Businesses To Ramp Up Compliance Spending Amid Covid-19 Concerns, Says Osborne Clarke


Over half of businesses in the West of England expect Covid-19 to lead to an increase in their risk profile - with 71 per cent expecting to increase investment in legal compliance.

The largest anticipated risk increase is from health and safety, but cybersecurity should remain the number one boardroom concern in a post-Covid-19 world, according to new research.

These are among the findings of the Covid-19: Compliance Risk Survey 2020 from international legal practice Osborne Clarke, which has more than 500 people at its offices in Temple Quay.

The survey, which interviewed company decision makers in a variety of business sectors across the region and the UK, also found that:

  • Technology, Covid-19 and consumer pressure will have the biggest impact on compliance investment

  • Reputational risk and ethical stance are a bigger driver than fear of regulatory fines

  • Only 24 per cent believe their corporate legal compliance processes are effective

  • Compliance with relevant laws and regulations in different jurisdictions and sectors is a significant but increasingly essential cost to business

Risk fears

In the survey, health and safety and cybersecurity are perceived to pose the greatest increased business risk as a result of Covid-19.

However there appears to be a trade-off between the two, with expected increased home working presenting more cybersecurity concerns but fewer health and safety concerns. Meanwhile a return to office working potentially reduces cybersecurity risks but heightens health and safety concerns.

Mary Lawrence, head of health and safety at Osborne Clarke, said:

“Covid-19 has put a spotlight on health and safety in the workplace. Businesses who previously perceived themselves as low risk, office environments for example, are now needing to dedicate significant resources and time to creating a Covid-secure working environment.”


Some 82 per cent of respondents said that their organisation’s anticipated level of investment in corporate legal compliance has changed as a result of Covid-19. But there is a split between large and small companies looking ahead to next year.

Among those with a turnover of less than £100 million, 70 per cent anticipate an increase in their organisation’s level of investment in corporate legal compliance next year due to Covid-19. The reverse is true for companies with a turnover above £100 million, where 62 per cent anticipate a decrease.

However, some 71 per cent of all companies expect a long-term increase in investment over five years. For those with a company turnover of £100 million and more, this rose to 78 per cent and for companies with a turnover of less than £100 million, this fell to less than two-thirds (65 per cent).

Katie Vickery, co-head of global compliance, Osborne Clarke, says:

“There are new and complex challenges arising as a result of the pandemic, but many clients and contacts are working in constrained financial conditions.

“Half of these experts expect to see a rise in annual compliance expenditure, half see a fall. The vast majority (71 per cent) see a rise in the longer term. It will be interesting to see how this pans out as we move from the first wave of this pandemic to the medium and longer term economic effects.”

Law firms have been increasingly offering compliance services to their clients, a trend which Covid-19 has accelerated. The survey shows, however, that although external legal fees remain a significant part of client budgets, only 17 per cent spend 20 per cent or more of their budget on law firms against 51 per cent spending 20 per cent or more on technology solutions.

Business ethics

Business ethics, especially in relation to the environment and diversity, have been high profile in 2020. Some 39 per cent of businesses surveyed by Osborne Clarke said that one of the most important drivers of investment in corporate legal compliance was “ethical stance.” However, just 27 per cent said that “doing the right thing” was one of the most important drivers - suggesting that businesses may care more about perception than the action itself.

There is more evidence of this when you consider that “reputational risk” has the highest percentage of respondents who said it was one of the most important drivers of legal compliance at 41 per cent.

“Reputational risk has undoubtedly moved up the boardroom agenda,”

says Chris Wrigley, co-head of global compliance, Osborne Clarke.

“It’s often only when organisations have gone through a major reputational issue that they take it seriously. In an era of social media, reputational damage can escalate quickly and can be hard to contain. It’s an area in which investment in training will almost certainly pay off in the short to medium term.”