2024 GeoLegal Outlook by Sean West / Hence Technologies

Legal leaders must protect their organizations and clients from political shocks via the legal vector this year. We cover five themes for 2024 - and how to prepare.

Legal professionals - whether in-house, in firms, or legal tech entrepreneurs - exist in an ecosystem of political, economic and social forces. We could ignore it before - but now the ecosystem is increasingly unstable and fragmented. To do best by their clients, especially in 2024, legal professionals need to look around the corner to understand what to expect and to make nuanced and complex decisions to navigate an often conflicting matrix of laws and regulations. Critically, they need to become expert in how risks from external global affairs impact their stakeholders via the legal vector as well as through the lens of integrity and purpose of their organization. Yet, there are few integrated resources to do this. 

This year, I and my colleagues at Hence Technologies will be releasing one of a kind “geolegal” research - research that covers the intersection of legal practice and global affairs. Hence is a software company that works with a select group of clients to drive real competitive advantage for global corporations through the application of technology to the legal function. We kick this off with our 2024 Geolegal Outlook.

1. Rule of Law Recession

So much ink has been spilled by myself and others about the need for lawyers to embrace technology - to become, as Richard Susskind has written, “future lawyers.” Perhaps this is only necessary but not sufficient. Lawyers in the years ahead will need to become adept political analysts to understand the game they are playing - and political actors when needed. 

2024 prompts an existential warning for lawyers: The rule of law is about to be questioned like never before at the international and national level. And this isn’t just because the 2024 US presidential election outcome has a high likelihood of being challenged.

Recent years have seen a reversal in momentum toward globalization and “universal values” (which were really just Western values) underpinning many international bodies. This is arguably long-term fallout from the 2008 Global Financial Crisis and the 2020 COVID-19 pandemic, but the impacts were felt sharply in 2023 and will come to a head in 2024.  We see around the world the rise of nationalist and isolationist political leaders in many key economies, and the expanding influence of China - where an emphasis on sovereignty and an alternative to Western values and institutions provides cover for dozens of other countries to forgo global commitments.

One doesn’t have to look far to see major countries walking away from international regimes. The UK left the the EU - a once unthinkable move. In hindsight, Brexit was just a preview. Countries like the Philippines and South Africa have withdrawn from the Rome Statute, which established the International Criminal Court. Signatories like the US, Russia and Israel indicated they no longer plan to ratify it. Japan even withdrew from the International Convention on the Regulation of Whaling. 

Open the newspaper today and one is greeted with the reality that the UN Charter’s prohibition on the use of force did little to prevent Russia’s invasion of Ukraine, though it created an implausible veneer for Russia’s narrative justifying its actions. Global citizens tracking the circumstances and composition of the death toll in the Israel-Hamas war are left to wonder what role, if any, the Geneva Conventions play in protecting civilians ensnared in conflict. 

At the same time, the US retreat from global diplomacy as well as great power tensions between the US, China and Russia raise questions about the future of international treaty negotiation and, in some cases, international law itself. While current US President Joseph Biden slammed former US president Donald Trump for withdrawing the US from many treaties, his administration has only rejoined some of them. In fact, his administration is pursuing one of the least ambitious trade agendas in recent memory - hardly repairing the damage Trump inflicted. Not long ago, the WTO adjudication process was a good example of international law working well. On current course and speed, it could become ineffectual and, perhaps, irrelevant.

At a national level, the declines are stark - a “rule of law recession” as the World Justice Project (WJP) calls it. WJP interviewed nearly 150,000 households and over 3,000 legal experts about access to justice and factors related to rule of law. Over the last year, 76% of the global population lived in countries where the rule of law declined - an overall negative direction charted for the sixth straight year. WJP estimates 5.1 billion people cannot access their justice system, are excluded from economic opportunities because they lack legal tools or live in exceptional circumstances of injustice - or some combination of all three. 

All of this is the backdrop against which the world enters the 2024 political cycle - where there will be around 70 national elections globally. In the US, in particular, the stakes are high. Trust in the US Supreme Court hit a historic public approval low as measured by Gallup in 2022, a sentiment no doubt further amplified by leaks of major rulings and ethical questions about at least one justice receiving favors from rich friends. Yet, the 2024 election is perhaps the most likely US election in history to end up in front of the Court.

Incumbent President Biden is facing an impeachment effort from Republicans related to his embattled son. Former President Trump is facing a slew of legal cases premised on claims that he undermined the electoral process in 2020 and encouraged the violent January 6, 2021 storming of the US capital. The stakes and animosity between the two parties are so high that on many days it’s easier to imagine both refusing to concede defeat than imagining an orderly change of power. 

US electoral processes were reportedly a victim of foreign meddling in 2016 and 2020. This year, the intelligence community expects more of the same, and it may involve AI generated deepfake content designed to confuse voters. As Mustafa Suleyman writes in The Coming Wave, it’s not hard to imagine a candidate for office losing due to this type of manipulative content, only to later find out the content was fake. Cue the legal battle for a redo. Now multiply that across every House and Senate race - plus any of the 70 or so national elections set to happen in 2024.

All of this is the backdrop against which lawyers will be practicing in 2024. 

Rule of law underpins international commerce. All good market entry and risk analyses are predicated on understanding whether businesses will get a fair shake in a foreign jurisdiction when times get tough. As the legal and regulatory rules of the game are undermined - whether impartiality of national legal systems or the customs and rules of international law - that dependability for corporate actors and their representatives breaks down. Key questions may involve: Where are we likely to face increasingly capricious government audits or investigations with little recourse? Or a radically shifting regulatory landscape? Could local competitors use these factors to their advantage? Could local competitors cause these things to happen?

Lawyers should ask themselves: How do I advise my clients when our assumptions about legal risk no longer apply? Smarter strategies will involve introducing resilience into the calculation to help clients figure out how to adapt or transform as events play out, also implying the need for their lawyers to provide some amount of monitoring said events for them. But such strategies are often labor intensive and, thus, require selling your client (whether internal or external) on the need to understand the dynamic nature of the game they are playing and invest in their ability to win. Having a good crisis management team and strategy for when it all goes wrong may be a blunt instrument but a helpful safety net.

A bigger question is whether it is good enough to simply be an excellent lawyer in a world that doesn’t value the rule of the law. If justice systems are perceived as unjust, lawyers can be seen as reinforcing an unjust system, bringing ethical dilemmas and reputational risk. At the same time, the legal profession will expect its professionals to stand up for the rule of law  - which may come at a political cost.

This requires a different set of muscles than most lawyers currently possess. That doesn’t mean each individual needs to change. But it does mean that introducing new skillsets into law departments and firms - and giving some deference to their capabilities - will go a long way in the years ahead. Redesigning training in law schools and professional training will a critical piece of the puzzle.

2. 2024 Political Stew

There are around 70 elections in 2024 covering roughly half the world’s population - that makes for a bigger election year than most of us have seen in our professional careers. Some of these are fully democratic, while others are more for show. However, whenever voters go to the polls, politicians throw red meat. Such an expansive map means that nearly all businesses will find themselves in the political stew.

The promises of aspiring elected officials can create a significant workload for legal leaders. The first step is to understand “who is saying what where.” Given the sheer number of elections happening this year, organizations will need to take monitoring much more seriously, though monitoring alone won’t be good enough.  

In doing that, the biggest challenge is separating signal from noise. Do politicians mean what they say or are they just pandering? This implies that relying on simple tracking of the news is not good enough - companies are going to have to sort for the issues that would critically affect their operations in order to zero in on the highest priority potential risks, then invest in really understanding the stakeholder dynamics around those issues.

For instance, in 2016 Donald Trump promised to start a trade war with China. Most observers incorrectly dismissed this as noise. Others thought actions would be reversed once he left office. Those businesses that depend on the US-China trade corridor are now stuck with both higher tariffs that the Biden administration has declined to reverse and also deeper tension in the relationship. Trump is back promising across the board tariffs far beyond China. Investing in understanding whether he is bluffing - or would be prevented from being successful by other stakeholders - is worthwhile if your business depends on open trade.

Of course, elections also provide public relations and lobbying opportunities and challenges for companies. Do you stand in the way of policy promises like the ones above and risk downside if the candidate wins? Do you quietly lobby while staying silent publicly? Do you support both sides in an election because politics has become increasingly unpredictable? Industry groups will provide a more important vehicle than in the past because of how willing politicians are to attack businesses in this cycle. When politicians are no longer afraid to slam companies on social media, singling yourself out may be riskier than in the past.

The real opportunity for legal leaders, however, is to prepare the organization for multiple eventualities. A key element in building resilience is understanding optionality in case the operating environment changes. Legal must have a seat at the table on these issues - and must invest in being prepared to contribute. 

Core issues that will shift as a result of this year’s elections include trade and tariffs, sanctions policy, military actions, AI regulation, and the intersection of technology and healthcare policy. Mapping out legal and operational responses in advance is critical.

Earth on fire as an oil painting, generated by Dall-E

3. War to the Second Power

The number of armed conflicts is at an all time high since the turn of the millennium. The ones on our screens feel ever more pressing because the human cost is visible 24 hours a day and also because we’re all susceptible to being affected by wartime propaganda.

The financial markets have largely shrugged off these conflicts. But it’s the second order effects companies need to worry about.

For instance, US and European brands perceived to support Israel are being boycotted across the Arab and Muslim world. University presidents are being felled by the way they discuss the conflict, and businesses face their own pressures to say the right things around the issue - often correcting themselves repeatedly. A raft of legal actions will come from employees who say their companies are discriminating on the basis of their side in the conflict - whether it is a missed promotion or a failure to hire.

East Asia is likely to get dicier this year. China continues to test the resolve of US protection of Taiwan and many key observers are notching up the chance that the beginning of armed efforts to retake Taiwan could occur in 2024. This is unlikely to be an outright invasion but could be an attempt to take islands claimed by Taiwan to probe the US response. In an election year, it’s not clear what President Biden would do.  Perhaps he would try to respond proportionally to signal an intention to defend Taiwan - without upsetting the typical American voter, who can’t find Taiwan on a map. 

Two risks emanate from Taiwan. First, a very quick escalation could lead to sanctions and frozen trade channels. This would dramatically increase the difficulty of operating in China, which is already getting harder. China and the US would increasingly pressure third countries to join the fray and the global business landscape could become fragmented quickly. Businesses weathered this risk when it happened in Russia by basically walking away from their assets (or, perhaps, receiving nominal consideration in a fire sale).  But China is not Russia. And, this risk comes on top of the events in Eastern Europe and the Middle East. 

The second risk is that Taiwan is a critical node for much of the world’s semiconductors due to the prominence of TSMC - Taiwan Semiconductor Manufacturing Company - which serves as a critical node.  Semiconductors are critical components for many technology powered products - and we live in a world where even our toasters can be connected to the internet of things. Since 2015, the total global trade in semiconductors has been bigger than the total global trade in crude oil.  So, it’s possible to imagine supply chain risks as big as during the pandemic - or bigger -  in this type of scenario.

There is a role for legal leaders to understand where liability for such risk sits in their supply chain. Mapping out how one would exit supplier relationships and stand up new ones in a worst- case scenario is critical so the playbook is ready if it should occur. Understanding the impact on employees, systems, data and IP will prove critical.

4. Lawyers in the Lead on AI

Legislation and regulation is a lagging impact of technological progress. Advances in AI create a far more complex challenge for policymakers than most technology advances of recent years. In undefined spaces like this, lawyers are left to fill in the blanks.

Europe is set to take the first comprehensive step with its AI Act; its effective date is likely to be early 2026, two years after passage by the European Parliament. The Act takes a risk-based approach to AI - ratcheting up rules governing different types of AI systems based on anticipated risks. Stiff fines - as high as 7% of global revenue - could be imposed for failure to comply. 

Given that the Venn diagram of businesses operating in Europe and using AI in some form covers most multinational companies, the law is effectively the first shot fired in global AI regulation. Other countries - or states, like California - will follow with their own rules, creating a complex web of obligations.

On the one hand, businesses will be familiar with this dance, having rehearsed it with the EU’s General Data Protection Regulation. Core elements include extensive preparation and internal policy development, which will be a boon for specialists who understand both the letter of the policy as well as likely trends in enforcement. 

However, enforcement is also a political game particularly with emerging technologies, where legislated rules are never clear cut. Companies will do well to boost their resources in Brussels and at European national levels to ensure that they can take the regulatory temperature and make their case as necessary.

What’s most clear, however, is the need to proactively develop legal rationales for AI-dependent business models. Businesses should not be overly risk averse based on regulatory saber-rattling. It will be at least half a decade from now before we see serious enforcement actions and in that time the opportunity for first mover advantage from path-breaking applications of AI may be gone.

As a result, it will be up to internal and external legal teams to begin to demarcate the boundaries of what’s permissible. This should be done not from a compliance point of view but from a strategic point of view, balancing the risk of prevailing at some point in the future if notional rules were enforced, against the chance of losing the opportunities to be first to market. In effect, lawyers will be in the lead on defining where business models can go over the short-term for the use of AI in the enterprise.

5. Guilt by Representation

It’s a long held belief that everyone deserves representation - after all, what would justice look like if we blamed criminal defense lawyers for defending criminals accused of heinous crimes? The challenge is that in a divisive political environment like that outlined throughout this Outlook, there is the potential for what I will call “guilt by representation.” That is, law firms and lawyers being held accountable for the beliefs and actions of their clients. 

97% of general counsel and chief legal officers responded to a recent survey we conducted by saying they would shift their external counsel if counsel did not comport with their ethics or values. Numerous examples exist of law firms finding themselves in the middle of red-hot politics. Firms that were involved in challenging the 2020 US election found themselves in this situation and, no doubt, any that are tapped to litigate 2024 results would feel even more pressure. But this is not the only source of such concerns.

Claudine Gay and Elizabeth Macgill, formerly of Harvard and University of Pennsylvania, respectively, testified before Congress on issues related to discrimination and anti-semitism on campus in the fallout from the Israel-Hamas war. Both resigned under pressure shortly after testimony which was seen as “wooden” and too legalistic. Both had been prepared by the same law firm, WilmerHale.

New York Times reporter David Enrich recently wrote an expose book about the work of big law firms, called Servants of the Damned. Central to the book was Jones Day’s work for the Trump administration, much of which reshaped politics and policy. Separately, Kirkland & Ellis became embroiled in Second Amendment issues after a string of successes in support of gun rights. Also, a number of law firms found themselves in hot water over work representing Russian oligarchs following Russia’s invasion of Ukraine.

This year may be the year these ethical considerations boil over. Lists of political appointees will be drawn up in all countries having elections this year, and surrogates will be expected to get on TV and give credence to political candidates who may tap them for key roles. 

No doubt top lawyers will be part of this cohort. A balancing act for their firms will be preparing for political fallout from those on the other side of key issues. A core choice for corporate legal departments will be to discern whether corporate values dictate a need to raise such issues or take action when politics runs counter to corporate policy. 

Looking Ahead

The political environment, as outlined above, is challenging. But we are also at a moment of unprecedented innovation when it comes to how new technologies will change the way we do business. While I’m not breathless about changes coming immediately, I do believe we are the dawn of shifts in access to AI-powered legal services driven not just by innovation but by the political pressure the legal industry will feel to adapt rules and regulations that govern such technologies (as I outlined in a recent Bloomberg Law column). This opens up untold possibilities to start to close the justice gap, which may dampen the rule of law recession over time.

Properly equipped companies and law firms - those that can see opportunities clearly while also preparing to manage downside risk - will thrive. My hope is that all of you are now better equipped for that journey - and that I can ride alongside you for it over the course of the year.

-SW