Making sure compliance is kept

April 20, 2016
meier-tabitha-mug.jpg Meier

Barnes & Thornburg LLP has launched a new corporate compliance group aimed at giving clients a “one-stop shop” at the same time the firm and one of its lawyers has received a top assignment from the federal government.

The firm announced it is opening a compliance practice group, which is focused on giving corporate clients easier access to compliance-related needs they may have, according to group co-chair Tabitha Meier.

mackey-larry-mug.jpg Mackey

Just before the announcement, Larry Mackey, a litigation partner with the firm, was selected to serve as an independent monitor of Olympus Corp.’s compliance with deferred prosecution agreements. Olympus is a Japanese-based manufacturer of optic, photographic and copying techniques. The company manufactures camera parts as well as medical devices including endoscopic, ultrasound and endotherapy, and cleaning and disinfection equipment.

Mackey said his selection as monitor and the firm’s creation of a group will move its compliance practice forward.

The group serves companies that immediately need a compliance program, and members will design a program that aims to keep the company out of legal trouble as long as everything is followed. Meier said convenience was a major factor in starting the group.

“A lot of firms don’t package services in a way that clients immediately need,” Meier said. “We have 70-plus members in a variety of areas: antitrust, document retention and other areas. We wanted a holistic approach to business and industry. What kind of program can mitigate their risk?”

Meier said a compliance program can not only help prevent litigation, but if it does happen, it can make litigation easier on everyone. There will be a record of what steps have been taken, and many times the noncompliance can be linked to just one person, and not the entire company.

“In some cases the government concluded the company had a rogue employee, and you can’t control every individual. The government looked at only the individual and not the company,” she said.

However, Mackey said the program needs to be more than a “paper tiger” and easily be able to demonstrate what measures have been put in place and how they have worked. With a well-run compliance program, independent monitors may never be needed.

“It can really reward you greatly with reduced penalties and no criminal exposure,” Mackey said.

But when companies don’t have compliance programs or good ones, they can run into trouble, such as what happened with Olympus Corp. The company won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, lavish meals, grants and free endoscopes. They gave a hospital a $5,000 grant to facilitate a $75,000 sale and paid for a trip for three doctors to travel to Japan in 2007 in return for their hospital’s decision to switch from a competitor to Olympus, among other violations.

Also, Olympus Corp. of Latin America, a subsidiary, entered into a separate deferred prosecution agreement after it provided payments to health practitioners at government-owned health care facilities, including cash, money transfers and personal grants.

In order to avoid criminal charges, Olympus was forced to pay more than $646 million, as well as pay for an independent monitor and implement compliance measures that will make sure that doesn’t happen again.

Mackey and Barnes & Thornburg were selected from a number of law firms across the country by the Department of Justice to oversee Olympus’ compliance. Mackey said his selection was “a tribute to the strength of this law firm” because the DOJ has developed very rigorous standards in appointment of monitors.

‘They mean business,” Mackey said. “You need the right kind of people and resources to do a great job.”

Mackey said the firm had to participate in a series of interviews and information sharing with both the Department of Justice and Olympus before being chosen.

“We had a dozen people from Washington, D.C., New Jersey, the CEO of the company and the sales and marketing unit,” interview the law firm, Mackey said.

There were a couple of things that Mackey thought set Barnes & Thornburg apart. The firm was very involved in the entire process of selecting a monitor and recognized corporations and government play a role. Also, the firm brought in a forensic accounting firm to prove Barnes & Thornburg was a large and data-driven firm.

“That’s not something you see in all law firms,” Mackey said. “And I think it showed we had the foresight to know assignments are not strictly legal, even if they are complying with the law.”

Meier said Barnes & Thornburg’s experience played a role as well.

“There are four former federal prosecutors on staff and a former U.S. attorney,” Meier said.

Mackey, one of the former federal prosecutors in the group, said while he can’t dictate anything while monitoring Olympus Corp., he can make recommendations, and he expects full cooperation from Olympus as the company tries to become compliant and avoid criminal prosecution.

“They have the full expectation that we’re going to bring our experience to bear,” Mackey said. “We’re going to evaluate people and policies and make recommendations to improve those. I think they’re very serious about implementing any changes we recommend and will seriously consider them.”

Both Meier and Mackey said they are seeing an increased focus on compliance from the Department of Justice. The DOJ brought on a new compliance counsel, they said, with a focus on benchmarking and protocols.

“In the cases that have a monitor,” Meier said, people recognize lack of compliance “corrupts business and hurts all marketing participants.

“So it’s everyone that’s realizing this is a problem.”•


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