The 2019 report of the Hampton-Alexander Review was published on 13 November 2019. This is the fourth annual publication of the UK government-backed initiative to improve gender diversity and balance in FTSE leadership. The report highlights two important facts.
Company policies are a foundational element of any compliance programme. They set out the principles and standards of behaviour expected of employees and are designed to ensure the organisation’s compliance with all relevant laws and regulations. However, are your policies a valuable and practical aid to employees that promote understanding and drive compliance in the workplace or are they just a box-ticking exercise, used primarily as a defensive “I told you so” after wrongdoing has occurred?
I would suggest asking yourself a few simple questions to help you decide where your policies sit on the spectrum of “proactive guide to employee behaviour” to “defensive artefact in the face of wrongdoing”.
Practical Law has published a report on the results of its compliance training survey.
Many thanks to all those who responded to the survey questions and to those who contributed to the report, particularly our survey panel. Two-thirds (62.9%) of respondents were in-house lawyers, or compliance officers, or both. Almost half (45.5%) were themselves responsible for creating/commissioning or delivering training on risk & compliance topics.
We hope that the detailed data allow you to benchmark your own organisation’s compliance training programme and consider whether any changes need to be made.
For me, the data overall suggest three areas where there seems to be dissonance between standard practice and what might be considered ‘best’ practice.
Our last quarterly horizon scan drew attention to the need to gear up for a no-deal Brexit. That prospect reduced in likelihood somewhat after Prime Minister Boris Johnson’s renegotiated withdrawal agreement seemed to be making its way through parliament. The political process, however, has been temporarily paralysed once more pending the outcome of the general election on Thursday 12 December. The UK may still depart the EU, with or without a deal, on 31 January 2020. Meanwhile, a Labour-led administration of any kind may lead to a second referendum and a possible no Brexit outcome. Continue reading →
The EU General Data Protection Regulation (GDPR) is eighteen months old today but, as seasoned practitioners will know, data protection law has been around for several decades.
What the GDPR has done is put a strict obligation on all controllers to demonstrate that they comply with the law. The GDPR refers to this as the accountability principle in Article 5 (2) but there is no detailed explanation of what this means on the face of the law itself. In practice, it amounts to an organisation putting in place a governance framework which sets out how the organisation meets its responsibilities under the law. What this looks like will differ for different organisations. Continue reading →
In addition to the general election on 12 December 2019, this month in-house lawyers should also be keeping an eye on developments in corporate governance and climate change reporting, data protection and cyber security.
Thomson Reuters hosted its second Legal and Technology Procurement Conference last week. Here are some key takeaways from a panel session on how lawyers can overcome the challenges of digital disruption and adoption.
Understand the problem you are trying to solve
Writing a detailed problem statement is a vital first step. You need to focus on the problem that you are trying to solve and think about what the technology would really be used for. For example, if you are interested in cutting down email traffic, consider introducing collaborative tools like Slack and Microsoft Teams. If you want to reduce the number of copies of documents in the team or if version control is an issue, Google Docs may be a solution. Although panellists were broadly positive about these products, they acknowledged the difficulties of getting panel firms to adopt and use them.
In-house solicitors will be familiar with the obligations of directors as set out in section 172 of the Companies Act 2006 (especially now there is a statutory requirement to report on it). Many of those same solicitors will be equally familiar with directors (newly appointed or otherwise) who believe that they have a legal obligation to maximise profit for the shareholders, and that this constitutes an ‘overriding duty’ or a director’s main ‘fiduciary duty’.
This fallacy persists for a number of reasons, including:
• Pressure from heavyweight shareholders who benefit most from short-termist decision making.
• Bonus and other reward packages.
• An easy metric that everyone understands.
• Fear of competitors.
However, the legal obligation in section 172 of the Companies Act 2006 is far more nuanced and provides a clear set of criteria which many directors may be surprised by. Now is an excellent time to revisit the fallacy of a legal obligation to maximise profit. We are in an age where environmental and social governance issues are rocketing up the corporate agenda and climate crisis is threatening both short and long-term stability. Section 172 speaks directly to those concerns.
When faced with a whistleblower disclosure, there is plenty to keep GCs up at night, from ensuring that the report is properly investigated to preventing reprisals. But it has become increasingly clear that whistleblowers play an invaluable role in ensuring corporate compliance and that, for the good of the organisation, whistleblowing should be made as easy and effective as possible. Nearly half of the respondents to Kroll’s 2017/18 Global Fraud and Risk report indicated that whistleblowers uncovered instances of fraud within their organisations.
In the area of whistleblowing, as elsewhere, legal departments face the daunting task of reducing costs while managing increasing legal complexity. Meeting this challenge requires clarifying how the legal team fits into the whistleblowing process, as well as fostering a culture that encourages people to speak up. Understanding the changes that technology is bringing to whistleblowing is a critical step in ensuring that an organisation’s whistleblowing procedures are up to scratch.
Legal Geek once again provided plenty of food for thought for in-house lawyers. To my mind, this year’s key themes centred around innovation, collaboration and client-focus.
Empathetic lawyers; not robot lawyers
“Behave like a robot and you will be replaced by one. Work like a robot and you should be replaced by one.”
This quote, and the same speaker’s advice to “get into the soul of the client” was a recurring topic of discussion during the day. Although efficiency tools will gain traction, lawyers can still thrive by focusing their efforts on establishing deep, personal knowledge of their client. Lawyers should be encouraged to listen, be empathetic and provide intricate, tailored, strategic solutions for their client. From an in-house perspective, this means focusing on the end users of your advice: your colleagues.