Using tech to avoid trouble with Foreign Corrupt Practices Act

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By David Simon and John Turlais

There’s no question technology is creating more efficiency and greater access to legal services.

Foley & Lardner’s Foley Global Risk Solutions project identified a market segment for legal services that we felt was being under-served: middle-market companies with international sales and operations – and thus significant Foreign Corrupt Practices Act risk – that may not have the internal resources to develop an effective anti-bribery compliance program.

The usual system of providing advice on an hourly basis just didn’t work for many of these companies. It produced high and unpredictable fees and resulted in advice and recommendations rather than a functioning compliance program.

Attempting to solve this problem for our clients, we knew we had to rely on technology to fulfill our promise of providing a real anti-bribery compliance program that would be designed to meet regulators’ expectations and that could be offered at a reasonable fixed price.

To that end, we built the Global Risk Solutions service, also known as GRS, on a cloud-based platform. This provides two significant benefits to our GRS clients.

First, it made entire anti-bribery programs – policies, procedures, risk-assessment results, training material and results, contract language, and access to legal advice – easily accessible to company employees who were exposed to Foreign Corrupt Practices Act risks.

Second, it ensured that compliance programs and all related activities are documented. This is absolutely critical, since, from regulators’ perspective, if a compliance action isn’t documented, it did not happen. In addition, a well-documented compliance program allows companies to report to and satisfy interested constituencies such as company directors or private equity owners who are worried about liability under the Foreign Corrupt Practices Act.

We learned that it was necessary to go beyond the rudimentary technology required to create and maintain the compliance platform. To deliver our service for a fixed annual subscription fee, we found that we needed to employ more advanced technology.

Two parts of the offering were particularly improvable through the use of technology:  (1) our risk-assessment function; and (2) legal advice and counsel provided on specific Foreign Corrupt Practices Act and anti-bribery issues that arise in our clients’ normal course of operations. After researching the options, we decided to work with Neota Logic to develop these two applications.

When working with clients on issues related to the Foreign Corrupt Practices Act, we always start with a risk assessment and then build an individualized compliance program. Gathering data to inform a risk assessment can be extremely time-consuming, and we have found that the use of technology is essential if we want to deliver these services at the price we want for our clients. The app we developed on Neota Logic’s platform allows our clients to enter data and answer questions about their international operations.

We developed and embedded a series of algorithms that automatically – without lawyer involvement – collect and assess such information and provide a baseline risk assessment.

This process creates a Foreign Corrupt Practices Act Heat Map (a risk-ranking score for each country in which our clients do business), as well as a business risk score and a compliance progress score. The information generated by the application is ultimately reviewed by a GRS lawyer and a more subjective, qualitative review is applied.

The second application we developed is our “curbside counseling” app, which helps use provide legal advice on specific Foreign Corrupt Practices Act issues to our clients. This app employs even more advanced technology and has our legal analysis embedded in it.

We began by identifying the various categories of questions we typically get from our Foreign Corrupt Practice Act counseling clients and attempted to reconstruct every variation of a counseling session we could imagine. The app itself asks a series of questions, the answers to which generate certain conclusions behind the curtain (e.g., “Will a government official be attending the dinner you are sponsoring?”) and will often prompt additional questions (e.g., “You said you were using a broker for this transaction. What is the name of the company? Who is the owner? Is the owner tied to the local government?”).

By the end, the app will have collected the information we need to provide advice. The data are given to a GRS lawyer, who ultimately exercises legal judgment and provides advice to the client.

The technology makes the process much more efficient, ensures that the requests and responses are documented and helps ensure that the advice provided is consistent.

In a global market that offers significant growth opportunities, it will be innovative services and products like GRS that provide the needed, effective legal protections that keep businesses out of the regulators’ crosshairs.

David Simon is a founder and Managing Director of Foley GRS and a partner at Foley & Lardner; John Turlais is a founder and Deputy Managing Director of Foley GRS and special counsel and litigation lawyer at Foley & Lardner. Both specialize in FCPA and anti-bribery compliance, internal investigations and enforcement defense.