Published on November 9, 2023, 6:28 am

Legal and compliance leaders are facing unprecedented levels of regulatory change caused by factors such as increased regulatory oversight, geopolitical tensions, and the ongoing COVID-19 pandemic. To cope with these challenges, Gartner has identified four primary options available to legal and compliance leaders.

According to Nick Sworek, director of advisory in Gartner Legal, Risk & Compliance practice, the pace of regulatory change is threatening to overwhelm some teams. As these regulatory changes continue, legal and compliance leaders need to find sustainable ways to stay on top of the requirements placed on their organizations.

Gartner experts have observed three distinct waves of investment in regulatory tracking in recent years. During the early stages of the pandemic, legal and compliance leaders turned to law firms for quick solutions to track regulatory volatility. In 2021, as the pace of change persisted, leaders started considering less costly in-house tracking options. This year, they are looking at technology investments as a more sustainable strategy to manage ongoing regulatory change.

To help legal and compliance leaders understand their options for tracking regulatory change, Gartner has identified four main approaches that should be evaluated:

1. Law firms: Law firms have a comprehensive understanding of regulations across geography and industry. They can quickly provide insights without an extensive onboarding process. However, using law firms for regulatory tracking can be expensive, and costs are expected to increase further in 2022.

2. Alternative legal service providers (ALSPs): ALSPs offer some form of regulatory tracking and can be a cheaper alternative to law firms. However, they may lack the necessary institutional knowledge to identify important regulatory topics for organizations. The onboarding process with ALSPs can also cause delays when quick turnaround is needed.

3. In-house staff: Using in-house staff leverages their deep institutional knowledge and business acumen. They understand which regulations are important and can facilitate necessary changes or policy creation for compliance. Involving only internal resources provides more control and flexibility. However, the scale of the task may overwhelm in-house staff, especially if they lack sufficient resources.

4. Regulatory intelligence technology: Vendor-provided tools automate regulatory tracking by automatically notifying organizations of changes. These tools track specific topics and regulations, sending notifications when there are updates. They offer a cost-effective and long-term solution while reducing the burden on in-house staff. It’s important to note that these tools still require human management, which could add to existing workloads.

Legal and compliance leaders should evaluate these options based on their organization’s needs and resources. Considering factors such as cost-effectiveness, institutional knowledge, control, flexibility, and workload sustainability will help determine the most suitable approach for regulatory tracking.

In conclusion, coping with regulatory change requires legal and compliance leaders to adopt effective strategies. By considering law firms, ALSPs, in-house staff, and regulatory intelligence technology as potential solutions, organizations can ensure compliance while managing the increasing demands of regulatory oversight.

Source: Gartner (September 2022)

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