GeoLegal Notes: Weekly #2-Davos GCs? by Sean West / Hence Technologies
If Davos happens in a Swiss forest and no GCs attend, did it really happen? Also: AI "containment", the first 2024 US elections deepfake, and Taiwan tensions.
Hence advisor and investor Matthew Layton, who served as Global Managing Partner of Clifford Chance, attended Davos last week. Layton debriefed his Davos experience from the legal perspective in a video on FTI Consulting’s website, where he is also a Senior Advisor. Layton says that out of 3,000 business, government and NGO attendees at Davos, only 30 GCs were on the formal list. “That really surprises me,” he says, “particularly [given] the pivotal role they are playing on ethics and culture.”
Why are only 1% of attendees GCs? The fact that it costs hundreds of thousands of dollars for CEOs to bring colleagues (and apparently $43 if the GC wants a hot dog) is one practical explanation. But it’s a good question to consider more deeply given the broader role the GC plays in the enterprise. Are GCs pounding the table to be involved?
To some extent, they should be. Davos is all about risk, government affairs, ethics and, in recent years, ESG/sustainability. Recent ACC research found the GC/CLO has reporting line responsibility for many of these very “Davos-y” functions.
And this year, when much of the debate anchored on regulation and rules of AI, having top lawyers there would have seemed pretty helpful. This feels like a missed opportunity — but one that will only change if legal leaders demand a seat at the table.
While Davos holds much less prominence now than in the past, it is still an important analytical node for two reasons. First, it is the best opportunity to enter the mindmeld of the globalization crowd and their discontents. This year, the potential for another Trump administration was high on that list as was the recognition of just how dicey the geopolitical and global security situation is in 2024. Sustainability discussions of course took place but they also took much less prominence than before.
Reporting from Davos indicated most business leaders were generally upbeat on the economy. What’s interesting to me about that is the disconnect between how leaders feel about what’s immediately ahead (“No interest rate increases!”) and how they will feel if any of the live wars or simmering political crises boil over into full blown regional conflicts across much of the world (“Uh oh!”). This implies we will see more aggressive business investment this year until something breaks.
This brings me to the second point, which is that Davos brings the release of the World Economic Forum’s Global Risk Report 2024: At a Turning Point. I was struck by the following passage:
“Only 16% [of respondents to the Global Risks Perception Survey] expect a stable or calm outlook in the next two years. The outlook is markedly more negative over the 10-year timeframe, with 63% of respondents expecting a stormy or turbulent outlook and less than 10% expecting a calm or stable situation.”
What are they worried about? Weather tops the list, which was surprising on first pass given the tight timeframe of the question, but not from a longer view. The rest of the list covers familiar ground to readers of my 2024 GeoLegal Outlook as well as other political forecasts: Misinformation, political polarization, cost of living crisis, cyber attacks, disrupted supply chains, armed conflict and more.
But the chart worth the price of admission is the “interconnections map”, which I’ve pasted below. While we can debate if the world is actually de-globalizing, there is definitely a sense of global fragmentation. However, looking at the WEF’s risk interconnections map underscores that risks are not something that live in isolation.
This is a critical reminder that today’s world requires breaking down silos in order to manage risks. The biggest risk node is the most obvious - an economic downturn. But societal polarization and lack of economic opportunity are also critical drivers that legal leaders are well aware of yet are less likely to track in any systematic way. Elections in nearly 70 major countries this year provide a chance for such societal level triggers to manifest.
For corporate legal professionals, ask yourself: How are these nodes being tracked in my organization? Assuming legal is not responsible for tracking, am I at least kept up to date? How do my direct reports - those that do the day to day work of my legal function-keep track? How do each of these risks manifest via the legal vector - for instance, how would an uptick in misinformation increase the chance of boycotts or litigation against my company?
For law firms, these risks cut both ways. While a growing economy implies happier clients in expansion mode, risks and shocks imply opportunities to help customers through distress. Will my clients turn to me in crisis - and, if not, how can I increase the likelihood they do? Are my offerings tailored for the type of risk environment that lies ahead? Can I proactively advise my clients to consider risk mitigation strategies or prepare for after event actions like asset sales or country departure?
In other news
A few quick hits from recent days that are worth keeping track.
A major AI leader pushes for AI containment. Mustafa Suleyman, co-founder of AI powerhouse DeepMind and Inflection AI, outlines in Foreign Affairs, a call to action for multifacted containment of AI. He writes: “Most people rightly argue that regulation is necessary, and there is a tendency to believe that it is enough. It is not. Containment in practice must work on every level at which the technology operates.” It’s tempting to downplay such proposals as idealistic but motivation will come from all stakeholder realizing there is no alternative. Well worth reading this article and, for those interested, his book The Coming Wave goes much deeper.
Donald Trump is the presumptive Republican candidate following primaries and the first deepfakes of the election campaign. A deepfake robocall of President Joe Biden telling some voters to stay home on primary day is just a taste of potential tech-enabled voter suppression on the way in the general election. Events like this increase the odds the election will be contested and resolved in the courts. The upshot of Trump’s wining Iowa and New Hampshire is that his policy proposals will start to take on more weight as it is clear just how willing Republicans are to return him to the White House despite his legal troubles.
Congress members visit Taiwan after pro-independence candidate wins election. President Biden sought to make clear that the US continues to recognize Taiwan as part of China while still asserting the US ability to arm Taiwan. However, senior congressional visits in the past have lead to provocations; the Washington Times has an interesting piece on what to expect.
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-SW