In-house litigation and investigation teams ‘likely to remain busy’ in 2021

In-house litigation and investigation teams ‘likely to remain busy’ in 2021

31 January 2021 By Jerome Doraisamy
Jason Gray

A new report from global law firm Allen & Overy deduces that the workloads of in-house litigation and investigation teams will continue increasing this year, on the back of aggressive enforcement agendas from Australian regulators.

A&O has published its annual Cross-Border White Collar Crime and Investigations Review, analysing the latest developments and trends, and highlighting the most significant issues that white-collar crime and investigations in-house counsel should prioritise in the year ahead.

The Australian chapter of the report noted that our national regulatory authorities “continue to pursue an aggressive enforcement agenda”, which are being encouraged by the ongoing public criticism and fallout from the banking royal commission and elevated government funding for regulators.

While the impacts of the global pandemic appear to have resulted in a “slight pause in the overall level of enforcement action, that trend is likely to be reversed as the Australian economy begins its recovery from the effects of the pandemic”, the firm submitted.

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“The financial sector continues to draw much of the attention of regulators, but public statements by some regulators, as well as recent reforms, have radically changed the compliance landscape. Boards of all companies, regardless of sector, are under unprecedented pressure to manage conduct risk effectively,” it wrote.

Speaking about the Australian market, firm partner Jason Gray said in-house teams in this space are “likely to remain very busy this year”.

“$104 million in increased funding and 67 new staff for AUSTRAC coupled with sustained public fallout from the Royal Commission means enforcement action remains high, even with the slight slowdown caused by the impact of COVID-19,” he said.

“Digital platforms remain under close scrutiny by regulators, continuing the trend of recent years, while the events of 2020 introduced a renewed focus on anti-competitive behaviour in the provision of key services – such as electricity and telecommunications.

“Cross-border coordinated enforcement activity has also continued, with Australian authorities collaborating with the U.S. Department of Justice, the FBI, the UK Serious Fraud Office and authorities in the Philippines on several high-profile cases in 2020.

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“Looking forward to the remainder of 2021, compliance teams will be under pressure to respond to the increasing activity of regulators with more mature compliance systems, while boards seek to adequately manage financial and non-financial risks with greater investment in corporate culture and governance.”

The increased funding, the firm wrote, “has led to greater cooperation and coordination between regulators, as well as an increase in concurrent regulatory investigations (where the conduct falls within overlapping regulatory ambits)”.

“As a result, the Australian legal and compliance market is experiencing a considerable skills shortage, making it even more difficult to staff the increased workload,” A&O said.

In light of this, the firm added, general counsel will need to be “particularly focused” on the use of IT systems and infrastructure to address conduct risk and compliance processes.

“Such systems can be critical for meeting the regulatory obligations of large institutions, however, breakdowns in those systems or related processes can lead to large-scale data breaches or systemic non-compliance with the regulations they were intended to meet,” it concluded.

In-house litigation and investigation teams ‘likely to remain busy’ in 2021
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