MoFo Economy & Markets Survey: 2023 Set to Be a Challenging Year for In-House Professionals
Despite a riskier and more unpredictable environment, some organizations remain optimistic, especially in the tech and fintech sectors; many are already taking an agile and proactive approach to prepare for the challenges ahead.
NEW YORK, Dec. 13, 2022 /PRNewswire-PRWeb/ -- Morrison Foerster, a leading global law firm, today announced the results of its inaugural Economy & Markets Survey. Conducted in the fall of 2022, the research shows that in-house teams overwhelmingly expect to operate in a riskier and more unpredictable environment in 2023. More than 170 respondents shared their main focus areas for the year ahead, and reflected upon some of their main challenges, including talent retention, data privacy and cybersecurity, and ESG. Against this challenging backdrop, some organizations remain optimistic, and many are already adopting risk-mitigation strategies, and showing agility and adaptability, to prepare for the challenges ahead.
"Our research shows overwhelming consensus around the business risks on the horizon, but also highlights glimmers of optimism. There are also significant nuances around the impact of the economic outlook on various organizations and their business strategies, in particular across sectors," said Bradley Wine, global co-chair of Morrison Foerster's Litigation Department and managing partner of the firm's Austin office. "What is also clear from our survey is that the organizational agility resulting from the COVID-19 pandemic has put businesses in a strong position to adapt their strategies for the challenges ahead, with many having already implemented risk-mitigating strategies. As we look forward amidst the challenges and opportunities that lie ahead for in-house legal leaders, we hope the insights contained in our report help our clients benchmark against peers, identify areas of growth and opportunity, and make more informed decisions as they develop their business strategies for the coming year."
Survey Highlights
- A majority of companies (51%) expect there will be more risks than opportunities in the months ahead. Three times as many organizations anticipate negative impact from the economy than positive impact.
- Against this backdrop, more than a quarter (27%) of organizations retain a sense of optimism, with differences along sector lines. Respondents in the tech and fintech space have a more positive outlook about opportunities in their sector compared with other sectors.
- Respondents identified talent (22%), data (21%), and ESG (15%) as their top priority for the year ahead.
- Organizations are already adapting to the challenges of the current economic climate. Respondents' current focus is on pivoting strategy and operations to focus on high-value products and business lines rather than immediately resorting to cost cutting and layoffs.
Mixed Views on Economic Impact
A majority of organizations (51%) expect to be operating in a riskier market. However, respondents are divided on the potential impact of the economic outlook on their organizations. Forty-five percent of respondents expect a wholly negative impact on their organizations as a result of the current economic outlook, while 16% anticipate a positive impact and 39% remain neutral.
Among those anticipating more risks, rising costs (of materials, labor, and capital), consumer spending, and supply chain continuity and logistics were identified as the three main risks to their organizations.
Overall Business Strategy and Response
In the wake of the COVID-19 pandemic, organizations are once again adapting to the challenges of the current economic climate. While respondents hinted at the prospect of layoffs and cost cutting within their organizations in the months ahead, their current focus is on pivoting strategy and operations to focus on value and efficiency.
Thirty-six percent of organizations suggested they will consider restructuring within the next 12 months to mitigate risk. Respondents also indicated that restructurings will focus on growth areas within their businesses: reallocating resources and efforts to organizations' most profitable products and business lines and shedding under-performing areas.
Optimistic Organizations
Despite risk-wary attitudes being more prevalent, the survey also reveals glimmers of optimism. Twenty-seven percent of organizations believe the economic outlook provides more opportunities than risks for their organizations. The research identifies differences along sector lines: tech and fintech organizations are more likely to be optimists, with 34% of respondents in this sector spotting more opportunities for the coming year. This is higher than those in the finance industry (23%) and all other industries combined (24%).
Reasons for optimism among tech and fintech companies include: a greater acceptance of remote working within their industry, which has provided opportunities to enter new markets and created efficiencies; sustained demand for their products and services, such as cybersecurity, due to increased digitalization at companies outside their sector; and M&A opportunities. Further, organizations in other sectors are also optimistic on account of new opportunities afforded by the digital economy and access to government funding.
The research also found that the optimist group is set to follow a different business course in 2023 than those predicting more risks. Optimistic organizations are less likely to restructure their businesses (organizationally or financially) in the next 12 months. They are also more data-focused, and are focusing more time and resources on ESG, including in their talent strategy.
Key Issues in 2023
Looking at macro-level challenges, more than half of respondents identified talent (64%), data (57%), and technology (53%) as areas of significant focus for 2023. ESG and market-related issues (such as inflation, interest rates and a strong dollar) were not far behind (47% and 46% respectively). Geopolitical-related issues (e.g., supply chains and regulation) are lower on the agenda, though still important for more than a third (35%) of respondents. When asked to identify their single most important priority, respondents picked talent (22%), data (21%), and ESG (15%).
Talent
Respondents suggested that talent—particularly attrition and retention—will continue to be a challenge in 2023. Sixty-nine percent of organizations said employee retention has been harder in recent months. The survey also pointed to differences across sectors. Eighty-one percent of finance organizations are finding retention more difficult, compared to 56% in the tech and fintech space, and 72% in all other industries combined.
The strategies being most actively pursued to support talent engagement and retention tend to be more people-focused than financial-focused. Providing greater freedom to work flexibly and personal development opportunities, as well as placing more focus on purpose and meaning in people's work, were the top three strategies being pursued by organizations overall. Finance, which is struggling with retention more than other industries, stood out for putting more emphasis on increasing compensation (35%) and improving benefits packages (23%). In contrast, tech and fintech companies were more likely to develop strategies that facilitate remote working (67%) and bring more purpose and meaning to people's work (41%, compared to 35% in finance).
Data Privacy and Cybersecurity
The majority of respondents expect to be spending significant time managing data-related issues in the year ahead. Seventy-seven percent of organizations surveyed are currently facing data privacy, cybersecurity, and monetization of data issues.
Cyber threats appear to be the most prominent concern, particularly issues around ransomware, malware, and phishing.
ESG
The survey also found that optimistic organizations and companies outside the Americas are more likely to be focusing their efforts on ESG. Morrison Foerster's GCs and ESG Survey earlier in the year showed that the "E" in ESG appeared to be less of a priority for in-house teams. This goes some way to explain why, when asked where they will be focusing ESG efforts in the year ahead, a fifth of companies spontaneously mentioned environmental aspects of their ESG strategy. Carbon reduction (including scope 1, 2, and 3 emissions) and product sustainability were named as the main issues of concern.
To download the full survey results with additional insights, visit: https://www.mofo.com/resources/insights/221213-economy-markets-research-report
Methodology
Between October 6 and October 28, 2022, Morrison Foerster surveyed in-house professionals around the globe and across sectors. More than 170 global corporations responded to the survey. The vast majority of respondents (86%) work in their organization's legal function. Twenty-nine percent of respondents have C-Suite level roles. The top three industries represented in the study were tech and fintech (30%), followed by finance (18%), and life sciences (10%). This research was conducted in partnership with Lamp House Strategy, the leaders in ESG consultation to the legal and professional services sector.
About Morrison Foerster
Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm's commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster was recognized as one of the top 10 firms on The American Lawyer's 2021 and 2022 A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia-Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.
Media Contact
Marie Armstrong-Hebert, Morrison Foerster, +44 (0)207 920 4065, [email protected]
SOURCE Morrison Foerster
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