Numerous events within the last few years have lent themselves to what could be considered the perfect storm for regulatory reform. While opinions may vary as to why the level one company is subjected to versus another may be disparate, one thing remains clear: Corporations are being viewed and examined with increasing levels of scrutiny; scrutiny that is manifesting in the form of new regulations and new reporting requirements.
The reasoning behind the shift is perhaps less compelling, and potentially less problematic, than the increase in responsibility that those charged with ensuring legal and/or corporate compliance will face in the future. Additionally, this increase comes at a time when the economy may not lend itself to an increase in company resources (of any kind).
This changing scheme reinforces the value and necessity in leveraging the partnership that exists between in-house and outside counsel. While it is true that these partnerships are crucial in adhering to the letter of the law when issues arise, it is arguably more important to leverage these partnerships and the expertise that can flow from them in a proactive fashion, such that noncompliance and any resulting reporting requirements are avoided entirely. Perhaps the most effective way to achieve this end is to remember to stick to the basics.
Remember: Ask the hard questions and give the hard answers.
Those serving as in-house counsel practice law in a very unique way. And with this unique practice come unique perspective, insight and responsibility in serving the business client effectively, ethically and responsibly. In some cases those in-house counsel may be privy to information that could lend itself to identifying an issue or potential issue before it is identified as such by the business. In these situations it is imperative that in-house counsel analyze and synthesize any information received in response to a potential legal or regulatory inquiry. The information however should not be considered in a vacuum. In other words, what do the company's business records or practices say about a particular incident, trend or transaction? This type of supporting information can be crucial when building and, if need be, defending a company's methodology and timeline (see below).
Along these same lines, in-house counsel will be approached by the business on any number of issues. Regardless of the issue, the goal is invariably to elicit guidance. This methodology puts in-house counsel in a position to act proactively rather than retroactively when a company is considering one path versus another. And while this may also require in-house counsel to give unpopular and/or unwanted recommendations, it is a necessary and critical function for any in-house practitioner. It is also important to remember that the long-term effects inherent in this type of proactive counseling can provide innumerable benefits to a company.
While a company's business information may not generally make its way to outside counsel unless and until there is a formal claim, inquiry or investigation, a company may benefit from an analysis similar to one described above and undertaken by its outside counsel. Despite the fact that outside counsel have limited access and visibility to information within a company, in-house counsel would be remiss if they did not attempt to leverage the most unique attribute its outside counsel can offer: a different perspective.
Just as in-house counsel have a unique perspective into a business, so too do those performing legal functions from the outside. In order to maximize this attribute and derive the most value from the in-house/outside partnership, outside counsel should not be tentative in questioning information received from a client/company. If information seems incomplete or inaccurate, ask the follow-up questions and bring closure or completeness to the concern. The follow-up may lend itself to the discovery of an issue previously unnoticed by the business.
Remember: Response time matters.
In the face of noncompliance and/or reporting obligations the questions regarding who knew what, when they knew it, and what they did about it (if anything) will take center stage. This will likely be true irrespective of the level or existence of in-house or outside involvement.
Inherent in the timeline analysis will be an examination into many facets of a company's business structure. A primary consideration will likely present itself in the form of analyzing a company's methodology in resolving or reporting an issue, which will inevitably include an examination of who was involved in any aspect of the issue in question. In other words, were the appropriate entities or persons within a company properly engaged—including that of legal counsel—in driving the issue to resolution?
The examinations will likely call into question the veracity of any work, data and analysis (or lack thereof) relied upon when assessing an issue. This makes it essential for any direction and/or counsel to be provided in response to a thorough and complete understanding of all of the issue(s). (See ask the hard questions, above.) Invariably, the time a company took to acknowledge and/or address an issue will be scrutinized. This is a potentially double-edged examination. Not reacting soon enough may increase the risks to a company. At the same time, doing too much too soon absent a thorough and deliberate methodology may present the same or additional risks.
While the scope of new regulatory schemes remains unclear, those serving corporations in a legal function will be well served by relying on the basics and any existing partnerships to serve as solid building blocks going forward. And while much has changed, and is changing, one thing remains the same: the practice of defending corporate clients will continue to be a fluid and continual balancing act.
Amanda J. Sanchez is a Senior Attorney for Deere & Company in Moline, Illinois, who handles product litigation for the company's tractor factories and John Deere Landscapes/LESCO. In addition to her litigation practice, Ms. Sanchez also advises her clients on prelitigation strategies, product safety matters and product related regulatory compliance. She is currently a member of the DRI Young Lawyers Steering Committee, serving as Chair of the Corporate Counsel Subcommittee.