Unfortunately, legal isn’t always about laying down slick one-liners in court or winning million-dollar settlements (thanks, Suits). At the beginning (and end) of the day, legal’s job is to protect the company. And, one thing the legal department definitely does not want is for the company to do something illegal or fall foul of regulations. But with a constant avalanche of new rules and requirements, different frameworks in different jurisdictions, and C-suites with shallow pockets — the compliance function is not easy.
We spoke to Natalie Hallerby, Head of Compliance at Found, Adam Van Wagner, Chief Legal Officer at MoneyLion, and Andria Jones, Head of Legal Compliance at Cloudflare to pick their brains on planning out a compliance strategy, who to hire first, and when to use outside counsel.
ICYMI, here are our top 5 takeaways.
🥣 Can I have some more please, C-Suite?
As you know all too well, legal is often seen (incorrectly) as a money vacuum. Compliance is no different. So how do you get the budget to get stuff done? You need to make the case that putting a good compliance team in place is going to:
- Protect the business.
- Create savings down the road.
- Help the company build better products.
- Create new business opportunities.
It could make it possible to do things that generate revenue like:
- Get government contracts.
- Build out data centers safely.
- Partner with banks.
🐘 It’s just like eating an elephant
Building a compliance team is a daunting concept. It’s less scary if you think about it like eating an elephant: you have to do it piece by piece. So where do you start? To design your strategy:
- Figure out who your regulators are.
- Take an inventory of regulations that apply to you.
- Identify your highest-risk processes (you’re a lawyer after all).
- Ask yourself: How do we mitigate this?
- Tailor your solution to your company.
If you’re in fintech, you’ll probably need someone who knows about the Bank Secrecy Act and, well — money laundering. Some candidates will be better suited to the mayhem of the startup environment while others will have what it takes to navigate a huge corporation.
Your perfect hire might be:
- An attorney.
- A non-attorney compliance expert.
- A program manager.
- Someone internal who knows the business well.
You need a good ratio of operational people to people with specialist knowledge. For your second hire, you may want someone who can do the work you’ve been farming out to outside counsel, a regional expert who can help you move into a new jurisdiction or a slick administrator.
If you can’t find good talent, think outside the box. If someone is good with data, collaborating with other departments, and building systems, you can always teach them about compliance.
🧂 Sprinkle outside counsel sparingly
No matter the size of your team, an $800 bucks/hour bill – as Will Ferrell would say – gets you right in the jejunum. Outside counsel is as expensive as it is essential. They’re particularly handy for:
- Explaining regional regulatory systems.
- Taking on work you don’t have the bandwidth for right now.
- Specific areas like tax.
But sometimes it’s better to bring things in-house. If something is part of the day-to-day operations of your business and will be around for the long term, you probably want to do it internally. You can always get outside counsel to show you how it’s done first but ideally, they should be an intermittent resource.
Also, you’d be wise to do the math. Work out the cost of outside counsel vs a new hire or a freelancer (ahem) and figure out what’s most cost-effective. Hint: there’s a good chance a freelancer is the most cost-effective option. Plus, hiring a freelancer is a great way to test out the possibility of a new hire.
If you do need outside help, don’t assume you need a top-tier firm. Instead, look for a firm or staffing agency (ahem, ahem) that specializes in your problem. Networking is a great way to get outside counsel recommendations (and advice on all kinds of things). You can build your community by:
- Attending trade shows and conferences.
- Getting in touch with a compliance association.
- Interacting with other compliance pros on LinkedIn.
🚧 Be a crossing guard, not a roadblock
In an ideal world, compliance should be involved in every part of the business. But, just like teens with strict parents, if people see you as the folks that always say no, they’re going to jump out the bathroom window after you go to bed. You need to build trust and let people know that you’re a resource … someone who can help them get stuff done. We won’t sugarcoat it - getting cross-departmental buy-in is tough. But you can put your best foot forward by:
- Having a collaborative attitude.
- Saying “here’s how” instead of “no” whenever possible.
- Hiring nimble, friendly people.
- Understanding other departments’ goals.
- Creating accessible “how to” documents.
- Offering training, like a workshop updating HR on hiring regulations.
You should also think about sitting in on different departmental meetings or getting involved early on in the lifecycle of new products or marketing campaigns.
👀 Keep an eye on new regulations
Just like the seasons (or interest rates at the moment) regulations are constantly changing. Your team should keep on top of the news and know what’s coming down the pipeline. But sometimes that’s not possible without a crystal ball — like when lockdowns are announced or Putin invades Ukraine.
You can react to sudden regulatory changes by:
- Watching how other affected companies react.
- Taking advantage of free advice put out by law firms.
- Having a conversation with the regulator.
It usually doesn’t make sense to hire someone new to deal with a regulatory change until you can work out how much of an impact it’ll have on your business. In the meantime, leverage outside resources like outside counsel, compliance specialists, and freelance legal pros.
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