How to adapt to the pressures on in-house general counsel

We are living in an age of disruption. Events such as Brexit, the US presidential election, breakthroughs in key technologies, fundamental shifts in global economic power and social change, all contribute to an increasing legal, regulatory and compliance burden on companies.

The responsibility for meeting these obligations will in most instances fall on the relevant businesses’ in-house legal department. As the regulatory landscape grows more complex company boards, which in turn are under growing margin pressure, ask legal departments to deliver more for less.

The general counsel faces numerous challenges in today’s fast-paced, technology enabled environment.

Regulation and compliance obligations

The post-2008 financial crisis trend for increased regulation has led to a situation where the current legal environment is burdensome. Businesses have been grappling for some time with how to properly adapt to key upcoming changes (from GDPR and Solvency II to regulation coming out of the Paris Climate Change Agreement).

Regulators, in many instances, are being handed powers under the relevant legislation and regulation to impose unprecedented levels of fines and other severe sanctions. Every organisation must therefore take seriously the implications of failing to implement proper systems and procedures to ensure compliance.

Technology

Technological breakthroughs on the one hand allow businesses to operate quickly and efficiently, which is essential for survival and growth. However, technology also means additional risks to manage. With new technology comes added cyber security and privacy risks and international regulatory and compliance obligations.

Political and economic uncertainty and shocks

Events such as Brexit and the unexpected outcome of the last US Presidential election can leave businesses facing uncertainty and attempting to second guess their legal and regulatory effect. Brexit, for instance, has caused businesses to undertake a wholesale review of; contractual relationships, the right of staff to remain in the UK post-Brexit and an assessment as to whether the UK should remain as the relevant businesses’ headquarters.

Challenges such as these add to the pressures onthe  in-house general counsel to deliver their legal and compliance obligations on time and on budget.

Businesses have traditionally turned to law firms to provide assistance, advice and support. Such law firms would typically charge by the hour for providing such services. This charging model has been under pressure for a long time and businesses have demanded firms provide fixed, discounted and contingent fees in order to help with the cost-pressure.

In the current environment however, even heavily discounted and / or contingent fees are still not sufficient for the general counsel to deliver their legal, regulatory and compliance obligations on time and on budget.

This has driven legal teams to look at even more innovative and cost effective solutions such as alternative legal services providers (ALSPs). ALSPs employ a mixture of technology, outsourcing and flexible staffing solutions to deliver a range of services including, large scale document review, contract management, regulatory investigation and litigation support, discovery and electronic discovery, contract lawyers and staffing, legal research and IP management.

The pace of technological advancement and increased regulation show no signs of slowing down in the short to medium term. As such the budgetary pressures faced by in-house legal departments seem set to continue and become even more acute for the foreseeable future. This points towards a continuing shift away from traditional law firms and charging models to increased use by businesses of the ALSPs.

Peter Workman is partner and MD of flexible legal resources at PwC

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