you really have to figure out how to work smarter.”

Lau said one of the skills legal chiefs have is the ability to lead through complexity, often without perfect information. She said that will be particularly important in 2023.

“You just have to apply the best judgment that you can. There are gifts in this next year as well because it will help people practice that muscle.”

Heather D. Nevitt is the Editor-in-Chief of Corporate Counsel, Corporate Counsel Advance and Global Leaders in Law. Email her at hnevit@alm.com and find her on Twitter @HeatherDNevitt