Why Are Law Departments in Companies Expanding
Why Are Law Departments in Companies Expanding These days companies are increasingly realizing the importance of being within the framework of laws and regulations. A company cannot thrive or grow unless legal requirements are met and applicable laws are duly respected. With corporate laws comes corporate responsibility. It is not only the duty of the governing bodies to keep corporates in order, but it is also the job of the corporates to make sure that they are doing all things within the ambit of the rules and regulations set out by the statutory bodies.
Keeping this in mind, we find that more and more companies today, big and small, are realizing the importance of corporate governance. It is wise for companies to have their very own in-house compliance or law departments in place. There are numerous benefits to this practice, as listed and explained below: STARTUP CFO
Law Departments in Companies Expanding
Saves On Cost:
It is much cheaper to have an in house law department than to run up mounting bills at the lawyer’s office. At some point and especially as a company starts growing, it will require legal advice on various matters, from employee issues to business expansion to tax matters and more. Each time an issue is sent out to a lawyer’s office to be settled in means an added expense for the company and the more a company saves the more it can spend on expansion and greater profits. Having an in house legal team can conveniently do away with the added cost of lawyer’s fees.
Always Staying On The Legal Side Of Business:
Corporate Laws and Rules keep on changing. It is difficult to always keep abreast with the new laws that are passed when you are trying to grow a business. Nobody wants to face criminal charges or penalties due to nothing but carelessness. A company, at all times, needs someone to act as a watchdog to make sure everything is going as per the law. This is another reason why it is prudent for a company to have its own law officer or law department whose job it is not only to keep up to date with the latest laws and accordingly to sanction each and every action of the company.
Trust Building And Corporate Responsibility:
Trust is the founding stone of any relationship, and this includes business relationships. In business, reputation and public image play a big role. No one wants to do business with a company they do not trust. A bad reputation will eventually cut into the profitability of a business. If a company makes the folly of ignoring the law, they will pay not only the penalties but also through a loss of reputation.
Having an in-house compliance or law department helps a company uphold a positive image and build consumer trust. It is easy for a company to fall prey to controversies and suits. An in-house law department does a great job to douse fires before they spread in a cost-effective and time effective manner and build a reputation of trust.
Greater Productivity And Better Management:
Growing a business is a full-time job. A company that follows the principles of delegation and distribution of work will grow faster than a company that does not. When a company has a specially designated law department or specially designated legal officers handling all their legal matters, the management side of the company can be left free to do what they need to, i.e. to manage and grow the business without worrying about the rigours and complications of the legalities.
Always Staying Ahead Of The Game:
Understanding laws and compliance rules can save a company a lot of time and money. It is a great asset for a company to have a law department that can help save the company unnecessary expenses by way of taxes or duties. This doesn’t suggest the evasion of taxes but working within the system in a profitable manner. A company should not always be facing legal issues and battles.
Having a good legal department means that a company steers away from legal issues and remains above board. A good law department is one that never rests. A company’s law department must always be abreast with the latest laws and corresponding regulations. The greatest responsibility of a company’s law department is to keep the company ahead of the law and constantly educate the management on corporate do’s and don’ts.
The long and short is that it is imperative that all companies must assess and reach their business goals in keeping with legal duties. Having a law department is an ideal way to do this successfully. Most growing companies have legal departments in place for the reasons cited above. As a company’s business grows, the responsibility of the law department also grows with added duties and goals to keep up with the growing business.