iThis practice, which is far from uniform, usually involves the selection of an independent monitor who assists with and assesses the company’s adherence to specific compliance undertakings incorporated into settlements. The monitor will usually be required to make one or more reports addressing the company’s progress in meeting the settlement’s compliance undertakings and often will make recommendations for enhancing such compliance initiatives before certifying, or not certifying, that the company has complied with the undertakings.
Below are some common attributes of successful monitorships that illustrate how they can be carried out in a productive, efficient, and sustainable manner.
Work Cooperatively
Successful monitorships are not adversarial in nature. Rather, they are characterized by cooperative working relationships between the regulator, the company and often their outside counsel, and the monitor. This means a team-oriented approach to undertaking significant tasks such as developing work plans, identifying relevant company personnel for meetings, understanding the company’s business processes and risk profile, producing and analyzing relevant documents, reviewing and commenting on the monitor’s draft reports, and scoping and implementing recommendations. For example, the monitor’s work plans often reflect comments by the regulator and the company, which focus on higher-risk compliance areas during the pendency of the monitorship.
Similarly, a company that is in good faith seeking to enhance its compliance program can often contribute specific proposals to address the monitor’s recommendations for implementing enhancements because the company’s personnel are generally more familiar with internal business processes. The shift to working cooperatively with the monitor can sometimes be difficult for company leadership and defense counsel when they likely have been in an adversarial posture with the regulator prior to reaching settlement. However, the sooner the company is prepared to work cooperatively with the monitor, rather than defensively, the more quickly progress can be made to fulfill the undertakings.
Work Expeditiously
In order to avoid an extension of the monitorship term, companies need to move quickly in updating their compliance programs to give the monitor sufficient time to conduct thorough testing of compliance enhancements. The US Department of Justice (DOJ) has indicated that for a three-year monitorship, companies should update their compliance program by the end of the first year to ensure effective testing by the monitor and to avoid an extension. This means that the company and monitor need to begin working cooperatively on day one to develop detailed work plans with definite timelines to ensure accountability and that efforts to update the compliance program stay on track.
Communicate Effectively
Open communication between the monitor, the company, and the regulatory entity is essential. Effective communication enables timely identification and resolution of any issues — compliance-related or otherwise — and helps ensure that all three parties understand each other’s perspectives on the status of the company’s achievements and growth areas.
Eliminate Surprises
It is important that both the company and monitor avoid surprises. Companies should discuss any negative developments or plans to make significant managerial or structural changes with all parties prior to making them. Similarly, the monitor may learn of significant compliance risks, and it is important to inform the company and the regulatory entity “in real time” so that the monitorship status is understood and the company has the opportunity to remediate such risks in a timely manner. Additionally, changes in staffing or approach by the monitor should also be discussed between all parties in advance.
Agree on the Scope of Work
The monitor, the company, and the regulator may have different ideas about the scope of work. Companies often fear that monitors and regulators will evaluate areas beyond those contemplated in their resolutions. Frank, early conversations about the monitorship team’s remit with all parties can prevent mission creep and future conflict.
Focus on the Objective
Every monitor’s goal should be to put themselves out of business by successfully completing the monitorship as soon as possible. Companies that have senior management buy-in and provide adequate resources to make the compliance enhancements recommended by the monitor are generally more able to timely meet the requirements of the undertakings. At the same time, the monitor should focus on higher-risk compliance areas and evaluate whether the company can effectively address such risks on its own going forward.
Recognize Value Can Be Added
It is important for monitors to quickly become familiar with the company, its senior management, and the company’s compliance risk profile. Most experienced monitors can help the company develop and successfully implement a strategy for meeting the requirements of the undertakings as quickly as possible. Working together, the company, the monitor, and the regulatory entity involved can expedite the conclusion of the monitorship, which should be everyone’s main goal.
