Government regulations can help law departments, too!

Very commonly general counsel and business executives complain vociferously about “regulatory overload.” Spewing out every year hundreds or thousands of new laws, regulations agency practices hobble business. The burden rises – but you know about every cloud. Four silver linings balance the picture a bit.

Were it not for governmental regulations and their enforcement, many in-house lawyers would not have their current jobs. If specialists in environmental issues, utilities, power transmission, food additives, transportation systems, or insurance products, to name but a few domains of ubiquitous regulations, were able to abolish their agencies and output, their jobs would diminish or disappear. Regulations protect the careers of regulatory lawyers.

Regulations clarify or set rules, so that businesses can plan, can design their products and offerings, and can rely on competitors honoring them at least partly. No executives thrive on chaotic unknowns; all of them like some anchor points because there still remain multifarious opportunities for innovation and improvement. As appellate decisions resolve legal tangles, regulations resolve business-practice tangles.

Regulations allow lobbying. Companies with more alertness, clout and skill can shape regulations to boost their prospects. Alternatively, to find a regulatory loophole can make all the difference to a fledgling MCI, for example. Regulations create both winners and losers.

Regulations advantage larger companies. If small players still have to collect data, spend, file forms and pay for expensive counsel, yet perhaps only have to comply with a regulation every now and then, they lag in productivity behind their larger competitors who develop processes and accumulate internal expertise. If cost per compliance with a regulation were expressed as a percentage of revenue, economies of scale likely benefit bigger companies. Regulatory regimes create barriers to entry.