Lawyers Can Be A Positive Force for Compliance

Lawyers get a bad rap, and I am not just referring to all the lawyer jokes we have heard numerous times. Lawyers get a bad rap when it comes to compliance. Much of it is not deserved – but candidly, some of it is deserved.

For some reason, Chief Legal Officers have difficult accepting the empowered role of a Chief Compliance Officer. This is not a universal assessment because I have worked with many companies where the CLO and the CCO work very well together. The problem occurs when a CCO and CLO have an antagonistic relationship. In this circumstance, the company’s compliance program suffers.

One area of internal strife is internal investigations. CLOs serve a valuable function – they have the attorney-client privilege, which is critical for conducting certain types of internal investigations. There are ways to preserve the privilege when a CCO, if a non-lawyer, is supervising the internal investigation, but it requires careful coordination to protect the privilege claim. This is when CCOs and CLOs have to work together closely.

Putting the internal disagreements aside, CLOs have had trouble adjusting to the new role of CCOs. Many CLOs, however, have recognized that the rise of the CCO also means the rise of the CLO.

An effective compliance program requires effective legal guidance, important legal opinions, and participation of legal staff in carrying out compliance functions.

CLOs and CCOs share a common goal – to detect and prevent violations of the law and the company’s code of conduct. CCOs design policies and procedures to ensure compliance with the law, and to implement an ethical business culture. CLOs provide guidance on legal requirements, and in effect define the rules for conduct.

CLOs and CCOs need to coordinate on a variety of functions: internal investigations, disciplinary actions, training content, legal guidance, contracts, litigation risks and other legal issues. It is not easy to separate their functions because they are so interdependent. They are natural allies on legal issues.

CCOs and CLOs recognize that there is a distinction between legal risks and ethical risks. The line drawn for legal risks is likely to differ from ethical risks. Many legal risks raise litigation or government investigation and enforcement concerns. In these circumstances, CLOs provide invaluable assistance in weighing litigation risks, government enforcement risks, and potential collateral litigation.

Whether or not the CCO is an attorney should not impact the relationship between the CLO and the CCO. CLOs apply legal expertise to manage legal risks. CCOs incorporate legal guidance into a compliance program to ensure proper conduct to avoid legal or code violations.

CLOs should be committed to promoting a company’s ethical culture. To state the obvious, a company’s ethical culture protects against a company’s legal risks.

Unfortunately, sometimes CLOs’ egos get into turf wars and they feel threatened by the rise of the CCO in the corporate political world. When this occurs, CLOs have to check themselves and constrain their egos. I always hear horror stories about CLOs who undermine the CCO because of their fear that the CCO will eclipse the CLO’s position in a company. CLOs need to rise above the petty turf battles, competitive fights for attention and resources, and join with the CCO to implement an effective ethics and compliance program. As my friend Donna Boehme always reminds us, an empowered CCO lifts all boats, including CLOs.

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