In-House Counsel More Concerned About Regulators than Competitors, Customers

While economic uncertainty topped the list of in-house counsel’s organizational growth threats, regulatory compliance and enforcement was considered the second-highest threat to growth according to Grant Thornton LLP’s Survey of Current Organizational Threats and the Role of the In-House Law Department.

“This may mean that organizational resource allocations are misaligned, considering the magnitude of regulatory threat”

The majority (57 percent) of in-house counsel respondents ranked “economic uncertainty” as one of the most significant threats to organizational growth, but almost as many (53 percent) selected “regulatory compliance and enforcement” as a major threat. “Global or domestic competition” trailed the economy and regulation with 36 percent of the responses. No other response garnered more than 25 percent, including matters typically associated with in-house counsel responsibilities such as “litigation” and “fraud and corruption.”

“The results of this survey indicate that regulatory concerns dominate the attention of in-house legal counsel,” said Brad Preber, national managing partner of Grant Thornton’s Forensic and Valuation Services (FVS) practice. “This is particularly surprising when you see that in-house counsel believe regulation is a bigger threat to growth than competitors or sales to customers.”

In the survey, in-house counsel identified 45 different regulatory threats. Only three of these threats, “labor law violations,” “Foreign Corrupt Practices Act” and “environmental issues,” were selected by more than 15 percent of the respondents.

In-house counsel who indicated that litigation is a primary threat to organizational growth were asked to identify the types of litigation contributing to the threat. The No. 1 litigation threat was “regulatory,” chosen by 47 percent of the respondents. “Contractual,” “intellectual property,” and “labor and employment” also appeared at the top of the list of litigation threats, chosen by 30 or more percent of the respondents.

When asked about the resources spent on the threat of regulatory compliance and enforcement, there was a large gap between the perceived significance of the threat (53 percent) and the resources spent to address it (38 percent). This disparity widened significantly for regulatory-related litigation. Forty-seven percent of respondents said regulatory issues are a top litigation threat, but only 10 percent indicated that the majority of the resources provided by their organizations were spent on this threat.

“This may mean that organizational resource allocations are misaligned, considering the magnitude of regulatory threat,” added Preber. “Alternatively, it could indicate that regulatory litigation costs have not yet reached the levels of more traditional problem areas for in-house counsel.”

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