How legal technology can make the difference
With the ever-increasing volumes of data being generated by organisations every day, and the proliferation of different ways for people to communicate both internally and externally, there is an increasing need for companies to put in place a robust pre-emptive compliance monitoring system.
The need for compliance monitoring systems is further amplified by new regulations and a renewed appetite among Competition Authorities for dawn raids and investigations.
In this article, Mathieu van Ravenstein looks at the increased use of eDiscovery in regulatory compliance monitoring systems.
From Reactive to Proactive
eDiscovery techniques have been used to assist with Competition Law matters for some time, whether mapping and securing data ahead of or during a dawn raid, or collecting, processing and reviewing data for internal or regulatory investigations.
The technology and processes used in eDiscovery in an internal investigation can in many cases also be used in a proactive and pre-emptive manner.
Increasingly we are working with companies to develop regulatory compliance monitoring systems, using a combination of eDiscovery technology and document review, along with advanced forms of artificial intelligence. The purpose of these systems is to identify and correct anti-competitive behaviour within an organisation well before a regulator might become involved.
Whereas in the context of an investigation there would be a scoping exercise based on alleged or known behaviours which would be used to identify potentially relevant data, in the case of proactive compliance monitoring, the scoping is based on a trained model that is able to identify certain types of behaviour.
All in-scope data can then be “scanned” on a regular and/or continuous basis to assess whether there is any data constituting a risk according to the system. A certain percentage of the data labelled as risky (above a certain “score” of likely riskiness) will then be manually reviewed to determine whether there is a real risk. This review process will then further ‘teach’ the AI model to increase the level of precision for the matter at hand.
The end result will be a clear overview of where in an organisation’s data there a risk of certain types of behaviour occurring. The company can plan its response and strategies accordingly.
This type of internal (continuous) compliance monitoring is particularly relevant in the light of certain anti-trust laws and regulations; the complexity and range of anti-trust regulations require high levels of industry-specific knowledge and having a trained reference model to use as a starting point in assessing risk can be incredibly helpful.
This is even more the case for certain recent new regulations such as the Digital Markets Act and ESG related regulations, where companies may well be starting from scratch in thinking about compliance issues.
Finally, the rapid development of AI in eDiscovery software is an important part of any pre-emptive compliance monitoring system, and advanced technologies such as sentiment analysis, communication mapping, entity extraction and similar are ripe for inclusion in these new processes.
The benefits of the use of technology are now widely known and embraced by the legal industry but traditionally have been used in a reactive scenario rather than in a proactive manner. There are two main reasons for this. First, because implementing an efficient (continuous) monitoring tool is a bespoke process that requires flexibility and a level of ‘deep dive’ into the data governance processes of an organisation. The second reason is that it is much more difficult to obtain budgetary sign off in a proactive scenario, where the financial and reputational risks and benefits are not as obvious or immediate as in the case of a potential fine imposed by a regulator.
Conclusion
eDiscovery used to be an “after the event” industry, assisting legal teams and corporates to get an understanding of what has happened. Increasingly eDiscovery techniques will become an important part of pre-emptive compliance monitoring, moving from “what has happened” to solving how to make sure “it doesn’t happen”.
About the author:
Mathieu van Ravenstein is partner at FORCYD in the Netherlands.
Mathieu has over 20 years of experience in eDiscovery and legal policy advice. He has worked with global corporations, law firms and international institutions across the globe advising on many high profile and complex investigations and disputes as well as on legislation in areas such as corporate fraud, money laundering, competition law and international trade.