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CCCA | Mondaq

2024 Canadian In-House Counsel Report

Unparalleled Insights into Canada's In-House Profession


Sponsored by

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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.


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Tim Harty

Chief Executive Officer

Mondaq

Alexandra Chyczij

Executive Director

Canadian Corporate Counsel Association


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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.


Steve Smyth

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Vice President, Corporate ​Development and General Counsel


Trotter & Morton


Margot Spence

Executive Director, Legal


Destination Canada

Heidi Schedler

President

CCCA

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.


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Location

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Job Role

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Organization Type


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Organization Size by Employees


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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.


82%

of legal departments work on a ​hybrid basis

Effective communication remains the

number one skill required by in-house counsel

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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.


50%

of respondents experiencing an increase ​in anxiety and stress in the last year

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Hybrid working is here to stay, but with more ​mandated office days -

82% of legal departments work on a hybrid basis and one in five of ​these do not mandate staff to spend any time in the office. However, ​there is a marked shift towards in-house counsel being expected to be in ​the office for two or three days a week, with the number rising to 64% in ​2023.

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Continued growth in demand for in-house legal ​services -

organizations continue to look to their legal departments to manage ​growing regulatory and compliance risk and increasingly to act as ​business partners to help drive revenue growth. The areas seeing the ​biggest growth in in-house demand are data privacy (+57%), compliance ​(+52%), contract management (+43%) and providing business strategy ​and advice (+33%).

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Continued focus on meeting the increased ​demand for legal services via insourcing -

while demand for in-house services continues to substantially increase, it ​appears that much of this demand will be met internally through ​additional investment in technology and people, with comparatively ​much less growth in spend on external counsel and alternative legal ​solution provider spend in 2024.

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Buy-side value drivers for procuring outside ​legal services -

the top four buy-side considerations are outside counsel’s legal expertise, ​practical advice, client service and their understanding of their client’s ​business, which is an increasingly important driver of buying decisions.

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In-house personnel are carrying significant ​accountability beyond their legal responsibilities -

including compliance, ethics, investigations, government affairs and ​more. The number of in-house departments responsible for ESG ​continues to increase, with a 75% increase since 2022, and significantly ​more CLOs/GCs are quoting ESG as their biggest legal challenge this ​year.

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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.

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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.

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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.

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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.

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This year’s joint beneficiary of additional spend is legal department ​technology (people featured highest in 2023), with 45% of respondents ​expecting to spend more (versus just 3% spending less). This number is ​highest in private companies (47%), followed by public companies with ​46% expecting to invest more on legal department technology (although ​this is down from last survey’s 54%) and 45% of government ​organizations. “Technology” and “AI” feature for the first time in our ​survey as biggest challenges to counsel and senior counsel, so legal ​department leaders should ensure that increased investment in technology ​is matched with the support required to help legal teams manage ​technology advances and change.







The other joint biggest budget beneficiary of additional investment is ​people, also with 45% of legal departments expecting to spend more on ​people (compared to 47% in the previous year) and just 5% expecting to ​spend less. A big driver of the increased spend is additional hiring (26% ​of legal departments anticipate headcount growth). However, growth in ​hiring appears to be decelerating as over 30% of departments planned to ​grow headcount in 2022 and 2023. Growth in people spend this year is ​highest in government legal departments, with 54% expecting to spend ​more, while growth on people spend is expected by 37% of public ​companies and 44% of private companies. With the continued expansion ​of in-house teams, the battle for legal talent within the Canadian market is ​set to continue.


In line with 2023, spend on outside counsel appears to be challenged in ​2024. While 35% intend to spend more on outside counsel, 17% are ​expecting a reduction in spend. Public companies spend on outside ​counsel is markedly more challenged than private companies, with 38% of ​public companies expecting to spend more and 20% less on outside ​counsel. In contrast, private companies are likely to see more investment in ​outside counsel, with 40% expecting to increase spend on outside counsel ​and just 9% decrease. The spread between legal departments expecting to ​spend more and those expecting to spend less on outside counsel ​continues to be much narrower, at 18 percentage points, compared to the ​near 40 percentage point spreads on departments expecting to spend ​more versus less on technology and people.


There does not appear, however, to be a shift of expenditure from outside ​counsel to alternative legal services providers (ALSPs), with only 13% of ​respondents making use of ALSPs (down from 14% in line with 2023) and ​the impact of ALSP spend on overall budgets is minimal, with 13% of ​respondents seeing more ALSP spend compared to 10% less. 17% of ​public companies use ALSPs, more than double other organization types ​and 16% are expecting to see their spend on ALSPs grow, compared to ​11% seeing a decline.


So, while demand for in-house services continues to increase, it appears ​that much of this demand will be met internally through additional ​investment in technology and people, with significantly less growth in ​spend on external counsel spend in the coming year.


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This year's joint biggest beneficiaries of additional spend ​are legal department technology and people


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:

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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.

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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

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:

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71%

Advice

Seeking expert advice in

a new area

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64%

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Transactions and activities where legal departments

want external counsel assurance and opinions


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58%

Transactional activities where legal ​departments don’t have internal capacity

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:

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OUTSOURCING CONTINUED

How important are the following factors when selecting outside counsel?

Other Outsourcing


Law firms continue to dominate the market for outsourced legal services. Just ​13% of in-house teams use Alternative Legal Service Providers (ALSPs), this is ​highest but declining in public companies at 17% (versus 21% in 2022) and ​lowest in government organisations at 8% (down from 9% in 2022). Rather ​than seeing growth in the uptake of ALSPs by in-house departments, each year ​has seen a small decline, from 14% in 2021 to 12.5% in 2023, a decrease of ​11% since 2021. Spend on ALSPs is expected to see marginally more growth ​in the next 12 months than the prior year, with 13% of respondents spending ​more on ALSP services compared to 10% less.


The outsourcing of non-legal advisory work has remained roughly flat on the ​previous year. E-discovery is outsourced by 12% of in-house legal departments ​(equal to last year). Translation services are also used by 11% of in-house ​teams (down from 12% last year), which increases to 17% of public ​companies, where there is more demand.



Percentage of legal departments using:


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13%

ALSPs

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12%

E-discovery

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11%​

Translation services

When outsourcing:

96%

Outsource within

Canada

32%

Outsource outside of

Canada

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INNOVATION & TECHNOLOGY

Innovation


Innovation in legal and risk management is a priority for 54% of legal ​departments. While some in-house counsel are blunt about the lack of ​innovation (“We don’t innovate ☹” GC, Private Company, Real Estate & ​Construction), the majority of respondents take innovation seriously. Legal and ​risk management innovation is highest in public companies, where 6 in 10 ​legal departments are innovating as a priority, followed by private companies ​at 52% and government organizations at 51%.








After barely a mention in 2021 and 2022, the most common area of legal ​department innovation is artificial intelligence (AI), with ‘Gen AI’ and ‘Chat ​GPT’ also getting several specific mentions. Document management and ​contract management, the two most popular areas of innovation in previous ​years, are the next most popular areas of legal department innovation in the ​most recent survey. Privacy is the only named legal/compliance topic that is ​raised as a key area of innovation. In 2023, legal department innovation was ​unsurprisingly fuelled by developments in generative AI as well as continued ​digital transformation (“Being primarily paperless” Senior Counsel, Public ​Company, Financial Services).


The most common area of legal ​department innovation is AI

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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