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Regulators say that effective corporate compliance begins at the top. They encourage company executives and directors to set an example in terms of a responsible culture built around ethics, morals, values, and a willingness to do the right thing.

There are overlaps between compliance and ethics that influence corporate cultures. When stakeholders demonstrate their capacity to operate in ethically responsible manners, the message is received by the rest of the corporation. Employees in the organizational hierarchy abide by the same ethical principles and, therefore, create a culture that upholds compliance.

What is the culture of compliance?

A culture of compliance is a set of attitudes, behaviours, and values that guide corporate workers to align with policies, procedures, and regulations. Essentially, a culture of compliance uses ethical principles to enforce legally binding protocols.

Some companies create diligent compliance culture programs that are shared with their employees. The Starbucks Standards of Business Conduct is one prime example, in which the corporation describes a series of ethics, values, and principles that all employees must adhere to as they conduct their day-to-day responsibilities.

Why is culture important in compliance?

Companies with strong organizational cultures empower employees to operate under both legal and ethical best practices. According to Gartner, strong compliance cultures produce both financial and non-financial benefits for the corporation. Specifically, they found that:

• Employees in strong cultures are 90% less likely to passively observe misconduct
• Employees in strong cultures are 1.5 times more likely to report misconduct
• Employees in strong cultures are 2 times as likely to be engaged with their companies
• Employees in strong cultures are 2.5 times more likely to voluntarily report misconduct

The commonality is a sense of trust. When people trust the corporate values; that they can safely live by those values, and that they can report misconduct without fear of reproach; they’re more likely to abide by those principles. As a result, any behaviour that could compromise compliance is dealt with before it becomes an issue for the business.

6 steps to achieve a culture of compliance

Creating an effective corporate compliance culture isn’t something that happens overnight. It takes time, patience, vigilance, and resources to implement the proper cultural protocols.

Here are six key steps recommended by Thomson Reuters that your compliance team should follow. Use these recommendations to achieve an effective culture of compliance.

Create an internal awareness initiative

Regulators are constantly changing compliance protocols, and employees won’t know how to abide by the proper protocols if they don’t know about them. Ensure your compliance managers have the resources to remain on top of these changes. Your compliance team is your first line of defence to uphold corporate compliance cultures.

Set the tone that the C-suite will communicate changes

Culture is set right from the top, and the C-suite executive team must communicate the cultural expectations to the rest of the organization. Expectations, policies, and procedures must be set by leadership, and there must be transparent communication of those expectations to shape the culture that develops from those guidelines.

Disseminate cultural protocols to employees

As your compliance team learns about changes that could impact corporate culture, they need the means to educate the rest of the company. Give your team the resources to produce educational content that can be disseminated to the rest of the company. Education is the best weapon against non-compliance activities.

Use the right technology to enforce compliance

Part of the educational effort is through the use of technology. Create e-learning programs like videos, modules, and quizzes that test employee awareness of compliance culture protocols.

You should also use technology like entity management software to create structured compliance programs. Entity management platforms have built-in compliance frameworks that are easy to use. Plus, they provide prompt updates to your team if any data is missing, filings are late, or anything that could trigger non-compliance.

Develop a rewards program for positive cultural behaviour

Incentives are the best motivator to prompt responsible actions. Leadership can use suitable compliance incentives as rewards for abiding by the compliance culture. Employees are far more likely to live by cultural values when they understand how they benefit from doing so.

Establish whistleblower programs that protect case reporting

Employees must feel safe coming forward when they witness unethical behaviour that amounts to misconduct. By creating a whistleblower program that protects employees, people will find the courage to report misconduct so that the compliance culture remains in effect.

Cybersecurity matters have emerged as one of the biggest issues facing global businesses. The global average cost of a cybersecurity breach now stands at $4.45 million.

When looking at the numbers on a regional level, the data is even more alarming. For example, in the United States alone, during 2006, the average cost of data breaches was $3.54 million. Fast forward 17 years, and that cost has escalated by over 150% to an average of $9.48 million, according to Statista.

It’s not just the direct financial costs of data breaches that concern organizations. There’s also the matter of corporate compliance. Data security breaches affect corporate compliance protocols that, left unattended, could subject legal entities to even greater financial costs.

What is the role of cybersecurity in compliance?

Cyber compliance is a series of corporate processes designed to maintain data privacy and security. These processes must align with regulatory standards and by-laws to protect sensitive corporate records.

Protecting sensitive data and abiding by the laws aren’t the only reasons to invest in quality cybersecurity measures. Cyber compliance also makes practical business sense that supports growth initiatives. Compliance helps preserve trust with existing and future customers, while also improving overall security measures for the corporation.

5 emerging cybersecurity compliance trends

Cybersecurity breaches occur seemingly at random, and no entities seem impervious to such a breach. In August 2023, for example, the UK Electoral Commission was the victim of what it described as “a complex cyber-attack As many as 40 million UK citizens’ personal information was accessed through the UK’s hacked electoral registers.

Given the reach, breadth, and impact of cybersecurity breaches, legal entities must take proactive measures to protect their sensitive records and maintain corporate compliance. Here’s a breakdown of five of the biggest emerging cybersecurity compliance trends.

1. Reinforcing databases against threats of artificial intelligence

Artificial intelligence (AI) is disrupting many traditional industries and workflows. While there are many benefits to incorporating AI into business practices, there are also an abundance of risks that could compromise corporate security and compliance.

Malicious actors can leverage AI to develop sophisticated malware that penetrates cybersecurity firewalls. These attacks risk becoming more prevalent if AI is primarily used by legal entities to manage cybersecurity. In one fell swoop, the defence mechanism can be turned into the commencement of a cyber attack.

To minimize the risk of these circumstances, ensure your cybersecurity measures are balanced by AI, machine learning technology, and human managers. Using technology can help automate and streamline many cybersecurity sequences. But you should always have human workers overseeing the platforms and ensuring no security measures are overlooked by the technology.

2. Ethics of using AI to enforce data security

There’s also the matter of business ethics regarding AI. Two key ethical concerns regarding the global adoption of AI solutions are the effects on data security and consumer privacy.

For AI to function properly, it requires substantial volumes of data to make decisions. As a result, there are growing concerns about how AI platforms collect and manage that data. If AI is collecting and analyzing sensitive data without giving consent or proper security clearances, the corporations using that technology could be liable for violations of privacy laws.

If your organization intends to use AI, ensure your corporate compliance framework includes the proper protocols to do so. Data must be handled with sensitive care and using strict security measures to avoid compromising any individual or corporate rights to privacy.

3. Security compliance rules and regulations

In the summer of 2023, the Securities and Exchange Commission (SEC) adopted new security compliance rules. The new regulations require legal entities to disclose any cybersecurity incidents and provide annual summaries of their cybersecurity risk management, governance, and strategies.

The SEC deems any corporate data as the intellectual property of shareholders and stakeholders. According to the SEC, transparent disclosures of any compromises of that intellectual property will protect investors, corporations, and the public at large from unlawful uses of sensitive corporate data.

Ensure your compliance reporting structure includes any risks that compromise your corporate data security. Failure to provide transparent reports of this information risks leaving your entity exposed to the penalties of non-compliance.

4. Mitigation of third-party risks from partners or vendors

Very few corporate entities operate on an island. Relationships with affiliate partners or third-party vendors are vital to further grow the interests of the business.

However, in an increasingly interconnected world, those third-party relationships may not be as secure as they once were in the past. Integrations with these vendors that lack the proper security parameters could leave sensitive data vulnerable to cyber-attacks.

As part of a compliance framework, ensure all third-party vendor relationships are backed by robust security measures. Creating risk management policies that vet and evaluate third-party vendors reinforces your corporate security and strengthens the trust of all stakeholders.

5. Automation of more cyber compliance processes and workflows

Finally, corporations increasingly rely on technology (non-AI technologies) to help automate many compliance tasks and workflows. Entity management platforms are a prime example of these solutions, and the market size for entity management software solutions will reach $3.85 billion by 2026.

Entity management platforms like MinuteBox have built-in compliance frameworks that guide legal and compliance teams to build robust compliance protocols. The platform is very intuitive and user-friendly, relying on drag-and-drop modules to help formulate and organize compliance protocols in a centralized domain.

Users of entity management software report valuable time savings and operational efficiencies. The platform accelerates time spent managing corporate compliance protocols, while still maintaining the highest standards for data security and privacy protection.

As a result, expect more organizations to embrace these modern solutions for corporate compliance and data security. To hop onto the bandwagon, join the MinuteBox revolution and take the leading step towards modernized corporate compliance.

Compliance with the Corporate Transparency Act is a necessary legal obligation so that entities avoid the repercussions of non-compliance. Qualifying beneficial ownership data must be submitted to federal regulators at FinCEN by pre-determined filing deadlines to maintain compliance with the enforced laws.

However, many legal entities risk undermining their compliance only weeks after the enactment of the CTA legislation. According to a joint study by Deloitte and the Association of Corporate Counsel (ACC), nearly one in three legal entities still need a corporate compliance calendar.

What is the use of a compliance calendar?

Most corporate entities have annual filing deadlines for legal, tax, and accounting purposes. A corporate compliance calendar keeps track of all compliance filing deadlines, which can include:

• Corporate meeting minutes
• Reporting obligations
• Industry filings
• Permits or accreditations
• Merger or acquisition filings
• Beneficial ownership reports

A compliance calendar also assists with operational efficiencies, such as standardizing compliance workflows and assigning compliance tasks to key filing dates. Aligning the compliance calendar with an organizational chart also helps expedite approvals and signatories from key organizational stakeholders.

These are among the strategic business benefits that come from maintaining a corporate compliance calendar. Unfortunately, entities with limited legal entity management resources — working time, compliance budgets, corporate counsel staff — fail to reap these benefits.

What are the costs of non-compliance?

A compliance calendar ensures all filings are submitted by the appropriate deadlines. The compliance calendar also increases compliance awareness across the business. Greater awareness leads to fewer data or clerical errors, streamlining the entity management process.

However, what’s the biggest reason why your entity needs a corporate compliance calendar? According to Ponemon Institute LLC — with sponsorship from Globalscape — the average cost of non-compliance is $14.82 million.

In a benchmark study of multinational organizations, the researchers determined that the average annual cost of compliance is $5.47 million. Contrast this cost with the cost of non-compliance, and it results in 63% annual savings by simply submitting reporting data at the appropriate deadlines.

Additionally, the cost of a single non-compliance deadline amounts to revenue losses of $5.87 million for the average legal entity. If one out of three entities still lacks a corporate compliance calendar, this means billions of potential revenue dollars are sacrificed for no justifiable reason.

What information goes on a compliance calendar?

The Corporate Transparency Act was enacted to improve how corporate entities report data on their beneficial owners. The Act is part of a government effort to crack down on money laundering, tax evasion, and other financial crimes nationwide. A corporate compliance calendar tracks all filing deadlines so that ownership data is transparently submitted without penalty.

However, a compliance calendar isn’t just useful for tracking external filing deadlines. You can use your compliance calendar to set operational compliance workflows and assign deadlines to each entity management team member. This ensures that all reporting requirements are tracked using project management strategies so that filings are submitted in detail and on time.

How to create a corporate compliance calendar

If you’re amongst the one in three legal entities without a compliance calendar, it’s time to change that approach. Assess your business needs and evaluate your past compliance processes to proactively make improvements to those workflows.

Once you’ve mapped out your compliance objectives, you can create your compliance calendar. Many modern business entities use legal entity management software like MinuteBox, which has a built-in compliance calendar to automate, streamline, and verify all compliance workflows.

Using the calendar’s guided template, follow these steps to build a compliance workflow.

• Review current compliance trends, laws, and reporting requirements.
• Upload the dates into your entity management platform compliance calendar.
• Create a work-back schedule that contains all internal reporting deadlines.
• Set up reminders for each team member and schedule them for deployment.
• Review and modify your compliance calendar as needed.

Are you tired of conducting compliance workflows without a proper compliance calendar? Become a modern compliant business entity by joining the MinuteBox revolution. You’ll effectively maintain compliance with speed and precision while avoiding the steep financial penalties of non-compliance.

Responsibilities placed upon legal departments have thoroughly expanded in recent years. Where once entity management required legal teams to maintain diligent minute book records, modern entity management plays a more strategic role in global business leadership.

Legal teams must coalesce with compliance, tax, and finance departments to implement effective entity management practices. Collaborative efforts between various department stakeholders allow for accurate summations of reporting data. Additionally, unity between each department minimizes corporate risk and protects the legal standing of the corporate entity.

What is modern entity management?

Once upon a time, entity management described the management of basic entity information, such as managing, sorting, and filing accurate minute book records.

Modern entity management has expanded into a more complex series of responsibilities. Sound entity management processes enable corporations to implement sustainable corporate governance and compliance across a global business entity.

How modern entity management affects general counsel

Forward-thinking corporations incorporate entity management practices into business strategy. This is one of the reasons why general counsellors increasingly function as strategic advisors to a corporate entity’s board of directors.

In a 2022 survey analyzing general counsel’s expansive role in business operations, 76% of participants expect their respective general counsellors to serve in several strategic roles for their businesses.

• Act as a legal counsellor and manager of legal risk for the corporation
• Contribute their views on business strategy and operations
• Actively participate in strategic planning and decision-making for the business

The data acknowledges the potential risks and costs of entity management and the potential that those risks could disrupt options or dovetail growth. The general counsel functions as a leader and advisor to corporate stakeholders while directing legal entity management at an operational level throughout the organization.

Align legal, finance, and tax for effective entity management

With entity management carrying significant risks to the business, general counsel uses their expansive leadership position to drive entity management best practices across numerous departments. Collaboration is most common across legal, compliance, finance, and tax departments.

Here are some of the best ways general counsel can align various departments and create a more robust entity management workflow.

Learn how to speak the language of various department heads

Legal and compliance teams share similar goals, and they sometimes function as the same, depending on the corporation. Similarly, finance and tax departments also speak similar languages, analyzing key decisions based on projected revenues or costs.

Use the position of strategic business advisor to effect

General counsel should tailor the need for effective legal entity management using language that various department heads will comprehend. In the role of strategic advisor, general counsel regularly data, trends, and dynamics to determine their collective impact. Use that analytical approach to explain the need for cooperation and create effective entity management workflows.

Create efficient entity management workflows

Finally, outline an entity management workflow that is efficient and effective. Explain how teamwork across the various departments helps streamline how reporting data is gathered, filed, and submitted. Research various tools and resources that will assist with the entity management workflow and select one that helps centralize all aspects of entity management.

Invest in entity management software to facilitate alignment

After receiving buy-in from various department heads, and creating strategic frameworks for entity management workflows, it’s time to establish the working processes. First and foremost, you need to select the right resources to assist with the workload.

Entity management software is the best resource to align legal, compliance, finance, and tax teams. These systems are built by legal professionals for legal professionals, creating a centralized single source of truth for all legal entity data.

The platforms include built-in compliance frameworks with easy-to-use modules that function as digital checklists for all matters concerning legal compliance. Additionally, you can build structured organizational charts, cap tables, and shareholder ledgers within the platform. All the corresponding data is centrally located, allowing managers from finance, tax, and compliance to add their contributions and finalize all reporting data.

Using entity management software, organizations can address critical entity management functions in a structured and consistent manner. Most importantly, they make entity management workflows more efficient and collaborative. Teams across multiple departments can work towards a common goal, and general counsel can provide progress reports in their respective roles as strategic advisors to the board.

Since 2016, the legal technology Clio has released annual Legal Trends Reports that summarize the latest advancements in legal entity management. The 2023 Legal Trends Report was recently published, and in the report, they’ve highlighted several key trends that are shaping the evolution of legal entity management.

If there’s one common theme throughout the report, it’s that successful legal talent consistently adopts a client-first approach. This means successful legal managers adapt their processes and update their workflows as new innovative solutions emerge. Modern technology allows for more flexible client-facing legal services, and successful practitioners embrace flexibility to improve client satisfaction.

Here’s a breakdown of the biggest takeaways from the 2023 Legal Trends Report.

Report methodology

The Clio team conducted two principal surveys to craft their report. The first survey was administered to 1,446 legal practitioners in the United States between May 31, 2023 and July 20, 2023. Participants included practicing legal professionals, as well as legal support staff like paralegals, law clerks, and office administrators who help run the day-to-day interests of a firm.

The second survey focused on the interests of the general public. 1,012 participants from across the United States were surveyed between June 13, 2023 and June 22, 2023. The survey’s purpose was to gather opinions from the general public about the legal profession. Many participants had hired a lawyer or retained the services of a firm in the past.

Productivity and Legal Recurring Revenue reach new highs

Productivity within the legal industry has significantly improved compared to workflows in 2016. The average legal professional works 25% more cases today compared to seven years ago, and they also record 35% more billable hours.

Improved administrative efficiencies have helped professionals collect more revenue for every hour of legal work. Billable hours and collected revenue have risen over two and a half times compared to 2016 numbers. As a result, Legal Recurring Revenue for legal practices is improving in response to more efficient workflows.

The cost of inflation impacts billable hourly rates

While Legal Recurring Revenue is improving for most firms, individual billable hourly rates are not rising at equal rates. Practicing attorneys have seen their hourly rates rise by 28% since 2016, increasing from $256 per hour up to $327 per hour in August 2023. However, billable hours charged by paralegals have only risen by 19%, rising from $150 to $178 over seven years.

The cost of legal services for clients has risen over the years, adjusting for inflation year over year. But over the past two years, global inflation has spiked to levels not seen since the 1980s. Mindful of the inflationary impact on clients, legal practices appear to be cutting or controlling some of the costs invoiced to clients. It appears that billable hours charged by paralegals are mostly being squeezed by inflationary pressure.

Improved utilization rates elevate invoiced billable hours

In the legal industry, a utilization rate measures how much of a legal practitioner’s eight-hour workday is put towards billable hours for clients. Since legal talent is working 25% more cases and invoicing 35% more billable hours to clients, improved productivity suggests utilization rates are improving.

And the data supports that estimate. In 2016, the average legal utilization rate was 28%. In 2023, that number has improved to 37%, marking a 32% increase in time that’s invoiced as billable hours to clients. If the numbers are broken down, this amounts to an average of three-quarters of an hour of billable time added to daily workloads.

Realization rates are steadily growing but there’s still room to improve

Realization rates determine how much of the time that a firm puts into a particular case ends up invoiced to clients. In 2016, the average firm realization rate was 77%. In 2023, that rate has jumped up to 86%.

While this is a remarkable improvement, the outstanding 14% can still be fully realized. Firms can utilize more modern technology to help bridge the remaining gap in actual rendered work and work that’s invoiced to clients. Automated billing systems produce more transparent invoices sent to clients, while efficient entity management systems can reduce the time that legal talent spends on non-client-facing work.

Entity management systems are law firm efficiency solutions

To help reduce the time and energy that legal talent spends on non-client-facing work, your legal practice needs to utilize modern technology. There’s no better time-efficient solution for legal practitioners than entity management systems like MinuteBox.

Entity management software is an example of cloud-based technology built by legal professionals to help legal professionals. The primary purpose of entity management software is to streamline workflows when creating diligent minute book records for clients.

Legal talent can reduce the time they spend filing, sorting, and managing minute book records. As a result, they can channel more time and energy into client-facing work and further increase billable hours.

Since entity management software is cloud-based, it’s also more efficient and convenient for clients. All minute book records can be accessed from anywhere in the world, enabling client meetings about the records to be conducted at the client’s time. It’s faster and more flexible, and it’s proven to improve client satisfaction rates — increasing the potential for repeat business.

Eager to increase billable hours invoiced by your firm and further augment Legal Recurring Revenue? Join the MinuteBox revolution today and introduce more time-efficient workflows to help your legal team maximize revenue opportunities.

Paralegals are the backbone of any law firm and in-house general counsel department. Tasked with conducting legal research, preparing legal documents, conducting client interviews, and running the day-to-day operations of a law office, no firm can function effectively without talented paralegals providing legal support.

Some paralegals are satisfied with their positions as legal support staff. Others pursue certifications to become professional practicing attorneys. However, many paralegals choose a career in legal operations, or legal ops, as the next step in their career paths.

What exactly does a career in legal ops look like, and how does it differ from a paralegal career? Let’s break down that transition and outline how more paralegals can open new career opportunities for the future.

What are legal operations?

The purpose of a legal operations team is to help legal teams deliver high-quality services at reduced costs with improved results. They remain focused on helping legal professionals perform their duties with efficiency and proficiency.

On a day-to-day basis, the legal operations team assumes responsibility for all operational tasks of a law firm, or in-house general counsel department. They oversee the duties and responsibilities for all operations that do not require a lawyer’s degree to manage.

What’s the difference between paralegals and legal ops?

You may assume there’s a degree of overlap between the responsibilities of paralegals and a legal operations team. While there are some similarities, here’s the biggest disparity between the two legal support roles.

Paralegals primarily manage legal documentation and client interviews

Some paralegal responsibilities do extend to office administration work. However, most of their duties are related to the management of legal documents for clients.

Many paralegals benefit from using entity management software to streamline many of these workflows. Entity management software is a tool built by legal professionals to help legal talent more efficiently manage legal matters.

Workflows that traditionally take several hours can be completed in a more streamlined manner using entity management software. Paralegals can complete their necessary tasks with greater efficiency and efficacy. Subsequently, they can reinvest their own time and energy into fostering the growth of Legal Recurring Revenue to grow the firm.

Legal operations handle more administrative responsibilities

Whereas paralegals manage legal documents and some client-facing duties, legal operations are primarily charged with overseeing the administrative aspects of a law firm. This can include items that range from:

• HR-related tasks
• IT installation and maintenance
• Compliance matters
• Calendar deadlines for important matters

Legal operations managers may also manage any third-party vendor relationships contracted by the firm or by the in-house corporate counsel. They’re primarily concerned with ensuring those services are provided to vendors in the most cost-efficient manner.

Legal operations managers can also benefit from solutions like entity management software. Entity management platforms like MinuteBox are designed with a built-in compliance framework to help legal ops maintain diligent compliance workflows. The platform can help guide legal ops managers as they build compliance programs, ensuring the firm or corporation remains in compliance with jurisdictional laws.

Why do paralegals transition into legal operations?

Suppose your paralegals are concerned about career mapping. Assisting their transition into new areas of responsibilities broadens their skill sets and helps them complete more fulfilling work to satisfy their interests.

The biggest reason for these transitions is to master new career skills. Some people want to develop skills as a manager, and a transition to legal operations is one of the best ways paralegals can develop those skills. Being responsible for all the administrative processes within the firm means operations managers gain influence, authority, and managerial skills.

How do paralegals transition into legal operations?

Legal operations managers often begin their careers as paralegals, so the transition from one area to the other is not that uncommon. The current director of legal operations for MGM Resorts International began his career as a paralegal.

The greatest advice from legal ops executives to aspiring paralegals-turned-legal-ops-managers is to voice your aspirations to your superiors. If you work at a law firm, inform the partners that you’d like to make the transition to a legal operations career. If you work for a corporate legal department, share your goals with the in-house general counsellor.

Use your learned skills and mastery of legal technology

Many paralegals, knowingly or unknowingly, already possess many of the necessary skills to be an effective legal operations manager. By managing client relationships and compliance calendars, paralegals can transfer those managerial skills and help improve legal operations across the organization.

Paralegals who master legal technology, like entity management platforms, have already introduced efficiencies into their operations. During the transition into legal operations, use those experiences to show your merit. Use entity management software to help organize the hierarchy, set date-based deadlines, and implement effective GRC protocols.

As an experienced paralegal, you already have the managerial skills and capabilities to assume legal operations responsibilities. Believe in your abilities and grow your legal career without requiring a law degree.