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The Association of Corporate Counsel (ACC) is the world's largest organization serving the professional and business interests of attorneys who practice in the legal departments of corporations, associations, nonprofits and other private-sector organizations around the globe.

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Survey results show that most respondents face extensive challenges regarding compliance and regulatory obligations related to subsidiary governance, resulting in higher risk for organizations.

Washington – The Association of Corporate Counsel (ACC), in collaboration with Deloitte, today released the first edition of “An Inside Look at Legal Entity Management Practices.” With over 500 organizations responding, this report provides a detailed analysis into legal entity management, also known as subsidiary governance. Among a number of key findings in the survey, the results clearly show organizations that implement a majority of LEM leading practices experience more effective and efficient business outcomes than those who do not.

“While many organizations have subsidiaries, this report shines new light on the fact that most do not have solid and consistent policies and practices in place to manage their governance,” said Blake Garcia, Ph.D., ACC’s Senior Director of Business Intelligence. “With significant risk and tax implications, often in multiple jurisdictions, ensuring a solid LEM function is a critical component for organizations to manage their risk. We are excited to collaborate with Deloitte on this unique survey and hope it provides significant value to ACC’s members and others to help identify and strengthen their LEM policies moving forward.”

“Given the current landscape of heightened compliance and reputational risks that organizations face, effective legal entity management has become a focal point,” said Michael Rossen, managing director, Legal Business Services, Deloitte Tax LLP. “This report provides insight on how organizations are managing their legal entities — as well as potential opportunities on how to strengthen the LEM function. We are thrilled to have collaborated with ACC on this survey to provide the in-house community with a relevant resource on legal entity management.”

Additional key findings from the report include:

  • Focus on LEM is growing – 22 percent of participating organizations expect to increase the number of staff dedicated to LEM, while 39 percent report increases in budget for LEM over the past year.
  • Consistent LEM policies are still lacking – most companies reported not having specific LEM policies and practices in place, while 56 percent do not conduct internal LEM-related audits or regular monitoring.
  • Technology to manage LEM widely used, but most dissatisfied – 60 percent of participants reported using an electronic database to track corporate records. However, 73 percent said they are dissatisfied or neutral with their current technology.
  • Competing priorities and lack of bandwidth are the main challenges faced by 71 percent and 49 percent of LEM teams, respectively – additionally, 40 percent said they struggle with inconsistent processes and 31 percent indicated that their LEM processes were antiquated.

The report can be downloaded here.

Deloitte Tax LLP does not practice law or provide legal advice.

ACC: The Association of Corporate Counsel (ACC) is a global legal association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other organizations through informationeducationnetworking, and advocacy. With more than 45,000 members in 85 countries employed by over 10,000 organizations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel.® For more information, visit www.acc.com and follow ACC on LinkedInTwitter, and Facebook.

Deloitte: Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 345,000 people worldwide connect for impact at www.deloitte.com.

This document contains general information only and the respective authors and their firms are not, by means of this document, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This document is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The respective authors and their firms shall not be responsible for any loss sustained by any person who relies on this document.

As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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