Social Media- Boon or Bane
The role of a CLO has always been somewhat of a juggling act requiring many different hats and skills. While ethics, compliance, and transparency continue to be top priorities, CLOs are also starting to play a larger role in corporate strategy development than in the past. As companies grow and adapt to constant change, it is critical for CLOs to be proactive rather than reactive, with a strong emphasis on preventing problems before they happen. To that end, I make it my mission to not only be a trusted advisor to my colleagues by staying abreast of new developments in the law, but also to work closely with our executives in a consultative leadership role when critical decisions are being made. In other words, it is becoming more common for CLOs to serve as strategic business partners within their senior executive teams.
Our firm expanded into the U.S. in late 2014 and experienced massive growth in a very short period of time, growing from zero to over 150 U.S.-based employees in just a year, a number we expect will double over the next few years. It has been a roller coaster ride unlike anything I have ever experienced and we have achieved tremendous success along the way. As we grow even larger in the coming years, critical decisions will continue to be made on a daily basis related to hiring, domestic and international compliance laws, new business opportunities, technology, process management, and risk mitigation. Ensuring those decisions are made legally and ethically, while also capturing additional business considerations in every analysis, is of the utmost importance to me, to our firm, and to our continued success.
“It is critical for CLOs to ensure their organizations have policies and procedures related to employees’ social media use”
Additionally, one area of concern that keeps me awake at night is the potential for data breaches and the protection of corporate data. While our firm has robust safeguards in place to prevent such breaches, hackers are becoming more sophisticated by the day, and CLOs are playing a larger role in cybersecurity strategy, risk assessment, and prevention. In fact, according to a 2015 survey conducted by the Association of Corporate Counsel, over a quarter of CLOs reported data breaches within their organizations over the past two years, the average cost of which was around $3.5 million. These statistics highlight the ever-increasing need for the role of CLO to evolve and adjust over time. Technology is here to stay, and we are relying on it more heavily than ever to drive results and compete in the marketplace. CLOs must be aware of potential risk factors facing their organizations and ensure appropriate procedures are in place to prevent and address such risks.
Emerging Technology Challenges in Legal
While the spectrum of technology-related challenges faced by an average company is vast (e.g. cloud computing, big data, mobile and remote computing, etc.), social media presents some particularly complicated issues for a CLO to assess. While on one hand it is critical for companies to embrace the value of social media for marketing, communication, and data collection, the use of social media may lead to surprising and unintended consequences, potentially exposing a company to legal, regulatory, and reputational risks.
Social media played an important role in our firm’s growth and success during our first year of expansion into the U.S. market. Our ability to locate, communicate and connect with potential clients and employees through platforms such as LinkedIn served as a mobilizing tool for pursuing new business opportunities, as well as effectively marketing our brand and culture.
That being said, the use of social networking for marketing, research, and communication opens a company up to exposures beyond their core business, and it is critical for CLOs to ensure their organizations have policies and procedures related to employees’ social media use. Additionally, it is important for CLOs to work closely with their senior executive teams to ensure the acquisition of the appropriate type of insurance and adequate limits of liability to address potential claims for defamation, intellectual property infringement, or the unauthorized release of personal data.
In addition to social media platforms such as LinkedIn, CLOs must also consider implementing policies and procedures related to employee use of sites like Facebook, Twitter, etc., both in and out of the office. If you are not already familiar with the terms “friending, following, sharing, tweeting, tagging, and liking” in the context of social media, you might want to ask your teenager or tween for a quick lesson. Did you know that “Instagramming” is a thing? Well, it is. And it can lead to some legal risks you’ve probably never even considered.
As for corporate profiles on social media sites, consider the potential damage that could be done if a hacker accessed your company’s Twitter account and posted a fake press release about your quarterly earnings or a potential acquisition, affecting both your stock price and reputation, along with potentially leading to a lawsuit. Limiting access to such corporate accounts can help reduce this risk, as well as having secure passwords in place. Further, if your company is considering posting earning reports or other material information on social media sites to get the word out, you must tell investors about it first to ensure all shareholders are on an even playing field when it comes to accessing information.
Social media is an important avenue to market your brand, seek new business opportunities, and disseminate information, but make sure you proceed with eyes wide open.