The Conversation
The regulatory uncertainly and risk are just another mounting pressure on GCs, particularly in fast-moving areas like AI, data privacy and financial compliance.
In fact, 23% of respondents in a recently released report from the advisory firm FTI Consulting identified regulatory or compliance crises as a top concern, recognizing that missteps in these areas can carry financial penalties and cause long-term reputational harm to the business.
Outside counsel are also struggling to find answers and stability for their clients with the unclarity around enforcement.
“We're definitely not in a time of certainty,” said Sidley Austin partner Stephen Cohen, who leads the firm's securities enforcement and regulatory practice. “I don't think that lawyers like myself have clear regulatory guidance yet from the administration in terms of advising our clients.”
What is clear, Cohen said, is the Trump administration’s desire to deregulate across the board. He said the administration has been willing, in some cases, to hear from the industry before any regulatory decisions are made.
“I would say in areas where we have investigations or investigative activity, we are definitely advising clients to consider a change in strategy and advocacy around whether or not there are ways to approach the administration differently than you might have before,” he said. “And I think that it's pretty clear that that door is at least open.”
Goodwin partner Kimberly Holzel, who advises clients who go before the CFPB, said that with staffing reductions, communication out of the bureau has been frustratingly limited. But she is telling clients to assume that an investigation will resume at any time, even if it is likely it will not.
“You just don't want your clients to be in a position where even though the CFPB didn't come to work today, they violated an order or they missed a deadline,” Hotzel said.
With the change in administration, virtually everyone was expecting reforms at the CFPB, she adds. But, so far, “it's been a little bit more chaotic and, sledgehammer-like than anybody imagined."
Claudio Calvino, global head of data science at FTI Consulting, said AI will be a critical tool for legal teams in the years ahead to help with this issue. Yet, FTI’s recent survey found that less than half of organizations are leveraging AI and machine learning for crisis impact analysis, possibly missing an opportunity to enhance predictive capabilities and risk assessment.
“As AI continues to evolve, GCs will need to refresh their thinking about how they can best shape their company’s AI approaches to balance risk and innovation,” Calvino said.
The Significance
Adding to the stress level for legal teams is that on top of the rapid pace and growing complexity of legal risks, corporate legal teams are not receiving additional resources to keep up. Hiring remains largely stagnant even as demands on legal departments intensify. According to the annual Harbor Law Department Survey, while 64% of legal departments expanded between 2022 and 2023, more than half anticipate no increase in headcount moving forward.
Also, imagine filing a lawsuit to challenge federal agency action but only being able to object to what you think the law is. That is what the practice of law is becoming for many administrative law attorneys, they say, because agencies are no longer acting like agencies under the old rules and definitions.
Scott Amey, the general counsel at nonprofit government watchdog Project On Government Oversight, describes this as a “situation we have never been in before.” In his view, “courts will have to better define what a federal agency is.”
To that end, the Project On Government Oversight filed its own lawsuit, seeking to do just that.
“We need a court to declare that DOGE is an agency and subject to FOIA,” Amey said. “It's operating as an agency, therefore, FOIA must apply.”
