5 Things General Counsel Need to Know for 2014

December 19th, 2013

The past year saw some of the largest regulatory fines ever levied, increased global coordination across different regulatory bodies and the continued evolution of the legal market through new technologies and services.

From the Experts

By Brian Flack |  All Articles

As we head into 2014, the legal landscape is evolving faster than ever before, and general counsel need to stay on top of industry trends, emerging technologies and the complex regulatory environment in which they operate.

From data privacy to cloud-based legal services, here are five things general counsel need to know for the coming year:

1. DATA PRIVACY GETS EVEN MORE SERIOUS

Google, Yahoo, Facebook—all are data behemoths under intense public scrutiny for potentially misusing client data and for not guaranteeing its integrity and security. But maintaining data privacy and security is not just a PR issue—the legal ramifications of data leaks and cyber-attacks have never been more pronounced.

IT departments around the world are renewing their efforts to develop and perfect systems to protect sensitive data from cyber-terrorism and from hackers trying to access client and customer data. GCs need to understand and to articulate the impacts that these security measures have—especially when they fail.

If data is compromised, what are your liabilities? What is the appropriate course of action? What is your protocol for notifying your customers and other end-parties?

There is a delicate balancing act here: how to protect the privacy rights of those custodians whose information you have while acknowledging the public’s right to access this information. The need to weigh the risks and benefits of aggressively pushing your business forward while also guaranteeing privacy and maintaining transparency will weigh more heavily on the minds of GCs in 2014.

Regardless of your stance, you need to develop an action plan that you can implement from the get-go should your company be hit with a massive data breach or cyber-attack. You need to know if people are having this discussion in your company. If you’re not at the table, you should be.

2. CLOUD-BASED AND ONLINE LEGAL SERVICES ARE ON THE RISE

Attend a legal conference or industry event and you’re bound to hear about the important role that technology is playing in the e-discovery space and in the automation of document review (predictive coding, anyone?).

Less discussed is the growing popularity of cloud-based and other legal software—online tools and apps that have the potential to significantly alter and improve the way GCs conduct business.

Consider ContractRoom, an online platform through which multiple parties can access, revise, negotiate and sign a contract from anywhere in the world—and in any language.

Ravel Law, a legal research tool, allows users to search for case information across jurisdictions and years, using data analytics to visualize results in a compelling, game-changing way. (Try it out now—it’s really cool.)

Or how about Wickr, an app that allows users to send each other military-grade encrypted messages that can self-destruct and help ensure total privacy?

GCs will increasingly have the option to leverage cloud-based tools like ContractRoom, Ravel Law and Wickr to be able to drive efficiencies in unexpected and potentially disruptive ways across their legal department. And as processes and tasks become increasingly automated and conducted in the cloud, perhaps we’ll begin to distill law to its fundamentals: ideas and arguments, rather than paperwork and redlining.

3. DATA-PRESERVATION STRATEGIES ARE MORE IMPORTANT THAN EVER

Data is growing at a seemingly Malthusian rate. GCs around the world are grappling not only with the sheer volume of data their companies produce, but also with the legal ramifications of potentially mishandling—or destroying—this data.

What are your requirements to hold data? How do you access, store and archive data, and what systems do you use? What about legacy data? What can you destroy and not destroy?

Every company is different. Some GCs will find that data retention is not a priority; heavily regulated companies may find themselves mandated by legislation to preserve all data. There is no one-size-fits-all approach, but in an age of exponential data growth, counsel need to be more proactive in identifying and formulating their preservation duties—and then deciding to what length they are willing to go to perform them.

As GCs work with management and IT in 2014 to understand and implement ways to control their data footprint, they need to be mindful of the constantly shifting regulatory landscape—and to have a defensible, holistic strategy.

4. ALTERNATIVES TO BIG LAW FIRMS ARE HERE TO STAY

The legal ecosystem is diversifying rapidly. The firms that general counsel work with—and the way they work with them—are going to drastically evolve in the year ahead.

Change is already underway: GCs increasingly are turning away from large, traditional law firms, opting instead to work with smaller, regional firms. These smaller shops, often less expensive than their large counterparts, also are uniquely designed to develop expertise in niche areas of the law, providing a focus and care to attention that larger law firms simply can’t deliver.

But there’s more at play here than just a regional vs. traditional, David vs. Goliath law firm dynamic. In addition to regional firms, there has been a proliferation of alternative firms such as virtual and boutique firms and investigation specialists that provide a variety of legal offerings and cost models.

Riverview Law, one such alternative firm, provides access to legal advice and support at a substantially reduced price by veering away from the partner model and placing an emphasis on efficiency rather than billable hours. Virtual law firms, such as VLP, are eschewing antiquated overhead costs and adopting nimble technology to offer more affordable and global legal advice.

The increase in the number and variety of legal vendors out there, not to mention the highly attractive and adaptable cost models they offer, is great news for GCs tired of the status quo. As the legal ecosystem becomes more crowded, complex and competitive in 2014, GCs should approach their legal spend strategically and build a diversified portfolio of legal providers.

5. CHANGE IS AFOOT FOR IN-HOUSE PRIVILEGE IN EUROPE

General counsel in the U.S. enjoy a luxurious amount of in-house privilege. And while this isn’t the case for their counterparts in Europe, this may soon change, as the E.U.’s traditionally cool stance toward applying privilege to in-house counsel seems to be thawing.

In a ruling this past March, the Brussels’ Court of Appeal (BCA) rejected a decades-long European precedent by decreeing that all communications and advice provided by in-house counsel to their employers are privileged. Although this ruling is limited in scope and does not apply outside of Belgium, the BCA’s decision may very well encourage other national courts to issue similar judgments. And if enough momentum builds, the European Court of Justice might finally modify its stance on in-house privilege.

As GCs wait in 2014 to see in which direction the wind is blowing, they need to ensure that they are employing a consistent strategy with all the firms and cases with which they’re dealing. And, as they tackle international litigation and investigations, GCs need to accommodate nuance and approach privilege in a practical, cross-border manner.

What are your predictions for general counsel for 2014?

Brian Flack is the general counsel and vice president of client services at Clutch Group, a provider of litigation, investigation, compliance and other legal services for Fortune 500 companies. Prior to Clutch, he was a partner at Venable, where he worked on white-collar criminal defense and enforcement-related litigation.