Corporates and Law Firms Feel Pressure to Comply with Regulations with Brexit as #1 Concern, Though Some Promising Signs of Improvement Have Surfaced
Today, global managed services provider Integreon released results of its 2021 Regulatory Readiness Report ("2021 Report"), its second annual survey of regulatory compliance professionals. Once again conducted by Pensar Media, the 2021 Report polled over 200 regulatory compliance professionals at US and UK corporations and law firms.
The pressure is on. The 2021 Report found that 70% of corporations do not completely agree that they have adequate resources and budget to achieve regulatory compliance. Corporate compliance budgets were spread more thinly in 2021, with minimal spending. Technology investment captured 26-50% of the budget for many respondents, likely a direct effect of data security concerns and the Covid pandemic which forced most businesses into work-from-home mode.
On the law firm side, 62% responded they are under client cost pressures when delivering legal services in support of regulatory change. 42% of law firms responded to those pressures by using outsourced alternative legal service providers (ALSPs) like Integreon or relying on their own offshore captive operations.
Corporations are still struggling to comply with US, UK and EU regulatory issues. 31% of corporates are still not fully compliant with GDPR (General Data Protection Regulation) in 2021. Though this is down 7 percentage points from 38% in 2020, it's still high enough to raise eyebrows since organizations have already had three years to achieve compliance. Likely, the split of GPDR into EU and UK flavors due to Brexit has been a factor as well as other complications like the Schrems II decision. Compliance with CCPA (California Consumer Privacy Act) was static (40% in 2021, 41% in 2020.) However, it's not surprising that CCPA's compliance numbers would lag behind GDPR's since this California-specific law is new and smaller in scope than GDPR.
Brexit continues to stir up anxiety for corporates. Nearly half (49%) of corporations now report they are not well-prepared for Brexit compared to 44% last year. Full repercussions of Brexit are still in flux, though UK companies now must comply with UK-specific GDPR as well as EU GDPR for cross-border business. Brexit changes have already catalyzed massive repapering efforts for contracts, and 20% of corporates named Brexit as their biggest anticipated impact next year.
On the bright side, the 2021 Report also yielded some promising signs that corporations are getting more traction on regulatory compliance. 29% of corporations agreed that responding to regulatory change created operational pressure for their business, a 9 percentage point drop from 2020's 38% which shows improvement. Also, last year, 40% of corporations agreed that responding to regulatory change increased their business risk profile versus 21% in 2021, a drop of 19 percentage points.
The encouraging improvements described above may be linked to the 2021 Report's finding that law firms have stepped up their capacity to help corporates with regulatory compliance. Nearly half (49%) of law firm professionals completely agreed that their internal resources were sufficient to help multiple clients with regulatory compliance simultaneously, a 12 percentage point increase from last year's 37% response.
When asked which regulatory events will have the biggest impact next year, corporates named Brexit (20%), new US government legislation (8%), Covid-related legislation (7%), GDPR (7%) and LIBOR reform (6%). Law firms also noted Brexit as their #1 impact (28%) but named Covid-related legislation second (14%) followed by GDPR (13%), CCPA (7%) and LIBOR reform (7%).
"This year's Report shed light on how US and UK corporations and law firms are coping with the tremendous challenges of regulatory readiness," remarked Integreon CEO Bob Rowe. "Clearly corporations are still struggling to maintain regulatory compliance especially in light of static or inadequate resources. A combination of people, process and technology resources provided by law firms, ALSPs and software vendors are filling the gaps. Looking forward, issues like Brexit, Covid-related legislation, United States data privacy laws, and the LIBOR transition will all require corporations and their legal counsel to step up more. Integreon is committed to helping its clients to accomplish more with tight budgets and unrelenting requirements."
To request a complete copy of the 2021 Integreon Regulatory Readiness Report, visit: https://www.integreon.com/regulatory-readiness-report-2021/.
About Integreon
Integreon is a trusted, global provider of award-winning legal, business, and research support solutions to leading law firms, legal departments, financial institutions, and professional services firms. The company applies a highly trained, experienced team of over 3,500 employees globally to a wide range of problems that require scale and expertise, enabling clients to become more operationally efficient by streamlining operations, maximizing investment and improving the quality of work they provide their end clients. With delivery centers on three continents, Integreon offers multi-lingual, around-the-clock support, as well as onshore, offshore, and onsite delivery of services. Integreon is owned by EagleTree Capital, a leading New York-based private equity firm that has invested approximately $2.7 billion of equity capital since inception.
For more information about Integreon's extensive range of services, email info@integreon.com, visit www.integreon.com and follow Integreon at LinkedIn, Twitter and Facebook.
About Pensar Media
Pensar Media is a research and content agency that specializes in legal and financial services. It provides survey-based thought leadership reports, content marketing and general copywriting support. For more information about Pensar Media's services, email hello@pensar.media or visit www.pensar.media.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210818005245/en/
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