General counsel in manufacturing companies are facing escalating challenges as their companies expand. Despite many of Europe’s top manufacturing companies moving into new geographical markets in search of fresh business models and revenue streams amidst geopolitical changes, few businesses fully consider the legal risks. A new report by Forbes Insights, in association with global law firm K&L Gates, "General Counsel in the Age of Disruption," measures the impact of such changes, and sheds light on the new legal responsibilities and challenges facing general counsel. The report draws from a survey of 200 general counsel and non-legal senior executives, as well as qualitative interviews with general counsel in Germany, the UK, France, Italy, Poland and Spain. 

International acumen

The report found that the most important job qualifications for general counsel are to possess international and geopolitical acumen, to understand collaboration and alliances, and to maintain the ability to handle technology-related risks. General counsel will also have to work hard to make sure that legal risks are factored into critical decisions about growth strategies, technology investments, and strategic partnerships. Although executives agree that the regulatory environment is continuing to intensify and become more critical to business success, only 27 per cent say that legal risks are fully considered when making decisions regarding growth, a potential cause of real concern for businesses.

Legal challenges

'General counsel are starting to function more like business partners,' said Bruce Rogers, chief insights officer at Forbes Media, 'becoming deeply involved in strategy and risk management.' Tony Griffiths, European managing partner for K&L Gates, said: 'In addition to examining how factors individually and in combination such as regulation, emerging technologies, geopolitical shifts and global expansion have changed—and continue to change—the role of general counsel, this report provides an important understanding of the biggest legal challenges currently facing organisations in the manufacturing sector, including areas such as international trade, policy and regulations, and cybersecurity and data protection, among others.' 

Compliance 

The key trends identified include an intensifying regulatory environment. A clear majority of executives (94 per cent) see an ever-increasing volume of regulations and greater significance of the impact of the regulatory environment on their organisations. The reserach reveals 53 per cent of respondents rank the compliance and regulatory environment as the trend most relevant to their organisation from a legal point of view. Furthermore, there is growth by global expansion with a growing number of European manufacturing companies revamping their international footprints, many increasing their presence in Asia, Eastern Europe and the Middle East. About one in five companies expect substantial or major shifts in markets, 15 per cent in location of operations, and 22 per cent in the workforce. 

Technology

The report also looked at how technology is impacting. Risks related to the Internet of Things (IoT) will only become more apparent with the introduction of self-driving cars or further use of robotics in the medical field, for example. By far the biggest risk and legal issue being introduced with technologies such as the IoT is cybersecurity. It ranks in the top three of the most important trends and as the area of legal expertise that will be the most needed over the next three years. 

Agile supply chain

Finally, the impact of technology on the supply chain means a myriad of legal issues can arise from an agile and transparent supply chain, including the ability to vet all participants or ensure compliance with international labor laws. Besides compliance, the top two legal issues in this area cited by survey respondents are cybersecurity risks (58 per cent) and data and information protection (54 per cent). Digitised supply chains make it difficult for general counsel to keep tabs on the safeguarding and whereabouts of data as it traverses multiple, geographically scattered networks. 

Methodology

This report is based on a survey of 200 legal and nonlegal executives from the manufacturing sector conducted by Forbes Insights in May 2017. Seventy-six percent of survey respondents were either general counsel or top legal officers. They came from five countries: France, Germany, Italy, Poland and the United Kingdom. A majority of companies (82 per cent) had revenues of €1 billion or more.