"Hands up who likes regulatory compliance?"
*taps microphone.* "Sorry, is this thing working?"
The in-house legal career ladder is a promising one, and new rungs are being added to it every year. But for all the exciting opportunities legal departments offer, meeting the rapidly growing demands of modern regulatory compliance is at the bottom of the barrel.
With compliance regulations increasing in complexity, staying ahead of the curve is not just a necessity but a strategic advantage. A recent ÀÏ˾»úÎçÒ¹¸£Àû survey highlights that 52% of in-house lawyers believe greater regulation and reporting are the top ways UK law is changing.
This blog explores the rising wave of regulatory compliance and how in-house lawyers are using AI to alleviate its burden.
The landscape of compliance is evolving rapidly, with new regulations emerging at an unprecedented pace. According to the same ÀÏ˾»úÎçÒ¹¸£Àû survey, 55% of legal departments cite the continuing demands of compliance regulations as their biggest challenge over the next 12 months. This surge in regulatory requirements is driven by a myriad of factors, including technological advancements, globalisation, and heightened scrutiny from regulatory bodies.
As regulations become more intricate, the risk of non-compliance increases, potentially leading to significant financial penalties and reputational damage. In-house counsel must therefore adopt proactive strategies to navigate this complex environment effectively.
Artificial intelligence is transforming the way organisations approach compliance. By automating routine tasks and providing advanced data analytics, AI enables legal teams to manage compliance more efficiently and accurately. According to a report by , businesses that integrate AI into their reporting processes experience up to a 35% reduction in compliance-related errors.
May Winfield, Global Director of Commercial, Legal and Digital Risks, at engineering and construction firm, Buro Happold, says they have embraced generative AI in a sensible, risk managed way, relying on internal AI specialists to drive the change.
"AI enables my commercial and legal team to have more time in what is really of value – the analysis of issues and risks, deciding on solutions and mitigation, and commercially-minded support," says Winfield.
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The legal landscape is constantly evolving, and staying informed is crucial. In-house counsel should prioritise continuous learning to keep abreast of regulatory changes and emerging technologies. This can be achieved through regular training sessions, attending industry conferences, and subscribing to legal news publications.
This is especially true with the rise in popularity of generative AI tools. Head of Lawtech and Chief Knowledge & Innovation Officer at Macfarlanes, Chris Tart-Roberts, says training staff to use AI and minimise risk is critical.
"Educating users about the types of tasks that are best suited to generative AI and how to write effective prompts goes a long way towards mitigating risk."
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In-house legal teams should leverage technology to streamline compliance processes. AI-powered compliance management systems can automate routine tasks, such as document review and data analysis, freeing up time for strategic decision-making.
This is especially true with the rise in popularity of generative AI tools. Jonathan Kewley, Partner and Co-Chair of the Global Tech Group at Clifford Chance, says AI will allow private practice lawyers to focus on the tasks that add the most value to clients. "It makes those labour-intensive routine tasks such as research and due diligence much quicker, giving our team more time for the interesting work."
Yet using these tools come with an element of risk. Four-fifths (80%) of UK in-house legal professionals are concerned about inaccurate or fabricated information from public-access generative AI platforms, according to the ÀÏ˾»úÎçÒ¹¸£Àû survey.
By integrating these tools into their workflows, in-house counsel can enhance their compliance capabilities and reduce the burden of manual tasks.
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Tom Whittaker, a Director and Solicitor Advocate in the dispute resolution team of Burges Salmon, highlights confidentiality as a top concern given the risk that inputs and outputs could be accessed by third parties without permission.
"Any loss in confidentiality is also a loss in privilege." As a result, information security requirements, AI use policies, vendor due diligence, as well as other steps are essential to mitigating this, Whittaker says.
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As AI continues to evolve, its impact on regulatory compliance will only grow. In-house counsel must be prepared to adapt to these changes and leverage AI to their advantage. This involves not only adopting new technologies but also rethinking traditional approaches to compliance management.
Looking ahead, the integration of AI into compliance processes will likely become the norm rather than the exception. By embracing this shift, in-house counsel can position themselves as strategic partners within their organisations, driving innovation and ensuring compliance in an ever-changing regulatory landscape.
Find out more about ÀÏ˾»úÎçÒ¹¸£Àû Regulatory Compliance here.
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