FastTrack to global subsidiary management

What we are seeing in the market

There has been a notable increase in concern from general counsels and their legal teams in terms of the risks of getting compliance wrong, especially around the risk of reputation damage, for the company or executives personally – caused by non-compliance with constantly changing regulatory requirements.

Risk of non-compliance: As legal departments face budget cuts and increased workload, they are concerned about the impact of sanctions for non-compliance. They worry about the damage non-compliance might wreak on relationships with employees, prospects, customers and investors. Fines for non-compliance can be heavy, and reputational damage is a difficult issue to solve.

Talent shortage: Legal departments are also having to negotiate the ongoing global talent shortage that companies in many jurisdictions are facing. There are difficulties in recruiting and retaining legal staff with multi-jurisdictional experience. This situation is unlikely to improve in the short term, with an estimated one-in-five young lawyer expected to switch careers within the next five years¹.

Risk in legacy systems: Many organisations have legacy systems that expose them to risk and potential errors. Without a single source of company information, deadlines can be missed and regulatory frameworks may not be recorded and acted upon. Decentralised and fragmented operating models can also work out to be more costly in the long run, as in-house legal teams are forced to spend extra time and resources managing a multitude of systems. Legal departments face challenges and issues around time management and workflow overload when using a clutch of outdated computer systems and data flows.

¹https://www.ibanet.org/New-IBA-report-reveals-significant-numbers-of-young-lawyers-want-to-leave-their-current-job

How does it impact you?

The speed of doing business and the ever-changing regulatory environment around the world means that global subsidiary management needs to be robust and efficient. This is where new technology can make a real difference to overworked legal departments.

A focus on robust and centralised technology often alleviates some of the challenges of operating across the globe, provides the necessary agility to make the most of market opportunities, and can help with workflow pressure and provide potential cost savings.

At a glance: technology for effective subsidiary governance

At the start of the Covid-19 pandemic – and a shift to remote and hybrid working – legal departments adapted their corporate governance standards to accommodate access to accurate and up-to-date information. With a new-found understanding of how modern technology can be transformational in terms of efficiency and ease, they are now looking at additional technology solutions to manage the burden of time-consuming in-house administration.

There are several advantages to using technology to manage workflow. It can reduce human error, help identify areas of risk or duplication and free up employees to do more interesting work, leading to greater employee satisfaction. Overall, it has become more important than ever for companies to get their operating models and technology suites up to speed and single-destination services providers are stepping in to help.

²https://www.dell.com/en-us/blog/blog-better-functioning-tech-makes-for-less-stress-at-work/

Why use technology solutions for effective subsidiary management?

Reduction of risk: Better risk management can enable the organisation to operate safely across multiple jurisdictions. Corporate legal departments depend on and expect the highest standards in automation, AI, cloud-native solutions and data privacy and cybersecurity. With patchwork operational models and decentralised tech stacks, efficiency, employee retention and risk are compromised.

A single source of information: Multinationals that use a unified legal and compliance portfolio management system have confidence in their compliance and smooth day-to-day operations. It enables them to manage their entities securely and can provide annual reports, corporate filings, service of process (SOP), litigation, deals, business licences, contracts and many other business needs in one easy-to-access and secure location.

Better compliance standards: Staying compliant with shifting regulations is time-consuming and costly. Having a technology-enabled compliance calendar ensures that a company does not miss a business-critical compliance filing. Automating reminders for annual reports and related filing obligations means no deadline needs to be missed. Email alerts can keep legal departments up-to-date with regulatory changes and due dates for filing.

Higher revenue-generation potential: By harnessing technology to automate regular but time-consuming administrative work, legal departments can instead focus on key revenue-generating initiatives and support the business across multiple jurisdictions where new opportunities may arise.