Bloomberg Law
May 8, 2023, 9:00 AM

ANALYSIS: In-House, Law Firms Diverge on SEC Rulemaking Impacts

Preston Brewer
Preston Brewer
Legal Analyst

In a recent Bloomberg Law survey, concerns about the additional burden of cybersecurity and privacy rulemaking far and away led the list of impacts for in-house attorneys but ranked lower for law firm lawyers, who see disclosure obligations affecting their practices the most.

Bloomberg Law’s State of Practice Survey asked 802 lawyers about the surge in SEC rulemaking under current Chair Gary Gensler and how these proposed and enacted new regulations are likely to affect legal practices and the clients, companies, or funds they advise.

The results lend credence to the age-old story of more regulation leading to higher burdens on the regulated (and their legal counsel)—but those impacts land differently on the practices of in-house and law firm attorneys, according to the survey.

Here’s what we found when we dug into those responses.

Cybersecurity, Privacy Rules Dominate In-House

One of the most notable takeaways from the survey was just how much cybersecurity and privacy rulemaking influences the practices of in-house counsel. Moreover, that anticipated effect diverges substantially from the expectations of how law firm lawyers expect SEC rulemaking will affect their practices.

Of the 802 survey respondents, 165 in-house and law firm attorneys answered a question on what SEC rulemaking topics they expected to impact their practice the most.

Fully half of in-house counsel respondents pointed to cybersecurity and privacy as impacting their practice, nearly double the next two highest cited impacted topic areas, disclosures (27%) and diversity, inclusion, and human capital (27%; collectively, commonly called DEI).

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Artificial intelligence, a technology that has made a big splash in the past year, is only adding to in-house counsel headaches over privacy. Several states are already requiring AI-powered processing to comply with consumer privacy laws.

The SEC is currently accepting comments for two cybersecurity risk management and privacy proposals and is considering agency rules under the Privacy Act, as well. Furthermore, the Commission has adopted a final cybersecurity and privacy rule since Gensler took his post.

It’s no small wonder that those topics are top-of-mind for in-house lawyers.

Disclosure, Board Rules Lead Law Firm Impacts

The law firm attorneys surveyed see SEC rulemaking affecting their practices differently than their in-house peers. Among the subject-matter impacts, law firm attorneys viewed disclosures (37%), corporate boards (31%), DEI (27%), and private equity and hedge funds (26%) as the greatest practice impacts from Commission rulemaking.

Cybersecurity and privacy ranked fifth (25%), and the climate-related disclosures proposal landed tenth (16%). By comparison, the climate proposal ranked sixth (20%) among in-house counsel surveyed.

Climate, DEI Less Impactful Than Other Rulemaking

The SEC has received over 11,600 comments regarding its climate-related disclosures proposal, a huge number compared to other proposal topics. Another controversial proposed rulemaking affecting special purpose acquisition companies, or SPACs, has garnered only about 100 comments.

Yet the SEC’s climate-related proposal ranks only ninth overall in our survey of the most impactful rulemaking topics, despite the proposal’s potential to dramatically affect company operations. Furthermore, for lawyers’ securities practices, the proposal would fundamentally transform the materiality-based disclosure regime that has been in place for about three-quarters of a century.

Disclosure obligations have always driven federal securities regulation, and our survey responses reflect this emphasis. The proposed climate-related rules are themselves essentially disclosure rules.

Compliance, Updating Policies Lead Burdens

Of the 802 survey respondents, 164 in-house and law firm attorneys answered a question on the anticipated burdens to their practice of SEC rulemaking.

Law firm and in-house attorneys agreed on the same two top anticipated burdens but they far outpaced all others for in-house counsel. Additional compliance burdens was cited by 63% of in-house attorney respondents as the most significant impact of new rulemaking compared to 48% for law firm lawyers. A slightly higher percentage of attorneys working for corporations (50%) rated the need to update policies/documents as their second most frequently cited impact versus law firm attorneys (48%).

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SEC Rulemaking Continues Apace

The Commission has given no indication that it intends to slow down the pace of its rulemaking or to narrow the range of topics they impact. In fact, new rulemaking continues to be proposed and adopted by the Commission. The final rules on climate-related disclosures—once expected in October last year—are now said to be poised for a fall release.

Bloomberg Law subscribers can find related content on our Surveys, Reports & Data Analysis page. Bloomberg Law subscribers can find more information on securities law on our In Focus: SEC Rulemaking page and on our Securities Practice Center resource.

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To contact the reporter on this story: Preston Brewer in Washington at

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