This week I am exploring a five-part series on compliance as seen through the lens of Winnie the Pooh and the characters who live in the Hundred Acre Woods: Pooh, Eeyore, Tigger, Kanga & Roo, and Piglet. Winnie-the-Pooh, also called Pooh Bear and Pooh, was created by English author A. A. Milne. Monday, we began by introducing Tigger and the sales function role in compliance, then Kanga and Roo and the role of Human Resources in compliance. Today, we consider perhaps the most beloved character (other than Pooh himself) Eeyore.
Eeyore is described as an “old grey donkey”. Eeyore has a poor opinion of most of the other animals in the Forest, describing them as having “No brain at all, some of them” and “only grey fluff that’s blown into their heads by mistake” (from chapter 1 of The House at Pooh Corner). Eeyore’s favorite food is thistles. He lives in the southeast corner of the Hundred Acre Wood, in an area labeled “Eeyore’s Gloomy Place: Rather Boggy and Sad” on the map in the Winnie-the-Pooh book. He has a stick house therein called The House at Pooh Corner. Pooh and Piglet built it for him after accidentally mistaking the original house that Eeyore built for a pile of sticks. On Eeyore’s birthday, he is given an empty honey jar from Pooh for keeping things in, a popped red balloon from Piglet to keep in the pot, and a note from Owl. (Eeyore’s birthday was originally celebrated by University of Texas students in Austin and is now a worldwide phenomenon.)
Eeyore expects misfortune to fall upon him and accepts it when it does and rarely even tries to prevent it. He is known for saying “Thanks for noticin’ me” and “Ohhh-kayyy”. His grumpiness is best shown in an encounter with Piglet, who cheerfully bade him “Good morning!”, Eeyore responded, “Well, I suppose it is…for some.” Yet, Eeyore is capable of great compassion. Most interestingly, he has a great friendship with Tigger.
I want to use Eeyore as an introduction to the differences in the compliance function and the legal department in the corporate world. When I initially went in-house, it was made clear to me that the role of the in-house department in the company I worked for was to protect the company. When I became a General Counsel (GC), I took that role to heart and felt like I was the company’s lawyer (even if the Chief Executive Officer (CEO) felt like I was his lawyer). But as Donna Boehme pointed out in her article, entitled “Toldya. (Reason #119 why Compliance is not a subset of Legal)”, there are distinct differences in approaches to doing compliance from practicing law. She said, “one thing is clear – the two functions have very different mindsets, mandates and priorities.” She notes that the legal department mandate is to “advise and protect the company.” The compliance mandate is much broader. She wrote, “Compliance, on the other hand, is tasked with detecting and preventing misconduct.” The compliance mandate includes constant vigilance on the integrity of the compliance program, protecting internal whistleblowers (in part to demonstrate to others that it is safe to come forward), and supporting a culture of accountability, especially at levels of management.
I might say that a corporate legal department’s role has traditionally been seen to protect the company from problems, while the role of the compliance function is to remedy problems. Here you can think of McNulty’s Maxim No. 3 – What did you do to fix it when you found out about it? But Boehme took it a step further by noting, “A well-run compliance program requires hundreds of judgments, big and small, to be made on a weekly basis. The company with the political will to elevate their chief compliance officer to a “separate but equal” status in the C-suite will benefit from those judgments being made with an independent compliance mindset, and not “Always Legal but Occasionally Compliance” prism.”
What does the legal department bring to compliance? It is largely the attorney client privilege (AKA “the Privilege”). What are the parameters of the attorney/client privilege? The attorney-client privilege is established when a communication is made between privileged persons, in confidence, for the purpose of seeking, obtaining, or providing legal assistance to the client. David E. Keltner has written that under US federal law, the attorney/client applies when the following are present:
- A client is seeking legal advice or a lawyer’s services;
- The person to whom the communication is made is a lawyer or his or her representative;
- The communication relates to a fact disclosed from a client (a representative) to a lawyer (a representative);
- Strangers are not present;
- A client requires confidentiality.
The significance of meeting each of these five prongs is critical. If they are met, “Absent privilege, once the attorney-client privilege is properly invoked – the privilege is absolute.” Finally, it is important to note that the attorney/client privilege belongs to the corporation and not to any one individual.
The bottom line is that while you may want an Eeyore in the corporate legal department just saying no; that is not something you want in compliance. The job of compliance is not to protect the company at all costs. Instead it is to prevent, detect and remediate any compliance issues that arise. You cannot do that by simply saying No. Yet, just like Eeyore, the corporate legal department can be a valuable adjunct to the compliance function if an internal investigation occurs and you want to maintain your corporate privilege.
Join me tomorrow when I take a look at Piglet and the role of payroll in compliance.
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© Thomas R. Fox, 2020