Law Technology Today From the ABA Legal Technology Resource Center
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‘RegTech’, is gaining momentum among companies trying to manage increasing regulatory commitments in these momentous times according to Andrew Moore, President, Governance Services, at global financial services company Computershare.
Over the past two decades, the work of many companies has been defined by global financial regulation including, in the U.S., the 2002 Sarbanes-Oxley Act and the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act. However, 2020 has delivered what is probably the most significant challenge for many U.S. companies since World War Two: coronavirus.
There are around 30 million business entities in the U.S., and each must meet business filing obligations and register their relevant entities and have a business license in every state or jurisdiction in which they do business to comply with local, state and federal regulations. Business licenses are particularly associated with industries with lots of regulation or public health impacts, for example pharma and transport, with some individual employees even needing a personal license and the number of licenses ranging from a modest few to hundreds, according to the state or industry.
Legal workers must also deal with garnishments (a court order that enables a creditor to take the property of a debtor when they don’t possess it) and notice of lawsuits as well as acknowledging correspondence from the Secretary of State and other government departments.
In the U.S. companies are also moving away from public company creation to limited partnerships, while firms around the world are increasingly looking to expand globally, evolve at a structural level and engage in M&A activity. There has also been increased pressure on organizations recently to ensure greater transparency.
These requirements also affects non-US companies looking to fufil long-term ambitions to businesses in the country. Fines for non-compliance can be hefty, and penalties, including being prevented from entering into legal contracts, can be highly detrimental.
Over the past month, the scope of regulation and reporting has extended even further. The Secretary of State’s office and the U.S. Securities and Exchange Commission recently announced extensions on business filings for companies affected by coronavirus and has also encouraged firms to consider disclosing, where appropriate, the resulting impacts and risks to their businesses.
The issue for in-house legal teams, legal operatives and solo lawyers is one of scale. Under pressure to provide accurate and reliable corporate data in real time to senior decision-makers, they tell us that they need ways to reduce work volume without compromising on quality.
As a result, legal workers in these challenging times are demanding better and more intuitive ways to manage their day-to-day compliance workloads to meet local and regional legislation.
All the above has helped to create a new market for regulation technology. ‘RegTech’, as it is known, is designed to enable company executives to view both the breadth and detail of their compliance obligations at the touch of a button.
