Comply with me

Big Brother is watching, and he or she is willing to fine and audit your business to make sure you are complying with government regulations and accounting and reporting procedures. ALB magazine takes a look at what services online legal compliance companies provide, and why being linked to law firms gives a competitive advantage

For business, like fashion, image is everything. However, unlike some of the frocks and models that were on display at Australian Fashion Week recently, a corporation needs to both have the look and make money by playing within the rules and not flouting regulation.

Legal compliance software systems

Legal compliance software systems enable companies to stay on top of policy and regulatory changes from areas as diverse as privacy laws, the Trade Practices Act, environmental regulations and anti-money laundering legislation. It also helps firms to save time and money by not having to constantly re-train or brief staff every time a new law is passed.

"We have seen the negative publicity and battering a firm's image can take when they feel the wrath of regulators," says Fiona Wallwork, a partner with Deacons corporate and commercial group and a manager with ecomply, the firm's compliance training arm for businesses. "Clients come to us to provide compliance programs and training modules because it is cheaper than going through the process of doing it themselves, they have the expertise of lawyers and experts to call upon, it can be used to train and re-train employees and can be useful in court proceedings."

While online compliance has traditionally being used to provide training for employees with regard to pertinent areas of legislation and regulation, clients are increasingly looking to these systems to monitor staff performance and to use the results in performance reviews and appraisals.

"Compliance systems I have used have gone beyond being just a training tool, and are now a monitoring and supervision tool as well," says Chris McCann, the group audit, risk and compliance manager at the Medical Indemnity and Protection Society (MIPS). "Regulators such the Australian Securities and Investment Commission (ASIC) love that."

This has meant that clients are becoming more demanding, and hence, services are now more individually tailored to suit that particular client's needs.

"The field of legal compliance services has evolved from what I would call the core areas of law, such as OHS and privacy legislation, to market developments in superannuation, corporate governance, the environment and providing specific compliance training programs to cater to individual client needs," says Ed Stockdale, the managing director of the legal compliance firm SAFETRAC of which Minter Ellison is the majority shareholder. "You need to support and understand what the clients do."

SAFETRAC has over 100 clients, including AMP, to whom it provides investment and advisory compliance services, Qantas, Toshiba and BlueScope Steel.

Why law firm alignment pays

The lucrative rewards on offer to online compliance companies means the market is very competitive and a tough nut to crack for prospective entrants.

Firms like SAFETRAC or ecomply have derived a competitive advantage over rivals by being able to tap into both the technical expertise of its staff, and the legal and regulatory knowledge of the lawyers from its parent legal firm.

Wallwork estimates that around 90 per cent of ecomply's clients, which include Caltex and Energex, also use Deacons for legal services.

MIPS compliance manager Chris McCann uses SAFETRAC for his company's legal compliance services. McCann has a long association with SAFETRAC, having used its products at four different companies, including the insurance firm HCF where he was previously the risk and compliance manager.

He says that the services SAFETRAC delivers has provided innumerable cost benefits to his firm.

It is now accepted that companies will spend between 10 - 20% of its IT budget on legal software compliance.

"The cost savings of going with an online compliance company that is aligned with a law firm has saved us hundreds and thousands of dollars," McCann says. "These types of services would be too expensive to deliver in-house, and when you can call on the expertise of partners and experts from a leading Australian law firm to update and provide material for its services, you have a safety net when dealing with regulators who know our compliance systems and content is being provided from a reputable source."

While Stockdale acknowledges the contribution Minter Ellison has made to the SAFETRAC brand and image, it cuts both ways. He says Minters have gained some blue-chip corporate clients after first engaging SAFETRAC for compliance services.

It is a similar story for Blake Dawson Technology. Founded in 2001, this is its first year as a separate entity from its famous law firm namesake. Its compliance training program Salt has won a number of awards, including the Best Compliance Training Program Award at the Learn X Asia Pacific 2008 E-Learning and Training Awards.

The business is expanding and has added four new staff added over the past nine months. "Our revenue is growing by around 35 per cent per annum," says Blake Dawson Technology CEO Julian Fenwick. "We have clients from a range of diverse areas, some of whom use Blakes for its legal work, and some who don't."

Its client list includes Kellogg's, JP Morgan, Macquarie Bank and Motorola, and over 100,000 people have access to its compliance systems.

"It's a competitive environment, with many firms who tried to get into the market failing because they didn't have that technical expertise," Fenwick says. "From a branding point of view, our association with Blakes provides a definite strategic advantage."