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Research Trends and Conclusions: Business Crime Defence 2011

With the benefit of over 14 years of research and thousands of votes from clients and private practitioners, Who’s Who Legal takes a closer look at developing trends in the business crime defence legal marketplace worldwide.

This is the seventh edition of The International Who’s Who of Business Crime Defence Lawyers and each year we have interviewed lawyers considered by peers, clients and counsel to be the leaders in their field. This not only allows us to skim the cream of the legal crop in this practice area to include in our directory; it allows us a long-term overview of the trends affecting the work of those at the apex of practice in business crime defence. Many of these individuals have long years of experience and can offer their thoughts from an informed and thoughtful perspective. We present the findings of our research here.

Overview

The number of inclusions over the past four years has shown a slow and steady growth, which seems to indicate stable conditions in the legal marketplace pertaining to this practice area. We have been monitoring the development of several trends that were predicted to result in an increase of lawyers active in this area, however these do not yet appear to have had a significant effect on the upper echelons of legal practitioners (those sufficiently highly regarded to be included in our publications). While we have not seen any significant movement between firms and jurisdictions this year, or any marked increase in the number of practitioners in any particular jurisdiction, there are certain types of work gaining in prominence.

Inclusions

Firstly, many of our sources pointed out that the current economic climate provides conditions that might be described as conducive to fraud and financial crimes. Corporations that have been forced to downsize might find themselves with reduced resources for compliance and accounts. Individuals might be more inclined to cut corners or bend the rules and these irregularities are now more likely to be discovered. Enforcement agencies are resorting to ever more aggressive tactics to discover instances of business criminality – wiretaps, new regulation with the effect of encouraging whistle-blowers and self-reporting. So while the economic downturn effectively encourages business crime, enforcers are more active and the consequences are harsher. This means that companies are more in need of skilled business crime defence lawyers than ever.

Certain types of work prove more prevalent as enforcement agencies go through phases of seeking to prosecute a particular type of business crime that has featured prominently in the press. Part of this tendency is driven by a certain amount of success – once an agency gains experience in discovering a particular kind of crime, this is then more easily identified as investigative systems are put in place and a piece of evidence in one investigation may indicate irregularities by other individuals or entities. The most obvious of these is currently financial crimes; many of our interviewees reported dealing with numerous cases of this type with the SEC increasingly prosecuting individuals. Criminal antitrust or competition cases are also seeing a resurgence, with competition enforcement agencies of different countries cooperating against multinational companies. Our research shows that this is one area in which a number of business crime defence lawyers are also included (see Chart 4). In the US, where health care-related issues have been prominent in the press recently, health care fraud arising from improper labelling and billing has become a growth area for white-collar defence lawyers. The DoJ seems very committed to pursuing these cases and many expect these to increase.

Enforcement

The trend that was most often mentioned by our interviewees was that international enforcement activity has seen a marked increase. This does not necessarily mean that lawyers in this practice area are moving to new jurisdictions. According to our research, business crime defence lawyers remain in their highest concentration in the US; out of the 487 individuals we listed, 299 are based there. The chart below serves to illustrate the contrast between the number of experts jurisdiction by jurisdiction. Expert business crime defence lawyers remain at their highest concentrations in North America and western Europe.

Those countries with stricter enforcement codes have a correspondingly higher number of defence lawyers – England and Germany have 39 and 33 lawyers listed each, respectively. Those countries with the highest number of defence lawyers also scored relatively highly in the 2010 Transparency International Corruption Perceptions Index so there appears to be a correlation between low levels of corruption within a country and high levels of business crime defence lawyers.

The continued increase in activity by enforcement authorities has had a serious impact on the activities of commercial entities and has increased the demand for excellent legal advice in this area. Many countries have enacted laws on commercial bribery and these, in concert with the ‘long arm enforcement’ of the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (which is expected to come into force later this year) mean that business crime defence lawyers have to be aware of a host of laws in other countries. These can vary from jurisdiction to jurisdiction – for example, attorney-client privilege and the national regulatory attitude to corporate behaviour can be different. Levels of implementation also vary between countries, and even EU-wide regulations are interpreted differently by member-states and acts of bribery having previously been regarded as an accepted business more in certain jurisdictions. International travel appears to be on the rise for business crime defence lawyers – one US-based lawyer at a prominent international firm told us that “a lot of our work is outside of the US and there is rarely a week that some number of our white-collar group are not out of the country.” Maintaining close contact with relevant local counsel can also be useful. Either a firm with an international spread or the ability to liase with trusted lawyers in other jurisdictions is of high importance.

Last year, we reported that lawyers expected an increase in cases arising from FCPA and SEC enforcement. The US administration has reportedly increased the amount of staff at the SEC, designated more prosecutors for health care fraud and been keen to promote its increased usage of wiretaps in investigations (although it is reported that this method in reality rarely results in prosecutions). Lawyers confirm an uptick in the amount of work in these areas and the rise of cases brought by voluntary disclosure has contributed to this. A company might discover an irregularity or problem and judges that it is likely that it will be discovered by regulators or exposed by a whistle-blower and so they reveal it themselves, often being able to achieve some degree of plea bargaining. This has brought on a rise of internal investigation and compliance work for the lawyers in these pages.

Interestingly, despite the increased activity of government enforcement agencies, there has not been a corresponding increase in the number of court cases. Many of these matters are settled, which, while it might minimise the exposure of a company under investigation, mean that there is very little case law developing. This is as true of England as it is of the US – several of our sources noted that there is no appetite for prosecution by the authorities and many of our interviewees in the US bemoaned the fact that younger lawyers had very little opportunity to gain courtroom experience. Having said this, of the roughly five per cent of lawyers in this book who are listed for their work in other practice areas, the vast majority of these are considered to be excellent commercial litigators (see Chart 2). With the rise in work coming from corporate insolvencies and restructurings, it is no surprise that a proportion of lawyers in this edition are also represented in The International Who’s Who of Insolvency and Restructuring Lawyers and the same can be said of competition lawyers.

Areas

What can be said is that large corporate law firms are paying more and more attention to business crime as their clients want to minimise any risk of prosecution or investigation and hence reputational implications. This rise in prominence (at least within the business world) is also marked by many of the larger and international firms expanding their business crime defence practices. In England, some firms are aiming to build up teams with a diverse blend of expertise. For example, a combination of civil litigators and criminal lawyers might achieve a greater degree of versatility within a practice group. Often, high-ranking individuals within a company will go to middle-ranking firms with strong criminal law backgrounds while the board of a company under investigation will seek out Magic Circle firms or those with a City-based practice – often their pre-existing counsel – according to several UK-based sources. While this practice area seems to have crystallised to a greater extent in the US, where successful white-collar defence lawyers often earn their stripes in a prosecutor’s office, it is at an exciting stage of its development in the UK and law firms are fine-tuning their approach to building strong practice groups.

* * *

Business crime defence work has stepped into the limelight and companies are increasingly demanding this type of expertise from their legal counsel. Compliance with stricter regulations has become even more important as companies fear the heavy fines and penalties that any irregularity might incur. Financial crimes such as insider trading, anti-competitive practices, health care fraud and corruption and FCPA matters have all come under intense scrutiny by regulatory and enforcement agencies. Larger and international firms have recognised the importance of providing a strong business crime defence practice to their clients and the lawyers listed in these pages may prove an important part of setting up preventative measures or encouraging a change in business practices. The economic downturn is recognised as providing conditions that are conducive to fraud, corruption and general business irregularities and this combines with increasingly aggressive enforcement measures to keep the lawyers listed here in great demand.

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Nominees have been selected based upon comprehensive, independent survey work with both general counsel and private practice lawyers worldwide. Only specialists who have met independent international research criteria are listed.

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