Business Crime Defence 2018: Trends & Conclusions

The corporate crime landscape has continued to see the increased internationalisation of work, with many jurisdictions bolstering their anti-corruption laws and regulatory authorities creating stronger links with others around the world. Corruption cases have come back into sharp focus in the past few years with lawyers also highlighting fraud claims stemming from revenue investigations into high-net-worth individuals as a key source of work in the last year. As the demand for legal services in this field has risen, so has the number of practitioners, creating a competitive but incredibly busy market.

Global trends in investigations

Benchmarking manipulation cases have dominated the white-collar crime market over the past few years, with LIBOR and Forex matters featuring as some of the highest-profile mandates in the space. One source told us that “the incredible surge of work in this area has now peaked”; however, this does not mean lawyers are able to put their feet up, as other scandals and areas of emphasis have taken their place. The past couple of years have seen a massive uptick in international corruption cases with lawyers highlighting that “the tsunami of work that the Car Wash scandal and other South American investigations brought has now come to the fore in many other jurisdictions.” Interviewees also highlighted “a never-ending stream of money laundering issues”, illustrating the heightened focus that economic crime around the world has witnessed in recent years.

In the USA, “there continues to be an emphasis on healthcare fraud, probably above other things”, as well as an increased focus on cyber- and data-related crime. One lawyer noted, “The Facebook issue has awoken people’s senses to the idea that companies are collecting more information about them than they realised,” adding that “there will be more regulation and enforcement in that area over the next couple of years”. In the USA and China, IP-related matters are cited as prevalent at the moment, while “trade and sanctions work is also pretty heavy in inventory right now – there is a lot of activity because of the technology and trade competition going on between the countries”.

In the UK, the question of legal privilege in investigations was identified as a hot topic by most lawyers we spoke with. “The erosion of privilege has been going on for some time,” commented one source, while another highlighted the “need to bolster the law on privilege”. In its current state, it is becoming increasingly difficult for lawyers to advise clients on the best course of action when dealing with investigations – while “corporates have obligations to investors, employees and the market”, it “leaves individuals more exposed than ever before”.

White-collar crime investigations have become increasingly prevalent in many jurisdictions around the world in recent years. The Netherlands has seen a boost in corporate-focused activity from regulators who are “now starting to get a slice of the action” while Brazil continues to witness the backlash against corruption.

New powers and compliance concerns

As governments around the world look to grasp the nettle of corruption and white-collar crime, in several cases new legislation has been introduced to tackle the issue. France introduced its new anticorruption law Sapin II in June 2017, introducing a new regulatory body and compliance duties. Sources commented that there has particularly been a large focus on tax offences with one noting, “There has been a real rallying cry for that in France.”

The UK saw new tax regulations introduced by the Criminal Finances Act 2017 which will be, according to one lawyer, “what’s keeping GCs awake at night”. One major change brought about by the Act is the introduction of unexplained wealth orders, which give UK authorities unprecedented powers to confiscate assets that they believe have been obtained illegally. New tax offences and knowing where clients may be personally liable are high on clients’ agendas, resulting in a growing volume of advisory and compliance work for lawyers.

The appointment of Lisa Osofsky as the new director of the Serious Fraud Office (SFO) in June 2018 has left lawyers unsure as to the direction the agency’s work will take under the former FBI lawyer, although Osofsky has set out her stall to make the UK a “high-risk place for the world’s most sophisticated criminals to operate”. However, one unexpectedly powerful potential new weapon in the SFO’s armoury has recently been blunted. The September 2018 Court of Appeal judgment in SFO v ENRC restored the protection of legal professional privilege to notes and materials gathered as part of internal investigations prior to criminal proceedings beginning. The judgment will be a great relief to executives, general counsel and corporate white-collar criminal lawyers across the UK.

Compliance work is also a prominent aspect of most lawyers’ practice in this area – often more so than investigations-related mandates, most of which entail assisting clients with implementing best practices and putting into place programmes and policies that ensure they remain compliant. Businesses around the world continue to increase the time, money and effort spent on in-house anti-bribery and corruption compliance. This perhaps reflects a concern that even best practices may result in something key being missed, which in an increasingly strict regulatory environment may lead to these businesses being held responsible. This has led to a desire from clients to seek legal advice at a much earlier stage in the process than previously, as they are keen to take a proactive rather than reactive approach.

Joined-up regulatory authorities

Not only have regulatory agencies round the world intensified their focus on corporate corruption and economic crime in recent years, but they have also increased the extent of cooperation and communication between them. Lawyers have witnessed “stronger links between various overseas prosecutors”, most notably when it relates to the work done by both the US Department of Justice (DOJ) and the UK’s SFO such as those concerning Unaoil, Rolls Royce and the “Dieselgate” scandal. Many lawyers we spoke to were quick to emphasise the effect of the combined pressure of global agencies and authorities in relation to corporate crime, noting that “barriers have come down and there’s more desire for people to work together”. Needless to say, lawyers we spoke to do not see the activity in this area abating, as global prosecutors and regulatory agencies become increasingly sophisticated and calls for transparency intensify.

The legal market

Legal competition in the white-collar crime space remains robust, with a plethora of firms engaged in high-profile matters, from specialised boutiques to full-service international outfits. Many firms who previously had little or no focus on this area “now have a credible offering in white-collar crime”, with one lawyer noting, “There has been a big change in market perception for big firms – it is now a necessary practice area.” Despite the growth in the number of firms and practitioners involved, lawyers have cited the increasing sophistication of in-house counsel as one of the key factors in influencing market competition.

Over the past few years, in-house legal teams have developed “a lot of clarity and awareness” in their knowledge of white-collar criminal regulation and procedure. However, they have also grown more sophisticated in their understanding of the quality and type of legal services that they require. “Clients are very intelligent and the budgets are only getting bigger for this type of work,” commented one lawyer, while another noted, “Clients want to go for someone they have experience with and have confidence in.” As has been the case across other practice areas, cost-consciousness is a huge factor in the client-lawyer dynamic; however as one source puts it, “Relationships are key in these cases, so much so that often fees and hourly rates are secondary to how comfortable a client is with lawyers.”

The globalisation of white-collar criminal work has also had an impact on competition in the market. Practitioners are dealing increasingly with clients facing investigations across multiple jurisdictions, which has naturally led to clients needing “lawyers with strong international connections to meet the clients’ needs as well as the complexities that multinational investigations bring with them”.

Looking forward

This past 12 months seem to have set the course for the next few years, as lawyers expect the strengthening of anti-corruption legislation around the world to continue. Following on from France’s Sapin II, other countries have also followed suit in introducing tough new legislation, including Argentina with its new corporate criminal liability law. As one source put it, “so many matters are now totally global”, a trend that seems set to continue as international regulatory enforcement levels remain high. Although lawyers note that we may be witnessing the tail end of the benchmark manipulation wave, they anticipate data-related cases will increase and come to the fore, particularly with the implementation of the GDPR. 

It seems that anti-corruption and bribery cases, as well as related compliance issues, are still growing, leaving the legal market with no shortage of work – be it advisory or contentious. Indeed, the pool of lawyers conducting white-collar criminal defence work continues to grow, reflecting the similar trend in global regulatory activity and internal corporate compliance.

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