CCCA | Mondaq

2024 Canadian In-House Counsel Report

Unparalleled Insights into Canada's In-House Profession

Sponsored by

INTRODUCTION

The Canadian Corporate Counsel Association (CCCA) and ​Mondaq are delighted to present the results of our third annual ​Canadian In-House Counsel Survey. Based on 600 responses, ​from across the country and across all job levels, this report ​provides Canadian in-house counsel and the legal profession with ​unrivalled insight into the key questions and issues that are ​impacting individual counsel and legal departments today. ​Designed in partnership with an advisory board composed of ​eminent in-house counsel, this report provides an up-to-date ​analysis of the hot button issues and 2024 outlook for the ​Canadian in-house profession.

We’d like to thank the Canadian in-house community for their ​terrific support of our survey, which has established itself as the ​definitive annual report into the Canadian-in house profession, as ​well as our advisory board members for their sage counsel. Thank ​you also to our report sponsor, Lawyers Financial, for enabling us ​to further amplify the survey findings and analysis.

About the CCCA

The CCCA is the leader and voice for Canadian in-house counsel. ​Founded in 1988 as a forum of the Canadian Bar Association, we ​represent over 5,000 in-house counsel from every province and ​territory, and sector and industry, making us the most inclusive and ​representative professional association for in-house counsel in ​Canada. Our members are lawyers working for public and private ​companies, not-for-profits, associations, government and regulatory ​boards, Crown corporations, municipalities, hospitals, postsecondary ​institutions and school boards.

About Mondaq

Mondaq is a leading global provider of AI-enabled content ​marketing, analytics and data solutions for professional services ​firms and helps its over 20 million readers worldwide to find ​answers to legal, tax and compliance questions. Mondaq has over ​2 million readers in Canada, including the majority of Canadian ​in-house counsel and executives from thousands of Canadian ​organisations.

It’s our hope that you will find this report useful in helping you to make ​informed decisions about your individual and your department’s ​priorities, now and in the future.

METHODOLOGY

Advisory Board

In October 2023, the CCCA and Mondaq jointly launched the third annual ​Canadian In-House Counsel Survey with the aim of providing unrivalled insights ​into the in-house counsel profession in Canada. This survey stands out as the ​most comprehensive and representative examination of the state of in-house legal ​departments in the country.

600 respondents completed an online survey between October and November ​2023. The survey included 38 questions covering organization and legal ​department activity, budgets and investment, outsourcing, technology, ​innovation, as well as priorities, challenges and other people-focused questions. ​Following the main questionnaire, a voluntary self-identification section consisting ​of 8 questions was included, and it garnered responses from over two-thirds of ​the participants.

To ensure rigorous oversight and authoritative input, the survey was developed ​in partnership with our survey Advisory Board, which includes eminent Canadian ​in-house counsel.

PARTICIPANT PROFILE

The survey successfully obtained a representative ​view, with notable characteristics in participant ​roles and organizational affiliations:

• 30% of participants, a significant increase ​from the previous year, represented the top ​tier (CLOs/GCs).
  
• Diverse representation across legal ​departments included responses from ​Associate GCs (7%), Senior Counsel (19%), ​Counsel (33%) and Directors of Legal ​Services/Legal Managers (8%).
  
• Excellent response levels from across various ​sectors, with 26% from public companies, ​29% from private companies, 31% from ​government organizations and 8% from not-​for-profits.
  
• Balanced distribution based on ​organizational size, with 37% of responses ​from organizations with up to 500 ​employees, 32% with 501 to 5000 ​employees, and 30% with 5001+ staff.
  

For further details on survey respondent specifics, ​refer to the Participant Profile charts to the right.

EXECUTIVE SUMMARY

Against the backdrop of global geopolitical upheaval and continued ​economic uncertainty abroad and at home, the CCCA & Mondaq Canadian ​In-House Counsel Survey seeks to shine a light on the state of Canada’s in-​house legal departments and profession. The extensive questionnaire and ​widespread survey participation, provides unrivalled insight into legal ​departments’ budgets, investment, staffing, activities, insourcing and sourcing ​focus; reveals the biggest challenges and priorities across all in-house job ​levels; and provides insights into what makes a great in-house lawyer in ​2024.

While there are areas of similarity from previous years, there are some ​significant changes in 2024, as well as pertinent issues, which are not ​yet being effectively addressed by the leaders of organizations and their ​legal departments.

Work-related stress and anxiety is still on the rise -

the profession continues to see high levels of work-related stress and ​anxiety levels, with 50% of respondents experiencing an increase in ​anxiety and stress in the last year and just 10% a decrease. Moreover, ​the number of Legal Counsel and Senior Counsel quoting workload as ​their biggest challenge has substantially increased, raising the prospect ​of widespread staff burn-out and wellbeing issues.

Continued lack of focus on Equality, Diversity & ​Inclusion in legal departments -

39% of legal departments (up from 35% last year) do not deem ED&I a ​priority and, while there are differences in responses based on the ​organization type, size and location, there remains a significant ​opportunity for legal departments to further prioritize and deliver ED&I ​initiatives.

Top in-house priorities and biggest challenges -

while managing regulatory risk and compliance remains a high priority, ​in-house counsel priorities and challenges are now being significantly ​impacted by technology and artificial intelligence (AI). It is apparent that ​recent developments in legal technology and generative AI are having a ​significant impact on legal departments and that in-house lawyers ​require support in this area.

What makes a great in-house lawyer in 2024? -

in-house lawyers require so much more than legal skills, with the three ​most important skills required for an effective in-house lawyer today ​highlighted as communication, followed by understanding the business ​and flexibility/adaptability. Effective communication remains the number ​one skill required by in-house counsel, which is indicative of an ever ​more complex and demanding work environment.

BUDGETS & INVESTMENT PRIORITIES

While five in ten legal departments are expecting their budgets to stay flat in ​2024, 38% expect in-house budgets to grow (down from 40% in 2023 but ​still well up on 33% in 2022) and 12% expect a decline in budgets in 2024 ​(up marginally from 11% in 2023). Budget growth is expected across all ​types of organizations; however, it appears that growth in public companies’ ​legal department spend is slowing, with 30% expecting growth (compared to ​42% in 2023) and 16% expecting a decline in budgets (compared to 20% in ​2023). Private companies are anticipating robust budget growth (45% ​expect growth and just 6% contraction), government organizations (43% ​expect growth and 15% contraction) and not-for-profits (29% expect growth ​and 6% contraction).

Expected size of the total in-house legal department budget over ​the next year:

Increased responsibilities and demands on in-house counsel, which continue ​to grow year-on-year appear to be a contributor towards budget growth. The ​top six areas of increased in-house demand are around data privacy (57% ​expect increase in activity, up on 50% in 2022), risk and compliance (52% ​expect increase up on 50% in 2022), contract management (43% expect ​increase), dispute resolution and litigation (32% expect increase), providing ​business strategy and advice (33% expect increase) and supporting ​operational delivery (31% expect increase). Organisations continue to look to ​their legal departments to manage regulatory risk and compliance and ​increasingly to act as a business partner to help them drive growth.

Expected Increase in In-House Demand:

OUTSOURCING

Outside Counsel

As seen in the 2023 report, there continues to be a very narrow range ​between those organizations expecting to outsource more work to outside ​counsel, versus those expecting to outsource less. 23% of legal departments ​are expecting to outsource more work to outside counsel in the next 12 ​months (compared to 22% in 2022 and 30% in 2021) and 20% expect to ​outsource less work (compared to 22% in 2022 and 19% in 2021). Like last ​year, this is most pronounced in public companies, with just 18% expecting ​to send more work to outside counsel and 26% expecting to send less.

When choosing to instruct outside counsel, the top four buy-side ​considerations are legal expertise (99% consider important or very ​important), practical advice (97%), client service (94%) and understanding ​the client’s business (94%). While the top four considerations rated as ​‘important’ or ‘very important’ ranked the same as in the prior year, a key ​learning from this year’s survey is that outside counsel’s understanding of ​their clients’ business is increasing in importance and has displaced client ​service as third-ranked ‘very important’ factor at 67% (up from 59% in ​2022), after legal expertise at 85% and practical advice at 75%. The data ​suggests outside counsel will be required to continue to provide top notch ​technical advice, maintain levels of client service and value for money, while ​getting to know their clients’ organizations better. 24% of legal departments ​are also seeking external expertise on industry perspective and intelligence, ​another way in which outside counsel can bolster their offering.

The importance of outside counsel diversity and inclusion in buying ​decisions has dropped from 30% in 2022 to 26% in 2023. The importance ​of law firm investment in technology and innovation when making outside ​counsel buying decisions has also dropped by 400 basis points to 20% in ​2023. Additionally, just 16% of legal departments deem existing senior-​level outside counsel relationships very important, and even fewer, at 11%, ​deem outside counsel brand and reputation as very important. The relatively ​low level of importance placed on existing relationships and the perceived ​brand and reputation of the law firm should be a signal to incumbent firms ​and fee earners to ensure the higher scoring buy-side value drivers are also ​addressed.

Work areas most often outsourced:

The three types of work that are most often outsourced to outside ​counsel are centred around areas where existing in-house capabilities ​don’t exist or need to be supplemented: seeking expert advice in a ​new area (71% likely to outsource); transactions and activities where ​legal departments want external counsel assurance and opinions ​(64%) and transactional activities where legal departments don’t have ​internal capacity (58%). These results are similar across organisation ​types and in line with those of previous survey results.

Key considerations with significant increase in Very Important rating:

INNOVATION & TECHNOLOGY

The single biggest area of innovation in the legal department is:

Technology

There is a small decrease in the number of legal departments treating ​investment in legal department technology as a priority. 43% (versus 45% ​in previous survey) of organizations are prioritizing investment in legal ​department technology. This is still well up on the 39% reporting ​technology spend as a priority in 2021. Prioritization is highest in private ​companies at 46% (a jump on last survey’s 41%), followed by ​government organizations at 44% and public companies at 43% (a ​sizeable fall on prior survey’s 55%). These shifts in technology ​prioritization across public and private companies are mirrored in the ​below technology spend plans. One hypothesis is that private companies ​are playing catch up on technology spend as public companies more ​quickly invested in digital transformation during the Covid-19 pandemic.

The prioritization of technology investment is visible in spending plans, ​with spend on legal technology accelerating in 2023: 45% of ​respondents (compared to 40% in the prior year) are expecting to spend ​more on technology in the coming year and just 2% to spend less. This ​number is highest in private companies with 47% (versus 38% in prior ​survey) expecting to invest more, followed by public companies with 46% ​(versus 54% previously) and lowest in government organizations, ​although 45% are nevertheless expecting to spend more on technology.

Consistent with last year, the areas with the most growth in ​technology investment are data privacy and security ​management (moves to #1 from #2), document management ​(moves to #2 from #1) and contract lifecycle management (#3 ​since 2021), with the vast majority of legal departments ​investing in these areas and most growth in investment expected ​from these areas. The number of organizations seeing growth in ​spending in e-signature technology, continues to decline, having ​been highest in 2021, at the height of the Covid-19 pandemic.

The biggest technology spending shift over the 3-years of the ​survey is the shift in organizations spending on e-discovery ​technology, with 46% more organizations investing in e-​discovery technology than in 2021. There has also been a ​marked increase in the number of legal departments investing in ​workflow management since 2021 (up by 25%).

Number of organizations expecting to invest more in these ​technologies:

Finally, the top three barriers to investment in legal ​department technology are the same as previous years, ​however data privacy as a challenge to tech adoptions has ​significantly increased. Cost continues to be the biggest ​barrier by far (77%) to the adoption of legal department ​technology, followed by lack of integration with other ​technology (50%) in the organization and implementation ​risk (39%). Data privacy concerns have leapt by a third from ​25% citing as a barrier in 2022 up to 33% percent in 2023. ​It is evident that technology solution providers need to do ​more to address these issues.

PRIORITIES & CHALLENGES

Whereas the 2022/23 Canadian In-House Counsel survey indicated ​a big shift in priorities and challenges away from the Covid-19 ​pandemic towards a focus on supporting the business growth, ​strategy, cost management and risk management, the 2023/24 ​survey has some new standout priorities and challenges. There is a ​step change towards supporting growth rather than focusing on costs ​and potential recessionary pressures. Additionally, in-house counsel ​priorities and challenges are being significantly impacted by ​technology and AI – it’s apparent that recent developments in legal ​technology and generative AI are having a significant impact on legal ​departments and that in-house lawyers require support in this area.

Given the continued high levels of work-related anxiety and stress ​across all levels of in-house roles, much of it related to workload, it is ​again counter-intuitive that in 2024 employee wellbeing and support ​does not feature as a top priority for in-house counsel leadership. ​The responses would indicate that more work needs to be done to ​reduce in-house counsel burnout and to address employee ​wellbeing.

Biggest Challenges

Looking at the biggest legal challenges expected to be faced across ​all job roles, the most common references pertain to volume of work ​and managing workload, risk and compliance - including privacy ​and cyber-security - and a major new challenge in the form of ​technology and AI, which is causing in-house lawyers concern. This ​includes the impact of the advances in generative AI and well as ​developments in the regulation of AI. Technology and AI did not ​feature at all as a challenge in the previous two Canadian in-house ​counsel surveys.

The concerns around increased workloads and managing the impact ​of technology and AI are most pronounced in Legal Counsel and ​Senior Counsel roles and it appears legal department leaders need ​to pay special attention to supporting their legal teams in these ​areas.

Top Priorities

Looking at the top priorities across all job roles, the most common ​references pertain to supporting business growth, risk management and ​compliance, technology and contract management. The key changes ​compared to the 2023 report are: a) supporting growth is more of a ​priority than before; b) technology features as a priority, whereas it was ​not highlighted as priority in either of the previous two surveys. Based ​on individual responses there are numerous mentions of legal ​technology projects and priorities.

CLOs/GCs more often call out supporting business growth and ​revenue, as well as employee related matters (such as staff retention ​and training), workflow, processes and risk and compliance as ​priorities (significantly less mention of cost management as a priority ​this year). Legal Counsel and Senior Counsel indicate technology, ​learning and development and compliance, including data privacy as ​key areas of priority. Technology and learning and development are ​mentioned far more frequently than in the prior year. Legal ​Directors/Managers have a greater focus on legal business operations, ​various contract projects and support projects as a top priority.

PRIORITIES & CHALLENGES CONTINUED

CLOs/GCs are again faced with challenges managing regulatory ​change and compliance, with data privacy commonly mentioned and ​cyber-security raised as a key challenge for the first time. CLOs/GCs ​also commonly mentioned ESG and AI as their biggest challenges, ​again the first time these two areas have been called out as ​frequently. There are also frequent challenges around budgets and ​costs.

The biggest legal challenge boards are expected to face are, like in ​the previous year, distributed across a number of different areas. The ​challenges can be grouped:

Unlike last year, acquisitions and employee retention are not ​mentioned as a big challenge for boards in 2024. Boards evidently ​have many legal challenges to contend with and the expectation is ​that the significance of legal departments and legal leadership to the ​business will continue to increase.

EQUALITY, DIVERSITY & INCLUSION

Respondents were asked whether Equality, Diversity and Inclusion ​(ED&I) is a priority in their own legal departments. Of the nearly 600 ​respondents, 39% stated that ED&I is not a priority in their legal ​departments. This is an increase on last year’s 35% and the highest ​number the Canadian In-house Counsel Survey has reported (higher ​than the 2021 survey’s 38%). The lack of priority on ED&I was ​reported more widely by more senior members of the legal ​department where 45% of CLOs and GCs in 2023 stated that ED&I ​is not a priority (compared to 37% in 2022 and 39% in 2021). This ​is concerning given that department leaders are most likely to have ​control and responsibility over the composition of the legal ​department.

Discrepancies in results were found based on location. For instance, ​more respondents in British Colombia (72%) felt that ED&I was a ​priority for their departments when compared to those in other ​provinces, for example, with Alberta at 67%, Ontario at 63% and ​Manitoba the lowest at 44%. Sentiment seems to be closely tied to ​the type and size of organisation and the size of legal department. ​The highest rate of negative response was in private companies, with ​53% noting that ED&I was not a priority, compared to 37% in public ​companies, 33% in not-for-profits and 31% in government. ​Significant discrepancies can also be found when an analysis is ​done of the size of organization and the size of legal department. In ​organizations with over 5,000 employees, 70% of respondents ​deem ED&I to be a priority while in organizations with less than 500 ​employees, 55% deem ED&I important.

The biggest driver of priority appears to be the size ​of the legal department. Here, we found that the ​vast majority (78%) of legal departments with more ​than 30 staff stated that ED&I was a priority ​(although this number has declined from 87% in ​2022), whereas only 62% of departments with 5 to ​30 staff felt ED&I was a priority, with fewer still in ​departments with 2 to 4 employees. A better ​understanding is needed of the obstacles and ​barriers faced by small to mid-sized legal ​departments when it come to prioritising ED&I.

Race/ ethnicity of respondents:

Survey response diversity data based on voluntary self identification question:

In terms of diversity data, the survey’s voluntary self ​identification questions, which was completed by half ​of respondents, show that while the in-house ​community is gender diverse (61% Female and 38% ​Male) and age diverse (49% between the ages of 25 ​and 44; 30% between 45 and 54; and 22% 55 years ​and older), it is much less diverse from the perspective ​of race/ethnicity (79% Caucasian), with Black, ​Chinese and South Asian respondents each comprising ​4% of the total.

PEOPLE & TALENT

Given the level of responsibility beyond the delivery of legal ​services, combined with an across the board increase in legal ​department activity, it is no surprise that stress and anxiety continue ​to run high in the in-house legal profession. 50% of respondents ​reported an increase in stress and anxiety while just 10% reported ​a decrease. This is on top of an already highly stressed employee ​base as 48% in 2022 and 71% in 2021 reporting increased levels ​of work-related stress and anxiety. In 2023 the increased level of ​work-related stress and anxiety is highest in CLOs/GCs at 54% (up ​from 49%) and Director of Legal Services/Legal Manager at 58%. ​The increase in anxiety levels by organization type is very similar ​across public and private companies, and government ​organizations and very similar across those that identify as female ​and male. However, those in large organizations (5000+ ​employees) report a higher increase than those in smaller ​companies (up to 500 employees). In the 2023 survey there are ​again numerous mentions of increasing workload and burnout in ​response to the biggest challenge faced by respondents). All types ​of organizations and their legal departments are clearly continuing ​to store up employee wellbeing issues and more action needs to be ​taken to assist employee wellbeing and mental health.

Given the high level of survey participation, we are able to examine a ​significant number of responses across all job levels, helping us to deliver a ​view from the top as well as from middle and junior-level in-house counsel ​roles.

The survey indicates that 82% of Canadian in-house legal departments are ​operating a hybrid location model (86% of public companies, 68% of ​private companies and 88% of government organizations), with 21% of ​those mandating no days at all in the office (down from 27% last year).

10% of law departments mandate one day a week in the office, 29% ​mandate two days and 35% mandate three days. One in twenty ​organizations mandates four or five days a week in the office. There is a ​marked shift towards those expected to be in the office for two or three days ​a week, with the number rising from 52% in 2022 to 64% this year. So, ​while hybrid is still far and away the most common staffing model, ​organizations are evidently expecting their employees to spend more time in ​the office than last year. The data also shows that large organizations ​(5000+ employees) are much less likely to mandate 3 or more office days ​than small to medium-sized organizations (up to 500 employees), with 31% ​of large versus 45% of small to medium-sized organizations mandating three ​or more office days. In terms of challenges created by hybrid working, ​employee engagement is rated the most difficult area, with 65% of ​respondents recognizing a degree of challenge.

In-house personnel accountability beyond legal:

Remote/hybrid working arrangements::

It is evident that in-house personnel are carrying significant accountability ​beyond their legal responsibilities, with over 47% of in-house counsel also ​responsible for compliance (up from 45% in 2022 and 43% in 2021), while ​one in four is responsible for ethics and 22% for investigations. 19% of in-​house counsel are responsible for government relations. The number of in-​house departments responsible for ESG continues to increase, rising from 8% ​in 2021 to 14% today (75% increase). In public companies, investor ​relations are also a frequent additional responsibility. Much of this ​additional accountability is centred on CLOs/GCs, with 61% responsible for ​compliance, 34% for ethics and 28% for investigations. One in five ​CLOs/GCs is also responsible for ESG and government relations. Senior ​counsel and legal counsel frequently pick up additional accountability too.

PEOPLE & TALENT CONTINUED

In-house lawyers require so much more than legal skills, with the ​most important three skills required for an effective in-house lawyer ​in 2024 being communication, followed by understanding the ​business and flexibility/adaptability. Effective communication ​remained the the number one skill required by in-house counsel, ​perhaps indicative of an ever more complex and demanding work ​environment.

Three skills required for effective in-house counsel in 2024:

Reported increase in work-related stress and anxiety:

While the increase is lower than in 2021, it is important to note the ​increase is on an already highly stressed base

Stress and anxiety levels amplified in more junior roles:

18% of respondents (down from 21% in 2021 and 2022) see an ​increase in the number of in-house counsel moving into non-legal ​business roles. The most common non-legal roles accepted are ​management roles covering ESG, compliance, HR and strategy. ​Chief operating officer (COO) role was also frequently mentioned.

There continues to be opportunity for in-house counsel to develop ​their roles and careers both within legal departments as well as ​outside of law departments in non-legal roles, however, ​established processes to facilitate moves into business roles are ​sometimes lacking.

CCCA | Mondaq

2024 Canadian In-House Counsel Report

Unparalleled Insights into Canada's In-House Profession

Sponsored by