Legal and Compliance Coordination – An Essential Foundation to an Effective Compliance Program (Part IV of IV)
Here is a profound grasp of the obvious – Lawyers can be difficult people. Some like to condemn the profession in its entirety (and carry with them a collection of lawyer jokes). As an attorney, I beg to differ. Many professions include and reward difficult people. For example, CEOs have the highest incidence of psychopathy among professionals. Lawyers are no different and expected to zealously advocate on behalf of their clients.
Lawyers and compliance professionals are natural partners. With the rise of the compliance profession, lawyers became more territorial. For some reason, some lawyers felt they had to defend their territory in the corporate governance world.
Lawyers’ resistance, however, has diminished through the years. There is more than enough work to go around for a CCO and a legal team to help design and implement an effective compliance program. Lawyers are starting to embrace the new landscape without feeling so threatened. (Some cynics may say that lawyers had no choice given the importance of the compliance profession).
As compliance programs mature, so do lawyers, and so has their relationship with he compliance profession. An effective compliance program requires lawyers and compliance professionals to work together. If they are at odds with each other, the program will suffer serious debilitating effects. To that end, a general counsel and CCO have to ensure a smooth working partnership. In fact, they can make each other look good by sharing in compliance and legal successes.
Lawyers can be excellent compliance practitioners so long as they recognize the essential difference between legal and compliance work. A lawyer defines and advises on the law – the rules of the road. Compliance officers develop controls, policies, procedures, and systems designed to ensure that corporate actors stay within the rules of the road.
Lawyers do not define the company’s ethical culture. To the contrary, the board, senior management and the CCO define, instill, promote, manage and measure the company’s culture. A company’s culture is at its most effective internal control, and it is up to the CCO to embrace this responsibility and bring all the key players to the table. Of course, the general counsel should be part of the discussions but the general counsel should not define the company’s culture.
In-house counsel are essential partners in conducting training, providing important legal guidance and analyses, marshaling due diligence and conducting internal investigations. Lawyers carry a valuable asset – the legal privilege, an essential tool when a company investigates and determines the nature and scope of a potential legal violation. Lawyers are key partners when it comes to the internal investigation function and working with compliance to develop helpful protocols, and investigation tactics and strategies.
Lawyers also play a valuable role in contract management – a key tool used to mitigate risks. A company’s contract system is an important aspect of its internal controls, and the design of risk mitigation provisions to include in appropriate contracts is a critical aspect of the company’s contracting system.
Compliance officers integrate legal analysis to design and implement appropriate controls. A CCO needs to work closely with the general counsel to ensured that compliance and legal questions are appropriately handled, that controls adequately cover legal risks, and that such controls are updated when legal interpretations and enforcement positions are adjusted.
Besides maintaining a positive working relationship, a CCO and a general counsel must coordinate and communicate regularly. They are natural allies when assessing risk, but they need to recognize they each have a different perspective.
A CCO is the guardian of the company’s ethical culture. A general counsel is the protector of the company’s legal risks. A company has to recognize that a legal analysis is not the same as adherence to ethical principles. Once this basic principle is understood, and the expertise that each maintains in their respective areas of concern, a CCO and a general counsel can build a lasting friendship and partnership as part of the company’s effective compliance program.