Will You Comply?


The emergence of the compliance industry is compelling many legal professionals to consider the question.

Compliance chose Alice BrightSky at a time when few, if any, in the financial services industry voluntarily chose compliance. In the mid-2000s, BrightSky’s employer, global financial services giant UBS, was in the midst of reorganization, which left her with two options: sales and customer integration or compliance. BrightSky chose the latter, reasoning she could obtain subject matter expertise on the job. Over the next decade, she became a subject matter expert in anti-money laundering compliance (AML), assuming managerial and advisory roles in AML at UBS and Fortis Bank and then later serving as the global compliance leader for AML and know-your-customer for GE Capital, the financial services arm for multinational conglomerate General Electric.

Around the time BrightSky’s compliance journey started, she considered going back to school for a J.D. She had been accepted to law school after college, but she opted not to attend, reasoning she should gain some practical experience first and have a sense of how she would apply her degree. One bit of practical experience led to another until BrightSky found herself well on her way to developing a successful career as a compliance professional. Again she contemplated the J.D. path and, again, decided against it. Devoting three or more years to a law degree did not make sense for her, particularly as her career was gaining momentum.

A compliance-focused degree earned in a shorter amount of time would have, on the other hand, appealed to her. Unfortunately, none at the time existed. Those were the days before the 2008 financial crisis, before the rise of compliance in response to government regulation, and before the development of Fordham Law’s robust corporate compliance program, including a one-year M.S.L. and one-year LL.M., the latter of which was the first degree of its kind among American law schools.

“I think there are a lot of people on the market who are like I was— mid-career and at a fork in the road—who feel like a law degree is too costly, requires too much time, and is not targeted enough to make practical sense for someone already in the field,” says BrightSky, who became senior director of Fordham Law’s compliance program in September 2016. “They’re already moving forward in their compliance career but know there’s a foundational piece they’re missing, which is very hard to acquire on the job.”

Compliance has emerged post-financial crisis as a white-hot market. Mammoth financial institutions such as JPMorgan Chase and HSBC have hired thousands of new compliance officers, in hopes of strengthening their internal controls infrastructure to help prevent internal misconduct, such as fraud, price and market manipulation, and external abuses of their financial products and services by would-be money launderers or terrorists. The consequences for failing to succeed in this endeavor are severe. HSBC paid a $1.9 billion settlement in the United States in 2012 for money laundering. Wells Fargo paid $100 million to the Consumer Financial Protection Bureau for consumer fraud in 2016. Also last year, Och Ziff Capital paid $412 million for violations of the Foreign Corrupt Practices Act (FCPA).

Fordham Law School, with its location near the heart of the global financial center, its deeply experienced corporate and business law faculty, and the strength of its alumni network, is well-suited to meet this growing compliance need, says Professor Sean Griffith, T.J. Maloney Chair in Business Law and director of the Corporate Law Center.

“The area is a natural fit for Fordham given the industry need for people with a firm handle on the complex web of regulations as well as basic ethics. Fordham stands out in both areas, so it was a natural place to focus our energies” when Fordham Law started its program in fall 2014, Griffith says.

Eric Grossman ’93, chief legal officer for American multinational financial services firm Morgan Stanley, concurs with Griffith’s assessment, calling Fordham “exceptionally well-positioned” to service the industry’s compliance need. Grossman’s description of Fordham’s entrée to the field could scarcely be more concise: “Right place, right time, right faculty.”

A Collapse Causes Growth

At the turn of the 21st century, compliance rarely warranted detailed discussion at American law schools. The industry did not factor much into Fordham’s corporate law curriculum in the mid-1990s, William Fenrich ’97 recalls. That’s not to say there weren’t compliance laws on the federal books—for example, the FCPA was enacted in 1977 in an effort to stop American businesses from bribing foreign governments in exchange for favorable treatment. However, the study of such laws was not part of a comprehensive course of study, nor did corporations view having a deep bench of compliance officers familiar with such laws as essential to their well-being.

The global financial crisis, with its collapse of venerable financial institutions like Lehman Brothers, massive government bailouts, and subsequent government regulations, turned compliance into an essential part of corporate culture almost overnight. In the years after the crisis, Fenrich, who had forged a successful career as a lawyer for Davis Polk, clearly observed the emergence of the compliance field. Then in 2015, Grossman picked Fenrich to serve as chief compliance officer for Morgan Stanley.

Today, financial services companies view compliance as more than acquiescing to government regulations. They see it as a risk management function—one increasingly driven by testing, monitoring, and process, not legal advisory functions—that not only protects them from fines but also ensures they avoid the type of scandal that would result in a loss of public trust.

“A huge part of what compliance does is ensuring policies, procedures, and processes that detect fraud and other forms of wrongdoing,” Fenrich says. While President Trump announced plans in February to roll back Dodd-Frank regulatory protections that Congress erected after the collapse, such actions will not eliminate the need for compliance, Fenrich says.

“Banks are always obligated to do the right thing and still will be,” Fenrich says, noting that that fact remains unchanged regardless of who sits in the Oval Office.

Joe Burke ’86 agrees with Fenrich’s analysis, but cautions that many corporations are still content to underinvest in compliance—that is, until scandal visits them. Burke is chief ethics and compliance officer for Quest Software, and before that served as chief compliance counsel for computer technology giant Dell.

The compliance industry “feels like it came out of nowhere,” but in part owes its rapid acceleration to the lack of trust engendered by Enron, notes Burke, who teaches In-House Compliance Counsel Practice at Fordham Law. While Burke says Enron ultimately was more about outright fraud than compliance failure, the Texas energy giant’s 2001 implosion served as a wake-up call to other corporations.

Still, 16 years after Enron collapsed amid a culture of fraud and conspiracy that resulted in its chief officers Kenneth Lay and Jeffrey Skilling going to prison, its lessons remain unheeded by some, at their own peril. In 2016, Wells Fargo fired 5,300 employees after reports surfaced that its employees created 2 million fake accounts to boost sales figures. The blowback has been immense. New credit card applications dropped 43 percent and new checking account openings fell 40 percent in the fourth quarter of 2016, according to Wells Fargo.

“Compliance is not something you do on a rainy day,” Burke declares. “CEOs are gradually learning this isn’t a couple of thousand dollars to put new shingles on. This is my company, my brand, my name.”

Tomorrow’s Leaders

Unlike Fenrich or Burke, today’s law students are versed in the importance of compliance—and its status as a growth market with six-figure salaries. National newspapers such as The New York Times and The Washington Post have dedicated columns to the subject, as do financial papers and magazines, thus raising the industry’s profile; the import of compliance officers in boardrooms is also rising.

“As compliance becomes more visible for its role—not just in picking up the pieces after a large enforcement action and helping to avoid another, but also as a trusted advisor to business and for its contribution to business strategy—the field is starting to attract people earlier in their careers and with a broader set of backgrounds and interests,” says BrightSky. “No one knew what compliance was when I was an undergraduate, but today college students are reading about compliance on the business pages of The Wall Street Journal and The New York Times.”

She adds that J.D. candidates who are seeking an alternative career path to the traditional law firm associateship are now aware that compliance is not merely a “tick-the-box” type of profession; they understand that compliance requires “true thought leadership and legal expertise.” BrightSky’s challenge, then, is not to convince potential students that compliance is valuable but rather to use her network and expertise to develop a program that meets the needs, both educational and vocational, of tomorrow’s compliance leaders. These leaders include professionals in the field looking for a foundation in the law, students fresh out of college who want to gain entry to the field, and international students seeking training in both compliance and American jurisprudence.

The east wall of BrightSky’s eighth-floor Law School office features four poster-length white pieces of paper with detailed plans to address deadlines, the needs of international and U.S. students, experiential goals, and experiential placements. A whiteboard hangs on the wall next to her desk, denoting the work streams she needs to advance. As of this spring, she has attended six conferences and spoken at two, coordinated meetings for students with her financial services contacts, and focused intently on potential gaps in the curriculum, so as to create a proper balance between financial and corporate compliance.

“The industry is growing and we need to grow and adapt as it does,” BrightSky says. The program must be malleable, she notes, stressing the need to listen to, and partner with, industry and be open to solutions that attract and benefit students—whether that means targeting accounting students for the M.S.L. to fulfill the 30 extra credits required to become a licensed CPA or, in the future, offering online compliance courses to meet the growing demand for high-quality distance learning.

Griffith praises BrightSky as “a rising star” in compliance whose energy and experience have already paid dividends for Fordham’s compliance program.

“Alice has brought in great people with deep industry knowledge to be instructors, and her network of connections has promoted Fordham’s work in compliance and also helped to find positions for graduates,” Griffith says.

Fordham Law Complies

For many major legal areas—corporate, international, torts, criminal justice—the breadth of case law, written articles, and scholarship is profound. Not so for compliance, at least not yet.

“[C]ompliance is largely absent from the mainstream corporate law literature,” writes Griffith in his 2016 William & Mary Law Review article, “Corporate Governance in an Era of Compliance.” Thus, legal scholars writing about this relatively new world in the law must define its core features and what distinguishes it from how a firm and its general counsel work.

“It’s a great opportunity to make a statement on what counts and to be involved in literature as it’s emerging rather than when it’s set in stone,” Griffith says. This also means looking toward the future. For Griffith, who views compliance as a discipline that “moves forward in fits and starts,” tomorrow’s compliance industry will rely on data-based technology and psychological methods to find evidence of and prevent wrongdoing.

Fordham Law’s compliance program engages students in the role of in-house counsel, the corporate compliance office, and the various elements of compliance, including risk assessment, attorney-client privilege, the FCPA, and global codes of conduct, and educates them on basic regulatory framework, especially in the banking and financial regulatory industries. In addition, M.S.L. students, who don’t need a law degree to matriculate, gain valuable critical analysis, writing and speaking, and research skills in the law school environment.

“The law school experience is very reflective of the marketplace,” BrightSky says. “You’re in the classroom with students from different backgrounds and degree tracks. It reflects what real life is like in the industry.”

Bryan Murtagh ’86, who served as compliance chief for UBS, teaches Global Compliance, which examines why firms and business organizations started compliance programs to limit civil or criminal liability at the corporate and managerial levels. The course’s international nomenclature, Murtagh explains, emphasizes to foreign-born students that principles taught in class are not limited to the United States.

The compliance industry has moved toward quantitative and systematic reviews of how firms are complying with laws and regulations. This means performing risk assessments and applying preventive controls. While this does not mean every case of wrongdoing will be stopped in advance, it does mean that if something bad happens corporations have procedures in place to handle the behavior, Murtagh explains.

“The need for law school compliance programs arises from the relatively high level of specialization of what compliance officers are expected to do and the lack of natural undergraduate or law school programs to provide students or potential employees with this background,” Murtagh says, adding a Fordham Law certificate provides an advantage for people interested in climbing the compliance ladder.

Fordham Law’s compliance focus, particularly as it applies to international LL.M.s, also strengthens the global practice of knowing your clients, anti-money laundering, and risk assessment, in hopes of preventing not only corporate scandals but also the next financial crisis.

“Fordham’s commitment to teaching compliance in a way that is practical and tethered to the real world can create a pool of uniquely trained and talented professionals, whether in New York, London, or Hong Kong, that bring a well-rounded legal and compliance skillset into the industry, and the industry needs people like that,” Fenrich says.



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