The Hindu Business Line : LCM: The new addition to management jargon

HERE is the latest addition to growing list of management acronyms — LCM, or `legal compliance management'. As the name implies, LCM refers to the function of ensuring that a company complies with all laws, which may sometimes include laws of other countries.

Going by the experience of one consulting firm that specialises in LCM, it appears that this function may evolve into an industry.

Strict corporate governance rules have made independent directors of a company personally responsible for all acts of the company's management. Corporate boards, therefore, want to be assured by an independent body that the company's executives have complied with all the laws.

``That is where we come in,'' says Mr Karti Chidambaram, Director of the Chennai-based LCM consultant Chess Management Services. Chess, which has a resource pool of 45 professionals, has done over 60 assignments in the last 18-odd months and has some 20 live clients, ``all of them large companies.''

Sometimes, it is also necessary to see if a company needs to comply with laws of another country. For example, some export products need to be certified that they were not made by children or prisoners.

While consulting firms usually get `legal compliance audit' assignments, such audits are only a part of the LCM function.

``LCM is more than just auditing for compliance,'' says Mr Sai Chandravadhan of Chess. There could be hidden implications of compliance or non-compliance. Example: a factory had caught fire and the company was dealing with the insurance company over the claim. But there was a demand from the Inspector of Factories for a fine of Rs 250, which the company was about to pay. Chess advised the company not to pay the fine as it would tantamount to admitting to negligence and go against the insurance claim.

According to Mr Chidambaram, assignments are also coming from banks who want to check out borrowers before lending to them.

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LCM: The new addition to management jargon