Can regulators and litigants help you advance
By Ernst & Young LLP, Fraud Investigation & Dispute Services
General counsels no longer sit on the sidelines of the digital agenda. They now have a critical stake in
their companies’ big data strategies.
Structured data is overlooked in legal response strategies
The response to and outcome of investigations or litigation often rely on identifying and analyzing data sets in ways that
are different from how they are handled in day-to-day business. All data should work in tandem: the structured data often
explains what happened, while the unstructured data gives context to why it happened. While structured data has been well-managed in ERP and CRM systems by finance and other corporate functions, legal departments have often overlooked structured
data and lack the same mature infrastructure to manage it. What they don’t realize is that they don’t need to start from ground
zero. They can leverage the processes and technologies of a well-established discovery program and extend them to incorporate
Why should you have a centralized legal response strategy?
Regulators and litigants have become increasingly savvy in how they put data to work, employing talented data scientists and
harnessing sophisticated analytics technologies for fact-finding purposes. This has also been enabled by technical advancements
and greater collaboration among enforcement bodies, regulators and litigants. For companies to keep pace with regulators and
litigants, a centralized legal response strategy encompassing all of the important data sources, underpinned by robust and aligned
analytics, will be the key to operational efficiency. Without it, an ineffective response can embolden a company’s opposition.
Rising litigation and noncompliance costs are exacerbated by inadequate data strategies
With outmoded surveillance capabilities, institutions risk criminal indictments, multibillion-dollar fines and reputational damage.
Money that might otherwise be earmarked for growth and expansion is instead wasted on covering legal costs, fines and
operational fixes, while spooked customers look to take their business elsewhere, prompting revenue losses. Regulators expect
organizations to establish robust surveillance capabilities to monitor the behavior of insiders against fraudulent activities.
Prosecutions and regulatory enforcement stemming from noncompliance related to employee behavior such as corruption,
bribery, rogue trading and insider trading are on the rise around the world. In fiscal 2015, the SEC filed nearly 7% more cases
over the prior year, meting out $4.2 billion in sanctions.
Identifying rogue behaviors requires a holistic approach bolstered by analytics
Total annual litigation costs at the financial services institutions continue to increase. The lack of a comprehensive data
management program that incorporates both structured and unstructured data to support the organization’s legal responses
only exacerbates these rising litigation costs. Even as companies start to recognize that data analytics brings cost efficiencies
to handling large volumes and wide variety of data, they must remember that the ultimate utility of data analytics relies
on the completeness and quality of underlying data. An effective data management program needs to first focus on the
comprehensiveness of its data, after which it can then take advantage of the cost-saving potential advanced analytics
technologies can deliver.
What’s needed: comprehensive data coupled with analytics
At a high level, organizations should consider actions to help elevate their legal response strategies. The ultimate goal is
a strategy that is comprehensive and efficient, in which legal holds can be applied rapidly and relevant data can be gathered
and produced quickly, founded on the right technologies, processes and resources.
The costs and risks will climb with each day of inaction
Regulatory complexity has increased, and governments are more equipped to scrutinize companies than ever. The volume and
variety of data have surged. Lawsuits are an ever-present threat. In this reality, organizations invest heavily to gather and produce
the required data. And for many, they penalize themselves — even in the best-case scenarios — because they fail to extend the well-established processes and technologies for unstructured data to incorporate structured data.