Rapid pace of regulatory change threatens to overwhelm legal and compliance teams
There are four primary options available to legal and compliance leaders to cope with unprecedented levels of regulatory change, according to Gartner, Inc. These regulatory changes are being driven by increasing regulatory oversight, renewed geopolitical tensions and the ongoing COVID-19 pandemic.
“The blistering pace of regulatory change right now is threatening to overwhelm some legal and compliance teams,” said Nick Sworek, director, advisory in the Gartner legal, risk and compliance practice. “As the main drivers of regulatory change appear ongoing, legal and compliance leaders will need to find a sustainable way to keep on top of the requirements this will place on their organizations.”
Gartner experts believe three distinct waves of investment in regulatory tracking have emerged in recent years: pandemic-induced law firm investments, human-capital-complemented investments, and technology-assisted regulation intelligence.
“At the beginning of the pandemic, legal and compliance leaders turned to law firms for a quick solution to track the regulatory volatility of that time,” said Sworek. “In 2021, when the pace of change clearly wasn’t slowing, legal leaders started looking at less costly in-house tracking options. This year, as legal and compliance teams are finding their ‘new normal’, they are looking at technology investment as a more sustainable strategy to keep up with ongoing regulatory change and support in-house staff.”
To help legal and compliance leaders understand their options for tracking regulatory change, Gartner experts have identified four main approaches that should be evaluated:
1. Law Firms
When faced with the regulatory volatility in the early stages of the pandemic, legal and compliance leaders turned to their law firm partners to help stay on top of the changes. This is a good option because law firms tend to have a comprehensive understanding of what regulations apply across geography and industry, and do not require a long onboarding process to get them up to speed.
The second path for regulatory tracking is to engage with alternative legal service providers, nearly a third of which offer some form of regulatory tracking. ALSPs are particularly useful where off-the-shelf products — such as regulatory intelligence tools — cannot meet the organization’s needs.
3. In-house Staff
In-house staff have deep institutional knowledge and a high degree of business acumen. They understand which regulations are important, and what processes and policies need to be changed or created to meet new regulatory requirements. Using in-house staff also eliminates third-party involvement, creating more control over the process and ensuring flexibility during high-change periods.
4. Regulatory Intelligence Technology
Some vendor-provided tools automatically track and notify of regulatory changes without human input. Through a variety of capabilities regulatory tracking software aims to automate the regulatory tracking aspect by allowing them to track specific topics and/or regulations, and by sending notifications when something changes