COMPLIANCE: survey reveals increase in support from senior management at multinationals


In-house lawyers at multinational companies believe they have made significant progress in raising the profile of legal risk management, research has revealed.



The 2007 PLC Law Department best practice survey on legal risk and compliance, which polled general counsel at 84 multinationals, found that just one in six (16%) respondents struggled to get board or senior management support for compliance programmes - down from a third (32%) in 2005. More than two-thirds of those questioned agreed that the influence of lawyers in corporate governance matters has increased in the past year.



Budgets for legal risk and compliance increased in the past 12 months at 61% of respondent companies, and by 'a significant' amount in a quarter (26%). Some three-quarters of those questioned expect their budget to rise again over the next two years.



The PLC survey also revealed that the implementation of effective processes has made the task of managing legal risk less onerous.



The number of respondents who rated monitoring and enforcing compliance programmes as extremely difficult or very difficult fell from 29% in 2005 to 18%. Just 8% rated identifying and keeping up with potential areas of legal risk as extremely difficult or very difficult, compared with 25% last time.



'These statistics would suggest that while legal risk management and compliance is still a huge challenge for most in-house legal departments, many now feel more confident in their ability to overcome the difficulties the process entails,' the report said.



Some 75% of respondents also agreed that the main board of directors has a good understanding of corporate governance issues, up from 47% in 2005.



The three areas of legal risk most frequently encountered were antitrust and competition issues, operational or contractual problems, and new legislation or regulation.



Helen Mahy, group company secretary and general counsel at National Grid, said she has never had difficulty getting co-operation from senior management when it came to legal risk.



'It's the way you tell them,' she said. 'There's no point putting a six-inch document in front of them. You should keep it brief, telling them the penalties and downsides of non-compliance, and what they need to do to put things right.'



Ms Mahy added that she was not surprised by the survey's findings because 'they probably reflect increased awareness of the issues'.



Jonathan Rayner