Tuesday, August 13, 2013

Corporate Counsel on "Inconvenient Truths About Law Firm Compliance"


Two experts weigh in on an ongoing discussion about firm compliance on the pages of Corporate Counsel: "10 Inconvenient Truths About Law Firm Compliance." The entire article and linked history is worth a read. Here are some (provocative) highlights:
  • "1. When it comes to compliance risk, law firms aren’t all that 'special.' Fact 1: People create risks. Fact 2: Law firms have people. But beyond the risks that are typically associated with legal partnerships, what about those additional risks common to most organizations: e.g., sexual harassment, discrimination, fraud, theft, social media, privacy, and cybersecurity, insider trading, and even money laundering, bribery, and kickbacks? Don’t look now, but a quick Google search will turn up law firm scandals in all of these areas. Inconvenient truth: a code of professional responsibility is not the same as a code of conduct. A credible compliance program, starting with a meaningful risk assessment and a code of conduct, would proactively identify and manage all top risks of the law firm organization."
  • "9. The Big 4 accounting firms are way ahead of you. Somewhere along the way, the Big 4 accounting firms—PwC, Deloitte, Ernst & Young, and KPMG—figured out that if they are going to offer compliance services, they’d better have a compliance program, too. (Evidently, the Big 4 don’t regard themselves as too 'special' for compliance.) OK, maybe that’s too cynical. But it is also fair to note that these firms initially did not think any of this applied to them—until they started to get into serious trouble, saw the folks with guns and badges at the door, and decided maybe rigorous programs were a good idea. It’s clear that for whatever reason, the Big 4 have taken a purposeful approach to compliance and ethics, dedicating significant resources and talent to compliance and ethics programs, including confidential employee reporting lines. This has earned their CECOs speaking slots at the top compliance and ethics conferences, where they share details on some of their leading best practices. Go ahead, take a look, they’re waving at you from their rear-view mirror."
  • "10. Compliance is a competitive advantage. The first law firm that can boast of a robust compliance program will be unique in the field. That’s called competitive advantage. And perhaps this is not so far away, as the 22-lawyer firm Smith Debnam, based in Raleigh, North Carolina, has just announced the appointment of Jennifer Quillen as a full-time compliance officer. Quillen is a former FDIC bank examiner with 19 years of experience in risk management and internal controls. What’s impressive is that the firm has dedicated one full-time professional to the new role (i.e., not just slapping an additional title on a partner or associate with extra time on their hands), reporting directly to the managing partner, Jerry Myers... From the sound of it, this firm is serious about compliance. If Smith Debnam has the resolve and foresight to appoint an experienced, full-time CCO for its 22 lawyers, what excuse does Big Law have for its continued head-in-the-sand approach?"

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