Courtesy of Ann Longmore, I spotted a recent report of the 2012 European General Counsel forum held in London last month and hosted by Consero Group. The three most pressing issues for European in-house lawyers identified by that forum were set out in Law.com by Paul Mandell:
- The Deferred Prosecution Agreement
- The Unofficial Staff of European Regulators
- Being Trivialized
Whilst they are the product of a different focus group, it struck me that the first two challenges are equally topical for board members and that the third (although perhaps a softer issue) might nevertheless benefit from being highlighted to board members. Perhaps all good topics for further debate?
1. The Deferred Prosecution Agreement
Mandell observes, correctly I believe, that deferred prosecution agreements are making their way to Europe from the U.S. (by way of the U.K.). Indeed this was the subject of an earlier post by me, US-Style Corporate Plea Bargains “Imminent” in UK. The same UK coverage issues I discussed there would apply to European firms:
- At what point does an investigation as a result of self-reporting result in a “claim” as defined under the policy and what are the implications of this?
- If payments are made to prevent a claim in the form of a criminal prosecution being brought, would such payments constitute loss under the policy?
- Would the relevant fines and penalties be insurable?
- To what extent might the insured v insured exclusion come into play?
- Is there a risk that individual directors will be tainted with the stain of having been involved in wrongdoing without the opportunity to clear their names by an acquittal as opposed to an admission and, if so, what (if anything) can the insurance do about this?
2. The Unofficial Staff of European Regulators
The U.K. Bribery Act and U.S. Foreign Corrupt Practices Act not only expand anti-corruption enforcement, writes Mandell, but incentivizes companies to gain a competitive edge by tipping off regulators to each other’s wrongdoing. “The result,” he writes, “is a millions-strong informal investigative staff.”
This is particularly significant at a time when investigative and regulatory authorities are having their budgets squeezed and cut in the same way as everyone else during times of economic hardship. Also it is worth remembering that it is not just companies which are incentivized but also individuals under bounty schemes such as that which operates in respect of the U.S. Dodd-Frank Act.
3. Being Trivialized
Mandell notes that, unlike general counsels based in the U.S., those in Europe enjoy less influence in their companies’ corporate suites.
I wonder if this is still as true as it was. My impression is that General Counsel, certainly in the UK, are now more integrated into the activity and decision making of main boards than ever before. I suspect this is a function of a generally heightened awareness of (and focus on) risk as much as a change in the litigation landscape as such.