When Tara Trantham, the chief legal officer of a billion-dollar publicly traded company, speaks about the perils of delaying legal involvement in business operations, her experience serves as a stark warning. Trantham's company underwent grueling simultaneous investigations by the Consumer Financial Protection Bureau and the Department of Justice, a process exacerbated by the absence of legal technology and efficient processes. The task of manually compiling five years' worth of legal complaints into spreadsheets for multiple agencies was not only arduous but also immensely costly.

"It took five years," Tara recounted, "And it cost hundreds of millions of dollars in expenses and lost productivity." The financial repercussions were immediate and severe. On the day the investigations were publicly disclosed, the company’s market capitalization plummeted by approximately $250 million. The operational impact was equally devastating; while the legal team was buried in document collection, essential business teams were diverted from their primary tasks to assist, significantly slowing growth as compliance issues took center stage.

Why Early Legal Engagement is Crucial

Tara’s ordeal underscores a vital lesson: incorporating legal and compliance from the onset of operational processes and investing in the right technology can dramatically reduce resolution times from years to months, saving millions in the process. This principle is equally applicable in areas beyond regulatory investigations, such as contracting. Engaging legal expertise only after problems arise—be it disputes or missed deadlines—results in significantly higher remediation costs compared to preventative measures. Poor recordkeeping, unclear obligations, and lack of proper approval workflows can disrupt business operations, mirroring the chaos Tara’s company experienced.

Strategic Measures to Integrate Legal Proactively

To avoid such pitfalls, businesses must take proactive steps: 1. Map The Process, Not Just The Policy: It’s crucial to document how information will be collected, stored, and accessed ahead of any regulatory or legal inquiries. 2. Integrate Legal Into Core Systems: Legal visibility should extend across all tools used by sales, procurement, and operations teams to ensure that contract terms and obligations are not isolated. 3. Create A Rapid-Response Data Protocol: Establish a clear playbook for swiftly accessing key information, delineating who controls each dataset and the retrieval process. 4. Use Data To Justify Resources: Quantifying the time and financial waste due to inefficient processes can provide compelling evidence to support investments in technology that streamline legal operations.

Cultural Shift Towards Early Legal Involvement

The broader implication of Tara’s story is the need for a cultural shift in how businesses perceive their legal departments. Instead of viewing legal as merely a reactive safety net, it should be seen as a proactive partner in designing processes that preempt potential issues. “The more prepared you are, the more you can keep the business growing, instead of pulling people away from it to handle preventable crises,” Tara advises.

For in-house leaders, the challenge lies in making early engagement a standard practice rather than a sporadic response. When launching major projects or entering new markets, the key is to establish legal connections and processes beforehand, thus avoiding the steep costs of delay and disruption.