Many large businesses have both in-house legal teams and compliance teams. What is the difference between the two and how do you know if you need a legal or a compliance professional?
The role of an in-house legal team
Of the two, the role of an in-house lawyer is probably more easily defined. Their role involves managing legal risk and providing legal services that support business growth. On a day-to-day basis, this includes reviewing contracts, interpreting the law, managing disputes and litigation, managing employment law matters, and providing legal advice on areas such as privacy law.
In-house legal teams are staffed by qualified lawyers and are typically supported by external law firms engaged on panels. Having an in-house lawyer can be a very good investment for a business seeking to manage legal risk and to reduce external legal spend.
What is Compliance?
So we understand what legal services are, but what about compliance.
Compliance is the process of complying with legal and regulatory requirements, industry standards, and community expectations. A business is compliant when it is operating in conformance with legal and regulatory requirements, industry standards, and community expectations.
In other words, compliance involves more than interpreting the law, it involves the development of business practices that that consistent with the purpose of those laws and the expectations of the community.
What is the role of a Compliance Team?
Compliance teams are responsible for achieving compliance, as defined above. They usually work very closely with the other divisions in a business to ensure. They also often work alone without the same assistance from external firms. If you have only started looking at compliance check out this article.
On a day-to-day basis, a compliance manager would meet with other business units in ensuring that proposed products and services were compliant, would consider the risk of non-compliance and the improvements that can be made to controls, and would review proposed regulation and new compliance requirements.
Compliance teams also typically manage the company’s relationship with industry regulators. They are usually required to attend industry briefings from regulators, to update regulators on the status of the company, and to submit regulatory reports on an ongoing basis.
What are the key differences between legal and compliance professionals?
There are clearly areas of potential overlap between the work of a legal and compliance professional however the two disciplines have different objectives and employ different methods.
Legal professionals are focused on legal risk and are typically less focused on the development of industry regulation and community expectations. The objective of an in-house lawyer is to deliver value by the combination of legal training and experience and knowledge of a business. The objective of a compliance professional is to embed compliance into the development of a business.
There are limitations on the work that can be undertaken by a compliance professional. That person cannot engage in legal work as defined in relevant jurisdictional regulatory instruments unless they are also qualified as a lawyer. In other words, only a lawyer can provide legal services.
It is possible nonetheless, and indeed it is common, for a team to manage both compliance and legal functions. However, at larger businesses, you will typically find both teams operating independently but alongside one another.
Compliance Quarter is in a unique position in having a ‘sister’ law firm, Law Quarter. As a result, we can provide access to both legal and compliance professionals, as the need arises.