If you haven’t had a chance to review our 2013 Corporate Governance and Compliance Global Hotline Benchmarking Report, you definitely should. The report spans 5 years of data and over 600,000 incidents providing great insight into industry trends. One of the more interesting trends that we saw from this past year was a rise in incident reports. A fact I found validated again, when I read a recent survey by AlixPartners.
The survey revealed in-house legal departments, initially set up as a cost-savings approach to compliance claims, have seen an uptick in reports– so much so that they are struggling to keep up. In the last year companies saw accounting/financial reporting/disclosure litigation rise 17% and anti-trust litigation 12%. Other compliance areas are also on the rise including internal investigations (34%), FCPA (15%) and whistleblower allegations (15%). And, although the number of cases reported have increased, companies in most cases are opting not to ramp up in-house legal (survey findings are a testament of this fact with 64% of legal departments staying the same size and another 9% decreasing in size in the last 12 months).
Why aren’t companies investing more in their in-house legal? The study, which consisted of more than 100 general counsels at companies with annual revenues over $250 million, discovered that companies have instead turned their attention to compliance programs. Companies are finding that by increasing internal compliance program reviews, implementing software tools to mitigate risk, monitoring and enforcing internal policies, analyzing compliance audits and increasing due diligence procedures they are not only alleviating the extra work placed on in-house legal departments, but more importantly they are creating a compliance structure that will enhance performance and promote a more ethical culture. Companies are turning to ethics and compliance with renewed focus, because they are all looking to be more proactive in building a sustainable culture, as well as indentifying new behavioral risks as they arise.
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