As we ring in 2021, we remain optimistic that it will be a more stable year on many fronts. In 2020, we saw that even the world of contracts and compliance was not immune to the pandemic, yielding new and interesting trends. While many of these trends began as challenges, with a resilient business continuity plan (BCP) and strong client relationships, we assessed, adapted, and delivered.
Interest in Managed Services Grows
As a direct result of the COVID pandemic, many companies had to reduce not only their headcount, but their real estate footprints as well. Corporate workforce and office space reductions prompted many companies to outsource larger portions of the work that was previously done in-house. For Integreon, we saw a marked increase in inquiries from new and existing clients seeking a Managed Services model that would deliver year-over-year efficiencies and cost savings.
Managed Services typically involves outsourcing scalable, high-volume, repetitive activities at predictable costs. My division’s Contracts, Compliance, and Commercial Services arm expanded tremendously in 2020, and I anticipate great potential for the continued growth of these types of engagements in 2021. We specialize in contract life cycle management process and technology assessment, contract abstraction and migration, and contract drafting and negotiation services. The Integreon team of contract professionals and six sigma process engineers understands how to effectively manage contracts through their entire lifecycle from end-to-end, from intake to storage. Our global delivery centers in three countries have continued to expand and build capabilities around CLM technology implementation services. Additionally, our ability to review, draft and negotiate in 50+ foreign languages is proving invaluable for our clients who have operations globally (or entering new jurisdictions).
To provide a comprehensive, in-depth picture for our clients, we have invested in technology to track key metrics and data to provide them with a clear and holistic picture of their contract’s engine including status, efficiency gains and opportunities, and notable trends. New technology advances in data capture and visualization have helped us identify patterns across a client’s contracts to flag areas which signify potential risk. Data also creates robust reporting options which reinforce our accountability to clients. This data informs better decisions for staffing and leveraging our teams’ industry knowledge.
Leveraging Artificial Intelligence Technology
Technology continues to play an essential role in Integreon’s client service delivery. We carefully cultivate relationships with technology solution providers to build necessary structure and automation for our services. The right technology helps us accomplish our work quickly and accurately and we are excited to be working with technology partners bringing true innovation to the market.
Increasing Compliance Creates Pressure and Risk
New compliance regulations continued to evolve in 2020, increasing pressure and risk for corporations and their law firms. Integreon released its first Regulatory Readiness Report which polled 200 compliance and legal professionals in the US and UK to determine and assess the compliance challenges they face. Most corporations (82%) agreed that responding to regulatory change created operational pressure for their business. 68% said responding to regulatory change increased their business’s risk profile, and 69% agreed that increased regulation was having a negative effect on profitability and growth.
Only 35% of corporations completely agreed they had the resources and budget to adequately achieve and maintain compliance. Many corporations are leveraging external human and technology automation resources provided by our teams to support their compliance preparedness and delivery efforts.
LIBOR and IM5 Both Sunset in 2021
Our Contracts and Regulatory teams are still addressing LIBOR and Initial Margin Phase 5 (IM5), both of which have deadlines this year. IM5 repapering projects have been fairly straightforward, but LIBOR projects can be larger and more complex due to its pervasive nature and use as a global benchmark.
LIBOR repapering projects were omnipresent in 2020. The aforementioned Integreon Report found that 53% of corporations believed they were well-prepared for the LIBOR transition as LIBOR will expire on December 31, 2021. However, while many companies were initially proactive in creating LIBOR programs, momentum slowed, and decisions were ultimately delayed due to the pandemic. Because the deadline is now less than one year away except for so-called “tough legacy” contracts which require synthetic LIBOR, we anticipate that stalled projects will get back on track and that 2021 will be a busy year for Integreon’s LIBOR team.
US Data Privacy Laws – California was First, Who’s Next?
California was the bellwether state for American data privacy controls, passing the California Consumer Privacy Act (CCPA), the first American data privacy legislation law. CCPA which was recently followed by the November 2020 passage of the California Privacy Rights Act, or CPRA (aka “Proposition 24”) which amended CCPA with more comprehensive privacy rules and increased responsibility for client data. The Integreon Report showed that 41% of corporations are not fully compliant with CCPA, and 55% are compliant even though CCPA just activated on January 1, 2020. Companies have made significant progress, but there is still far to go.
New York and Texas are currently attempting to pass bills similar to CCPA. As new U.S. data privacy regulations continue to emerge and eventually become law, Integreon’s readiness and response teams will have a steady stream of work.
Compliance Issues in Europe
GDPR: Even though GDPR came into force in 2018, it still is a major issue for corporations doing business in the EU. According to the Integreon Report, 38% of corporations are still not fully compliant with GDPR. Our GDPR readiness team is assisting corporations which are still tackling its compliance requirements.
Brexit: Brexit has just happened, and no one is sure what will be forthcoming from a compliance regulatory perspective. We are watching the UK carefully for this, but it is likely that businesses will have some time to adjust to new rules, whatever they may be. GDPR is an EU regulation, and we do not yet know whether the UK will be releasing its own equivalent.
New Frontiers in 2021
As the COVID vaccine rolls out in various countries and the U.S. presidential transition draws near, 2021 promises to be quite different from last year. We learned many lessons that have helped our teams to be stronger, smarter and more efficient. The boom of Managed Services, particularly for Contracts, will likely continue. Our compliance-related consulting services will keep expanding, responding to how government entities and businesses are required to handle data. As IM5 and LIBOR projects are completed this year, other regulations and deadlines will undoubtedly appear which will provide new challenges for companies worldwide. For all of these, Integreon is standing by to help. We look forward to collaborating successfully with our clients, partners and technology providers as we face the busy year ahead.