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As the new year truly begins for some, all legal departments are trying to anticipate, identify and address legal, compliance and business issues and disputes before they become complicated (and expensive) problems and create operational and reputational risk.  As outlined in this recent Wall Street Journal Article, "legal officers at many large companies are preparing for stepped-up scrutiny of their operations by both regulators and private litigants as they head into 2014.  Among their concerns: staying up to speed on wage-and-hour rules and anticorruption laws, while guarding against possible data-security breaches."  Moreover, "companies have to contend with threats from inside, too, as federal bounties for whistleblowers grow." 

In an attempt to stay ahead of these issues, legal departments continue to bulk up their internal risk management and compliance efforts (through policy and personnel initiatives).  As the general counsel community has learned, an increase in compliance requirements has a direct effect on the amount and scope of litigation and regulatory action.  Accordingly,
if 2013 was the year of high-profile -- and higher dollar amount -- government and enforcement actions, 2014 will likely be the year of the resultant lawsuits.  And, there likely will be collateral damage, as companies who were not the subject of inquiry but participate in similar activities as those sanctioned can be the victims of "where there's smoke, there's fire" legal theories.

GC know that legal risks are inherent in any business and strategic projects designed to grow revenue, increase profits, reduce costs, or expand markets and they are searching for outside counsel that are not merely "fire fighters" and reacting to events, but firms that are strategic and proactively anticipating risks and addressing them. These firms learn about clients’ regulatory and compliance environments (both here and abroad) and are managing risk in addition to fighting fires.  They do this by identifying and fixing policy gaps, establishing standards of conduct, and analyzing and addressing trends in regulatory rule-making, litigation, and enforcement actions.  As President Lincoln counseled, "“If I had eight hours to chop down a tree, I'd spend six hours sharpening my ax.”


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