Ungreasing the wheels

By | 9th December 2009

A recent article in the Economist [Ungreasing the Wheels, 19th November] caught my eye. The  article confirms what we have been seeing in cases referred to us over the past few months, namely that the US Foreign Corrupt Practices Act is providing litigation lawyers with a staggering amount of work.

For those of you not familiar with the FCPA, it sets out to punish US corporates who seek to bribe foreign officials in order to win business particularly in places like China. Of course it is not in any way limited to China, but that is where a lot of new business is located and tensions are beginning to show.

Even the British Government is getting in on the act. The Queen’s Speech contained a promise of anti corruption legislation although the chances of anything becoming law this side of the General Election must be remote.

All of this is good news for lawyers being paid to assess liability and review mountains of data and less good for their clients who have to pay for it (and that is before any fines are levied in cases where guilt is established).

US Justice DeptBoth the SEC and the DOJ (Securities Exchange Commission and Department of Justice in the US) have said they intend to get tougher and the fines are getting bigger too as the article describes.

So what is to be done? This blog does not give legal advice. However, much of that work involves collecting data, processing it, analysing and reviewing it and the exercise is potentially much less costly now than it was.

The article refers to firms which decide to confess their faults up front, receiving lesser fines and comments that this means they will have to invest in internal monitoring. The author says that scanning email costs between $200 -$400 per hour if done by a law firm and rather less if carried out by a specialist firm.

It would seem that clients who are prepared to make a clean breast of misdemeanours before they are found out, and those who are caught out and have to carry out detailed investigation of their records to deal with the allegations they face will do well to consider instructing their lawyers to involve a specialist firm to process the material quickly and cost effectively before asking the lawyers to review and advise. If they cannot reach a deal with the prosecutors and the case continues on, at least they will only end up paying for the relevant material to be hosted.