UK and US corporates lack budgets to maintain regulatory compliance, study finds
Law firms, however, are better resourced than last year to help clients manage regulatory change, Integreon report shows
A majority of companies in the UK and the US say they don’t have sufficient resources or budget to maintain regulatory compliance, according to a new report from alternative legal services provider Integreon.
The 2021 Regulatory Readiness Report found that 70% of companies are not completely confident they have the capacity to adequately meet their compliance requirements, with a fifth completely disagreeing they have sufficient budget – a sharp rise from 2020 when no respondents felt that way.
At the same time, almost a third of companies said they are still not fully compliant with GDPR despite the regulations being in place for more than three years. Roughly half of respondents (49%) also said they are not well prepared for Brexit, up from 44% in 2020 – underscoring the challenge for companies to navigate the regulatory uncertainty caused by the UK’s exit from the EU. A fifth of respondents said Brexit will likely have the biggest regulatory impact over the next 12 months.
Law firms are also seeing a rise in Brexit-related matters, with 54% of law firm respondents noting a significant increase in workload over the past 12 months compared to 32% in 2020’s survey. Firms are optimistic that fee income from Brexit and other regulatory compliance work will grow over the next 12 months, with 73% expecting fee income to rise over that time frame compared to just 45% in 2020.
Despite that optimism, 62% of law firms also said they remain under cost pressure from clients when delivering legal services in support of regulatory change, with 42% turning to either ALSPs or their own offshore captive operations to help manage those costs. However, law firms said they are better equipped to support clients this year, with 49% saying they are completely confident they have the resources to help multiple clients with regulatory change, up from 37% in 2020.
Bob Rowe, Integreon CEO, said: “This year’s report shed light on how US and UK corporations and law firms are coping with the tremendous challenges of regulatory readiness. Clearly corporations are still struggling to maintain regulatory compliance especially in light of static or inadequate resources. A combination of people, process and technology resources provided by law firms, ALSPs and software vendors are filling the gaps.”
He added: “Looking forward, issues like Brexit, Covid-related legislation, United States data privacy laws, and the LIBOR transition will all require corporations and their legal counsel to step up more.”
The survey was conducted by Pensar Media and polled more than 200 compliance and legal professionals in the US and UK.
A report published by Baker McKenzie last month found that global corporations are failing to meet their diversity and inclusion goals due to a lack of collaboration, consistency and action across organisations, exposing them to potential compliance issues.