Chapter § 1.10 Ethics and Compliance

• Jurisdiction: United States
• Publication year: 2020

§ 1.10 Ethics and Compliance

All in-house counsel, even those that aren’t in an ethics and compliance role, should be aware of the fundamental ethics and compliance matters we discuss below.

[1] Ethics Department

Regarding compliance and fraud detection, the majority of companies represented at the roundtable reported that they rely on an ethics department to handle ethical and compliance issues and an international code of conduct to set the rules of compliance. Companies with a global presence cannot afford “not to have an extremely robust compliance function just for self-protection.”⁸⁵ Companies with huge operations outside of the United States require a lot of compliance managing.

In-house ethics departments vary in size and reporting relationships. At one company, 25 people make up the ethics department, with the head ethics officer reporting to the general counsel. Because of the nature of conducting investigations and variances in regional and country laws, the litigation group works closely with the ethics department. Another company had developed an ethics and compliance group in the last few years that reports to the general counsel. The hope is that the group, still in its formative stages, will act as a robust gatekeeper for antitrust issues. At another represented company, the person who is dedicated to the ethics compliance group is an auditor rather than a lawyer. The auditor is also responsible for the development of the international code of conduct. However, it is expected that key members of the legal department and the ethics compliance person work together on policies.

[2] Code of Business Conduct

For international companies, a code of business conduct is important to create uniformity throughout the company. The international code of business conduct provides a standard of behavior for all employees regardless of company rank or location. Some companies may decide to set standards across their systems, including affiliated enterprises. Suppliers and vendors need to meet company expectations. High company standards benefit employees: “Compliance with local law may not necessarily be the final analysis. In the area of worker’s rights, for example, it may actually raise the operative standards in the local market where we are.”⁸⁶

For one company, the international code of business conduct is organized around a dozen or more principles; for another, the international code of business conduct is a stand-alone booklet, roughly 14 pages...