Legal Operations teams generally design, plan, and implement their legal team’s strategic initiatives to support the business. They must balance managing risk and regulatory changes with operational efficiencies while keeping costs in check. Access to data in a structured form allows the team to provide valuable and powerful advice, guidance, and support to their legal function. Given the unique position of an in-house legal function, they often hold a wide range of information about the business they support, which gives them an unparalleled view of their organization. While most in-house legal teams will broadly use the data for similar reasons, the rise in legal and regulatory changes impacting financial institutions has increased their demand for meaningful data. Some of the leading legal and regulatory changes include the Senior Manager and Certification Regime (SMCR), “ring-fencing,” Dodd-Frank, European Markets Infrastructure Regulation (EMIR), and General Data Protection Regulation (GDPR), to name but a few.
The introduction in 2018 of the Senior Manager and Certification Regime (SMCR) by the Financial Conduct Authority has put the additional onus on specific key individuals and material risk-takers within UK financial institutions to evidence their decisions. Maintaining structured data that can be analyzed and measured will help provide evidence for some critical decisions. These decisions might include law firm panel appointments, outsourcing / insourcing business activities, and management of legal risks.
Those Financial institutions with clear visibility of the derivatives and related instruments they have entered will have benefited in understanding any re-papering needed for “ring-fencing.” The data may also enable them to meet the new collateral obligations under EMIR. Understanding the legal spend to support these legal and regulatory changes will allow the in-house function to better prepare and budget for future changes.
Under recent Banking reforms, financial institutions must maintain “living wills” to try and ensure they fail safely. This activity requires the maintenance of critical contracts/documentation in a central location. As many of these will have passed through the legal function at some stage, a well-structured database with crucial contract details will help remove obsolete documents and add new ones.
With the increases in cyber security, the legal function will, over time, be able to identify better which external law firms have handled data for the organization and ensure robust measures to safeguard that the law firms are applying data.
The data can support trend analysis which will help the legal function understand and support significant changes in demands for products and services and any resultant risks. A substantial change in demand may be seasonal (such as the end of a tax year or when certain subsidies get paid), market or social-media-driven (such as mis-selling issues), or economic/geopolitical (such as changes in interest rates, exchange rates, commodity prices as well political uncertainty). Any of these can alter the legal risk profile of the business and change the demand for legal resources. Being aware of pressure points will help the legal function adapt.
Legal departments in financial services face unique regulatory challenges. Technology provides a central source of truth to manage these requirements. The resulting data output ensures legal operations can support the legal function quickly and accurately while predicting risk and change.
Learn more about BusyLamp from Onit, our end-to-end legal spend management solution built for European corporate legal departments.