How are corporate legal teams evolving to adjust to global growth? A recent survey conducted by IDC – Modernization of Corporate Legal – found that while most legal departments surveyed made an effort to evolve their operations in the past few years, 85% said much improvement is needed in managing international legal and regulatory compliance.
Challenges of scaling legal compliance to support global operations
Under pressure to do more and ensure global operations go on without a hitch, corporate legal teams face common obstacles.
- A lack of jurisdictional knowledge: In-country expertise is a significant pain point. It’s easy to underestimate the differences in legal systems and regulations between countries, and it becomes increasingly challenging when you are unfamiliar with specific local requirements or processes. Add to this keeping track of ongoing changes and a growing volume of regulations around the world.
- Resource constraints: Teams are also under-resourced and/or lack the capabilities in-house to manage all the aspects of global compliance. In the absence of local directors or contacts, the responsibility often falls on existing resources who are already being asked to do more with less.
- Managing multiple vendors: Legal teams often contract multiple vendors for multiple services. Not only can this be time-consuming, but service level differences and a lack of continuity across countries can lead to inconsistencies in work output.
- Operational inefficiencies: Multiple and diverging priorities within different internal clients, stakeholders and agendas can add complexity to internal processes.
- Poor information management: Often times different systems are used for different things, between teams and locations. Without a repository of corporate data or one that integrates with other internal systems, data management issues can arise. Additionally, without visibility across all entities, there is a higher risk of non-compliance.
- Budget management challenges: Corporate legal teams may lack awareness of the true costs of compliance work in each country. Many often fail to leverage their economies of scale to get better pricing with vendors. This makes it hard to keep track of costs or estimate their budgetary needs.
These challenges are compounded by cultural and language barriers, different time zones, and the need to be operationally agile.
It’s no wonder that the main reason respondents to the survey said that they need the most help in improving how they manage their international regulatory and legal compliance.
Despite these challenges, only 20% of respondents currently outsource legal corporate compliance and entity management compared to other legal responsibilities.