Decade two: FS in-house function of the future

The conversation began with GenAI and the rapid impact it has made on the profession and the business of law. The potential implications are widespread and multifaceted and the topic recurred as we moved through the other themes as the discussions progressed. While GenAI remained top of mind throughout the evening, we noted aninteresting disconnect with the findings of the survey. In relation to internal pressures and investment focus areas for GCs, integrating GenAI was ranked lowest. On reflection, this may be because there is an increasing application of GenAI solutions becoming inevitable in all aspects of the business and in-house teams, with the ability of the GC of the future to deliver their role effectively with GenAI being second nature to everything they do.

 This also links to the survey results showing that GenAI rated lower as an external pressure. The discussion reflected the challenges of managing emerging risks in these relatively early days of GenAI but equally a recognition that over time GenAI will be embedded in the way we work inhouse and across the legal sector. Hence it was a key topic of discussion during the dinner, however as a sole theme, it was rated lower when considered with other factors. This is an area we will consider further through our ongoing discussions, as well as finalising a wider data set and will revisit in the thought leadership report.

If the GC can act as an organisation’s conscience, what role should they play in guiding and shaping culture? 80% of GCs said people and culture is in their current remit, however, it is important to note that, GCs cannot forge culture alone. The relationship with stakeholders, particularly the CEO, is critical in successfully shaping culture from the top down.

There was an interesting divergence in culture between the incumbent and disruptor banks in attendance. Are there specific cultural challenges and opportunities in today’s changing financial services landscape that need to be explored? Rising expectations for the level of consultancy that GCs are expected to provide was discussed. One phrase familiar to every attendee was ‘if you get two lawyers in a room you get three opinions.’

Advice rarely presents itself as a binary choice and judgements have to take the broader business context into consideration.

In addition to being pushed by more technological change, there was a lively discussion about the role of regulators and what a GCs relationship with them should be. The discussion included whistleblowing and the challenges of ensuring that wrongdoing isn’t covered up. The potential for a new role was mentioned, perhaps a ‘Corporate Whistleblowing Officer’? Is such a move necessary, or can GCs be expected to play this role?

It speaks to the idea of the increasingly pivotal role of the GC as a Corporate Conscience or Chief Integrity and Ethics Officer. For the GC, it’s important to answer the questions, ‘Who are we as an organisation?’, ‘How do we manage complex and often conflicting risks?’ and ‘What are we willing to get behind?’ It must be based on a collective responsibility for understanding risk – as an inevitable element of any successful business – with both upside and downside implications that need to be balanced.

Communicating that expectation and why it is so important is still an emerging skill set for many GCs. When ranking current external pressures and challenges GCs rated the complexity of the global regulatory landscape highest (with an average score of 4.2 out of 5) with 80% rating this as 4 or 5 out of 5. However, despite the average score of business transformation and reorganisation being slightly lower (at 4.1 out of 5), 90% ranked business transformation or reorganisation 4 or 5 out of 5.

Against that backdrop, attendees were in agreement about the importance of regulatory scanning, and using data to enable better decisions quickly about changes in governance. 80% of GCs scored regulatory complexity as 4 out of 5 (with a rating scale of 5 being the highest) as their biggest external pressure.

The issue of change management prompted one interesting discussion thread. The time and effort required to implement change is immense, regardless of whether the change involves new processes or new technologies – and more often than not both. How can the timescale be shortened so that value is gained faster? It was noted that investments in technology typically imply the potential for reducing headcount and/or budget. There is a suspicion that the enthusiasm for rolling out AI may be driven by a limited understanding of its genuine business value.

Attendees touched on the support that external providers can give to GCs. Much of the focus was naturally on law firms and how the service they provide needs to evolve. There was a consensus that law firms could improve by taking a more business-focused approach when answering legal questions – looking to align more closely with the wider role of the GC. Some felt the narrow business experience and risk averse attitude of certain lawyers is limiting. Others expressed frustration that they have to explain business context to their law firms.

This was backed up with the survey results whereby 60% scored law firms understanding and alignment at 3 out of 5, which indicates that there is scope for considering how can we help bridge this gap. How this can be best achieved for mutual benefit is a topic that may merit further exploration and discussion.

On the topic of GenAI, GCs seem to be looking to other ecosystem partners to help them understand the benefits and potential current use cases. The limitations of GenAI and the need for quality and well curated data for some users was discussed, with a group of attendees more positive than others in terms of AI shaping the law function of the future. The majority of GCs see GenAI impacting service delivery in 1-2 years.

One very interesting discussion revolved around the question, ‘What happens if legal AI comes back with an answer that is not expected?’ The importance of human judgement alongside many uses of GenAI was recognised as essential. However, if the GC role is all about judgement, how will young lawyers who rely on AI for guidance, gain the experience and judgement to question what AI produces.

Perhaps the ecosystem can play a role in providing outside perspective and market intelligence. On our attendee survey, the capability GCs most wanted from external partners was help with transforming data and information management.