February 22, 2017 | 11:30 AM – 1:30 PM
John C. Albrighton, Jim Durham, Jill Himelfarb, John R. Neidecker and Stacy Rowe
We should know by now that it’s not about your attorneys or your firm; it’s about your clients! As clients have increased their demands and expectations of law firms, the one-size-fits-all client experience has become obsolete. Clients have become catalysts for greater changes in the legal industry and to stay competitive, it’s imperative that firms have a strategic, tailored approach to client engagement and service.
Three Chicago-based legal marketing leaders and a well known consultant and former CMO will candidly share their experiences implementing “client-centric” business development initiatives. Our panelists will share their perspectives on the following topics and how they relate to their current client experience management (CEM) strategies:
- Where Marketing & Business Development Meet – Developing Marketing Strategies that Support Business Development
- Teams and Resources – Aligning both to support CEM Strategies
- Revenue Generation – Evaluating Opportunities and Developing Pursuit Strategies
- Cross-Selling – Overcoming Barriers and Fostering Success
- Business Intelligence + Client Feedback – Using Information to Drive Action
In a nutshell, “client experience management” describes the process by which firms attract and retain a greater number of clients by validating business strategy and improving the value brought to individual clients and prospective clients through services rendered, relationships and targeted and optimized engagement.
Neal, Gerber & Eisenberg LLP
2 N. LaSalle Street
Chicago, IL 60602
Lunch will be provided.
$40 LMA Members
$60 Non-Members and any registrations after February 20th
Note: You must be logged in to the LMA website to receive the member rate.
President Donald Trump has nominated R. Alexander Acosta to be Secretary of Labor. His nomination comes one day after Andrew Puzder, Trump’s first pick to lead the Department of Labor, withdrew his nomination.
Acosta, currently the Dean of Florida International University’s law school, is the son of Cuban immigrants. If confirmed, Acosta would be the first Hispanic member of Trump’s Cabinet.
Acosta is a graduate of Harvard College and Harvard Law School. He clerked for Justice Samuel A. Alito, Jr. when Alito was a Judge on the U.S. Court of Appeals for the Third Circuit, in Philadelphia. Acosta then went into private practice at the Washington, D.C. law firm Kirkland & Ellis and taught law at the George Mason School of Law.
Acosta has been confirmed by the Senate three times — to become a National Labor Relations Board member, then to become Assistant Attorney General for the Civil Rights Division of the U.S. Department of Justice, and finally when he was nominated to be U.S. Attorney for the Southern District of Florida.
He was appointed by President George W. Bush as member of the National Labor Relations Board, and served as a Board member from December 17, 2002, through August 21, 2003. Acosta reportedly authored approximately 125 opinions during his tenure on the Board.
Thereafter, Acosta served as Assistant Attorney General for the Department of Justice’s Civil Rights Division under President George W. Bush until June 2005. He later was appointed U.S. Attorney for Southern District of Florida, where he served until becoming the Dean of FIU Law in 2009.
What used to work in SEO just a few years ago won’t work today. Learn how to make this year your most profitable ever by getting consistent leads from SEO and positioning your firm as thought leaders.
- Step-by-step actions you should take in the next 12 months to substantially increase your revenues.
- Powerful strategies that are based on the 10,000 keyword study from Searchmetrics, including the latest Google ranking factors including Content, Social Signals, Technical Factors, Backlinks, User Signals, and User Experience
- Highlights from the Orbit Media study of 1,000 bloggers and what they do to stand out.
Some examples of cutting-edge topics we’ll be discussing (this is way more than just “add keywords” and “add more content”):
- Why click-through-rate, time-on-site, and bounce rate are more important than ever
- Why merely having keywords in your meta tags and copy is not nearly enough
- How the length of your content can affect your search rankings
- How video and podcasts can enhance your thought leadership and improve your mobile user experience and search rankings at the same time
- Why links are still significant, especially deep links to inner pages
- The extremely high correlation between social signals and ranking position
- How your website load time can directly affect your search rankings, especially on mobile devices
This webinar will leave you with 12 must-do action steps for success, based on data from industry leaders, as well as a list of ridiculously great tools you can use to speed up your process and spy on competitors.
In today’s hyper-competitive legal SEO landscape, your either need to do SEO deeply or don’t waste time doing it at all.
The International Organisation of Securities Commissions (IOSCO) has released a new report that says that changes resulting from FinTech are testing the boundaries of full disintermediation through the use of technology. IOSCO is the international body that brings together the world’s securities regulators and is a global standard setter for the securities sector. IOSCO develops, implements and promotes adherence to internationally recognised standards for securities regulation. It works with the G20 and the Financial Stability Board on the global regulatory reform agenda.
The report incorporates the finding of three surveys:
the Committee on Emerging Risks (CER) and the Growth and Emerging Markets Committee (GEMC) survey to gain further insight on the types of FinTech firms in respective jurisdictions, key regulatory actions taken by members, and the practices of FinTech firms in onboarding investors;
the CER, the Affiliate Members Consultative Committee, and World Federation of Exchanges survey on distributed ledger technology; and
a GEMC survey reviewing the state of development of FinTech in emerging markets, including existing and potential regulatory implications.
The report particularly examines:
Financing Platforms, including Peer-to-Peer (P2P) lending and equity crowdfunding (ECF)
Retail Trading and Investment Platforms, including robo-advisers and social trading and investing platforms
Institutional Trading Platforms, with a specific focus on innovation in bond trading platforms
Distributed Ledger Technologies (DLT), including application of the blockchain technology and shared ledgers to the securities markets.
Copyright 2017 K & L Gates
The Department of State’s (DOS) March 2017 Visa Bulletin showed some minor movement in some employment-based categories, with more significant movement in other employment-based visa categories.
The Worldwide EB-1 category remains current for all categories, including individuals born in mainland China, El Salvador, Guatemala, Honduras, India, Mexico, and the Philippines.
The cutoff date for worldwide chargeability in the EB-2 category is current but for mainland China and India. There was significant movement for mainland China in the EB-2 category which moved from July 15, 2012 to Dec. 15, 2012, and for India, which moved from Nov. 1, 2007 to June 1, 2008.
In the EB-3 category, the cutoff date for worldwide chargeability, as well as El Salvador, Guatemala, Honduras, and Mexico moved five months from July 1, 2016 to Dec. 1, 2016. The cutoff dates for mainland China and the Philippines both had significant movement, with nearly eleven months for both, with China advancing from April 15, 2013 to March 15, 2014, and the Philippines advancing from April 1, 2011 to March 15, 2012.
For those in the EB-5 category, the priority date remains current for all applicants other than those born in mainland China, which moved its cutoff date by almost two months from March 8, 2014 to May 1, 2014.
For those seeking to adjust status, The United States Citizenship and Immigration Service (USCIS) website indicates that the Department’s Application Final Action Dates chart must be used for filing Form I-485. This has not yet been updated with the March 2017 dates; however, we anticipate that USCIS will continue to follow Application Final Action Dates for March as well.
Final Action Dates for Employment-Based Preference Cases
Dates for Filing of Employment-Based Visa Applications
The Federal Trade Commission’s (FTC’s) Settlement in FTC v. Vizio, Inc.may signal the direction that agency is heading on Internet of Things (IoT) enforcement. With veteran FTC enforcer Jessica Rich leaving and new appointee Maureen Ohlhausen taking over, Ohlhausen’s separate concurring statement in that matter is insightful.
The settlement took a broad view on the types of data that require protection. While the “Covered Information” included information like personal identifiers, IP address, and geolocation, it also included “Viewing Data,” which is essentially data about the content viewed on a television. Ohlhausen criticized this expansion and the FTC’s foray into this public policy basis for alleging an unfair practice. She notes, “But here, for the first time, the FTC has alleged in a complaint that individualized television viewing activity falls within the definition of sensitive information.” Hinting that this broad view of personal data may not continue, Ohlhausen writes, “There may be good policy reasons to consider such information sensitive…. But, under our statute, we cannot find a practice unfair based primarily on public policy. Instead, we must determine whether the practice causes substantial injury that is not reasonably avoidable by the consumer and is not outweighed by benefits to competition or consumers.” She then promises that “[i]n the coming weeks I will launch an effort to examine this important issue further.”
At the moment, English law says that insurers and reinsurers are not under a positive duty to pay valid claims within a reasonable time. If an insurer/reinsurer delays in paying a claim, or fails to pay at all, an insured/reinsured can only claim the sums due under the policy and interest. An insured/reinsured cannot claim damages for late payment if it suffers additional losses by reason of a delay.
That position will change after 4 May 2017 when certain parts of the Enterprise Act 2016 introduce a new section 13A into the Insurance Act 2015.
The result of the new legislation is that any insurance/reinsurance (including retrocession) policy issued or renewed after 4 May 2017, and which is subject to English law, will contain an implied term that requires an insurer/reinsurer to pay claims within a reasonable period. If they act in breach of such a term, then they are potentially liable to pay contractual damages to the insured/reinsured as well as due under the policy and interest.
Going forward there is likely to be debate about what constitutes “reasonable time,” but it will include giving time to an insurers/reinsurer to investigate and assess the claim. And what is “reasonable” will turn on issues such as the type of insurance in question, the size and complexity of the claim, compliance with relevant statutory and regulatory rules/guidance and factors outside an insurer/reinsurer’s control.
The new legislation also provides a defence to an insurers/reinsurer and they will not be in breach of the implied term if they can prove that they have reasonable grounds for not paying the claim. The manner in which the claim is handled will therefore be a factor in determining whether there has been a breach of the implied term.
An insured/reinsured must issue the court claim for damages within one year of the date that the insurer/reinsurer pays all sums due under the insurance contract. This introduces a new limitation period for legal claims under English law.
Insurers and reinsurers should note that it will be possible to contract out of the new provisions provided they do so in a transparent manner and draws this to the insured’s attention before the policy is entered into.
Whilst on the face of it this is all good news for insureds, insurers can take comfort from the fact that claims for breach of the implied term will not be straightforward and may not therefore be widespread. In particular, insureds/reinsureds will still have to satisfy the Court on issues such as causation, remoteness and mitigation before a claim can succeed. And insurers/reinsurers will only be liable for foreseeable losses suffered by their insureds/reinsureds.
Going forward, practical steps to be taken by insurers include responding promptly to an insured’s request for claims’ information, continuing to carefully document the claims process and to consider making interim payments to an insured if appropriate. These will significantly improve the chances of an insurer/reinsurer successfully defending any legal actions taken by insureds/reinsured alleging a failure to pay a claim within a reasonable time and claiming damages.
© Copyright 2017 Squire Patton Boggs (US) LLP
Reuters reports Gander Mountain, the St. Paul based hunting and fishing chain, is preparing to file for bankruptcy. The bankruptcy is reportedly due to aggressive expansion that failed to draw new customers. Gander Mountain is known as America’s firearms superstore.
Gander has faced stiff competition from Bass Pro Shops, Cabela’s, and Dick’s Sporting Goods.
Currently, Gander Mountain has about 160 stores, with about 60 new stores opened or announced since 2012. According to Reuters, the company has a $30 million loan and revolving credit lines for $25 million and $500 million.
If Gander Mountain files, it will be the fifth outdoor retailer to file for bankruptcy in the last year. Others include Sports Chalet, Sports Authority, EMS, and Eastern Outfitters.
COPYRIGHT © 2017, STARK & STARK
Last week, the United States Supreme Court informed litigants in Epic Systems Corp. v. Lewis that it is pushing the case to its October 2017 term. The lawsuit, which rose up through the Western District of Wisconsin and the Seventh Circuit, presents the High Court with a chance to resolve a robust circuit split on the question whether mandatory arbitration clauses in employment contracts may contain class action waivers without running afoul of the National Labor Relations Act (NLRA). Last spring, the Seventh Circuit ruled that such clauses were unenforceable, deviating from rulings by the Second, Fifth, and Eighth Circuits, and prompting the Supreme Court to grant certiorari on January 13, 2017.
The resolution of the issue turns on whether NLRA Section 7’s (29 U.S.C. § 157) protection of employees’ right to engage in “concerted activities” qualifies as a “contrary congressional command” (under CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012)) sufficient to override the Federal Arbitration Act’s (FAA) presumption that arbitration agreements are enforceable as written. The National Labor Relations Board (NLRB) has taken the position for years that class action waivers in employment agreements are unenforceable under the NLRA. See D.R. Horton, Inc., 357 N.L.R.B. 2277, 2289 (2012). In Lewis, Judge Barbara Crabb of the Western District of Wisconsin followed the NLRB’s interpretation, based on Supreme Court precedent directing courts to give “considerable deference” to the agency’s interpretations of the NLRA. Lewis, No. 15-cv-82-bbc, 2015 U.S. Dist. LEXIS 121137, at *4 (W.D. Wis. Sept. 11, 2015) (quoting ABF Freight System, Inc. v. NLRB, 510 U.S. 317, 324 (1994)).
On appeal, the Seventh Circuit ruled that such class action waivers were “illegal” under the NLRA, making them unenforceable because the FAA contains a “savings clause” that allows courts to refuse to recognize arbitration agreements on grounds sufficient “for the revocation of any contract.” Lewis, 823 F.3d 1147, 1159 (7th Cir. 2016) (quoting 9 U.S.C. § 2). The Seventh Circuit acknowledged that its decision departed from precedents in its sister circuits but dismissed their reasoning. Following Lewis, a divided Ninth Circuit panel joined the Seventh Circuit, deepening the circuit split and teeing the issue up for Supreme Court review.
Because the case has now been deferred until next term, President Trump’s recent nomination of Judge Neil Gorsuch leads inquisitive minds to wonder about his jurisprudence on the FAA. With the Supreme Court’s present four-to-four ideological split, Judge Gorsuch’s vote may well decide the case. The 10th Circuit has not weighed in on the enforceability of class action waivers in employment agreements, but Judge Gorsuch’s opinions on the FAA demonstrate a commitment to enforcing its preference for arbitration.
Just a few weeks ago, in Ragab v. Howard, 841 F.3d 1134 (10th Cir. 2016), Judge Gorsuch penned a dissent from a panel decision that affirmed denial of a motion to compel arbitration. The parties in Ragab agreed to six business contracts with one another, each containing a separate (and contradictory) mandatory arbitration provision, which led the panel to rule that the parties failed to reach agreement on the essential terms regarding arbitration. In his dissent, Judge Gorsuch opined that the parties’ verbal cacophony regarding the procedural details of arbitration did not override their clear intention to arbitrate. His dissent identified two “workarounds” to save the arbitration agreements and alluded to the preemptive force of the FAA over state law. Id. at 1139, 1141. And, in Sanchez v. Nitro-Lift Techs., L.L.C., 762 F.3d 1139 (10th Cir. 2014), Judge Gorsuch joined an opinion requiring three former employees to arbitrate their wage claims against their employer, despite ambiguity in the parties’ arbitration agreement, based on the “liberal federal policy favoring arbitration.” Id. at 1145, 1147-48.
Furthermore, Judge Gorsuch has expressed deep skepticism regarding deference to administrative agencies. Back in August, he authored not one but two opinions in a case called Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016). In his opinion for the court, Judge Gorsuch ruled that the Board of Immigration Appeals could not apply a new administrative rule retroactively. Id. at 1148. Then, in a separate concurring opinion, he called on the Supreme Court to reconsider the doctrine of Chevron deference to administrative agencies, calling the precedent a “behemoth” of administrative law that was “more than a little difficult to square with the Constitution of the framers’ design.” Id. at 1149. This suggests that the NLRB’s anti-class waiver position may not carry much deferential heft with Judge Gorsuch.
So, while it appears that employers across the country will need to hold tight for a few months longer to see whether the class action waivers in their employment agreements hold water, the wait could be worthwhile for those looking to avoid class adjudication.
© 2017 Foley & Lardner LLP
Enforcement activity under the Obama administration often made headlines for the eye-popping level of fines, with the Foreign Corrupt Practices Act (FCPA), Anti-Money Laundering (AML) regulations, and economic sanctions maintained by the Office of Foreign Assets Control (OFAC) leading the way. The U.S. Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), and the U.S. Securities and Exchange Commission (SEC) devoted substantial resources to criminal enforcement of these regulations, including through their application to non-U.S. companies operating outside the United States.
To avoid becoming enmeshed in this vigorous enforcement environment, most multinational companies have implemented enhanced regulatory risk management and compliance programs. Under a new Clinton administration, the continuation of the enforcement environment likely would have been a given, but that assumption ended when President Trump secured the 270th electoral vote. So with a new administration coming to town, a number of questions arise in the white collar world, including:
What is the future of white collar enforcement over the next four years?
Will the aggressive enforcement activity under the Obama administration continue or even grow?
Will the U.S. government continue to emphasize enforcement of activities abroad, including against non-U.S. companies and for conduct occurring outside the United States?
Or will the new administration mark a change in the enforcement priorities of the U.S. government?
To help deal with the open questions regarding enforcement activity in the Trump Administration, this client alert presents the “top ten” questions every company potentially subject to U.S. jurisdiction should be thinking about. Previously issued client alerts discussed the future of national security (CFIUS) reviews,1 NAFTA,2 U.S. Customs,3 and international trade litigation4 (antidumping and countervailing duty measures and so forth) under the Trump administration; future client alerts will deal comprehensively with all international trade and regulatory areas where significant change could occur under the new administration.
The Top Ten White Collar Enforcement Questions Answered (or, Will the New Administration Enforce with Force?)
1. What has President Trump promised?
Although President Trump has generally assailed government activity that stands in the way of the operation of business (including with regard to the FCPA, as discussed below), there is little to indicate President Trump’s views on white collar law enforcement. Nonetheless, there are numerous reasons to believe the Trump administration will continue to aggressively enforce what are commonly known as white collar crimes. The trend has been to enforce these crimes more aggressively under both Republican (George W. Bush) and Democratic (Obama) administrations. There is now an institutional apparatus to handle white collar enforcement, including dedicated FBI investigation resources, the creation of avenues to share information with foreign governments on white collar matters, established procedures to handle the large amount of data often generated by these cases, and increased hiring to support white collar enforcement (both through the addition of attorneys and the assignment of additional FBI agents) at the DOJ and dedicated personnel at other agencies (such as the SEC) that investigate these matters. And the regulatory agencies have established conduits to share information and coordinate potentially criminal matters.
The results show up in the numbers: enforcement of the FCPA has resulted in the collection of $4 billion in penalties over the course of the Obama administration, and OFAC/AML enforcement is well over $10 billion. This vast apparatus to handle white collar matters is not going away.
2. What impact would the appointment of Senator Sessions as attorney general have on white collar enforcement?
The DOJ is much more than a top-down organization that precisely mirrors changes in administration and the views of the current attorney general. Only a few persons are politically appointed; most of the DOJ consists of career prosecutors and agents. Thus, there is a certain institutional inertia that transcends changes at the political level. The long-term trend of increasing enforcement activity has been fostered and implemented as much at the lower level as it has been a top-down initiative, and it has institutional reasons to continue.
Nonetheless, the attorney general exercises a great deal of discretion regarding what cases are brought, where the DOJ focuses its enforcement attention, how the laws are interpreted, and how they are settled. With Senator Sessions surviving a hard-fought confirmation process to become Attorney General, the high degree of attention currently being paid to white collar matters likely will continue. Senator Sessions has nearly two decades of experience as a prosecutor in Alabama, both on the federal level (as an assistant U.S. attorney and then the U.S attorney for the Southern District of Alabama for 14 years) and state level (Alabama attorney general for two years). In his role as a federal prosecutor, Senator Sessions prosecuted savings and loan fraud, which was a major enforcement area during Mr. Sessions’ time as a federal prosecutor. In a 2002 Judiciary Committee hearing, Senator Sessions stated his view that vigorous enforcement of the savings and loan fraud cases during his time as a prosecutor led to “a lot better behavior in banking today” because, in his view, “[h]arsh sentencing does deter.”
These statements show an appreciation for the deterrent value of prosecuting white collar crime and a willingness to use prosecutions to send a message of compliance. Companies and corporate executives should not expect any lessening of the enforcement attention applied by the U.S. government under a prospective Attorney General Sessions.
Additional support for the continuation of the aggressive enforcement of white collar crimes is provided by the nomination of U.S. attorney Rod Rosenstein as the deputy attorney general (the second-highest position in the DOJ). Mr. Rosenstein is the longest-serving U.S. attorney. Appointing the only holdover U.S. attorney from the George W. Bush administration. As the person responsible for the day-to-day operation of the 113,000 employee DOJ shows support for continuity at the DOJ, both in terms of its operations and its enforcement priorities, especially since the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives will report directly to him.
3. What are the likely areas where we would see enforcement attention in a Sessions-led DOJ?
Predicting enforcement activity can be difficult, because events can have a large say in how the DOJ operates. When Attorney General Ashcroft was appointed in the George W. Bush administration, he came into an administration that was believed to have a pro-business tilt. There was little expectation that white collar enforcement activity would become a priority. But financial scandals and revelations of bribery led to a large ramp-up of government enforcement activity, culminating in the investigation of Siemens and the assessment of a record FCPA penalty. FCPA enforcement has been strong ever since.
Against this backdrop, we predict the following areas will see significant enforcement activity over the next four years:
FCPA. President Trump has expressed skepticism regarding the FCPA and international antibribery enforcement, such as in a 2012 interview with CNBC, where President Trump stated that “this country is absolutely crazy” to prosecute alleged FCPA violations in places where corruption is common because it puts U.S. business at a “huge disadvantage.” President Trump concluded that the FCPA is a “horrible law and it should be changed.”6
Despite these criticisms of the FCPA, it is unlikely that strong enforcement of the FCPA is going to go away. Senator Sessions has shown general support for the value of antibribery laws, having co-sponsored the Public Corruption Prosecution Improvements Act, which would have revised U.S. law to expand prohibitions against bribery, theft of public money, and other government-related public corruption. By all reports, there is a strong pipeline of FCPA investigations at the DOJ and the SEC, and the Trump administration is unlikely to court the bad publicity that would occur if these investigations were quashed or the level of penalties were suddenly to fall. Other countries (often at the urging of the United States) have also drafted new anticorruption laws and stepped up their enforcement of their laws, making anticorruption enforcement more of a worldwide movement. To the extent that the public skepticism of President Trump regarding the FCPA will be realized, it is more likely to take the form of congressional amendments to the FCPA, such as the inclusion of an affirmative defense based on the existence of an effective compliance program. (Predictions regarding FCPA enforcement will be covered in a future client alert.)
Export Controls. One of the hallmarks of the Trump campaign rhetoric was an emphasis on enhancing U.S. national security interests. Although export controls were not mentioned specifically, both the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR) are specifically intended to implement national security concerns and have seen significant enforcement activity in recent years. These are goals likely to be supported by Senator Sessions, who in 2003 joined with other senators to support a plan to strengthen export controls on products with military uses.7 It would not be difficult to accomplish a similar result by enforcing the existing export controls in a strong fashion, leading to the prospect of increasingly stringent enforcement activity in the export controls area. (Predictions regarding export controls enforcement will be covered in a future client alert.)
Of particular note, Senator Sessions argued that administration of the dual-use controls (i.e., commercial or dual-use products with potential military uses) should not be overseen by the Department of Commerce because there supposedly is “an inherent conflict of interest in resting the protection of our national security in the hands of a department that is charged with the promotion of U.S. business interests.”8 With the Department of Commerce overseeing the export controls that apply most broadly (the EAR), including the civil (but not the criminal) enforcement of the EAR, Senator Sessions may emphasize the area of criminal enforcement of the export control regulations, in part to combat this perceived conflict in overseeing the most common export control regulations.
Economic Sanctions. Economic sanctions enforcement (along with AML) showed the strongest increase under the Obama administration, with the U.S. government using aggressive theories of jurisdiction as a means of asserting the extra-territorial application of the economic sanctions administered by OFAC. Neither trend is likely to change in the Trump administration. Senator Sessions introduced the Iran Sanctions Loophole Elimination Act, which would have imposed sanctions on any foreign bank that knowingly engaged in certain transactions with the Central Bank of Iran or any entity blacklisted within the shipping, shipbuilding, port operation, or energy sectors.9 Senator Sessions also was in favor of a “Sense of Congress” motion stating that negotiations with Iran would be more likely to succeed if the president were granted the explicit authority to impose new sanctions on Iran. Indeed, Republicans in general have been skeptical of any easing of the economic sanctions against bad actors, opposing efforts to ease the Iranian or Cuban sanctions. This general sympathy towards the robust use of economic sanctions likely will translate to a willingness to enforce the existing laws strongly, including against non-U.S. companies that have engaged in activity with some connection to the United States (such as the use of the U.S. financial system or the conduct of transactions in U.S. dollars). (Other anticipated developments with regard to economic sanctions will be explored in a future “top ten” questions article on the topic.)
Anti-Money Laundering. AML enforcement is likely to remain a priority, as it also is viewed as having terrorism and national security implications. Senator Sessions co-sponsored the Combating Money Laundering and Terrorist Financing Act of 2004, which would have combated money laundering by expanding RICO to cover funds related to illegal activities (embezzlement and fraud in the purchase of securities, illegal money transmission businesses, and so forth). Although the statute was not enacted, it indicates an approval of the aggressive use of the AML laws, a mindset favoring strong AML enforcement.
Cybersecurity. President Trump’s transition website states a plan for the Trump administration to “order an immediate review of all U.S. cyber defenses and vulnerabilities, including critical infrastructure, by a cyber review team of individuals from the military, law enforcement, and the private sector.”10 President Trump also has indicated he will instruct the DOJ to “create Joint Task Forces throughout the U.S. to coordinate Federal, State, and local law enforcement response to cyber threats.”11 Senator Sessions, in turn, supported the Cybersecurity Information Sharing Act of 2015, which would have enabled enhanced sharing of cyber threat information between government and private companies. Based on these positions, increased enforcement attention regarding cybersecurity breaches, and prosecution of same, appears likely. (Further information regarding cybersecurity under the new administration will be covered in a separate “top ten” questions article.)
Financial Fraud. Senator Sessions co-sponsored the SAFE Markets Act in 2009, which authorized the FBI to hire an additional 500 agents to investigate criminal misconduct that relates to U.S. financial markets, as well as an additional 50 assistant United States attorneys.12 Although the legislation was not enacted, it does indicate support for the aggressive use of enforcement resources in this area.
Health Care Fraud. Beyond stating that repealing the Affordable Care Act (Obamacare) would be a priority,13 and stating his general view that the federal government has a lot of “waste,” President Trump did not specifically focus on the issue of health care fraud. Nonetheless, the health care fraud provisions of the Affordable Care Act have a strong chance of being preserved, as it is unlikely that the Trump administration or Congress will want to be perceived as being soft on fraud. While the prioritization of other enforcement areas, such as national security, might divert resources from the issue of health care fraud, we expect that significant resources will continue to be devoted to this area.
4. Will there likely be changes in how the DOJ determines what cases to bring, how they are run, and what evidence is gathered?
Ever since the indictment of Arthur Anderson resulted in the demise of the firm, the perception has been that the DOJ weighs the “collateral consequences” of any indictment. In a 2012 speech, the head of the DOJ’s criminal division, Lanny Breuer, stated that the “collateral consequences of an indictment,” such as potential losses for corporate shareholders, jobs, and the potential to destroy a company factor into decisions by the DOJ in the Obama administration to bring charges.14
This view could well change under a Senator Sessions-led DOJ. In 2010, Senator Sessions questioned whether the DOJ should consider the collateral consequences of a criminal conviction for a corporation, stating that “I was taught if they violated a law, you charge them. If they didn’t violate the law, you don’t charge them.”15 Also, with regard to the DOJ’s investigation into BP over the Deepwater Horizon oil spill, he stated that BP “should be held liable for their responsibilities to the extent of their existence.”16 Both of these statements indicate that Senator Sessions might bring a more law-and-order view of enforcement to the DOJ, with enforcement activity being based solely upon consideration of whether a legal violation has occurred.
With regard to the way in which cases are prosecuted once the DOJ determines to go forward, Senator Sessions supports the aggressive use of electronic surveillance methods in criminal investigations, which could lead to a rolling back of certain electronic surveillance restrictions put in place by the Obama administration, such as the limitations on the bulk gathering of telephone records.
Another change could be to the contentious issue of when the DOJ can pressure companies and people to waive the attorney-client privilege and the attorney work product doctrines. The current approach is that the DOJ can request a waiver, and can consider whether the privileges were waived as an affirmative factor, but cannot punish a company or individual for not waiving privilege. But during a 2015 Senate Judiciary Committee hearing, Senator Sessions argued against this approach, noting that prosecutors regularly pressure street criminals to waive constitutional rights using threats of tougher penalties. Senator Sessions argued that the Justice Department should be able to use similar leverage against corporations, seeking to have them waive privilege in return for more lenient treatment.
5. Will there be changes in how cases are settled?
Potentially yes. The use of Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs) has sharply increased under the Obama administration. DPAs and NPAs are agreements not to prosecute, with the DOJ (and other agencies, such as the SEC) agreeing to settle the cases based upon a recitation of the facts and enumerated conditions of settlement, generally including the payment of a penalty. Although the DOJ seldom used NPAs and DPAs as recently as 2003, the Obama administration has used them to settle a large proportion of its investigation. This is based upon the view, summarized by Assistant Attorney General Lanny Breuer, that DPAs and NPAs are a “powerful tool” because, “in many ways, a DPA has the same punitive, deterrent, and rehabilitative effect as a guilty plea.”17
Senator Sessions has raised concerns about resolving investigations in this fashion. Senator Sessions once stated that the use of NPAs and DPAs “undermine the rule of law by depriving the [DOJ’s] legal arguments of meaningful testing in a judicial forum.”18 While this statement does indicate a skepticism regarding the use of DPAs and NPAs, it remains to be seen whether a different view would prevail if Senator Sessions transitions to attorney general. Our view is that any attorney general overseeing a criminal enforcement division with a large case load and limited resources will always be looking for expeditious ways to bring investigations to a close, including through the use of NPAs and DPAs.
6. What about the False Claims Act (FCA)? Will it continue to show increasing use?
We expect the FCA will continue to be an important area of DOJ attention. The FCA provides a mechanism whereby individuals can file lawsuits regarding claims that persons and companies have defrauded governmental programs. Since the law includes a qui tam provision that allows persons who are not affiliated with the government (relators) to bring cases on behalf of the U.S. government, and to receive a portion of any recovered damages, activity under the FCA largely is driven by private actors bringing cases, with the DOJ becoming involved thereafter. The financial incentives for relators to file such cases are not going away.
One development that could have an impact is the manner in which the Affordable Care Act is amended/repealed, as that act contained amendments to the FCA that enhanced the ability of certain individuals to qualify as relators. The Supreme Court also has shown interest in this area, making the appointment of a new Supreme Court justice to replace Justice Scalia potentially important.
7. Will the recent trend in focusing on individuals continue? What about the Yates memo?
The Yates Memorandum (formally known as the Individual Accountability for Corporate Wrongdoing memorandum19 is the latest of a series of pronouncements regarding the increasing focus of the DOJ on individual liability for corporate crimes. Under the Yates memo approach, corporations cannot qualify for any cooperation credit unless they “provide to the Department all relevant facts relating to the individuals responsible for the misconduct.”20 The Yates memo also has other requirements regarding individuals, including announcing a reluctance to release individuals from liability. All information regarding individuals can then be viewed by the DOJ to determine whether it should focus enforcement attention on individual employees. This focus on individuals both deals with some criticisms of the DOJ for not prosecuting individuals regarding the sub-prime mortgage crisis, and also is consistent with the view stated by Assistant Attorney General Breuer that “the strongest deterrent against corporate crime is the prospect of prison time for individual employees.”21
Senator Sessions is likely to continue this focus on individuals. At a 2002 Judiciary Committee hearing regarding white collar crime, Senator Sessions stated his view that prosecution of individuals is essential for deterrence of criminal activity. As he stated: “I am going to tell you there is a lot better behavior in banking today because people went to jail over those cases in the past. They lost everything they had, their families were embarrassed, and a lot of people started checking to make sure they were doing their banking correctly.”22 Along these lines, in hearings involving white collar issues, Senator Sessions has stated that in cases of serious violations of law, “the crooks in the corporation [should] be sent to jail” and that sentences for white-collar violators “should not be a lot different than [for] somebody who robs a bank.”23 This endorsement of individual responsibility for corporate wrong-doing is consistent with the goals of the Yates memorandum — a point made by Sally Yates herself, who recently stated that “[h]olding individuals accountable for corporate wrongdoing isn’t ideological; it’s good law enforcement.”24
8. Will recent efforts to incentivize whistleblowers continue?
The U.S. government has put in place incentives to report wrongdoing, including in the high-profile area of the FCPA (where the SEC maintains a whistleblower program for publicly traded companies). Senator Sessions appears to approve of such efforts, having stated that “whistleblowers can be a critical part of discovering frauds that may be of a massive nature,” making whistleblower programs “a legitimate part of our enforcement effort.”25 This mindset may lead to support for enhanced whistleblower programs, especially when considered alongside evidence that such programs as the one implemented at the SEC have been successful. (Further information regarding the potential repeal of the Dodd-Frank Act, and its impact on the whistleblower program, will be covered in a future client alert.)
9. What about the international application of U.S. law?
Across a variety of enforcement contexts, the U.S. government has used aggressive theories of agency, tangential contact with the territorial United States (such as the sending of a single email from within the United States), or the unplanned/unknown use of the U.S. financial system as a means of asserting jurisdiction. As a result, the U.S. government, in some ways, has become the world’s white collar policeman. For example, 7 of the 10 largest FCPA actions have targeted non-U.S. companies for activities largely taking place outside of the United States, and many of the recent large OFAC settlements have targeted non-U.S. financial institutions (particularly in Europe).
It is unlikely the U.S. government will cease using such theories, because they are such a useful way of asserting jurisdiction. Nonetheless, as more individuals are charged (see above), the number of cases going to court is likely to rise, because individuals facing jail time are far more likely to fight enforcement activity than are corporations, which often want to settle investigations and move on. These cases likely will target jurisdiction based upon attenuated contact with the United States, the U.S. economy, or the U.S. financial system. Thus, judicial review may lead to restrictions on the use of such jurisdictional theories. Otherwise, we do not see a likely decline in the use of these aggressive jurisdictional theories.
10. Everything discussed above sounds scary. What can I do to mitigate the risk of heightened enforcement activity?
Regardless of the enforcement priorities of the new administration, the days where enforcement actions could be considered a “cost of doing business” are long gone. Large penalties and the poor publicity that accompanies high-profile compliance lapses have ensured that regulatory risk management is going to remain a corporate priority for the foreseeable future.
Although the topic of regulatory risk management is complicated, and best performed based upon an evaluation of the individual risk profile, scope of business operations, and compliance culture of an individual company, the following are the six areas where corporations (especially multinational corporations) should focus their risk-management attention:
Risk Assessment. Regulatory risk management is, at its heart, an exercise in risk identification and management, through the implementation of effective compliance measures, backed up by appropriate internal controls and training. It necessarily follows that the starting point is the conduct of a risk assessment that evaluates the regulatory risk points unique to each organization. A risk assessment should be performed or updated at least every two years and after every significant change in the risk profile of the firm, such as after a significant acquisition, expansion to a new country, change in key laws, or other major change in the business/regulatory profile of the organization.26
Compliance Program. At most organizations, there are anywhere between 18 and 22 key regulatory areas that are the subject of detailed compliance policies.27 These policies should dovetail with the company’s code of conduct/code of ethics and internal controls/standard operating procedures. The focus should be on making the policies effective, including through making them short and easy to understand and tailoring them to the organization’s unique risk and business profile.
Compliance Infrastructure. There can be a major difference between how compliance is envisioned at headquarters and how it actually is implemented in the field. Often this is because compliance is viewed as a top-down affair, with insufficient attention being given to the administration of the compliance program, especially at multinational corporations. Organizations, accordingly, should take the time to evaluate their compliance infrastructure, including by determining whether the organization has sufficient compliance liaisons at different divisions and regions/countries, whether there is an adequate two-way flow of information regarding compliance topics and compliance lapses, and whether the compliance infrastructure is supported by adequate resources.
Internal Controls. Internal controls, along with written compliance policies and training, are one of the three legs of a properly functioning compliance program, yet they are often neglected. But the compliance mission is not satisfied by the mere promulgations of even a well-written compliance policy. Organizations should look for areas where compliance response can be institutionalized and governed by internal controls that systematize the compliance function. Examples of common internal controls include Gifts, Meals, Entertainment & Travel policies for antibribery compliance, screening protocols for economic sanctions, and know-your-customer controls for AML.
Training. Effective compliance requires frequent training, yet too many organizations provide training at orientation and leave it at that. The U.S. government, however, has communicated that it does not give any mitigating credit in an enforcement action to “paper programs” that look good as written, but are not consistently applied or understood at the organization. Training should be tailored to the audience, being more in-depth for personnel at highest risk and made relevant to the audience through the provision of actual examples likely to be encountered. Detailed logs of training, including when it occurred, who was trained, and the actual training materials relied upon and used should be kept for a minimum of five years past the time when the personnel remain at the company.
Audits. Finally, the days when an organization could launch a compliance program and then let it run on auto-pilot are long gone (if they ever existed). Effective compliance, at least in high-risk areas, requires that organizations continually assess the state of compliance efforts, benchmark them against industry competitors, and update the compliance program and internal controls based on the gathered learning. Companies accordingly should establish a multi-year compliance audit schedule in which key compliance measures are evaluated and processes established to enhance compliance efforts. The areas/divisions/regions to be examined should be established using risk-based principles.
NOTE: The international climate for U.S.-based multinational companies and non-U.S. based companies that sell into the United States has never been more uncertain. We will be issuing a series of “ten question” alerts related to the transition to a new administration, including with regard to such international regulatory topics as the future of NAFTA (already issued),28 International Trade (antidumping, countervailing duty, and safeguard) actions (already issued),29 Customs & Border Protection (already issued),30 CFIUS reviews31 (already issued), economic sanctions and export controls, the FCPA, and cybersecurity.
1 See Gregory Husisian, “CFIUS and the New Trump Administration: Your Top Ten Questions Answered”
2 See Gregory Husisian and Robert Huey, “NAFTA and the New Trump Administration: Your Top Ten Questions Answered”
3 See Gregory Husisian and Robert Huey, “U.S. Customs and the New Trump Administration: Your Top Ten Questions Answered”
4 See Gregory Husisian and Robert Huey, “International Trade Litigation and the New Trump Administration: Your Top Ten Questions Answered”
5 Penalties for White Collar Crime: Hearing Before the Subcomm. on Crime and Drugs of the S. Comm. on the Judiciary, 107th Cong. 176 (2002) (Statement of the Hon. Jeff Sessions).
6 See FCPA Professor, “The FCPA is a Horrible Law and It Should be Changed,” http://fcpaprofessor.com/donald-trump-the-fcpa-is-a-horrible-law-and-it-should-be-changed/.
7 See Ken Guggenheim, “Republican Senators Push for Tighter Export Controls,” Associated Press (Mar. 10, 2003); David Clarke, “Hill Republicans Want Bush Help on Export Controls,” CQ Homeland Security – Technology (Mar. 11, 2003).
8 See Ken Guggenhein, “GOP Senators Seek Tighter Export Controls,” http://www.myplainview.com/news/article/GOP-Senators-Seek-Tighter-Export-Controls-8861452.php.
11 See Donald J. Trump’s Vision – Cybersecurity, available at https://www.donaldjtrump.com/policies/cyber-security.
13 See “Healthcare Reform to Make America Great Again,” available at https://www.donaldjtrump.com/positions/healthcare-reform.
14 See “Assistant Attorney General Lanny A. Breuer Speaks at the New York City Bar Association” (Sept. 13, 2012), available at https://www.justice.gov/opa/speech/assistant-attorney-general-lanny-breuer-speaks-new-york-city-bar-association.
15 Nomination of James Michael Cole, Nominee To Be Deputy Attorney General, U.S. Department of Justice: Hearing Before the S. Comm. on the Judiciary, 111th Cong. 99 (2010) (Statement of Senator Sessions).
16 Nomination of James Michael Cole, Nominee To Be Deputy Attorney General, U.S. Department of Justice: Hearing Before the S. Comm. on the Judiciary, 111th Cong. 98 (2010) (Statement of Senator Sessions).
17 See Assistant Attorney General Lanny A. Breuer Speaks at the New York City Bar Ass’n (Sept. 13, 2012), available at www.justice.gov/opa.speech/assistant-attorney-general-lanny-breuer-speaks-new-york-city-bar-association.
18 Protecting American Taxpayers: Significant Accomplishments and Ongoing Challenges in the Fight Against Fraud: Hearing Before the S. Comm. on the Judiciary, 112th Cong. 54 (2011) (Questions Posed by Senator Jeff Sessions).
20 See Sally Quillian Yates, “Individual Accountability for Corporate Wrongdoing” (Sept. 9, 2015), available at https://www.justice.gov/dag/file/769036/download.
21 See Assistant Attorney General Lanny A. Breuer Speaks at the New York City Bar Ass’n (Sept. 13, 2012), available at www.justice.gov/opa.speech/assistant-attorney-general-lanny-breuer-speaks-new-york-city-bar-association.
22 Penalties for White Collar Crime: Hearing Before the Subcomm. on Crime and Drugs of the S. Comm. on the Judiciary, 107th Cong. 176 (2002) (Statement of Hon. Jeff Sessions).
23 Penalties for White Collar Crime: Hearing Before the Subcomm. on Crime and Drugs of the S. Comm. on the Judiciary, 107th Cong. 177 (2002) (Statement of Hon. Jeff Sessions).
24 See C. Ryan Barber, “Yates ‘Optimistic’ Trump Won’t Trash Namesake Enforcement Memo” (New York L.J.) (Dec. 1, 2016) (quoting Deputy Attorney General Sally Yates).
25 Effective Strategies for Preventing Health Care Fraud: Hearing Before the S. Comm. on the Judiciary, 111th Cong. 3 (2009) (Statement of Hon. Jeff Sessions).
26 A risk-assessment questionnaire that provides a good starting point for assessing regulatory risk at most multinational corporations
27 A starting list of typical core policies that should be considered by most organizations is available by sending an email to email@example.com or by contacting him at 202.945.6149.
29 See Gregory Husisian and Robert Huey, “International Trade Litigation and the New Trump Administration: Your Top Ten Questions Answered“
30 See Gregory Husisian and Robert Huey, “U.S. Customs and the New Trump Administration: Your Top Ten Questions Answered”
31 See Gregory Husisian, “CFIUS and the New Trump Administration: Your Top Ten Questions Answered”