Law departments, pessimism and the spirit of compliance

Jeff Kaplan, guest blogger, takes up the ongoing question “whether a company’s compliance and ethics officer should report administratively to the general counsel. (Informational, as opposed to administrative, reporting to boards by C&E officers is now fairly pervasive.) The critique of such reporting relationships is based, in part, on the perception that corporate counsel – because of their role as the organization’s advocate – often lack the independent spirit that is necessary for optimal compliance efforts.”

Jeff continues: “Undoubtedly this is the case in some companies. However, a fair accounting of what is entailed by the spirit of compliance should also include pessimism – a quality of thinking that in many areas of work (and life) can hinder success but which can in fact be essential to effectiveness for lawyers.

A strong connection between pessimism and success in the legal profession has been documented in research conducted by Prof. Martin Seligman of the University of Pennsylvania. Indeed, the tie is readily understandable: in identifying and helping clients avoid pitfalls in negotiations, litigation and a variety of other traditional legal practice settings, a pessimistic cast of mind can be invaluable. By the same token, in compliance-and-ethics related work (not yet a traditional legal practice setting, but becoming one), pessimism can be key to identifying and sufficiently mitigating the risks of unlawful or illegal conduct.

“[T]he spirit which is not too sure that it is right” – not the same thing as pessimism, but reasonably close – is how Judge Learned Hand once famously described the spirit of liberty. It is also not a bad way to describe the spirit of compliance (although there is more to the picture than that.) Of course, by itself this way of viewing corporate compliance does not answer the question for any particular company of whether the compliance-and-ethics officer should report to the general counsel. But it does suggest that a lawyer’s general habits of mind – in addition to her knowledge of particular areas of law – should play a significant role in a company’s compliance program.

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