The wave of regulation experienced by the Asset Management industry has brought about a seismic shift to the way firms go about their day-to-day business and has created a raft of new reporting standards to demonstrate transparency, regulatory compliance and good governance. For the General Counsel, navigating through the regulatory complexity can be challenging while also managing dozens of law firm relationships and trying to keep a lid on legal spend.
Relying on outdated and inefficient methods of tracking external legal spend can often require significant manual effort for the latest figures. This is a problem because it means the necessary paper trail is not always available. Where information is available, there is a concern about the extent to which it can be relied upon due to potential inconsistencies and lack of real-time data.
This represents an unnecessary burden on already constrained in-house resources. It is therefore crucial for General Counsel to leverage technology to give them transparency and real-time data on their legal spend. Technology also removes the need for manual intervention such as chasing up law firms for the latest invoices. This allows the General Counsel to free-up resources and re-allocate them to higher-value tasks.
Show me the value
In addition to the regulatory pressures, Asset Managers have seen their profit margins squeezed as investors become cost-savvy and ask them to demonstrate value. As a result, Asset Managers have been looking closely across their business lines to find potential efficiencies.
This presents an opportunity for both the General Counsel and those in charge of business transformation to support the organisation by closely examining the, often high, costs of external legal advice. Unfortunately, demonstrating value and cost control has been a struggle because of the outdated ways of tracking legal spend.
By employing technology, the business can have the ability to forensically analyse their legal spend by fund, law firm, geographic location or a specific matter. This level of granularity enables the legal department to have full control and oversight of their legal spend which supports their obligation of demonstrating good governance, while also realising cost efficiencies to the business and delivering value to investors.
Making your data work
The level of transparency, accessibility, and utilisation of data is an important factor in meeting the ever-changing demands of both investors and regulators and gaining a competitive advantage.
Through the application of technology, the General Counsel can gain a competitive advantage by unleashing the treasure trove of real-time data that can drive value and efficiency in areas such as legal fees, law firm selection and resource allocation. It also promotes greater cohesion between the legal and finance department when it comes to budget management as decisions can be made on accurate and reliable data.
Investor pressure to reduce fees and demonstrate value combined with the increased legal costs of regulatory compliance mean that transparency and utility of data are not only desirable but now a prerequisite. As the rest of the business and industry goes through a a significant transformation, it is important that the legal department does not get left behind.