John Herbert Roth
In the regulatory world, in-house lawyers and compliance professionals1 are gatekeepers tasked with preventing or altering proposed actions (or inactions) in order to comply with law and/or internal policy.2 Yet, this gatekeeping role is not a totalitarian one-there is no such thing as automatic adherence and seemingly everything is challenged. As well, in-house lawyers and compliance professionals are not issued keys to the proverbial ivory tower where they can contemplate the questions of their choosing in a legal vacuum. Rather, we are required to consider business goals and view issues through the lens of profitability. Finally, in many industries, whether something is "permitted," "not permitted," "encouraged most of the time" or "discouraged almost never" is hardly ever a black-and-white analysis. Similar to seeing a cool spring in the desert, unassailable solutions in such a vast of gray are usually just mirages that fail the test of reality.
With this backdrop, it is arguable that in-house lawyers and compliance professionals tend to fall into one of three categories. First is the "Yes Man," a paper tiger who cowers to the "but we are trying to run a business" line of reasoning at the expense of permitting unacceptably risky behavior. In some cases, the Yes Man places his personal desires for acceptance and monetary gain ahead of the firm's health. This is particularly true where the Yes Man is young and/or his compensation is largely comprised of a discretionary bonus that is determined by those who are trying to pass through the gate before which he stands guard. A Yes Man may justify his role by claiming team-player status, but in application his role as a gatekeeper is, at best, ceremonial, and at worst, similar to a fox guarding the hen house.
Second is the "Never Man," a draconian figure who takes a chastity belt approach and would be most comfortable with a gate that resembles the Berlin Wall. The Never Man may have an unhealthy aversion to risk, but many times the Never Man simply is not sufficiently educated on the issues to overcome his bias for opposition. After all, saying "no" is usually the easiest answer. Not unlike the Yes Man, the Never Man's motivation may reside in self-interest, albeit of the self-preservation variety. If the Never Man's extreme conservativism is unchecked, the firm's business mission may be thwarted by the resulting paralysis.
Third is the "Effective Counselor," a champion of acceptable risk and a true member of the team. The Effective Counselor has an open-door policy, promotes approachability and seeks involvement. He spends his time providing input on a proactive basis rather than chasing problems resulting from bad decisions. He is similar to the doctor who advocates health care rather than tending only to the sick. At the top of his game, the Effective Counselor can block a proposal while simultaneously garnering appreciation for having closed the gate. Likewise, an Effective Counselor is one who is not viewed as a speedbump to be run over or a roadblock to be rammed, but rather an asset to help navigate the firm toward optimal solutions. In sum, the Effective Counselor is regarded as critical and necessary to the pursuit of smart profit.
All in-house lawyers and compliance professionals should strive to be Effective Counselors. Yet, how can one obtain such a lofty status? How does a gatekeeper, who must say "no" at least some of the time, do so judiciously and without casting a pall on the pursuit of profit? Is it possible to protect the gate by discouraging those who would try to improperly pass through it from ever trying in the first place, not by promoting fear, but by establishing clear expectations of what is acceptable? How does an otherwise authoritarian figure avoid being viewed as a problem instead of a possible solution? How can the gatekeeper pursue a successful career without sacrificing his integrity in the process? These are the questions that perplex young professionals in industries such as the investment advisory industry, but also seasoned professionals who work in industries that are becoming increasingly regulated and otherwise complicated.
The first step on the journey to becoming an Effective Counselor is to know what is knowable, as well as acknowledge what is unknowable. And through the active process of discovering both, you will increase your capacity to make wise decisions. This means that y ou must vigorously keep up with new developments-and the possibility of developments-in the applicable bodies of law and the business of the firm itself, and embrace the fluidity of both. Otherwise, you will find yourself on a rudderless ship, never certain where you are going and hardly capable of leading.
The requirement for knowledge and awareness is particularly important in industries where regulations, discoveries and methodologies are constantly changing, especially where such change fosters ambiguity in application. One must be aware of not only the black, white and otherwise well-defined boundaries, but understand the gray...