In a new survey, a majority of chief legal officers at U.S. companies expressed optimism that their business operations will be positively affected when Donald J. Trump takes control of the White House as U.S. President.
The phone survey, conducted by the legal market research firm Acritas, covered 101 U.S. general counsels or their equivalent personnel and took place after the November election.
It found 72 percent of respondents believe their business operations will be impacted as a result of Trump’s election (21 percent said they didn’t know and seven percent said their business operations would not be impacted). Fifty-six percent of respondents expected Trump to affect their business in a positive way while 44 percent had a negative outlook.
Most of the positive responses related to a perception that Trump will cut back on the rules and regulations many companies believe hold them back unnecessarily, said Lizzy Duffy , vice president of Acritas US Inc.
But even lawyers who are eager to be unchained from regulatory regimes tempered their expectations: survey respondents were most confident in the short-term impact of reduced regulations and less optimistic about the long-term, Duffy said.
“After all, those regulations were put in place for a reason — usually to prevent bad behavior,” she said.
The Trump-specific questions, a small part of Acritas’ Sharplegal survey of more than 2,000 legal officers at companies with at least $50 million in revenue, represented Acritas’ first foray into U.S. presidential changes.
The firm posed similar questions to chief legal officers in the U.K. after the Brexit vote last June. Fewer respondents (52 percent) expected an impact, but almost all of the expected impact was negative, the survey found.
Duffy broke down the Trump survey results for Big Law Business on the eve of the inauguration. The following interview has been lightly edited for length and clarity.
Big Law Business: How would you characterize the results of this study?
Duffy: The big result is around regulation. Fifty-six percent of the responses about how this will impact their operations were positive, and those positive responses mainly related to the prospect of having reduced regulation. Now we know from our broader and historic research among the GC community that regulation is a key risk for businesses as well as a great challenge for the GC, especially if it’s an international company and they’re working in various territories and they have to comply with and understand various regulations in various markets. That has created what some call an unnecessary burden of regulation and many have felt that it’s positive to reduce that because it has hampered their opportunities for business. However, some have noticed that reduced regulation may be a positive thing in the near term but not so much in the longer term. So it was, ‘we think it will be great in the near term,’ but what will happen after that was unclear.
Big Law Business: Law firms are hired to help businesses comply with regulations — so will less regulation be bad for law firms?
Duffy: Good point. While some of the respondents see that reduced regulation as a key benefit for their business, it wasn’t across the board, and actually the types of companies who were more positive about the impact in general are manufacturing, oil, and gas. So it does differ a bit by segment — based on the industry the respondent is in, we found some different answers. There will continue to be a lot of opportunity for law firms. On that point, the other area that may be subject to change that sits in the positive camp was policy. We heard prospective policy changes might become more pro-business. But whenever there’s going to be a change in regulation, a change in policy, a change in the tax code, these are all areas where general counsel will need their law firms to help them understand how it’s changing and the impact on their business and how to navigate that.
Big Law Business: What were the most surprising results?
Duffy: Comparing it to Brexit where the perceived impact was virtually all negative, when we look at the impact of the change in administration in the U.S. it was really mixed.
Big Law Business: Trump was a polarizing candidate and president-elect — is that reflected in the data?
Duffy: It’s a close call between positive and negative: 56 percent positive, 44 percent negative. So, yes, I think the results do show quite a mixed view. And what also came out in the results is a general consensus or a general feeling that there’s a lot of uncertainty. We have to appreciate that we were asking this before President-elect Trump had come into office, so he hadn’t begun to make any policy changes, but there were some comments in the run-up to the election about there being some inconsistency in messaging as to what policies would be changing and how. This has led to uncertainty from a business perspective, not being able to project what might happen and therefore what the impact might be. A couple months down the road, we may introduce the question back into the survey to see if anything is changing.
Big Law Business: Health care was a factor for both sides — repeal of the Affordable Care Act was viewed as positive thing and changes in the health care system were viewed as a negative. How do you explain that?
Duffy: On the one hand, [the Affordable Care Act is] seen as quite a heavy burden for some companies, so the potential repeal of that they see as lifting some of that regulatory burden from them. On the other hand, there are companies that have heavily invested in adapting to the Affordable Care Act, and there the feeling was, if this does get repealed, we’re going to go back to scratch and start again and there may be a significant wasted investment.
Big Law Business: Why did you use the Brexit questions as a comparison?
Duffy: Well, we don’t have a benchmark for the impact of a change in U.S. administration — we’ve never asked that question before. So the next best thing that we had to compare it to was a country where a nationally impactful decision was made and what’s the GC response to it. So that’s why we compared it to Brexit; it was our best, closest thing. But I think it’s important to note that Brexit really was unprecedented whereas, in the U.S., there’s a change in administration every four to eight years. I think the business community [in the U.S.] is more adapted to understanding that these things do change on cyclical basis.
Big Law Business: What else stood out from the results?
Duffy: The other piece that stood out was in the negative camp. So one primary reason why respondents thought there may be a negative impact on their business operations was, where they might be a global multinational or a smaller company with international activity, they were concerned that there’ll be harder tariffs. A lot of companies have business north and south of the U.S. borders, so it’s undetermined what that may mean if we break away from NAFTA. Harder tariffs in trade, the risk of damage to international relations — that came out quite strongly. And then another concern was around the ability to bring in foreign workers and get them visas.
Big Law Business: From your perspective, what’s the net takeaway for law firms?
Duffy: I think what the results show is that the GC community on the whole is feeling more positive than negative about what [Trump’s election] means for their business operations and that really is mainly driven by the prospect of reducing regulation. So, again, as much of our research shows, regulation is still a really critical topic for clients and an area where they continually need support from their law firms.