How to simplify your Legal processes to improve compliance

Adrian Warren

Commercial Director

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Over the years, we have seen many well intentioned but highly complex compliance processes created by Legal functions. These set out how the business should operate to mitigate risks.

Unfortunately, most of the time, the business just nods their head to the new processes, and then just goes and does what they’ve always done.

Compliance requires ongoing vigilance to ensure that process is actually followed, and the more complex the process, the more vigilance required.

Business non-compliance highlights a lack of trust from both parties

Without the business following compliance processes, Legal and compliance teams feel forced to insert themselves in every business activity.

Legal’s fear is, if they don’t become involved early on in an activity where they don’t trust that process is being followed, they will have to spend even more time later on, once the plan is well and truly off the rails.

At the same time, the business is likely intentionally bypassing Legal processes, concerned that following the process will complicate or prevent their deal from moving ahead.

Legal involvement on every action the business takes has led the function to be viewed as the number one barrier to execution in a business. In fact, three quarters of the clients we speak to say they don't see the value their Legal team delivers for this exact reason.

This lack of trust between Legal and the business can cause friction when rolling out projects. Some plans might be set in motion without adequate review from Legal that could put the business at risk.

Fostering trust can be a challenge

The challenge is, left to their own devices, people will always do the fastest and easiest thing that gets the job done. That means if getting the right approvals, filling in the right forms, or filing the right paperwork doesn't get the business its outcome immediately, they won’t do it.

Leading Legal functions recognise they need to go a step further than creating a shiny policy and assigning a Lawyer to police it. These functions are baking compliance into the system itself and ensuring that the fastest way to a commercial outcome is the most compliant one preferred by Legal.

How to change behaviour and get your business following compliance procedures

There are two options for Legal functions wanting to alter their relationship and position in the business process:

1. Make the current business process inconvenient.

Legal can choose to add obstacles to non-compliant processes in an attempt to push the business to follow compliance procedures instead. Businesses who try this method typically add more checklists and more approval gates to Legal processes. While this approach may seem like a good idea at the time, it does not encourage the business to follow the correct process. Rather, this approach typically slows down the business and reinforces incorrect processes and workarounds, leaving Legal out of the loop until the last minute - or when things go wrong.

2. Reduce the resistance on the compliant route.

Alternatively, the business can juxtapose the old and now inefficient process with a seamless experience on the preferred approach. Ensure Legal’s preferred support request process has as few friction points as possible. Make the business forget why they ever used a non-compliant process, and make sure they never want to use it again.

A major manufacturing client of ours took this approach recently. They had a complex delegations and approvals process to ensure their suppliers comply with the increasing regulation in their space. They were finding however that many contracts were being signed by divisional managers without going through proper process, and these contracts were never making their way back to Legal.

Their process, designed to manage risk, had introduced so much friction that the business was choosing to ignore it, thereby actually increasing the risk of things going wrong! They had a process but it was filled with loopholes that still allowed the business to easily bypass Legal.

To solve this problem, we worked with the client to simplify and digitise their approval ruleset and flow, introduce electronic approvals and executions, and create an automated workflow that captures contracts in their system every time. This process actually made it easier and faster for the Divisional Heads to execute agreements, while ensuring Legal compliance at the same time.

Over to you - The future of In-house Legal

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