[January 29, 2015]

One Quarter of General Counsel Report Their Companies Hit by Data Breaches, ACC Chief Legal Officers 2015 Survey Reveals

More than a quarter of general counsel today are grappling with data breaches, while 96 percent are prioritizing compliance and ethics issues and 72 percent are deploying alternative fee arrangements, according to the ACC Chief Legal Officers (CLO) 2015 Survey, published by the Association of Corporate Counsel, a global bar association representing more than 37,000 in-house counsel in 90 countries.

The survey, which includes responses from 1,289 individuals in 46 countries, revealed that 27 percent of CLOs and GCs work at organizations that have experienced a data breach in the past two years. The likelihood that a company experienced a data breach increased to over 50 percent among companies with more than $4 billion in revenue, according to the survey. GCs in Canada were most likely to report data breaches, at 41 percent. Although CLOs from the telecommunications, transportation, professional services and educational services industries all reported that their companies had experienced data breaches at higher than average rates, health care led all industries in data breach prevalence. According to the survey, 49 percent of health care industry CLOs stated that their companies have experienced breaches since 2012.

"Thwarting and responding to breaches of corporate data is increasingly a reality for today's GCs and CLOs," said Veta T. Richardson, ACC president and CEO. "As attempted data breaches become more sophisticated, the CLO will play a growing role in cybersecurity strategy, risk assessment and prevention."

The 2015 survey included new questions regarding diversity among the ranks of CLOs. Examining the overall representation of women, minorities and LGBT in-house lawyers raised questions about continuing compensation gaps. While 38 percent of male CLOs reported total compensation packages of more than $400,000, only 26 percent of female CLOs crossed this total compensation threshold. Similarly, nearly three in 10 men reported base salaries of $300,000 or more, compared to 22 percent of women.

"This was our first year examining diversity among in-house leaders as part of the annual CLO survey," said John Page, ACC board chair and senior vice president, chief corporate social responsibility officer & chief legal officer at Golden State Foods Corp. "This year's survey and the 2014 ACC Global Work-Life Balance Report show that although we have made great strides to advance diversity in the profession, our industry still needs to foster stronger inclusion programs and build diversity and inclusion into areas of compensation and succession."

The report also provides a barometer of the top issues for the CLO and GC community. Nearly all (96 percent) CLOs rated ethics and compliance as an important issue for 2015; around 25 percent of all CLOs and approximately 33 percent of large law CLOs stated the topic would be "extremely important" in the year ahead. Additionally, compliance was the top practice area for hiring over the past year, especially for new positions created in Latin America (33 percent) and Asia Pacific (30 percent). Data breaches (82 percent), litigation (79 percent), transparency (78 percent) and mergers and acquisitions (76 percent) rounded out the top five issues of concern to CLOs in the coming year.

GCs around the world are increasingly using alternative fee arrangements (AFAs), especially at companies with the highest revenues (companies with revenues of $4 billion or more were twice as likely as companies with revenues under $100 million to use AFAs). Specifically, use of flat fees for a portfolio of similar items is increasing; 20 percent of all CLOs reported using this fee structure, compared to 12 percent in the 2014 survey. Within large law, 53 percent of CLOs of law departments of 25 or more employees used flat fees for entire matters, versus 36 percent at law departments of under 25 employees. After setting and negotiating AFAs, the two most common strategies to reduce outside counsel spending among CLOs were increased hiring/reliance on in-house legal staff and streamlining the number of retained outside counsel.

Respondents also provided advice for aspiring CLOs, with "understand/learn your business" provided most often. Garnering approximately 25 percent of all responses, CLOs went on to note the constantly evolving relationship of business and law and the increasing role of the CLO in business strategy.

Of the 1,289 survey respondents, the majority (78 percent) worked in offices located in the United States. Men were 64 percent of respondents and the average age of all respondents is 50. Approximately 11 percent of CLOs identified with an underrepresented group (e.g. racial or religious minority, sexual orientation).

Other significant survey findings include:

• Just under one-quarter (24 percent) of respondents stated their companies had been targeted for litigation by a nonpracticing entity or patent troll in the past two years.
• The percentage of CLOs indicating that they are "very satisfied" with their current role stands at 44 percent, a 9 percentage point increase over two years ago. Additionally, job satisfaction increased as company revenue increased.
• The percentage of women occupying the CLO role is 12 percentage points higher in Generation X than in the baby boomer generation.
• A majority of CLOs (65 percent) do not plan to change their internal and external budgets in 2015.
• Only 9 percent of CLOs reported minimal, moderate or significant cuts to legal staff in the past year.
• Approximately one-third (32 percent) of CLOs stated that they actively encourage staff to engage in pro bono work.

For more information on the 2105 CLO Survey or to purchase a copy of the full survey or a customized benchmarking report, please visit http://www.acc.com/closurvey.

About ACC: The Association of Corporate Counsel (ACC) is a global legal association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other private-sector organizations through information, education, networking opportunities and advocacy initiatives. With more than 37,000 members in 90 countries, employed by over 10,000 organizations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel.^® For more information, visit www.acc.com and follow ACC on Twitter (News - Alert): @ACCinhouse.

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