In the aftermath of the global financial crisis, companies are facing increased regulatory compliance pressures. To strengthen regulatory oversight in the UK, the UK government restructured financial regulation and split the Financial Services 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 US financial regulatory environment and almost every part of the country’s financial services industry. In the wake of these sweeping regulatory reforms, companies in regulated industries like finance and healthcare need to be extra diligent about their compliance programs.
Today, industry regulators in the UK and the US are aggressively investigating any allegations of corruption and bribery, particularly in relation to foreign jurisdictions. Subsequently, the number of investigations and litigation has increased significantly, and companies face heavy fines for non-compliance, and even risk criminal prosecution.
When an investigation occurs, corporate legal departments often need to provide vast amounts of information to satisfy regulators’ requests. The traditional ways of collecting and collating this information and checking its relevance are no longer feasible. Legal departments must have the ability to review information quickly and cost-effectively, so they can efficiently respond to regulatory notices.
Law firms may not be the ideal choice for managing large volumes of information and data in a timely and cost-effective manner. ESI collection and processing, forensics, storage, database management, hosting, and software configuration and maintenance are non-legal services that may be provided by non-legal specialists. Legal Process Outsourcing providers are better positioned to handle these tasks because they typically offer advanced technology and focus more on these skill sets, which are now essential for both litigation and regulatory investigations. Experienced LPOs are prepared to provide exactly this kind of cost predictability and timelines for disclosure and can work on a fixed budget. This provides more certainty and allows clients to control costs, particularly in complex investigations or litigation cases.
At the same time, courts are demanding a more extensive and in-depth review of electronic documents in legal proceedings, as well as an explanation of the steps parties have taken to retrieve potentially relevant electronic documents. Once again, LPOs are well-equipped to provide end-to-end data management, allowing clients to confidently outsource document management and review work in regulatory affairs. Some clients are even establishing LPO panels and asking their outside law firms to work collaboratively with these LPOs to ensure potential cost savings are properly and appropriately realized.
The global financial crisis has forced corporations to develop new strategies to handle investigations and litigation profitably and efficiently. As more companies seek to manage the associated costs and risks resulting from regulatory scrutiny, document review and electronic discovery are likely to be growth areas for LPOs.
