U.S. compliance education expands as demand increases – Part One: law schools

December 3, 2014

By Julie DiMauro, Compliance Complete

NEW YORK, Dec. 3 (Thomson Reuters Accelus) – As companies spend more on compliance to meet regulatory imperatives on financial crime, data privacy, supply-chain management and others, the focus on compliance officers and their skill set has expanded.
This has in turn put a focus on preparation for the increasingly challenging role of compliance officer, the subject of this three-part series. The first installment looks at how some U.S.-based law schools are starting to realize that they are well-suited to offer programs that will prepare students for this role, and it seems likely more will follow.

The second installment of the series will explore the training that some companies and professional membership groups are offering, and give a view from recruiters on the impact of compliance training on career prospects. Part three will examine how several countries got ahead of the United States in creating compliance-focused educational opportunities at their universities.

Law school curricula

Most law schools offer a course or two on white-collar crime and smaller seminars in discrete areas such as the Foreign Corrupt Practices Act (FCPA). This is in addition to the standardized, two-credit ethics course that U.S. law schools must offer third-year students.

Yet only a handful of law schools offer curricula geared specifically for the compliance role. This despite the fact that the compliance profession is booming, with starting salaries for compliance officers rising 3.5 percent each year since 2011.

There are no specialized degrees required for compliance officials. But as demand has intensified, candidates with law degrees have moved into the field in greater number.

Compliance professionals in banks or broker-dealers with a couple of years of experience often make $65,000 to $85,000; five to 10 years of experience can command a base salary of up to $150,000 per year.

JP Morgan Chase announced in late February that beefing up regulatory controls was a priority for 2014, even as it made steep head-count cuts elsewhere in the firm. The company said it planned to add 3,000 employees in the compliance function, even after adding 7,000 such employees in 2013.

Just as compliance is a growth area, the opposite is true of the job market for lawyers.

Members of the law-school class of 2012 had little better than a 50-50 shot of landing a job as a lawyer within nine months of receiving a degree, according to the law school reform group Law School Transparency. In 2012 more than twice as many people graduated with law degrees (46,565) as there were estimated job openings (21,640) for them.

Teaching corporate compliance to JDs

One school that has adjusted its teaching focus to prepare for the compliance profession’s growth is New York University Law School.

“Our program on corporate compliance focuses on compliance and enforcement, going from start to finish,” said Jennifer Arlen, Director of NYU’s Program on Corporate Compliance and Enforcement (PCCE).

“PCCE is a law and policy program dedicated to developing a richer and deeper understanding of the causes of corporate misconduct and the nature of effective enforcement and compliance,” she said.

Each year, a small group of students join the program, enabling them to gain expertise through coursework and through access to leading practitioners who guest-teach classes and share their experiences.

PCCE is directed by Arlen, Professor Geoffrey Miller (author of a coursebook entitled “The Law of Governance, Risk Management and Compliance”) and executive director Serina M. Vash.

Former CFTC enforcement chief David Meister and Judge John Gleeson of the U.S. District Court, Eastern District of New York, were two of the practitioners who shared their insights in the past year. Gleeson walked the students through various aspects of complex investigations, noting red flags the government will look for and the access it has to documents, such as employee emails.

“We try to prepare our students for a professional career path that might take them directly to compliance, or first to a regulator and later to a compliance position, or from a compliance position to a law firm role,” Arlen said.

The more prosecutors knows about compliance, the better they can enforce components such as reporting and training, she noted.

Students who had participated in the program then served as summer associates said they knew as much about the Foreign Corrupt Practices Act as some full-time associate attorneys, Arlen said. One of her former students helped instruct several partners on New York’s Martin Act, a state securities law the students had been taught about by a representative of the New York Department of Financial Services.

Arlen said she hoped to create a course on whistleblowing, particularly since some boutique lasw firms are developing expertise in this area.

George Washington University Law School in Washington, D.C. offers a course on anti-corruption, ethics and compliance.

The goal of the course is to make students think about legal and policy issues involving anti-corruption statutes (FCPA, False Claims Act, asset forfeiture, suspension & debarment, etc.) and consider how anti-corruption, ethics and compliance work in the real world.

“We don’t just teach to the students. We require them to develop a corporate compliance system on their own,” said Jessica Tillipman, Assistant Dean of GWU’s Law School and one of the course’s instructors. “We evaluate the students on the completeness and effectiveness of the program, asking them how they demonstrated results to the board, involved senior leaders, and communicated their policies to every line of the business,” Tillipman said.

The course also covers compliance best practices and the development of a corporate culture. Students learn how to design a whistleblower program, and how to distinguish between instituting a compliance regime and an ethical culture in a business.

“We explore ethical quandaries, such as gifts and hospitality rules and conflicts of interest that may not violate any rules but put the firm at risk,” she said. “We emphasize how students would advise their clients along the way.”

The course features lecturers who are experts in their fields — such as current and former regulators — so students can see how their learning could be applied in real-life investigations and enforcements. A federal Suspension & Debarment official will be visiting Tillipman’s class soon to walk students through a suspension and debarment proceeding so they know how to represent a client in such a situation.

“I have seen former students graduate to become successful anti-corruption and compliance practitioners at companies, law firms, consulting services and international organizations,” Tillipman says of her six-year experience in teaching the class.

Tillipman has shared her syllabus with other schools and she has seen other law schools that don’t offer these compliance-based courses begin to map out a way to do so.

Fordham Law School in New York offers compliance instruction as part of a master of laws degree program in corporate compliance, which began this fall.

The school also offers a 3-week program and a 1-week program that award certifications to current or future compliance professionals who may or may not be lawyers.

The master of laws degree program has eight students this year and is based on the U.S federal sentencing guidelines’ Seven Steps for an Effective Compliance and Ethics Program, which serve a fundamental compliance standard.

Carole Basri is the architect of the course and its principal instructor, but she relies on a long list of highly skilled practitioners to help bring her lectures to life.

“I bring in the AML directors of the major banks, auditors from the big four accounting firms and CCOs from private equity funds — experts from major companies who are doing the type of work I am preparing the students for,” she said.

Students in the program develop a portfolio of documents that show they understand the myriad aspects of compliance — from knowing how to conduct an internal investigation and setting up a whistleblower hotline to understanding potential sanctions a business could face.

They also collectively conduct a risk assessment in which they create a training program and code of conduct for a large bank.

“The students create the risk assessment and a crisis management plan,” Basri said. “They learn how to prioritize risk and understand there is a process involved in managing it.” Students also learn to distinguish compliance from law as distinct professions and business roles.

Program graduates have been finding good employment opportunities, Basri said. “They have documented proof of their understanding of the practical components of a compliance professional’s job to show hiring managers,” she said.

Basri spreads word of her program during frequent travels. “I want to fill the compliance field with people who have the auditing, risk-assessment and legal skills they need to build strong and effective compliance programs,” she said.

An expanding list

Although the list of law schools offering compliance-centered coursework is growing, the number still represents just a handful of U.S. law schools.

Illinois Institute Chicago-Kent College of Law offers an Institute for Compliance that trains students for a career in financial services compliance, calling itself the first unit of its kind inside a U.S. law school. It emphasizes learning from current chief compliance officers, but also offers a compliance-centered job board with internship and full-time job listings in the compliance, risk and AML-specific arenas.

Beginning this spring, a Global Compliance and Ethics course will be launched at Widener University School of Law (Wilmington, DE) for the school’s Masters of Jurisprudence students.

The teacher of this new course, Kristy Grant-Hart, said she was surprised that she had to create the instructional materials for the course herself, since she could not find appropriate materials to borrow from other law schools.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges. Follow Accelus compliance news on Twitter: @GRC_Accelus)

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