Year-end Planning and Examining the Attorney-Compliance Relationship

Attorney Compliance

As I discussed in a previous post, the relationship a compliance officer has with the company will be different than the one an attorney has with the same company. Attorney communications are private and protected and focused on protecting the company as the client. A compliance officer’s communications and self-critical analysis of the company and its controls do not receive that same protection or single focus. This is a distinction that is important to understand as enterprise risks are managed and year-end testing is completed.

If collaboration is leveraged, enterprise risks can be efficiently managed. On the other hand, if the business treats attorneys and compliance officers as they treat doctors shopping for a second opinion, business development could be delayed as answers are reconciled.  For example, if an attorney is asked about how to expand into a new jurisdiction or whether one can loan money to a client to enable the client to participate in a new opportunity, an attorney may analyze the legal permissions and agreements needed to help the business proceed. A compliance officer may attempt to also help the business proceed but, for expansion into a new jurisdiction, the compliance officer may also consider the timing because the company will need the infrastructure to monitor adherence with local laws and anti-bribery, anti-money laundering (“AML”) and sanctions requirements. When helping the business consider the appropriateness of a loan to a client, the compliance officer will consider whether proceeding with the loan is fair to other clients who may also want the opportunity but weren’t offered a loan or whether the loan raises other conflicts or regulatory issues such as affiliated transactions and disclosures.

As you complete year-end planning, consider how to leverage the collaboration between these teams when completing risks assessments and budgeting for compliance, legal and risks costs in the coming year.

There are several ways compliance and legal can work together for the benefit of the organization to make a long-term impact including treating attorneys as “Friends of Compliance” (FOCs) and understanding that they cannot represent compliance officers if interests diverge.  Learn about these specific situations and solutions for compliance officers by reading Chapter Six of my book, Triple Bottom-Line Compliance here.