The Attorney-Client Privilege and Compliance
On a more “sophomoric” note, I often think of the attorney-client privilege as the “cone of silence” often used by Agent 86, Maxwell Smart, when talking to the Chief. Hopefully, the attorney-client privilege works a little better than the old cone of silence.
The most valuable commodity that a lawyer provides to a company-client is the attorney-client privilege. I recognize that this is a self-serving concept for lawyers but it is really the greatest asset of our profession, especially when dealing with corporate compliance issues.
The privilege not only encourages frank communications between a client-company and its attorneys (in-house or outside counsel), but it permits a company to identify and remedy wrongdoing guided by counsel and with the full protections provided by such privilege.
In reality, the privilege is a compliance officer’s best friend. Why do I say that? A compliance officer can work within the privilege to identify compliance issues, analyze them and then remedy problems under the umbrella of the attorney-client privilege. Companies can maximize legal protections by building the privilege into compliance procedures and protocols, especially for the handling of compliance complaints.
As a problem solver, compliance officers need to incorporate the privilege, either personally as a licensed attorney or by coordinating with legal staff, in everything they do. Compliance programs without privilege protections are only asking for trouble if the government initiates an investigation.
A lawyer’s role, however, is not limited to the identification and assessment of a potential compliance issue. It is important to include lawyers in any remedy which is implemented by a company. If the communications related to a potential remedy involve an attorney, then the privilege protects everyone from disclosure of the options considered, the benefits and drawbacks of each option, the legality of each option, and the course of action taken to remedy a problem and reduce the risk of prosecution.
It scares me how many companies fail to appreciate the importance of the privilege. While I work closely with forensic auditors, compliance consultants and other professionals, a company commits gross misjudgment when it hires accountants and consultants to design or review a company’s compliance program.
Even more dangerous is when accountants are asked to take an initial dive into a potential FCPA violation by examining financial issues. Auditors play a valuable role but they do not have the privilege.
When hiring outside accountants or consultants, a company needs to engage the auditor or consultant through the legal office so that it is clear that the information and advice being provided is to the legal staff for purposes of advising the company on relevant legal compliance issues.
It is easy to ignore lawyers. After all, we are often viewed with disdain. Companies have to recognize the value of the privilege, embrace the privilege and build it into corporate strategies.
For now, Shakespeare’s King Henry VI quote – “The first thing we must do is kill all the lawyers” — is not a practical solution when it comes to an “effective” compliance program.