In our role as a provider of alternative legal services to medium and large national and multinational clients, we see that internal legal and governance teams are increasingly focusing on efficiency as well as outcome. Here are four ways corporate governance is evolving – and how this is pushing the move to greater automation.
In the past, governance professionals typically spent a lot of their time responding to queries and dealing with ad-hoc issues. As their workloads increased, they became ever more reactive.
In recent years, however, faced by a surge in workloads, we’ve seen their roles undergo a major shift, moving from reactive to proactive. The increasing pressure of work has also forced governance teams to reflect on what they do – and how – and to organise themselves better.
One key result has been to make compliance an increasingly central issue. This typically involves using dashboard technology to monitor compliance activity, controlling risk by keeping on top of potential issues before any alarms are set off, and using data to make better informed decisions.
A drive towards greater transparency has prompted changes to compliance workflows. This is especially the case at larger companies where the combination of multiple internal teams plus external service providers makes transparency essential to efficient compliance processes. This is especially the case for organisations that work across several jurisdictions and those in sectors that are subject to a high degree of regulation, which means they need to keep accurate audit trails.
3. Knowledge centre role
In the past, a head office legal team would be the nerve centre of compliance information and expertise. However, the huge complexity of dealing with an increasing legislative burden across multiple jurisdictions has highlighted the need to make it easier to access relevant corporate data and compliance information.
Focusing on furthering access to knowledge and information brings a number of benefits:
- The legal and compliance team no longer need to hold so much information personally.
- General counsels and corporate secretaries, as well as stakeholders from other teams, can access the information they need themselves, rather than asking paralegals for it.
- The governance function is able to shift its focus onto more strategic work, adding value to the business.
4. Greater focus on risk and compliance
Today, information spreads faster than ever before – and compliance breaches can cause even more damage to a company’s reputation when they can be shared on Twitter within days. Even poor service resulting from unavoidable impacts of the coronavirus pandemic have caused huge damage to brands.
Directors who are accountable for multiple entities worldwide are also facing a higher degree of personal liability. For them, it is essential that the compliance status of their operations around the globe is visible – and, especially, that all filing deadlines are met.
The impact of automation
More and more internal legal and governance teams are finding that technology can facilitate a fast transition to new ways of working that minimise compliance risk and boost efficiency. Automation can also eliminate a lot of the burden of routine work, freeing up governance professionals to make better use of their time and expertise.
Here are a few of the key processes that automation is now helping to streamline:
Automating the creation and distribution of routine reports and coupling this to process to persona-specific dashboards empowers stakeholders to access information they need directly, rather than bombarding paralegals with requests by email.
Typically, legal teams with multiple entities have to manually create contracts and reports for each one individually. Automating this process enables data fields such as the names of entities, directors and officers to be completed automatically, with the required details pulled directly from the entity management software.
Artificial intelligence can be used to review documents, especially low risk contracts and when doing the due diligence for mergers and acquisitions. This is much more cost-effective than getting lawyers to check each document individually.
Data quality assurance
Workflows can be automated to remind entity holders in certain jurisdictions when they need to update the information they are responsible for, with the central champion reviewing and approving any changes.
When directors and officers leave, or a company address changes, legal are sometimes the last to know. Integrating disparate software can ensure data is harmonised automatically. For example, if a director resigns and the HR team note that in their HR platform, this can be flagged in real-time to the governance team as expired data.
The transformation of governance
Technology is facilitating a transformation in the way governance teams operate. Software solutions like Diligent Entities help organisations do more with less while also lowering risk by streamlining and automating entity management and compliance processes. Whether it’s advising the board or ESG initiatives, gains in resource efficiencies enable governance teams to add more value to the organisation.