New Survey Analyzes Four High Risk Areas In Balancing Growth And Compliance Of Multinational Corporations
Report Shares How In-House Legal Counsel Anticipate, Prevent, and Mitigate Risks While Doing Business Across Borders
CHICAGO, July 24, 2013 /PRNewswire/ -- In today's global economy, continual expansion across borders into new markets can create a never-ending stream of business risks. Four significant challenges include cross-border joint ventures and alliances in high-growth markets, anti-bribery and anti-corruption, antitrust and competition, and data privacy and protection. A new survey released today, sponsored by Winston & Strawn LLP, shares insights and opinions on these high risk areas from senior corporate counsel in multinational corporations within Europe and the United States, and offers strategic advice for balancing growth and compliance.
"What keeps a U.S. general counsel awake at night may differ markedly from what his or her U.K. or European peers think of as their greatest business risks," said Thomas Fitzgerald, firmwide managing partner, Winston & Strawn. "In responding to our client's desire to understand how other market-leading companies are preventing and remediating cross-border business risks, the survey provides excellent benchmarking data for how well-prepared major multinational companies are or aren't currently and what should be done about it."
Cross-Border Joint Ventures and Strategic Alliances in High-Growth Markets
The two greatest risks identified by respondents for cross-border joint ventures and alliances in emerging markets are the differing cultural and market practices of partners and understanding the local legal and regulatory regimes. Survey respondents deemed the Asia-Pacific region as posing the greatest risk for legal problems. Not surprisingly, 60 percent of those surveyed are less concerned about risks in mature markets.
"Companies need to consider early on what their most important rights are and then decide where to seek adjudication if rights or remedies need to be enforced," said Zoë Ashcroft, partner, Winston & Strawn London. "Neutral jurisdictions which do not give real or perceived home team geographic advantages can be helpful here, but confidentiality concerns may favor arbitration or mediation as the preferred dispute-resolution."
Anti-Bribery and Corruption
Of the many strategies and processes used to reduce bribery and corruption risks, only 45 percent of respondents have implemented monitoring mechanisms to measure the effectiveness of their policies, and 47 percent lack confidence in their companies' oversight of third parties. Respondents identified sales as the division which poses the greatest risk, and lower-to-mid-level managers as the most susceptible employees at risk for bribery or corruption.
"A risk assessment is an essential starting point for developing an organization's anti-bribery and corruption policies and procedures," said Gilles Bigot, managing partner, Winston & Strawn Paris. "Training is critical and should extend beyond internal procedures to cover third-party participants. Companies would be well served by incorporating provisions in contractual arrangements with counterparties to set the correct tone for the relationship and to allow for appropriate oversight."
Nearly half of the surveyed companies have been the subject of an antitrust investigation, including 35 percent in multiple jurisdictions. And despite widespread policies and training among respondents, more than half reported they had no antitrust/competition audit processes or risk rankings. Among the greatest threats identified were vertical agreements (with suppliers and competitors) and cartel behavior a distant second.
"While the threat is already highly recognized among Europe-based counsel, U.S.-based corporate counsel should be vigilant in monitoring anti-competitive practices effectively," said Peter Crowther, partner, Winston & Strawn London, and managing partner, Winston & Strawn Brussels. "Incorporating an audit step into every important antitrust compliance procedure is key to catching potential problems sooner rather than later."
Data Privacy and Protection
Loss of brand equity and consumer confidence is the primary concern for companies complying with data privacy laws worldwide. In-house counsel respondents also indicated there is greater concern about these risks in Europe and North America than in any other markets.
"Interestingly, it is the potential for loss of brand equity that responding corporate counsel identify as their most significant concern," said Liisa Thomas, partner, Winston & Strawn Chicago. "Companies should consider ranking their data privacy and protection legal risks based on their industries and the countries where they operate. This will help them focus efforts to ensure compliance."
The Winston & Strawn Business Risk Survey 2013 was developed by Winston & Strawn partners resident in the United States, the United Kingdom, France, Switzerland, Belgium, and Asia. A number of senior counsel of major multinational corporations and institutions in Europe and the United States provided input, including helping to draft the survey questions. Responses were received from counsel in 12 countries; of the respondents nearly 50 percent were with a company whose annual revenues totaled more than $10 billion in the most recent fiscal year.
Winston & Strawn LLP is an international law firm with 16 offices located throughout North America, Asia and Europe. More information about the firm is available at winston.com.
SOURCE Winston & Strawn LLP
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