Tech news last year was all about AI, including generative AI, which lets people engage with software in natural language to get human-like responses to queries. Expect the news this year to keep the focus on this new technology given its business promise, including in the legal industry.
For in-house legal leaders, generative AI is both an opportunity for in-house teams to do more by using the technology in research, contracts and filings, among other things, but it’s also a policy challenge; legal leaders must help the broader organization get a handle on the technology to prevent its use from becoming a problem as employees throughout the enterprise incorporate it into their work.
Given the importance of the technology and the risks it raises, legal leaders can expect AI to dominate headlines in the areas of legal tech and legal operations.
Other issues that commanded the attention of in-house counsel last year are also expected to stay in the spotlight.
On the regulatory side, the antitrust agenda of the Biden Administration will be tested. Several of the high-profile cases brought by the Department of Justice and Federal Trade Commission will get their day in court. That should help clarify whether the administration has overplayed its hand or is in fact forging an effective new approach to handling the competition issues arising from the dominance of tech companies in the economy.
Other big trends we anticipate seeing include deepening inroads by women general counsel and chief legal officers in the C-suite and more experimentation by them and other legal leaders in how in-house teams can work with their business partners to make legal operations more efficient, better aligned with organizational goals and more collaborative.
Here’s Legal Dive’s take on what topics in-house counsel and legal operations professionals can expect to dominate the conversations in the media and in their workplaces this year:
1. Generative AI inroads will deepen
Legal departments have been playing central roles in helping their organizations evaluate the generative AI tools such as ChatGPT that they are considering using, including within the legal function.
These efforts have included different approaches to testing both legal-specific and general purpose AI technologies prior to widespread adoption to prevent mishaps that expose corporate data or result in well-publicized hallucinations.
In 2024, more in-house legal teams are anticipated to start implementing a wide array of generative AI systems into their work.
Options they may choose to use include products from some of the biggest names in the legal tech industry that can facilitate legal research, brief writing and contract review.
“GenAI adoption will be quicker than any other tech we’ve seen introduced in the legal industry so far because people are using it in their everyday lives and becoming familiar with the benefits and limitations on their own,” executives at the technology company Lighthouse predict.
At the same time, legal leaders will need to grapple with the risks corporate use of generative AI presents, including in the areas of data privacy and intellectual property.
Seven in 10 legal, compliance and privacy leaders view rapid generative AI adoption as a top concern for them in the next two years, according to a Gartner survey conducted last fall.
“Progressive legal leaders accept that GenAI can drive value, and they are working with others in their organization to develop governance and policies that nudge employees and business partners toward high-benefit, low-risk use cases,” said Stuart Strome, a director, research in the Gartner Legal, Risk & Compliance Practice.
2. Labor will stay on the march
Unions are coming off a big year but they could see even bigger successes in 2024, creating land mines for in-house counsel even if they have experience in labor issues.
Unions filed nearly 2,600 petitions for elections in the fiscal year that ended Sept. 30, a 3% increase from the previous year and a surge of nearly 60% since 2021. They also won a near-record 76% of elections held, Reuters said in a report based on National Labor Relations Board data.
“This year has been a good one for labor unions,” David Leonhardt and Noam Scheiber say in a New York Times 2023 look-back.
In addition to the rise of unionization efforts in companies not accustomed to them — Starbucks, Amazon and Apple, for example — there were high-profile strikes by the United Auto Workers and Hollywood screenwriters that are likely to embolden workers to strike if they’re already organized or to organize if they’re not.
"There's an all-out assault to get businesses to recognize unions and increase union membership," Ben Brubeck, vice president at construction trade group Associated Builders and Contractors, said in the Reuters report.
Economic conditions will help keep union interest high, too, if inflation and worker shortages persist, which they’re expected to do, Michelle Kaminski, a professor and labor expert at Michigan State University, said in a Fast Company report. “This is the strongest leaning of the economy in that direction in some time — in recent memory,” she said.
Actions by the NLRB are also expected to help. Backed by one of the most pro-union presidents in the White House in decades, regulators have issued rulings and made rule changes that make unionization a more realistic option than it was in the past.
In two of the biggest changes, employees can pursue unionization without having to hold a secret ballot, greatly speeding up the process, and the pathway for franchise and contract workers to unionize is opened up. Other rulings give unionizing employees new protections.
Employer groups are challenging the changes but given the broad shift to labor, conditions remain good for the momentum to continue, pointing to more election petitions this year, Michael Lotito, a Littler employment lawyer, told Reuters.
"Employers should be trained and prepared for an election at any time," Lotito said.
3. Women GCs will see more gains
Several reports released in 2023 highlighted that women are increasingly being appointed as the legal chiefs of large companies and are faring quite well on the compensation front.
For example, women comprised roughly two-thirds of the 43 general counsel appointments at Fortune 500 companies in 2022, according to a Russell Reynolds Associates report. This was the first time women bested men in being selected for these high-profile positions, the executive search firm told Legal Dive.
Meanwhile, the median compensation for women general counsel in 2022 was $3.2 million compared to $3 million for men legal chiefs at the 500 largest companies that trade on the major U.S. stock exchanges, according to an Equilar report published last year.
This was the second time since 2018 that women GCs earned more than their male counterparts, the compensation report published in partnership with BarkerGilmore said.
Additionally, a compensation survey from the Association of Corporate Counsel released last year found that non-minority women who achieve the GC spot in multi-lawyer departments are among the highest paid.
The survey also found that compensation levels for minority women across all general counsel positions bested that of their peers for the first time, according to an ACC press release.
“I celebrate these women whose ability, leadership, and awareness have enabled them to achieve the role of general counsel and negotiate higher compensation,” said Veta T. Richardson, the ACC’s president & CEO, in a prepared statement. “I am pleased to see that their compensation levels are rising to reflect the value they bring.”
4. Bankruptcies will drive litigation finance
If they stay on the path they began last year, bankruptcies will be big in 2024 and that positions the litigation finance business for a boost despite more insurance companies entering the space and increased efforts by lawmakers to regulate the business.
There were almost 600 bankruptcies by companies with at least $2 million in assets in November, putting 2023 on course to be the biggest year for filings since 2010.
“We are living in a financial environment of post record-sustained interest rate lows, substantial stimulus legislation, and now volatility and rate increases,” the New York State Bar Association says in announcing a webcast on the topic. “Litigation finance is a useful tool for bankruptcy trustees and receivers as well as debtors and creditors.”
Litigation funders can help estates pursue creditor recoveries from third-party fraudulent transfers, breaches of fiduciary duty and aiding-and-abetting claims, among other bankruptcy-related claims, Emily Slater, managing director of Burford Capital, says in an analysis. But they can also help estates access otherwise dormant assets that have nothing to do with the bankruptcy – a portfolio of antitrust claims, for example, or other interests the estate otherwise wouldn't have the resources to go after.
Over the last decade litigation funding has grown into a $13 billion annual business and in recent years it’s attracted insurance companies, which focus particularly on providing judgment preservation funds in appellate cases. “Insurance has essentially ‘killed’ the role of litigation funders in cases that have been decided in a lower court,” a Bloomberg Law report says.
Competition from insurers doesn’t appear to be a big worry among traditional funders, in part because their main business is funding early-stage cases that insurers have little appetite for, according to the Bloomberg report.
“Insurers ultimately ‘don’t want to really be in that business in a dedicated way, given what the other side of the house often is insuring,’” Cesar Bello, research and portfolio manager at Corbin Capital Partners, told the publication.
Nor does the increasing noise over regulation appear to be a big threat. Pushed mainly by the U.S. Chamber of Commerce, which wants to see requirements that funders disclose their role in cases, several states and lawmakers in Congress have pushed mandatory disclosure legislation, but the bills mostly aren’t getting traction. Montana is an exception; in May it passed a mandatory disclosure law that includes a cap on the share funders can get from an award or settlement.
House Speaker Mike Johnson (R-La.) last year introduced a bill to require disclosure and, out of national security concerns, prohibit sovereign wealth funds and foreign governments from investing in cases. A similar bill was introduced in the Senate. Given the slow pace of legislation that’s expected this year, and split support over the bill, the chances of passage in this Congress aren’t high.
The litigation finance industry has long called national security concerns a non-issue. “The alleged threat to national security is reckless and has no basis in fact,” a spokesperson for the International Litigation Finance Association told Legal Dive last year. “It is simply a Trojan horse argument created out of whole cloth by the U.S. Chamber of Commerce, an argument they have admitted is purely speculative, in its attempt to pass universal automatic forced disclosure.”
5. In-house legal will collaborate more
A key operational goal for in-house legal professionals is to better align with other internal business units, with 70% of surveyed professionals indicating that is a priority in the next year.
Legal’s collaboration with colleagues almost always takes the form of providing legal advice, but also frequently includes offering strategic business advice, according to a 2023 survey from the Association of Corporate Counsel and Everlaw.
One way for legal departments to improve their relationships with other departments would be to respond more promptly to requests for assistance, surveys indicate.
As a result of legal’s reputation for unresponsiveness, roughly two-thirds of non-legal enterprise employees (67%) spread across four major countries say they bypass legal and its policies, according to a survey report from legal workflow solution provider Onit.
In hopes of improving business outcomes, 60% of legal departments say they are working to partner more closely with business operations and roughly 40% say they want to collaborate more with sales and finance units, the ACC/Everlaw survey found.
Léo Murgel, senior vice president and chief operating officer of Salesforce’s Legal and Corporate Affairs department, says legal ops units thrive when they effectively collaborate with ops teams in other business units.
“I think legal ops has an opportunity to be much more than an enabler within the legal department,” Murgel said during a podcast episode focused on ops.
6. Antitrust will stay in the spotlight
The Biden administration’s antitrust push could reach a tipping point this year, with big cases against Google, Meta and Amazon pending and, depending on how they go, possibly teeing up more cases as the Department of Justice and Federal Trade Commission continue their aggressive approach.
“I think we’re going to see more new actions in terms of investigations and litigation than any prior year during the administration,” Ryan Sandrock, an antitrust lawyer at Shook, Hardy and Bacon, and a former DOJ staff attorney, told Politico. “The volume of antitrust activity is higher than at any point since I started practicing in 2003.”
U.S. District Judge Amit Mehta has scheduled closing arguments in the District of Columbia for DOJ’s case against Google for its search dominance in May, setting up a possible decision on that matter before the end of the year. DOJ says the company uses anticompetitive deals to maintain its position as the go-to place for most internet searches but the company says its deals are common in business.
“We pay to promote our services, just like a cereal brand might pay a supermarket to stock its products at the end of a row,” Kent Walker, Google’s president of global affairs, has said.
DOJ and Google are scheduled to clash in an early 2024 trial over another antitrust matter about the way the company dominates the brokerage of online ads. Part of its dominance stems from its acquisitions of DoubleClick and a company called AdMeld. DOJ wants Google to divest the companies even though antitrust regulators allowed the deals to go through years ago.
“DOJ is demanding that we unwind two acquisitions that were reviewed by U.S. regulators,” Dan Taylor, Google’s vice president of global ads, has said. “In seeking to reverse these two acquisitions, DOJ is attempting to rewrite history.”
The Federal Trade Commission late last year launched what might be the biggest lift of all the antitrust cases – its lawsuit against Amazon for the alleged way it traps sellers into staying on its platform even while undermining them with lower-cost products and preventing them from selling at lower prices on other platforms.
That case is unlikely to see much movement this year but it will be closely watched as it tests the thesis of FTC Chair Lina Khan, who’s had Amazon in her sites since she wrote a paper about the company in 2017 that argued regulators’ traditional antitrust approach can’t work for a big-tech giant like it.
“The company has positioned itself at the center of ecommerce and now serves as essential infrastructure for a host of other businesses that depend upon it,” she said. “Elements of the firm’s structure and conduct pose anti-competitive concerns — yet it has escaped antitrust scrutiny.”
The FTC’s record going after companies on antitrust grounds has been mixed. It lost two high-profile efforts to stop mergers it thought were anti-competitive, one in the video game business and the other in the virtual workout space. Meanwhile, it successfully forced Illumina to divest Grail following a favorable court ruling.
Now it has its biggest fight, with Amazon, on its plate.
