Verbatim Global Compliance...The “Single Source Of Truth” For Information About Your Corporate Subsidiaries
An Interview With Seth McNary, Verbatim’s CEO
The OPTIMIZER: Seth, please tell us a bit about Verbatim – and how it got started.
Mc Nary: We started in 2006 as “Orrick’s Corporate Services”: The General Counsel of one of our major clients – Cisco Systems – came to us and said, essentially, “We have a huge number of subsidiaries and we know we are not managing them as effectively as we could and should be doing...We really don’t want to spend a lot of strategically important resources to do it as it needs to be done…and we think you can help us fi it all out.” So naturally, we set to work. And very soon it turned into a full-fledged business for us. We became Verbatim in 2010 and we remain a wholly-owned subsidiary of Orrick Herrington & Sutcliffe, LLP, a global law fi whose name most of your readers will recognize, I know.
OPTIMIZER: What, if anything, was different about your approach here?
Mc Nary: Most of your readers, I’d bet, will also be pretty familiar with the typical corporate landscape when it comes to managing subsidiaries, and the many trials and tribulations of doing so. When legal departments are being asked to do more with less, subsidiary governance has a tough time competing for resources and budget. An effective governance
approach really needs to be efficient on multiple levels. Early on we deconstructed the process – from a provider and client perspective – to get down to the DNA of subsidiary
maintenance. We built our methodology from the ground up with a focus on three distinct areas of efficiency: specialized staffing, aggressive use of technology, and local expertise.
We provide several specialized resource levels to project manage and coordinate substantive matters and manage entity information for clients. We strongly advocate for the adoption of entity management software that functions beyond data collection and provides workflow capabilities and the ability to automate common tasks, and we manage it for our clients. Lastly, we bring to bear the largest network of local providers to ensure cost effective and quick outcomes. We bind these three areas of efficiency into a cohesive methodology that allows for seamless execution. It’s really a turn-key solution and we are viewed by some clients as virtual in-house resource. We spend less time on execution which give us more time to work with clients on improving governance processes and controls, and I think this is really where we have a unique offering. What makes our approach so different is that we take a broad strategic approach to each client’s situation – and enhance and align the structures, processes, procedures that surround global subsidiary compliance activities. We focus very intensively on the good governance aspects; on reliability, on increasing transparency – on developing a “single source of truth” about all of a client’s subsidiaries – and especially on the cost effectiveness of the overall effort. It is a gradual process for most clients but one of constant improvement.
OPTIMIZER: This sounds kind of daunting. Tell us who a “good client or prospect” would be for you.
Mc Nary: It may sound daunting but in reality we carefully construct a governance framework that pays off for clients in terms of cost predictability and peace of mind. We fi our value proposition really starts to make sense for companies with a minimum of 50 subsidiaries, say in 15-20 or more countries. Most organizations below these thresholds are able to cobble together an adequate approach on their own. That said, the offering is extremely scalable and we fi smaller clients, particularly in the high-growth/post IPO context, benefi greatly from the thought leadership and best practices we bring to bear. Getting started doesn’t require a big investment for most clients and we take a value-based, fixed
fee approach for “baseline compliance” - and for additional matters too – that is transparent, easy to understand and very specifically designed to ensure against “overspend.”
OPTIMIZER: Give us a feel for how this actually works in the real world.
Mc Nary: First, we guide clients through a strategic review and implementation process that allows us to tailor our methodology to the client’s specific governance environment. This typically involves creating a blueprint of existing controls and identifying “low hanging fruit” where the introduction of best practices or new processes will bring about immediate improvements. I should make it clear that while we are not a software company, we strongly advocate the use of technology and some form of technology implementation and configuration – usually related to entity management software - is generally part of our approach. Many companies we encounter have some form of entity management software in place that we can utilize and enhance. We do have our opinions on what we think is the minimum level of functionality in the “entity management” space and elsewhere, and sometimes, a change of providers or a migration to new software is warranted following our initial strategic review. This sounds like a lot of change but we work very hard to create a transparent and easy to use service that minimizes the impact to client users.
For multi-national companies – which are the primary focus with us, and which so many companies are fast becoming – we maintain a network of local counsel in 135 jurisdictions, which we manage carefully to ensure the most efficient staffing and pricing we can find. Since we work with so many organizations the collective volume of matters allows us to drive down the cost per transaction. We also fi however, that most companies want to retain some of their established relationships with other law firms in non-U.S. locations. So we work with clients to make sure they are getting proper value out of the relationship – and many times we succeed in generating very signifi price reductions from existing providers. Recently a client saved over £40,000 in U.K. costs through this exercise. The goal is to leverage our approach to build a strong foundation of ‘baseline compliance” from which we can build out a robust governance program – and do it as cost-effectively as possible. Once you have the right resource allocation, the right technology and streamlined local counsel you can really focus on governance.
OPTIMIZER: Tell us more about the next steps, once the baseline analysis is complete. What do I do if, say, my company suddenly has a deal going down in Brazil?
Mc Nary: We provide clients with two sets of resources to serve as their “single point of contact” for global compliance matters. First are our compliance analysts. They are generally attorneys, who work with local counsel and often execute in our Center of Excellence in Wheeling, WV. So for your deal in Brazil, we’d have a country data-sheet, to give you an idea of what to expect in terms of paperwork, timelines, etc. This really helps set expectations with the client and its business teams. In most cases we provide the fi drafts of all the paperwork – for validation by local counsel – which really streamlines things and reduces expense for all concerned. The second set of resources is the data coordination effort: This rounds-out the process by uploading all the required documents, then monitoring all the scheduled compliance activities. Every compliance activity is catalogued in our system as a “matter” – with a scheduled completion date that is visible to us and to the client. The process maintains a calendar of events, monitors the completion of all such events, and issues “alerts” as needed. In short, Verbatim offers multinational companies a turn-key global compliance solution in a very transparent and cost-effective manner.
OPTIMIZER: Tell us again about that “Single Source of Truth” concept:
Mc Nary: A single, reliable repository of up-to-date subsidiary information and compliance documents is a critical component of a well run subsidiary governance program. Too often we encounter companies where unreliable data really inhibits good governance and reporting. One common side effect of “bad data” is that it encourages internal functional groups (legal, tax, fi treasury) to maintain data or org charts on their own, which is a waste of resources and typically intensifies data accuracy issues. A Single Source of Truth approach to capturing subsidiary information that is reliable and transparent may sound a bit daunting but the truth is a small investment to improve the process will provide an immediate return on investment in the form of improved governance and efficient flow of subsidiary information. It may be difficult to see the advantages at glance, but the benefits are real and we are finding clients really like the value we deliver.
Contact Seth at firstname.lastname@example.org