Innovation in Compliance with Tom Fox

What are you doing to keep your documents secure and your data protected? Today we have Tomas Suros, Chief Solutions Architect, Practice Automation, at AbacusNext. They’ve developed an innovative, all-in-one system for the legal and compliance field that makes work more efficient and more secure. Today we’re learning more about the system and what it can do.Tomas’s background: when law meets techTomas attended law school at the time the internet boom was in full swing, with his classes applying their concepts to the internet, back when it still had no jurisdictional boundaries. Right after graduation, he worked for Pandora, a streaming radio entity and his first experience with the technology of law, and eventually, his interests turned to leveraging technology for compliance and developing software tools for lawyers. AbacusNext: What is it, and how does it work?AbacusNext uses software tools to protect data and give companies efficient access to them through a private cloud environment. Having a private cloud environment allows them to build the controls into the architecture of the software itself — everything from encryption to how the data is held and who can access it — so that your compliance needs are met. Each document is encrypted and, using the tools, you can manage who has access to which documents, and what they can do with them.Each version of each document is saved in real time so there’s an audit trail of the different touch points to the documents.Sharing and collaborating can also be done within the ecosystem, so people no longer need to send emails back and forth to each other with the document attached, which is risky and potentially not secure.A comprehensive solution The goal of AbacusNext is to create an integrated, comprehensive solution. Over the past five years, they’ve acquired different software tools, so things like managing leads and clients, capturing information, and performing checks can be done securely and quickly. Reminders, deadlines, and task notifications are all automated, and the whole life cycle of the services you provide for clients flows through one protected and secure system. The advantage in Customer Relationship ManagementWith AbacusNext, you’re able to start your client relationship on a secure footing, with the assurance that you proactively have the systems in place to protect their information. The system also makes it much more automated and efficient for clients to reach out to you and share what their current needs are, allowing the firm to respond quickly and appropriately with helpful information. And once they’re a client, there’s no need to redundantly re-enter information they’d already given since everything is already within the ecosystem, making it a smooth experience for everyone all around. ResourcesTomas Suros | tsuros@abacusnext.com | AbacusNext (Website) | How to Gain a Competitive Advantage With CRM

As the web gets more and more complicated, how can we keep up? Keith Laska, a board member at Hanzo, joins us today. Hanzo uses artificial intelligence and modern technology to improve compliance effectiveness. With the web being as dynamic as it is, our compliance solutions have to be, too. The story of HanzoAt Hanzo, they use data science to make their customers’ lives easier, covering both proactive and reactive compliance. But there’s one major difference: they collect, store, and offer insights and analytics on content in a native format instead of the usual plain PDFs. That may sound trivial, but it’s a complicated process. The aim is to preserve the web forever, and static PDFs remove almost all of the dynamic nature of the web. They needed a platform that could capture everything — metadata, JavaScript, videos that could play back — so future generations could have context and provide quality insights and analytics from the content.And that’s how Hanzo was born.What does Hanzo bring into the arena of compliance effectiveness? When you’re dealing with large scale future trends like hyper-personalization, one of the challenges that marketers in compliance face is wanting to promote their product or service while being careful that they’re taking the right steps. Effectiveness is the only way to measure these critical decisions that compliance officers have to make on a daily basis. The analytics and add-ons that are on Hanzo allow you not just to collect that information, but also to measure how effective you are with that information, both proactively and reactively. What are these add-ons to the platform? The web composition and power balance is largely asymmetrical, and what Hanzo is doing is bringing symmetry back to that equation. The web is a dynamic, contextual, and confusing information store that cannot be controlled — but it can be understood, investigated, analyzed, and defensively harvested. There are four components to the platform: Hanzo Investigator which utilizes data science, artificial intelligence, and machine learning algorithms to scan the entire web Hanzo Hold has the ability to apply retention policy to preserve custodial data on team collaboration tools like Slack, GSuite, and Office 365.Hanzo Capture is the web archive for regulatory compliance Hanzo Dynamic Review provides a legally defensive export. It’s dynamic, which means you can analyze the collected content in its proper context.What’s the difference between a reactive and proactive compliance program? How can this suite of tools help the compliance practitioner or the business owner be more proactive? We have many tools that help us react to regulatory guidelines, like investigations or alerts. What we should be challenging ourselves with as innovative vendors in this space is: now that we have the ability to apply AI, data science, and machine learning, how can we redirect our efforts as aggressively as possible toward proactive compliance? A lot of information to find smoking guns in terms of fraud, for example, are actually out on the web. The ability to analyze, pull back relevant data, and act on information that’s out there on collaborative and social media platforms is the next level kind of symmetry that brings the power back to the customers.ResourcesKeith Laska (LinkedIn) | Hanzo | FCA Compliance Report Courses

As the fraud risk landscape changes, how do you adapt? Today, we have Vince Walden and Matt Galvin. Vince is a Partner with Ernst & Young’s Forensic and Integrity Services Practice, and Matt is the Global Vice President of Ethics & Compliance at Anheuser-Busch InBev. We’re talking about an article Vince has co-authored in Fraud Magazine entitled: Accelerating Anti-Fraud Innovation, as well as innovations that Matt has put forward in his compliance program. What are some of the key reasons for the success of an innovation project in the anti-fraud arena? It’s about measuring compliance effectiveness and finding ways to keep compliance fun, interactive, and top of mind for employees. Putting systems in place so you can see measurable improvements in the quality of transactional data moving through a system is what’s driving a lot of the innovation in compliance. People are beginning to really understand the technologies available to them. What are some of the key reasons for the failure of an innovation project in either the fraud or compliance arena? Spiffy technology alone doesn’t innovate. When a business isn’t involved and it’s not a collaborative exercise, it’s harder to get a lot of adoption. Many think of it as an IT project as opposed to a business domain project, and expect the IT people to come up with the business questions and interpret the results. The compliance function itself is a risk function, and risk functions don’t necessarily lead themselves to innovation. It’s hard to marry the mindset of trial and error and root cause analysis to innovate in a space where you’re always thinking about the risk. How can natural language learning help with improving the quality of data? Nobody is going to input perfect data, because data entry, by definition, is boring. Natural language processing will have the ability to take and aggregate data that is unstructured, instead of humans having to force structure onto the data. Technology catching up with the imperfections of humanity will accelerate the pace of change. What is the innovation funnel? Ideate. The brainstorming phase where anything and everything can be put on the table.Evaluate. A formal committee narrows down and focuses the opportunities.Accelerate. A few projects are chosen and pilots and feasibility studies are put in place.Incubate. 2-3-week sprints are developed to quickly determine if the idea works.Iterate. Ideas are made ready to become new products and move to production systems. The collaborative nature of innovationIf you were to take a look at compliance, what is it: systems and processes? Or can we look at it as encouraging better outcomes and business decisions? It’s the best way to drive better outcomes and decisions than to give people stronger information and make that information transparent to multiple stakeholders. That way, everyone is driving compliance.ResourcesVince Walden | Matt Galvin | Accelerating Anti-Fraud Innovation (Fraud Magazine) | You can’t monitor what you can’t measure (Fraud Magazine) | Designing a compliance program at AB InBev (Harvard Business Review) | Why compliance programs fail — and how to fix them (Harvard Business Review)

When doing business in a new country, do you know what the bribery risks are? Robert Clark is the Manager of Legal Research at TRACE International, and he’s here to discuss the TRACE Bribery Risk Matrix, an excellent tool for the compliance practitioner, and deep-dive into it and how you can use it — so you don’t get caught unawares.What is the TRACE Bribery Risk Matrix? It’s a tool for assessing bribery risks on a country-by-country basis. Before 2014, the best available resources for doing this were general evaluations of the perception of corruption in each country. This tool is more specific, and does two things distinctively: (1) focuses on business bribery risk, and (2) takes a multi-dimensional view of that risk by looking at a range of factors or domains. What are these domains and how do they work? Opportunity: which is concerned with the direct engagement with public officials in each country. It asks three questions: How much interaction can you expect there to be? The more interactions you have with public officials, the more chances there are for that public official to demand a bribe.Is bribery generally understood as the way things are done in the country?If a public official asked for a bribe, would that official have leverage to make it hard for the other side to resist that demand?Deterrence: which speaks to whether there is anything discouraging public officials from demanding bribes. Its two subdomains are:Dissuasion, or society’s general attitudes about the acceptability of briberyEnforcement, or whether or not a government has good enforcement mechanisms to make it a lot less appealing to engage in briberyTransparency: does the society have the tools it needs to detect, expose, and thereby deter corrupt schemes? It has two subdomains:Processes, or how easy is it to get information about what the government is doing? Transparency of Interests, which attempts to assess how easy or difficult it is to determine the interests public officials might have in particular entities.Finally, we assess the Degree of Press Freedom, the Strength of the Free Press, and the Strength of Civic Institutions to act as a watchdog with respect to government abuses.How can a compliance professional utilize this information in an anti-corruption compliance program? If you’re trying to make a broad assessment, the matrix provides a top-level risk score to give you a high-level overview of a country’s risk level. Or you can dig a little deeper and understand where the risk comes from and what it looks like specifically, so your business can respond accordingly to make sure it’s not complicit in any bribery schemes. Why is it important to have this perspective when conducting commercial operations outside of the US? We want to help people appreciate how people in the community understand the history and processes that give rise to these risks. So rather than trying to build the matrix as something that would track how bribery changes over time, the complete dataset has been made available online, arranged in a way that’s relatively easy to browse through so you can visualize how the underlying conditions have changed and developed in the past. ResourcesRobert Clark | TRACE Matrix | Matrix Browser | TRACE Matrix FAQs | TRACE Matrix Info Pack

Are you using social media to get your message and your practice out there? Gyi Tsakalakis is the co-founder of AttorneySync, an internet marketing agency helping their clients grow their visibility and get in front of their audience. He’s here to share with us his insights around the use of the internet and social media — and why you’re already left behind if you don’t. How do you communicate the values of utilizing social media to your clients?It requires a lot of education because it still faces a lot of skepticism. It’s all about demonstrating that from search, to click, to phone call, to fee, clients will make a return on investment, and grow their social network and referral base. It comes down to those key metrics. Between 25-50% of the audiences Gyi speaks with still don’t have a basic website, and websites really are table stakes.Will a website or social media presence be able to help a general practitioner? It’s a no brainer. One of the challenges is to get out of the mindset of pitting the internet against traditional client acquisition activities. Social networking is simply an extension of professional networking, except more efficient, with the opportunity for you to accelerate and amplify your message to a global audience. No matter how somebody hears about you, they will probably look you up online. And what they find or don’t find plays a big role in their first impression of you. If they can’t get a sense of what your expertise is, or what it’s like working with you, then they’re going to go on and find somebody who is online. They can vet them without a phone call.What are search engine marketing campaigns, and how does that tie into search engine optimization? Search engine marketing is paid media management like Google Ads or boosted content on Facebook or LinkedIn. Search engine optimization is organic: you don’t pay the search engine, you do things to make sure your pages come up in Google search results.Free information online Providing information and demonstrating your knowledge and expertise is powerful. It’s human knowledge organized based on queries at your fingertips, and it’s some of the most effective and efficient marketing you can do. The majority of searches on Google are research-based and you want to be where others are looking for answers.Social media marketingAn overwhelming majority of business that AttorneySync wins is from inbound marketing since the education-based approach to marketing their own services is really effective. It also resonates with clients, because they can get on the phone and say, ‘Hey, you know how you did a search, found us online, downloaded our guide, got on our newsletter, then called us? That’s what we want to do to get you in front of your clients.’Resources for GyiLinkedIn | Twitter | AttorneySync | Lunch Hour Legal Marketing Podcast

Innovation can come in many forms: a new product, or a new piece of technology. Today we’re talking about innovation in a process, specifically, mergers and acquisitions. Our guest is Axel Kirstetter, the Vice President for Product Marketing, Content Marketing, and Pricing at Merrill Corporation, here to talk about M&A, and the seven critical M&A transaction mistakes.How does Merrill help companies in the M&A process?They have a virtual data room where clients can put information, content, and data for potential bidders to participate in the due diligence cycle. Bidders, buyers, and sellers worldwide can get together and exchange information via technology that’s compliant and secure. What is Synergy Savings? And what is its importance in the M&A process? In acquisition mergers, you’re combining two entities, and naturally, there will be some overlap between capabilities, production resources, and so forth. You can remove some of these redundancies to achieve Synergy Savings. For any acquisition to be successful, you have to achieve between 4-5% Synergy Savings.On timingTime management is important in decreasing the likelihood of deal fatigue, which dramatically diminishes the chances for success. Axel adds that there are other things to take into consideration, too, like unexpected, politically-driven, compliance changes. Be sure to make space for these changes when choosing to announce or include something related to your transaction. Seven Mistakes That Can Derail Successful M&A Transactions Overindulgent optimismPoor structural engineeringIneffective organizational integrationInsufficient time allocationInability to execute the business planLack of proper data preparationAbsence of secure business tools Why is controlled access so critical? Information security. You get to make sure that your information is secured with tools that allow you to do that. Speed of the deal. You have to actively manage the speed at which the deal is going by choosing who gets access to what by setting the overall pace of the deal. Post-deal success. You’re specifically looking at things like auditing capabilities, robust document security, creating new presentations for maximum impact, doing research to target the right approach. Resources Axel Kirstetter | Merrill Corporation | Seven Critical M&A Transaction Mistakes | The Art of M&A Integration | Reed Lajoux (Amazon) | FINRA

Is the smart contract a key innovation that will change the way we arbitrate agreements? Today on the show we have Jacob Enoch, a partner at M. Firon & Co., to talk to us about smart contracts and the implications for both lawyers and the compliance profession.What is a smart contract?A smart contract is a computer protocol or program intended to facilitate, verify, or enforce the negotiations or performance of the contract. There is an emphasis on the automatic performance attributes of a smart contract and the fact that it no longer requires a leap of faith or an element of trust when it comes to dealing with the performance of such a contract. Jacob states that this introduces a shift in the way that contracts usually work.What’s the difference between a smart contract and blockchain?Blockchain is a technology that may be used as a platform for smart contracts, and it’s known for its reliable control of cryptocurrency and attributes that contribute to the certainty of automatic execution, which is at the heart of the smart contract concept. So a smart contract can be established with blockchain technology but, in theory, can run on a different platform.Do you think smart contracts are going to change the practice of law?The short answer is: Who knows? The tool is still new and we can’t tell how extreme of an impact it’s going to have. At the very least, this new form of contract will become another acceptable type of contract, which means it will change the practice of law as it pertains to its existing legal rules, and the application and enforcement of such agreements.Will lawyers need to learn to code going forward? Anyone who would have anything to do with smart contracts will need to understand how the program works. Even if the concept of smart contracts is that it works automatically, someone will still have to translate that code into human language, as the parties to these contracts are human beings.That begs the question: Which version of the smart contract should prevail? The human language version or the code version?Can you walk us through the example of a smart contract from your article?The article refers to a copyright scenario, where, for example, you own the rights to a song or video. You can have a smart contract in place controlling the downloads and payments, where a payment in cryptocurrency is to be made automatically upon completion of a download. This can ideally run without immediate complications, because the deliverable lives on a digital platform and is 100% online.But how far can you go? Can you really detach this system entirely from the outside world? Probably not, but you can implement much more complicated transactions online. Though it should be noted that the more complicated the transaction, the weaker the code; it allows for more potential loopholes and issues. There IS a tradeoff.If this contract were between two parties who are not part of the outside world, will this arrangement lend itself to greater transparency and auditability?In a closed system, there’s nothing one party can do to defraud the other because no party has control of the blockchain. But the universe of transactions in which smart contracts can become the ultimate solution is not vast, because most transactions are a little more complicated and require interfacing with the real world. But it’s definitely a starting point for both law and compliance.Resources: LinkedInArticle: Who’s going to write ‘smart contracts’ – the lawyer or the programmer?

“Compliance” and “cinematic” aren’t words you often see together — but for our guest this week, Marc Havener, the pairing makes perfect sense. Marc is a filmmaker and the founder and CEO of Resonate Pictures, a company that produces cinematic training films that stick. Why cinematic training films? On today’s episode Marc shares about his innovative use of storytelling and how he uses it to communicate memorable messages.The divide across filmmaking and compliance trainingThe idea began when Marc’s friend asked him to do training videos in the style of the TV show The Office — which Marc recognized as the spark of creativity that could make communications stick. That experience opened his eyes to the world of corporate training and ethics, and made him realize that the perceived divide across filmmaking and compliance training isn’t all that wide. The heart and essence of filmmaking and storytelling is changing culture, and so it is with compliance training. Embedding a message in a story is the best way to engage your audience, give them something tangible to wrestle with, and change behavior.Crafting a Resonate Pictures Film Marc is very particular about his craft, and shares the elements that give a story power when presented in a cinematic film: The script: Marc brings screenwriters on board because they have the experience and technical knowledge to bring the internal out into the external: they know how to use subtext, how to frame a message so it doesn’t sound pedantic or patronizing, and create characters who are human, vulnerable, and relatable.The cinematography: They place a high value on creating the mood and feeling for the piece. The actors: They work with SAG actors, who are able to communicate more with a look than a page of dialogue.The new initiativeMarc and his team at Resonate Pictures have a new offer for compliance training. Their main offer before was one-off videos that ranged anywhere from one minute to 35 minutes. Now they’re offering the same power, drama, and story in video library form: 6 episodes, 3-5 minutes each, to keep them manageable and not have one video take too much time out of an employee’s day.The initiative is being launched through partnerships with companies at two levels. At the Executive Level, partners have the power to choose topics for two of the videos, have the rights to use them in perpetuity, and gain access to the other four videos. At the Associate Producer Level, partners come in as early investors with early bird pricing to kickstart the initiative and allow Resonate Pictures to gather the budget they need to begin.If you’d like to join, the deadline to sign up is January 15, 2019, or when all positions have been taken. Screenwriting begins in January, and the videos will be released in the fall. Resources for Marc HavenerLinkedInResources for Resonate PicturesWebsiteMore information about the Library

What is blockchain, how does it work, and how can it apply to you? On the show we have Syed Hussain, the Global Chief Commercial Officer of BANKEX, a blockchain-based fintech company from New York City. They have an extraordinarily innovative tool, Securitization 2.0 Operating Systems for Capital Markets, and today, Syed tells us more about blockchain and how it can revolutionize the market.Blockchain: what is it, and why is it so revolutionary? This is the kind of technology that spans across humankind because it operates on two core foundations of human interaction: trust and incentivization. But blockchain technology allows us to make incentives a fungible resource that can be freely traded, facilitated by the trust that is systematically built in. That is, it allows us to digitize our assets  — i.e. anything that holds value, like art, or real estate, or copyrights, or even information — so that it’s freely tradable and traceable. Then, the ‘proof of asset protocol’ allows relevant parties to reach a consensus as to the value of the asset and the fact that it exists.It’s revolutionary because it’s efficient. Once you put up an asset on an immutable blockchain, that record exists forever and there’s no need to replicate the process every time a transaction needs to occur. What is a blockchain-based Smart Contract? It’s leveraging the power of blockchain to institute an algorithm that allows you to do an individual transaction, then come up with agreements around that individual transaction. That is, because everything surrounding your asset is already digitized, stored, associated, and controlled by algorithms, a Smart Contract is able to automate the execution of succeeding transactions, from granular to highly complex, without the need for human interference. What is Smart Justice, and how does it work for clients, customers, and other stakeholders?There is a lot that goes into ensuring compliance, but what happens when something doesn’t adhere to what was agreed upon? Or, perhaps, a situation occurred was outside the control of the parties involved? These are common situations, and contracts usually have arbitration clauses just for this purpose, where an arbiter comes in and uses a “baseline” to understand both sides.With blockchain, you can agree on those baselines in advance of the execution. Smart Justice is arbitration on the blockchain, referencing a different set of Smart Contracts — allowing for automation, pre-agreement, and self-execution of arbitrations. Resources for Syed:Syed Hussain (LinkedIn)syed@bankex.comResources for BANKEXWebsiteFacebookLinkedInTwitterHashtag

Today on the show, we have a guest who isn’t your typical compliance professional. Ronnie Feldman is the President and Creative Director at Learnings and Entertainments… and a comedian! Ronnie and his team help clients communicate more effectively through humor and entertainment, and when it comes to a subject as serious as compliance, Ronnie shares that laughter may be the best teacher.Engaging employees with comedyTreating a serious subject seriously is a surefire way to make it boring, pedantic, and to lose your employees’ attention. You have to separate the message from the delivery mechanism. As compliance professionals, employees might dislike or be afraid of you, so there needs to be a friendly and positive way to approach these subjects. Also, a majority of employees don’t think about these issues regularly, if at all, and this is mostly because we aren't communicating effectively. A better approach is to treat the subject matter like advertisers: things like helpline jingles might be weird, but it sticks out, it’s catchy, and it helps people remember them.Compliance needs a makeoverThere is a need to rebrand Compliance and Ethics from the perception of it as a scary, finger-wagging police force. Even if your e-learning needs to be more serious, you can still play around with campaigns: these could be videos, posters, GIFs, memes, or any other communication channels that say: the compliance team is available for advice and support, and we are here to help. These messages should be continually reinforced all the time because you’re undoing the preconceived notion that you’re all scary people. Why it’s a good ideaRonnie makes a few arguments for the efficacy of this unorthodox approach: People are forgetful. A lot of corporate learning is lost after initial training, and people need regular reminders and reinforcement. It helps create a social environment where people police themselves because that’s the kind of company you are. It combats messaging fatigue and keeps people interested instead of tuning out. Ongoing EducationWant to stay up to date with the latest compliance news in an easy-to-consume format? Go to our courses page and choose from several 4 hour-long training packages.ResourcesRonnie Feldman (LinkedIn)Learnings & Entertainments (Website)