Eversheds Consulting's Lee O'Connell explains how the GC role has evolved to take on compliance issues

In today's global and economic environments, regulatory compliance is seen by corporate counsel as one of their highest legal risk areas and, with regulator action on the  increase, it is now presenting legal departments across the globe with many different challenges.

One key area of focus is the need for organisations to develop and embed fully functioning risk and compliance frameworks, servicing many internal departments, including legal, across multiple international jurisdictions and in accordance with differing regulatory regimes. The impact of these regulatory compliance changes on the entire enterprise need to be considered in unison with those once thought of as purely legal risk, widening the scope of those involved in establishing the risks.

Responsibility is now falling to corporate counsel to play a pivotal role in identifying and driving targeted legal risk and compliance programmes across multiple jurisdictions that incorporate good ethical, legal and risk management behaviours.

The steps

As corporate counsel are now required to incorporate effective risk management methods within their processes in order to circumvent long and costly litigation, they need to become involved with:

  • the early identification of regulatory compliance, as well as ethical and legal risk issues;
  • fully contributing to the risk management process; 
  • improving understanding of the enterprise-wide impact of compliance across multiple  jurisdictions and knowledge transfer; 
  • communicating and helping to train legal compliance; and
  • settling regulatory disputes by increased negotiation based on risk-informed outcomes.

Incorporating the above into normal routines and improving the approach to risk and compliance processes within any global organisation can bring benefits to the whole company and help with employee engagement.

Early identification

The early identification of regulatory compliance and ethical and legal risk issues across multiple jurisdictions is crucial for the success of implementing a global risk and compliance model. 

Risk information used to formulate the risk strategy can be obtained via many sources including corporate counsel knowledge transfer and previous dispute experience, regulatory compliance early warning systems, compliance control functions and control risk self assessment.

Relevant, regular and up-to-date information on regulation specific to the sector needs to be readily available to those contributing to the compliance and risk frameworks, and legal teams can play a vital role in disseminating pertinent regulatory information.

Risk management

Corporate counsel need to understand their enterprise-wide legal and regulatory risks, enabling them to contribute to the risk strategy of the business.  A well-established system for facilitating this would be an integrated global compliance and risk framework that can be used and updated by all functional departments.

This would highlight the importance of enterprise-wide risk management across a whole organisation and provide risk information on a global perspective that may be applicable to any functional group. 

It would allow for accurate multijurisdictional risk assessment and could be used to track, manage and monitor risks across many multiple jurisdictions. What can often be perceived as a small risk in one particular area, when connected with another, could have a greater impact upon the organisation.

Deeper understanding

The role of in-house corporate counsel has to continually evolve, with responsibilities being further expanded to include providing advice and guidance on regulatory compliance and ethical issues, and inclusion in the development and implementation of risk management programmes.  
There will be a need for a deeper understanding of the enterprise-wide impact of compliance across multiple jurisdictions through improved knowledge transfer and centralised information and data sources.

Focused communications

Following early identification of regulatory requirements, the role of corporate counsel becomes vital in providing relevant, effective and regular communications and training of regulatory changes, either independently or incorporated within firmwide releases or training programmes.
It enables the embedding of a risk and compliance-aware culture specifically focused on the right areas to improve business performance.  

Regulatory disputes

When armed with the above steps, corporate counsel equip the organisation, the employees and themselves with legal, regulatory, compliance and risk information and fully become part of the value chain. This enables the early settling of regulatory disputes through an enterprise-wide approach and allows for more increased negotiation on disputes based on the risk and legal informed outcomes of the organisation.

In summary

There is a growing consensus and recent research is verifying that corporate counsel are becoming more pro-active in their approach to compliance by becoming involved with and incorporating risk management tools and techniques on a global scale in order to circumvent long and costly litigation.

Corporate counsel can play a key role in driving these targeted compliance and risk programmes across multiple jurisdictions that incorporate good ethical and risk management behaviours. 
This, coupled with focused risk training and 'top-down' communications, will help contribute to a fully operational enterprise-wide system of legal, risk and compliance.   

Lee O'Connell (pictured) is a senior management consultant in the risk and compliance group at Eversheds Consulting.