Lawyer for the Compliance & Ethics Program

How can we make sure the compliance and ethics (C&E) program follows the law and does not generate unnecessary legal risk unless the General Counsel (GC) runs it?  This concern has tortured our field for years.  But here is a possible solution that could make everyone happy. (Or at least less grumpy.)  Consider the possible role of having a lawyer for the C&E program. 

Any inhouse corporate lawyer would know that they have only one client:  the corporate entity.  But in the real world, company lawyers have different groups within the company who are their real “client” groups.  Yes, they must all work for the company’s benefit, but they understand the interests and dynamics of their client groups. 

With this understanding, consider the potential value of having a compliance program lawyer, at least in any company where the legal department is large enough to have specialist lawyers. 

What would be the role of the compliance program lawyer?

The compliance program lawyer would be the one who participated in compliance program meetings and who reviewed program documents, investigation files and call reports to flag any possible legal issues.  This lawyer would also know the inner workings of the legal department such as which lawyer handles antitrust issues, and which lawyer to bring in when a compliance issue raises labor law concerns.

When C&E professionals have questions on legal issues or concerns about advice or actions by company lawyers, this lawyer would be their voice and place for them to turn. C&E professionals would know they had a lawyer who understood their mission, and would return their calls as a priority. This lawyer could also ensure that when attorney-client privilege was applicable that all appropriate steps would be taken to preserve that privilege.  The lawyer’s evaluation would be a joint project between the GC and the Chief Ethics and Compliance Officer (CECO).  

Within the legal department this lawyer would represent the compliance program’s interests.  If a labor lawyer was flatly refusing to allow any reference to company misconduct in any program communications, the compliance program lawyer could work through practical solutions for such an impasse, drawing on the examples where companies have done this and not experienced any adverse results.  When a litigation lawyer wanted to just pay a large severance amount to be rid of a manager who had broken the rules, the program lawyer could shift the focus to deal with how this would undermine morale and the company’s culture.   

A compliance lawyer could also be a Subject Matter Expert (SME) in the highly-sensitive risk area of retaliation.  A lawyer without that background might only consider that retaliation had occurred where there was proof of immediate negative action such as firing of a subordinate who reported misconduct.  But someone who knew this field better would be alert to the crucial but more subtle types of retaliation.  They would recognize the telltale signs that let everyone know that going around the boss would be a career-limiting move.  This SME could also understand that protecting whistleblowers requires more than merely offering a mighty oath in the Code of Conduct that retaliation “is not tolerated.”  This protection requires serious management steps, far beyond mere words. The compliance lawyer would know this.  

This lawyer could play the role of SME for conflict-of-interest issues.  This is a risk that applies to everyone in the organization, so a lawyer identified with the C&E program could be ideally situated as the neutral champion for addressing this important risk.

Must or should the C&E program report to the legal department?  Must the GC also be the CECO?

Having a lawyer in the legal department dedicated to C&E makes it considerably less sensible to have the C&E program report to the GC.  The compliance program lawyer can flag legal issues and bring in the right expert from the legal department as needed

At times, those who advocate having the GC be the CECO treat this as if it were an all or nothing proposition – as if the C&E program would be siloed and off on a frolic of its own if it were not the exclusive domain of the GC. But having a lawyer specialized in C&E is much more practical and gives both groups what they need to be most effective.  Just as legal does not need to have full responsibility for other groups that deal with risks such as HR, internal audit, marketing, or security, so too there would really be no need for the separate area of C&E to be a subset of legal.  The GC can get everything she or he needs by the more focused approach of having a compliance program lawyer. 

C&E, when properly approached, can take quite a bit of time and attention – things the GC typically does not have.  Having a lawyer participate at the ground level gives the GC the necessary input, but without diverting the GC’s time and attention.  The compliance lawyer can get all the training and background necessary to be professionally competent in this burgeoning area.  One significant trouble with having the GC be the CECO is that the GC typically does not realize how much there is to learn in this area, nor have the time to learn or follow this dynamic area. A lawyer focused in this area can treat this as the specialty it actually is. 

For a corporate lawyer, this can be an engaging career opportunity. It is a chance to develop a new area of expertise. It can be more fulfilling to know you are preventing wrongdoing, rather than just reacting to problems after the damage is done. It can even be a precursor to someday becoming a CECO.

Any GC could feel much more comfortable knowing they had someone inside the C&E camp, helping people there to understand the law, keeping the GC from being blindsided, but also helping the two groups to work cohesively together.  For GCs who are already exceedingly busy, this is a path for having the best of both worlds – a direct source of appropriate insight into what is happening in the C&E program, but the time to focus on being a company’s chief lawyer.