A majority of legal professionals see an increased demand for environmental, social and governance (ESG)-oriented legal expertise; however, there are gaps between corporate legal departments and law firms when it comes to being prepared to meet this rising demand, according to a recent survey.
The rising demand for the legal industry to provide ESG services looks to be more than just a passing trend as it represents a fundamental shift in how legal services are delivered in a world increasingly concerned with sustainability, social responsibility and governance, finds the 2024 Wolters Kluwer Future Ready Lawyer Survey.
ESG continues to be a major topic for workplaces and staff, with 68% of legal professionals surveyed – 77% in legal departments, 61% in legal firms – seeing an increased demand for ESG-oriented legal expertise.
The three main drivers of this trend, the survey notes, include an increasingly complicated global regulatory system, ESG data challenges, and expectations around ESG standards.
Preparedness gap, training
However, there are gaps between corporate legal departments and law firms when it comes to being prepared to meet the rising demand for ESG expertise. Notably, 41% of corporate legal professionals, the survey points out, feel very prepared to address the demand for ESG-related legal expertise; 12% indicated that they are not very prepared or not at all prepared.
On the other hand, law firms expressed less confidence, with only 29% indicating they feel very prepared and 24% saying they are not very prepared or not at all prepared. There is also a difference in providing ESG training for staff – 56% of corporate legal departments provide ESG training, versus 45% of law firms.
To address these challenges, the primary response, the survey reveals, is to provide ESG training to existing legal staff. Over half (56%) of corporate legal departments and 45% of law firms are administering training to existing staff. Other measures include developing internal policies and guidelines for ESG compliance and working with external experts or consultants to meet ESG responsibilities.
Additionally, 42% of law firms and 41% of corporate legal departments have established dedicated ESG departments – specialized units focused solely on ESG matters – ensuring concentrated expertise and dedicated resources for clients’ specific needs.
“In-house legal departments are certainly leaders in the legal industry when it comes to ESG,” says Kamila Kurkowska, president and founder of the Women in Law Foundation. “In a sense, they influence law firms – their suppliers – to also incorporate ESG into their policies.”
“Although law firms are beginning to advise clients in the area of ESG, they have not yet fully addressed this issue within their own operations. Particularly when we talk about ‘S’ for social – which includes people, especially employees – law firms have not yet realized how important people and, more precisely, employees are. There is a lot of talk about diversity, but not enough is being done in the area of inclusion, and exceptionally little has been done regarding equity.”
