What's Happening?
Tara Trantham, the chief legal officer of a billion-dollar publicly traded company, shared her experience of facing simultaneous investigations from the Consumer Financial Protection Bureau and the Department of Justice. The lack of early legal involvement
and technology led to a five-year manual process of compiling legal complaints, costing the company hundreds of millions in expenses and lost productivity. The company's market capitalization dropped by $250 million upon public disclosure of the investigation. Trantham emphasized the importance of embedding legal and compliance processes early to prevent such costly delays.
Why It's Important?
The case underscores the critical role of early legal involvement in corporate operations to prevent financial losses and operational disruptions. Companies that integrate legal processes early can avoid the high costs associated with regulatory investigations and disputes. This approach not only saves money but also ensures smoother business operations and compliance. The lesson is particularly relevant for industries facing complex regulatory environments, where proactive legal strategies can safeguard against potential crises.
What's Next?
Organizations are encouraged to map processes for legal information collection and integrate legal visibility into core systems used by sales, procurement, and operations teams. Developing rapid-response data protocols and using data to justify technology investments are recommended steps. The cultural shift towards viewing legal departments as proactive partners rather than reactive safety nets is essential for fostering early engagement and preventing crises.
Beyond the Headlines
The broader implication is a shift in corporate culture towards proactive legal involvement, which can redefine the relationship between legal departments and business operations. This change can lead to more efficient processes, reduced risk, and sustained growth, highlighting the evolving role of legal professionals in strategic business planning.
