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Domestic regulation 'making moves abroad easier'

Posted by: Laurence Simons 14/05/13

The globalised world of modern business - hands across the water, men in suits gingerly sampling mysterious gobbets of food in exotic countries then smiling with unexpected enjoyment, trying to have a Skype conversation with people of four different nationalities - has become well entrenched in the last two decades.

This has had many benefits for global companies, especially as the economic crisis took the wind out of the sails of many core markets. However, as in-house lawyers know, the regulatory environment faced by many firms has become increasingly labyrinthine.

While this means a lot of work for general counsel, it is clearly necessary to keep things on the straight and level. Businesses, much like small children, perform best when given a degree of structure; when left untrammelled, they run amok, poking sticks into each other's eyes and drawing on the wall in crayon.

According to a report from global law firm Reed Smith, written by the Economist Intelligence Unit, 65 per cent of business leaders agreed that domestic regulatory developments have made it easier for their companies to expand into new markets.

Three-fifths of respondents believed that as well as supporting cross-border expansion, regulatory regimes encourage companies to innovate and develop new products, reports the Global Legal Post.

Cynthia Donoghue, partner and co-head of Reed Smith's data privacy, security and management group, warned that overly-complex regulation and a lack of transparency can have a negative effect.

However, she added: "The survey demonstrates that regulation benefits international expansion, encourages innovation and determines valuable investment decisions. In order to facilitate global business transactions and to create a level playing field for all market participants, it is important that coordinated regulatory frameworks are put in place."

To once again compare large companies with small children, too many rules are stifling, while the right amount encourage creativity and growth. I think in-house lawyers are in a kind of Mary Poppins role in this analogy, which should be pleasing.