Regulatory frameworks are in a state of constant evolution, both across industries and around the world. In the post Covid-19 world, governmental regulation related to the fallout from the pandemic has taken center stage. In recent times, we have continued to hear about the concept of deregulation as a recurring theme. However, Covid-19 has ensured that regulation continues to be essential as a mechanism for shaping, correcting, and protecting the most varied range of markets, their agents and stakeholders.
In the United States, the passage of the wide CARES Act in response to the pandemic with its wide ranging impact on the economy has underscored the importance of regulation in the 21st century. A similar trend has been followed by governments of various countries across the world with regulatory action, especially related to the financial sector, proving vital in the fight against Covid-19.
In modern times, most governmental intervention is executed not by legislation but through agency regulatory activity. In the U.S. itself, there exist several regulatory bodies such as the Federal Trade Commission (FTC), Food and Drug Administration (FDA), Internal Revenue Service (IRS) and Environmental Protection Agency (EPA) among others. They are a snapshot of the various regulatory bodies that are responsible for making and enforcing regulations in relation to their field. These agencies function as an essential tool for a modern government that has to react and keep up with market dynamism at a pace that both the legislative process and courts are unable to keep up with. With the importance of transparency in business rising and the increasing costs of non-compliance with laws and regulations, businesses worldwide are striving to adapt to greater pressure from regulatory agencies.
The Importance of a Regulatory Regime for a Lawyer
The primary function of a lawyer is in essence helping clients navigate the law. Considering the majority of the business activity in the world is governed by agency issued regulation rather than the black letter of the law, most legal advice lawyers will give throughout their careers will be based on regulation. An essential skill for lawyers in the modern age is their ability to navigate the myriad regulatory sphere in order to advise their clients on the regulations applicable to their organizations. In most modern day scenarios, any organization irrespective of the nature of its business will likely have to comply with regulations from multiple regulatory bodies and not just the ones that relate to its primary business. For example, an entity whose primary business involves pharmaceuticals will also have to be in compliance with EPA regulations with regard to their manufacturing process, in addition to complying with FDA guidelines. A glance at the Federal Register which currently lists 454 Federal agencies with a broad range of powers including rulemaking, oversight, and spending, gives a clear snapshot of the vast breadth of regulatory bodies currently in the U.S.
The financial industry is one of the most heavily and dynamically regulated industries. The surge of crowdfunding, cryptocurrencies, and mobile payment methods are living proof of the complexity and ever-evolving nature of the regulatory perimeter of financial agencies. It is a prerequisite for anyone who wants to excel in the legal profession to master the art of keeping up with regulatory change, and to be able to efficiently comb through the weeds of regulatory content published at an increasing pace.
The inability to keep up with these changes carries an enormous risk for the regulated entities. For example, the Securities and Exchange Commission (SEC) initiated 862 enforcement actions including 526 standalone actions in the year 2019, and obtained judgments and orders totalling more than $4.3 billion in disgorgement and penalties. The ability to track the enforcement activity and trends of the relevant agencies gives legal professionals a tremendous comparative advantage when advising clients — not only on regulatory compliance, but also when negotiating contracts, structuring deals, or when advising clients to commence litigation.
Modern Times Necessitate Modern Solutions
Compliance.ai is a regulatory technology (RegTech) company with a modern solution designed to help legal and compliance professionals in the financial services industry, track and monitor regulatory changes in an ever-changing world, through the use of supervised machine learning. Supervised machine learning, often referred to as “Human-in-the-Loop,” is one of the most effective methods of machine learning available to date, and considered a best practice for Artificial Intelligence solutions. Through this method of Artificial Intelligence (AI), Compliance.ai is able to automate the collection and classification of different regulatory and agency issued documents, such as regulations, proposed rules, guidelines, white papers, and enforcement actions, among many others.
To achieve a high precision rate when classifying and organizing these regulatory documents, it is of the utmost importance that human judgments from human-in-the-loop methodologies are accurate and well-reasoned. Understanding and distinguishing sophisticated legal documents requires skill and training to render optimal results. Compliance.ai leverages an “Expert-in-the-Loop” model, which, as its name implies, requires the judgment of domain expertise to define the subtle differences between different types of legal documents. For example, understanding the difference between documents that deal with securities regulation in general from documents that address broker-dealer fiduciary duties, or the difference between consumer and commercial lending requires a skilled assessment.
Compliance.ai’s Contributor Program
Compliance.ai leverages a unique crowdsourced-based supervised learning model, which gives law students and legal professionals an opportunity to gain first-hand exposure to an innovative technology that dynamically processes the most abundant collection of regulatory content.
Technology is disrupting the traditional ways that the legal world interacts with the real world of business, industries, and consumers. By becoming a Regulatory Hero via the Contributor Program, aspiring legal practitioners, law professors, and domain experts will gain exposure to the latest RegTech platform, and benefit from deep knowledge into the most relevant issues to the financial industry. Law students will have an opportunity to learn how to discern between distinct regulatory topics, and will stay updated on the most recent regulations, proposed rules, and enforcement trends.
The director of the Contributor Program is an international lawyer with years of experience in different countries. He can attest to the fact that regulation is an integral part of the legal structure of countries worldwide. In a globalized world, businesses need to keep up and comply with regulations among many jurisdictions across the U.S. and the world. Compliance.ai opens a window to, and sheds light on the obscure landscape of regulatory change, and it enables its users to stay on top of managing these changes. In the context of the post Covid-19 landscape, the contributor program is uniquely suited to meet the new normal of remote working that is bound to become an integral tool for the functioning of the legal industry in the future.
After obtaining his law degree from Berkeley, our Contributor Program director became Legal Associate for Compliance.ai while preparing for the California Bar Exam. This experience gave him a new perspective on the way financial regulations work in the U.S., and how fast the regulatory landscape evolves. Having reviewed and judged thousands of regulatory documents while contributing to Compliance.ai’s network, he developed the skill of being able to swiftly identify and understand different types of regulations, guidelines, and enforcement actions. In addition to his document analysis skills, the program gave him an opportunity to evaluate the impact of new regulations on the financial market, and how these regulations relate to enforcement activity. For attorneys in the compliance industry, this is a key competitive advantage, because it provides important context on issues that matter the most to both regulated firms(clients) and their regulators.
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