An inside look at legal entity management practices

Twenty-two percent of departments expect an increase in LEM staff over the next year. In addition, 39 percent reported an increase in the LEM budget over the past year. About half of departments are currently satisfied with company leadership being sufficiently attuned to the organization’s subsidiary management processes, indicating there is still room for improvement.

Forty percent of departments do not have a compliance calendar to track corporate entities records, and 56 percent do not conduct any internal audits or regular monitoring for LEM practices and procedures. The silver lining is that three in four participants are at least somewhat confident in their organization’s ability to stay in compliance with regulatory changes.

Sixty percent of participants report using an electronic database to track corporate records, but just 41 percent use a specific legal entity management database. Seventy-three percent of participants, however, are dissatisfied or neutral with the current technology solutions that they have in place. Forty percent list the lack of technology as one of the main challenges in successfully handling LEM in their organization.

Companies that implement leading LEM practices deliver better business outcomes. Ninety percent of LEM leaders are at least somewhat confident to stay in compliance with regulators, compared to just 64 percent of organizations with the fewest LEM practices in place. Similarly, 68 percent of LEM leaders are satisfied with business stakeholders being attuned to subsidiary management processes compared to just 31 percent of those in the bottom tier.