Increased Regulatory Scrutiny Contributes to Legal Outsourcing expansion
Following the global financial crisis, businesses are facing increased regulatory compliance pressures. To tighten regulatory oversight in the UK, the UK government restructured financial regulation and divided the Financial sets Authority (FSA) into two regulatory bodies — the Financial Conduct Authority and the Prudential Regulatory Authority. Across the pond, the US enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, which changed the American financial regulatory ecosystem and almost every part of the nation’s financial sets industry. In the wake of these sweeping regulatory reforms, companies in regulated industries, such as finance and healthcare, must be hyper-diligent with their compliance programs.
Today, industry regulators in the UK and US are aggressively investigating any allegations of corruption and bribery, particularly related to foreign jurisdictions. afterward, the number of investigations and litigations has increased considerably, and companies confront heavy fines for noncompliance – and already risk criminal prosecution.
When an investigation occurs, corporate legal departments often need to provide huge amounts of information to satisfy regulator requests. The traditional ways of gathering and collating this information and reviewing it for relevance are no longer possible. Legal departments need to have the ability to review information quickly and cost effectively, so they can respond efficiently to regulatory notices.
Law firms may not be the ideal choice to manage large volumes of information and data in a timely and cost-effective manner. Collecting and ESI processing, forensic examination, storage, database management, hosting, and software configuration and maintenance are non-legal sets that can be provided by non-legal specialists. Legal outsourcing providers (Legal course of action Outsourcing) are better positioned to manager these responsibilities because they typically offer progressive technology and more focus on these skill sets, which are now basic for both litigation and regulatory investigations. Seasoned LPOs are geared up to provide exactly this kind of predictability of costs and time lines for disclosure and can work to a fixed budget. This provides more certainty and allows clients to control costs particularly in complicate investigations or litigation situations.
At the same time, the courts are mandating a wider and deeper review of electronic documents in legal proceedings in addition as an explanation of what steps parties have taken to retrieve potentially applicable e-documents. Again, LPOs are well-equipped to provide end-to-end data management, allowing clients to confidently outsource document management and review work in regulatory matters. Some clients are already setting up panels of LPOs and requiring their external law firms to work collaboratively with these LPOs to ensure that the possible cost savings are properly and appropriately realized.
The global financial crisis has forced corporations to develop new strategies to cost-effectively and efficiently manager investigations and litigation. As more companies look to manage the associated costs and risks resulting from regulatory scrutiny, document review and e-discovery are likely to be growth areas for LPOs.