Legal to leader: How has a general counsel’s role evolved in the digital age

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Nowhere is the combination of team leadership, tactical acumen, and strategic foresight in the role of chief legal officer or general counsel (GC) more in evidence – and more necessary – than in the Middle East. With its unique pace of change, complexity of regulation, heterogenous workforce, and breadth of corporate and national ambition, the region presents a unique set of opportunities and challenges.

As shown in the most recent FTI/Relativity Global General Counsel Report 2023, the role of the GC globally has become more critical for firm leadership than ever before, with a range of challenges coming under their oversight, from the traditional (contract review) to the 21^st century (cybersecurity). They also have in many cases moved beyond serving as the senior risk manager to working with CEOs and boards as a strategic decision maker.

While the GC has always served as the tip of the spear in managing and mitigating corporate risk, recent social, economic, and technological changes have made the task truly multidimensional, increasingly critical, and ever more challenging.

Challenges facing a general counsel

The list of issues confronting today’s GC is indeed daunting.

These include: finding the right people post-COVID and the Great Resignation; the disruptive advance of AI; increased attention to environmental, social, and governance (ESG) issues from companies and stakeholders; the increasing velocity and complexity of regulation and compliance; and the inherent threats to cybersecurity.

Noteworthy among the global survey findings is a lukewarm readiness across these key areas. Technology received particular concern: 73 per cent highlighted their unpreparedness for the risks from AI; 80 per cent believed they were unprepared or at best minimally prepared to handle certain advanced technology risks, like blockchain and cryptocurrency issues.

And among the 79 per cent of GCs reporting increased risks and strains on their departments, more than half (57 per cent) listed ESG among their top five areas for 2023.

“The general counsel is now more a secretary of state for the CEO,” said one of the GCs consulted for the 2023 FTI report, “There is a sense that a crisis can pop up in a geopolitical way that we [hadn’t thought] about.”[1]

Ambitious national agendas

Add to these global pressures the heightened regional and national ambitions of GCC countries like Saudi Arabia, the UAE, and Qatar. Taken together, plans like Saudi Arabia’s Vision 2030, Abu Dhabi Economic Vision 2030, and Dubai Industrial Strategy 2030 chart a high-velocity, large-scale path to a place on the global stage, with governments meeting risks head on and in many cases adapting regulation and enforcement quickly to maintain momentum.

Enormous investments in national projects have hastened social and cultural changes, attracted foreign investment and talent, and driven technological innovation, often leaving companies and government entities to play catch-up.

Over and above the normal duties of a GC, the rapid growth and development that are the fruit of these national ambitions present new challenges in managing fast-changing legal and regulatory developments. Increased non-oil foreign trade, particularly in the UAE, heightened IPO and M&A activity, especially across the GCC.

Migration of key international players into the region’s financial services sector, again in the UAE, also present new challenges for GCs.

Complex web of regulations and jurisdictions

That this growth takes place within a complex web of legal systems and regulations requires GCs with the ability to manage across civil and Sharia law and juggle varying restrictions and compliance across GCC countries on things like foreign ownership and labor laws. With governments representing a large chunk of all business, contract management, compliance, and dispute resolution take on an added complexity.

Additionally, in their attempt to further attract businesses to their countries, some governments have created separate global business jurisdictions – e.g., the Dubai International Financial Centre (DIFC) – that require additional consideration. These jurisdictions inherently bring additional complexity as new dimensions are added to them, as the DIFC did when it created the new International Digital Economy Court in 2021 to address issues related to current and emerging technologies.

Cybersecurity

The digital challenges prominent among global GC concerns are magnified in the Middle East context. Cybercriminals have been drawn by the increased growth and business activity in the region, particularly from fintech organisations, private equity firms and sovereign wealth funds and governments.

Readiness remains an issue: the Middle East has maintained its second place in the global ranking for the second consecutive year in terms of the total cost of data breaches: $8.07m. GCs must play a critical, multi-faceted role in preparedness, crisis response, and mitigation of damage from cybercrime (including on the front lines of insurance claims).

Cultural diversity

The nature of the workforce in the Middle East presents additional and unique management and cultural challenges, markedly for multinational companies or for GCC companies assuming a greater role on the global stage. GCs in the region manage across a unique and changing workforce comprised of a variety of nationalities.

At the same time, they are under pressure from many governments to build local skills and increase the percentage of nationals in the workforce.

As talent comes into the region, bringing expectations about diversity, equity, and inclusion, flexibility, and workplace culture with them, GCs will be front and center to balance local compliance with current regulation and cultural norms against workers’ and other stakeholders’ aspirations.

More narrowly, legal departments face their own team challenges in the region. GCs must build and lead a team with diverse skills, that includes some facility with local Arabic, while at the same time taking on the increased role of AI in the legal function.

Where those skills are not available or where vendors provide more efficient solutions, GCs then need to manage outside contractors, aligning them with their team and guiding their efforts. And while there remains certainty that technology will play a bigger part, challenges in managing the risks of AI, including third-party risks, remain.

Focus on ESG

Finally, an increased focus on ESG globally has applied pressure on Middle East subsidiaries of global companies or those region-based companies taking on global operations.

With intensified scrutiny by stakeholders and increased enforcement by regulators on ESG both abroad and within the region, GCs find themselves assuming responsibilities for assembling and storing data, managing disclosures, and dealing with risks and crises as local governments take on ESG responsibilities, and international standards themselves continue to evolve.

The role of the general counsel now, more than ever before, requires a unique and evolving mix of skills.

They must serve as commanding general for a team of in-house and contract professionals tackling local, regional, and global challenges, and as an advisor to the chief executive and to the board.

In addition, they must also keep up with the increased complexity of regulations, technological advances, and HR challenges, as well as the velocity of change, in a region with high global ambitions.

The business realities in today’s Middle East, which truly magnify and intensify many of these challenges, especially require a general counsel that helps craft the strategy to transform, devises the tactics to overcome immediate challenges, and organises and activates the resources to protect and advance their firm – truly emphasising the commanding “general” in the general counsel role.

Also read: Celebrating the rise and rise of women arbitrators in Saudi Arabia

The authors are, Wayne Anthony, senior managing partner, Forensic Litigation Consulting, Middle East at FTI Consulting; Shahin Shamsabadi, managing partner, Forensic Litigation Consulting, Middle East at FTI Consulting; and Sunil Mashari, head of marketing, Middle East at FTI Consulting.

References:

[1] FTI Consulting and Relativity, The General Counsel Report 2023: Global Legal Departments Alleviate and Respond to Critical Pressure Points (2023), 8-9, https://www.fticonsulting.com/en/insights/reports/general-counsel-report-2023