Compliance and Ethics: Ideas & Answers. Edition 7

Dear friends, 

Welcome back! In this seventh edition of Compliance and Ethics: Ideas & Answers we are going to look at some interesting topics.

Firstly we'll understand how to evaluate compliance programs, then we have a quick thought on board compensation committees. Next we will look at time management for ethics and compliance professionals, some tips from the field. And towards the end, we have a deep dive on reverse conflicts of interest.

As always, there's more content on our website so please do visit that to read our other articles.

Thank you, Joe. 

Canadian Bureau update

The Canadian Competition Bureau has been working on new guidance for competition law compliance programs. The new Draft Compliance Guidance for Public Consultation has been posted for comments here. The Bureau is particularly interested in input, including any suggestions on how to communicate this message most effectively. This consultation period is open until June 9th, but it is best not to delay. I would also be interested in comments. Anne Riley and I were both consultants to the Bureau on this project. We know how serious the Bureau is in seeking input.

It is my hope that all government agencies looking to provide guidance on compliance programs will take this same, interactive approach, gathering comments and input from those who will be affected by the proposed guidance.

Joe

How do you evaluate compliance programs? One government agency has the answer, but no one has noticed!

By Joe Murphy

Recently the ABA Antitrust Section, led by the Compliance and Ethics committee, put on an excellent program about the Monaco memo. The presenters were Rebecca Ryan, Eyitayo “Tee” St. Matthew-Daniel, and Sarah Flanagan, with Lauren Briggerman as moderator. The coverage of the key topics was very useful. But an important point was made in the discussion that it is likely no one noticed. Yet it contains a strong answer for a perceived dilemma in the compliance field that academics who write about our field have been missing, and one that those who question how to assess compliance programs have mostly overlooked. 

In the literature about compliance and ethics, academics have bemoaned the idea of “cosmetic compliance” or the assumption that governments were too na?ve to assess compliance programs. In this hypothesis the company lawyers would just say the company had an excellent compliance program and the poor government types would be overwhelmed and fall for the fake program. These writers create this enormous dilemma that dooms any effort by government to encourage or recognize compliance programs. Mostly this is based on no actual experience, either in developing programs or in assessing them. 

I have argued for years that this supposedly unsolvable dilemma is for the most part a product of those who have never actually tried to assess a compliance program. For example, one truly amazing point in the literature is that, as far as my review of the most prominent publications has revealed, no one in academia has ever tried to examine their own university’s compliance program to get a sense of how programs actually work. (Universities are among the largest industries and typically have very substantial compliance programs. The lists of violations and misconduct taking place in universities is every bit as significant as those in other industries.) All this would involve might be walking across a leafy campus to the compliance office and taking a look. But no one in academia that I know of apparently does that.

Read the full article on our website

Time Management For Ethics And Compliance Professionals – Tips From The Field

by Adam Balfour

How often do you start a week with grand ideas of accomplishing certain goals or objectives and by the end of the week the same goals and objectives have that untouched look to them? There are so many different priorities that we all face as ethics and compliance professionals and we have to ensure that we are smart and intentional in how we use our time. Just as we budget for dollars (or whatever currency your program deals with), we also need to budget and carefully spend our time.

One of the tips that I use for myself is that the first hour of every Monday morning is dedicated to “Weekly planning and goal setting” – this is a recurring calendar invite for myself and allows me a solid hour of sitting down with my schedule and my daily planner to make sure that my week ahead is (as much as possible) planned and scheduled. By thinking about what I have scheduled, what I would like to achieve and the amount of time otherwise available, I can block time for goals and objectives around already scheduled meetings or calls, and create a realistic plan for the week ahead. While my expectations for the week and the reality of every week might not always align, I find this is helpful for prioritizing work and getting work done. If I don’t take a disciplined approach to my work, I often find I can spend my time in reactive mode or finding that I try to cram my proactive project work into the last remaining hours of a Friday evening when my brain is running on exhaust fumes. Instead, my Monday morning disciplined approached often means I get to use Fridays afternoons to reflect on the progress made that week. 

How do you manage your time? Share other tips in the comments below.

Read this article on our website

Board Compensation Committees

By Joe Murphy

As is fairly obvious from my prior LinkedIn posts, I believe incentives are an essential part of any compliance program. When reading a draft ALI Principles document dealing with compliance programs, I came across an idea that I think is excellent. For companies that have board-level compensation committees, those committees should be charged with promoting the compliance program and making sure that executive level compensation includes a compliance element. This would mean that senior managers would have an incentive to show leadership in supporting and promoting the compliance program and the company’s values.  

More on reverse conflicts of interest

by Jeff Kaplan

A company enters into a complex business arrangement where one of its managers has a relationship with the other entity. The relationship is fully disclosed and approved pursuant to company policy on COI waivers. After some time, the arrangement runs into business difficulties. Although the company has lived up to its contractual obligations, the other entity seems to feel that the company should have done more to make the arrangement work. Based partly on that, some employees of the company question whether that entity had been promised more than was disclosed by the manager, causing the employees to take various defensive measures which put further strain on the arrangement. Ultimately, the arrangement collapses.

As a general matter, if properly disclosed and approved, some COIs can be waived (although some should not be permitted under any circumstances). Such approvals can be either a true “green light” or subject to being managed on an ongoing basis, i.e., a “yellow light.”

Like many C&E-related determinations, this type of decision tends to be made based on a balancing of costs versus benefits (hopefully, with a reasonably high burden of showing that the latter outweigh the former).

The case above illustrates what I believe is a factor that should generally be considered by companies deciding whether to grant a COI waiver: whether there will be a reasonable possibility of over-compensating for the COI in ways that are harmful to the company. The potential for such “reverse COIs” could turn on many factors – perhaps most significantly, on the extent to which the contemplated relationship must rely on trust. (That is, the greater the need for trust, the greater the possibility of suspicion – at least as a general matter.)

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