Balancing Cost & Compliance: What if compliance costs too much?

April 22, 2022

We recently recorded an episode of the Conversations with CGL podcast featuring CGL Partner Jenny Gumer. In it, we discuss the impossibility of complying with the patchwork of CBD laws cropping up in the US. Building on the information Jenny shares in the episode, we’re sharing some guidance for businesses navigating any rising costs of compliance.

Compliance Shouldn’t Be a Checklist Item

Compliance is usually cheaper and more effective if your legal obligations are considered early in the project planning, instead of as a check box task before ‘launch’. This is true for financing, privacy, commercial and corporate transactions, intellectual property, employment and many other areas of the law. 

Companies should consider legal risk management and compliance as early as possible, and they should consult an attorney in these early stages too. By bringing in attorneys early, you can gather a complete picture of your potential legal risk and the likely costs of compliance. 

Prioritizing Certain Compliance is Key to Managing Associated Costs.

With the information about your company’s risk profile and costs of compliance in hand, you can prioritize compliance accordingly and make informed decisions to better manage costs. 

For some, tackling smaller items initially can help with motivation (since it’s easier to tick these smaller items off the list). When managing compliance and legal risk, it’s usually better to tend to the legal risks that pose the largest threats to your business before digging into those smaller items. 

Again, working with legal counsel can really help here. Especially since the largest threats to your business may not be the risks that attract the biggest penalties. Consider privacy risk for instance. The FTC imposed a $5 billion penalty on Facebook for breaches in 2019, while European privacy authorities regularly impose significant penalties too. These penalties may look like a significant legal and compliance risk, but they aren’t if your company is not likely to attract enforcement due to its size or other unique circumstances.

Instead, it may be better to prioritize compliance with regulations where either: 

  • Enforcement is likely; and/or 
  • Consumer expectations and reputational risk coincide with the legal risk.


That is, companies should prioritize legal risks based on the likelihood of the risk actually impacting the business as well as the scope of risk and the cost of compliance. 

Working with an attorney, you can determine your risks and assess which risks pose the biggest legal, financial, and reputational risks to your company and its operations. From there, you can reflect on the cost of compliance for those risks and determine what steps you need to take (if any) to either improve compliance or reduce the risk of negative legal or business consequences. 


If you need assistance balancing cost and compliance, reach out. Our experienced corporate attorneys would love to help. 


The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between CGL and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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