Editor: Please tell us about your background.
Sarwal: After working at a large law firm within the Supreme Court section and then trying my hand at starting a regulatory appeals firm of my own, I joined the U.S. Chamber of Commerce in 2005. There, I was responsible for directing the Chamber’s general litigation docket – that is, all cases in the courts that weren’t labor and employment. It was a great experience to have worked with the best lawyers in the Washington, DC-area and a real intellectual feast. During my time there, I filed hundreds of briefs on a variety of issues, including punitive damages, class actions, arbitrations, the alien tort statute, antitrust and patents.
During the mid-2000s, I worked with ACC’s advocacy team and its then-general counsel Susan Hackett on the Thompson Memorandum fight back when the DOJ coerced companies to waive attorney-client privilege by threatening to indict them. ACC led a successful effort to convince the DOJ to reverse its position.
In 2010, I started working at ACC and directed its advocacy efforts by marshalling resources to promote the unique perspective of the in-house bar. Specific issues included attorney-client privilege, multi-jurisdictional practice, SEC whistleblower bounty programs and FASB standards for disclosure of litigation contingencies in financial statements. In September of this year, my responsibilities grew when I became vice president and chief legal strategist – responsible for managing the advocacy agenda, the ACC Value Challenge and our chief legal officer and legal executive engagement efforts.
Editor: Describe how issues are prioritized and the ACC’s resources are deployed.
Sarwal: We have divisions for membership, marketing and legal resources, which deliver practical advice to in-house counsel. My division complements those great service lines. I run the legal strategies division, which seeks to lead, provoke and stimulate conversation on hot issues facing in-house counsel that arise from a variety of sources: courts, regulators, outside counsel, media and legal departments themselves. The ACC Value Challenge is about reorienting the delivery of legal services, based on the idea that clients should drive the substance and logic of legal billing. Some clients prefer predictability in the form of hourly rates, while others tie value to the reduction of bad legal results, and law firms must internalize these preferences to determine billing procedures for each client.
Editor: How does ACC view and support corporate counsel’s role in compliance?
Sarwal: To use one specific example, the SEC whistleblower bounty program has placed the world on the shoulders of corporate counsel by draining the lifeblood – tips from whistleblowers – from responsible internal compliance and reporting systems. For the past 30 years, but particularly after the Siemens 2008 settlement in the amount of $800 million, in-house counsel have implemented the key principles animating the U.S. Sentencing Guidelines approach to robust internal compliance. Companies are better qualified than regulators to ensure that these programs perform, not just domestically, but globally.
Whistleblower compliance program performance must reach beyond the hotlines, which are useful and offer essential anonymity. I’ve talked to companies that offer hotlines in 27 different languages, and many try to particularize them with sensitivity to the different cultures within the structure of a multinational company. These efforts are remarkable and prove that companies are uniquely qualified to understand their own circumstances and implement creative compliance initiatives that enhance government-mandated hotlines.
One in-house counsel did a study on reporting processes within the company and related industry competitors and discovered that a majority of useful tips actually were communicated to the supervisors, not to the hotline. This prompted supervisor training aimed at managing this process and learning how to detect evidence of fraud or misconduct during conversations with employees at all levels. Whistleblowers can be a company’s ally and a valuable source of insight about activities on the ground; however, a company should not allow the tremendous pressure for quick action by the SEC to force a rush to judgment.
There was a case in which Renault jumped to conclusions and wrongly terminated three executives suspected in a bribery scheme. The instigating tip was later determined to be fraudulent, and Renault had to rehire the executives. These delicate situations reflect the complex environment that today’s GCs must navigate, in spite of having spent the last 30 years, as a group, developing and implementing compliance systems.
ACC is committed to helping corporate counsel manage SEC regulations and internal compliance initiatives. For example, our Annual Meeting in Denver featured programs on whistleblowers, and we also encourage ACC chapters to provide additional support and foster open dialogue among members.
Editor: Should companies train their legal staffs to detect potential compliance issues?
Sarwal: Most cutting-edge law departments seed their lawyers throughout the company to ensure familiarity with the business and to enable them to identify and proactively address issues before they mushroom into serious misconduct. This is one of the practical tips the ACC offers to its members: insight into what leading departments are doing. For instance, we host CLO ThinkTanks and produce a CLO Executive Bulletin, but we also seek to advocate at a higher level and actually engage with regulatory agencies like the SEC. Law departments can deliver enormous internal value to their companies by leveraging the ACC’s resources to speak with one voice on important issues – such as the FCPA and the UK Bribery Act – seeking, at minimum, to harmonize global compliance efforts.
Editor: Are you also involved with pro bono initiatives?
Sarwal: ACC has a robust pro bono initiative led by Kevin Buck, our vice president and chief marketing officer. In conjunction with Kevin, our team works with Pro Bono Institute as part of a joint venture called Corporate Pro Bono. This collaboration seeks to support in-house counsel and their law departments in their efforts to provide pro bono services to needy clients. Unfortunately, some states forbid in-house counsel from offering this kind of assistance. So, ACC has been engaged for many years in an effort to educate and influence state bar regulators about how in-house counsel can help individuals obtain access to justice. In just the past few weeks, we have filed comment letters with the Iowa and Hawaii supreme courts and plan to file one in Minnesota in a few weeks. We are very active on the multi-jurisdictional front to ensure that in-house counsel have the same freedom to deliver pro bono service that outside counsel enjoy.
Editor: Are you involved in the effort to expand bar association licensing for corporate counsel of a global company?
Sarwal: Absolutely. We will be filing letters with the ABA’s Commission on Ethics 20/20, which is studying this issue as well. Our approach is freedom of mobility for in-house lawyers who are in good standing in their home jurisdictions, provided they comply with professional conduct rules and individual state rules as applicable in each case. Because a corporate counsel works for the same client regardless of jurisdiction, there is not the same risk of client abuse that is of potential concern with outside counsel. While this approach departs from usual practices of state bar regulators, it also reflects an appropriate view of the U.S. as one nation, not 50 states.
Editor: General counsel are frequently called to attend meetings of the independent directors with no other member of management present. Does ACC sponsor or intend to sponsor programs for GCs in which they can frankly discuss among themselves the often-delicate issues such meetings present?
Sarwal: Yes, we do. Your excellent question reaches back to Sarbanes-Oxley and basic ethical rules concerning an attorney’s primary obligation to identify the client, and the rules make clear that the company is the client, not the CEO. If GCs are not forthcoming about concerns or issues they discover or do not work independently with outside directors, the GCs can get in trouble.
Over the last decade, regulators have increasingly focused on GCs as targets for criminal and civil liability for failing to act as adequate gatekeepers, and so there have been more and more cases like this, particularly from the SEC. Further, I expect this will become a major issue for the in-house counsel bar, based on the number of investigations brought to my attention that will result in even more cases over the next three to five years. So, it’s a sensitive issue and really reflects that in-house counsel practice is extraordinarily sophisticated, with GCs required to mediate the relationships among CEOs, boards of directors and independent directors.
The forum ACC uses for these programs is the CLO ThinkTank, which is attended only by chief legal officers, myself and other logistical staff. We capture insights for the benefit of our other members – without attribution – and often discuss the issue you raise here as a particular concern for larger law departments. We also focused on this issue during the lead session for our annual meeting and offered an additional plenary session focusing on how to manage these communications during a crisis situation. Our panels are comprised of prominent lawyers – including the current general counsels of KPMG and Bank of America, the former general counsel of AIG and the head of litigation at Pfizer – all discussing exactly this suite of issues and how they play out in practice.
These discussions highlight the importance of understanding the critical lines of communication with independent directors and with the board and senior leadership generally. Particularly during times of crisis, GCs should follow strictly defined protocols and know in advance who the “go-to” people are for particular situations.
Editor: Do ACC’s local chapters leverage its national efforts to provide relevant programs?
Sarwal: Yes. Our U.S. office works closely with chapters to share insights from CLO ThinkTanks and other groups with whom we work, and many chapters have their own robust networks of CLOs. ACC chapters are the main interface with members; they work on the ground and offer tremendous programs. For example, I recently spoke with the ACC Europe Chapter about efforts to establish a common sales law governing the entire EU and how this development affects in-house counsel. The practical, real-life insights I gain from conversations such as these are just staggering.
This collaboration is a major coordination effort, but we also have a great staff that provides additional support. In addition to my own efforts with advocacy and legal strategies, Robin Grossfeld and Tori Payne, membership vice president and chapters director respectively, oversee member and chapter relations. Their teams do a masterful job in managing the infrastructure and producing chapter programs and newsletters, and our general counsel, James Merklinger, coordinates with them on legal resources.
Editor: How can The Metropolitan Corporate Counsel help the ACC with its programs and initiatives?
Sarwal: I invite your readers to learn more about the our international and chapter activities, which MCC generously publicizes. The ACC very much appreciates MCC’s past articles on ACC chapters and leadership, and we encourage further collaboration to spread the word about chapter and member activities and to maintain a vital dialogue with corporate counsel.