Adapting to Change: The Role of Managed Legal Services in an Uncertain Regulatory Climate

Globalisation and the rapid pace of change in our interconnected world constantly create new challenges for the entire economy.

As business processes grow increasingly intricate, the landscape of legal governance and market regulation is similarly evolving. There is a growing shift towards data-centric models, requiring constant monitoring and quantification of multiple variables. Consequently, there is an ongoing requirement to frequently review and update organisational documentation, external files, and contracts.

Against this backdrop, companies face escalating regulatory pressures to maintain compliance, a situation that demands the allocation of extra resources to ensure that new and existing regulations are met, and various processes standardised. As a result, in-house legal teams are increasingly burdened with a high volume of repetitive tasks.

While technology offers solutions to alleviate these issues, the sheer variety of options, and the associated costs of onboarding and maintenance, mean that retaining an entirely in-house legal function may not be the most effective approach. This accounts for the growing demand for managed legal services, which offer a more streamlined and efficient approach to handling these complexities.

The aim of managed legal services (MLS) is to leverage technology to redesign and standardise legal processes to help in-house legal teams increase efficiency and reduce their workload. MLS allow organisations to gain control over their document management systems, ensure clear and timely management of given processes regardless of their volume, and facilitate scalability.

Typical tasks undertaken as part of MLS include:

Regardless of the model utilised for delivering MLS, the main goal is to streamline legal operations, reduce costs, and enhance efficiency. This can be achieved through different models, for example, by building dedicated in-house teams, often in more cost-effective territories, or outsourcing the services to third-party providers.

Large, multinational organisations are looking for ways to increase the efficiency of their contracting functions. Traditional methods of concluding, renewing, or renegotiating contracts often require considerable manpower and associated costs. To demonstrate how these challenges may be practically overcome, envision a scenario where an international conglomerate seeks to revamp its global procurement function. As a starting point, the following steps may be suggested:

Assuming successful completion of the project, the potential benefits could be manifold:

The concept of using MLS is known to regulators. For the most sensitive sectors, such as banking, the way legal functions can be outsourced is at least partially regulated by regulations and guidelines set forth by market oversight bodies; for example, the outsourcing guidelines issued by the European Banking Authority (EBA) or the guidelines on cloud computing announced by the Polish Financial Supervisory Authority.

Recent developments in AI, particularly generative AI tools, are redefining the landscape of MLS. Companies are increasingly looking to incorporate AI tools to augment existing MLS models. While the promise of AI in this domain is considerable, its application is not without complications. Specifically, the intricacies involving intellectual property and data protection necessitate heightened scrutiny during the implementation phase.

MLS offer a practical solution to simplifying complex and time-consuming tasks by harnessing the expertise of legal, process, and technology specialists. This enables organisations to adapt to ever-changing regulatory landscapes with greater control. Crucially, the continuous oversight and reporting integral to MLS models aid in risk management and compliance mitigation. As a result, MLS, when properly implemented, can effectively address the challenges of maintaining compliance with applicable regulatory requirements.