Proactive regulatory advice critical as enforcement pressure intensifies, partner says

“The key to successfully advising a client through high-pressure situations is understanding their commercial motivations and risk appetite,” Winokur said.

“The legal position should always be the starting point, but it is equally critical to understand your client.”

At the forum, Winokur will join a panel of BigLaw partners on stage to discuss “Preparing clients for heightened regulatory scrutiny”.

In the cyber security space, he said, organisations responding to cyber incidents often manage multiple competing pressures, including reputational damage, potential regulatory investigations and the prospect of third-party claims.

“Understanding the ethos of a company, the level of transparency it wishes to adopt in response to a reputational risk event, and whether it wants to simply comply with its legal obligations or voluntarily notify certain individuals, are all important considerations,” Winokur said.

While legal requirements provide the framework for decision making, advisers should continually test strategic decisions against those obligations to ensure clients fully understand the legal risks associated with different courses of action, he added.

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With regulators becoming increasingly active, Winokur said law firms must also maintain a detailed understanding of regulatory priorities and enforcement trends to help clients avoid unnecessary escalation.

“Firms should be very across regulatory priorities and actions to help clients anticipate and respond to regulatory expectations,” he said.

“Having a deep understanding of the key issues for regulators can help law firms advise clients on the strategic approach to dealing with regulators.”

That insight extends beyond compliance advice to practical decisions about engagement with regulators, including whether voluntary notifications should be made, when they should occur and what information should be disclosed.

“The better a firm understands the way a regulator operates, the better equipped its lawyers are to advise clients on those strategic issues,” Winokur said.

Looking ahead to the new financial year, Winokur said advisers should prioritise proactive risk management rather than waiting until regulatory scrutiny emerges.

“A key focus in the year ahead is continuing to understand regulatory priorities and providing proactive advice on key issues so clients can prepare and take steps to mitigate risk,” he said.

From a cyber risk perspective, he said that incident simulation exercises provide an effective way for organisations to assess their preparedness before a real event occurs.

“Simulating incidents with table-top exercises is an excellent way to explore regulatory risk and identify gaps before something goes wrong. A similar approach can apply to a range of other regulatory risks,” Winokur said.

He encouraged advisers to proactively identify the issues attracting regulator attention and raise them with clients early.

“Advisers should understand the red flag issues for their respective regulators so they can proactively reach out to clients and get these issues on the agenda. Some clients may already be well prepared, but others may require additional work to be better placed to respond to regulatory scrutiny should it arise,” he said.

The Australian Law Forum is being held on Thursday, 30 July, at Royal Randwick in Sydney. To view the full agenda, click here. To view the full speaker line-up, click here. To secure your ticket for the day, click here.