Law Department Management

A narrow legal view or a more enlightened ethical view by in-house lawyers

By co-author Linda DiSantis,

In his book, Profit with Honor, Daniel Yankelovich argues that corporations must be on the forefront of addressing key issues – including the need for sustainable development, climate change, and energy independence. He argues that the assumption that government or educational and religious institutions can and will address these issues alone is unrealistic. He makes a compelling case for what he labels “stewardship ethics” and how it will be the next stage of market capitalism.

He also argues that companies cannot simply rely on the “law” as the means to achieve this goal. He calls the law a “blunt instrument” and states that if you want results you need to give people a basis for trust and inspire them with an ethical vision.

What is the role of in-house counsel in the development and implementation of such a vision? You need to ask yourself as the company’s lawyer, do you provide guidance that leads the company to think in narrow terms of “legal compliance” or do you assist the company’s management in envisioning a broader, ethical approach? For example, if you were asked to advise your organization on how to deal with possible sweat shop conditions by your suppliers, do you approach it from with a lawyer’s view that we must focus on how to comply with the law of the country in which our suppliers operate, or do you take the opportunity to argue for a more inspired view that takes into account the living conditions of the workers and how your organization can help improve those conditions?

You can argue that your role is “only to be the lawyer” because all you are required to do is ensure your client has the right advice on complying with the “law.” Or you can view your role more broadly to encompass what it takes for a company (your client) to become and remain a compliant and ethical company and promote the view that without some inspiration, you are likely to be dealing with same legal compliance issues over and over. If your employees are not be led by an inspired vision of the role of corporations in addressing the needs of society in our increasingly complex (and smaller and flatter) world, it is likely that your company will be dealing with the “blunt instrument” of the law repeatedly.

Climate change and in-house counsel (Linda DiSantis, EthicsLINC)

By co-blogger Linda DiSantis: As an attorney for a corporation, you may be facing questions relating to what the company ought to do about the issue of climate change. In the Sept. 14, 2007 Wall Street Journal, Jeffrey Immelt, CEO of GE, is profiled regarding his push to change GE by responding to global warming and seeking business opportunities through his “eco-imagination” program. One of Mr. Immelt’s initiatives, in response to shareholder pressure, was to inventory the company’s carbon emissions. He put Steve Ramsey, the company’s chief regulatory attorney, in charge of this process. The WSJ reports that Mr. Ramsey was a “skeptic” of the push by the CEO, and although he was a former EPA lawyer, apparently had not yet bought into the notion that climate change was real issue. Another interesting push by Mr. Immelt is to encourage the federal government to begin to regulate carbon emissions, stating that he believed it was better to be part of the conversation rather than reacting to whatever the government might do on its own. He had managed to convince a number of other CEOs to join him in this effort.

As a general counsel or in house regulatory lawyer who spends time sparring with regulators, all this attention to cooperation and innovation related to carbon and climate change might strike you as a bad idea. In my experience as in-house environmental attorney who on occasion tried to deal with government regulators in an innovative way, I found that the end result of that process was often disappointing – that the government always wanted to preserve its “big stick,” and could not bring itself to trust industry to “do the right thing.” In these days of remarkable change in how companies are stepping up to their global responsibilities, it will be important for attorneys to understand the pitfalls (as we always do well), but also embrace the opportunity for innovation and a new approach that might bring real opportunity to our companies.

When does a compliance review make sense?

This blog welcomes Linda DiSantis, of EthicsLINC, who will contribute posts from time to time on compliance-related topics. Below is Linda’s first post.

As an attorney for a thriving company, when should you consider whether your company needs a review of its compliance efforts? Sometimes, it’s easy -- your company operates in a regulated industry or has encountered compliance and/or ethics issues that have landed it in trouble with the government, shareholders, employees or other stakeholders. But how about everybody else?

Consider six business changes that might trigger the need for a review of compliance efforts: (1) Companies moving into international markets for the first time. Do your employees and contractors know the rules regarding doing business with government officials under the U.S. Foreign Corrupt Practices Act and similar laws in other countries? What about customs, privacy, banking and human resources issues with operations overseas? (2) Companies rapidly increasing the number of employees. Do you have good employment practices in place as you add more supervisory personnel and lessen your ability to manage your employees directly? (3) Companies moving into a new line of business. Are there regulations that you have previously not had to deal with? Are there issues with regulated materials that your company has not handled before, like pharmaceuticals, dangerous goods, or food products? (4) Companies going public. Have you established guidelines to address insider trading? (5) Companies considering acquiring or merging with another company. What are the specific compliance issues raised by that acquisition or merger? (6) Companies developing new markets or creating new business development strategies. Are there antitrust issues? Or issues with government contracting?

These examples are just a few areas of legal compliance process development that may need to be explored as your company grows and changes. Although it is easy to say, “I can’t afford to spend money on a compliance program right now,” you need to consider whether you can afford not to.