Law Times

Page 8 OctOber 3, 2016 • Law times www.lawtimesnews.com Crisis response teams ready for whistleblowing program BY JUDY VAN RHIJN For Law Times T he rollout of the Ontario Securities Commis- sion's new Office of the Whistleblower this July has not caught larger law firms napping. For the last five years, firms have been developing and brand- ing white-collar crisis response teams to react to an anticipated upswing in internal investiga- tions in the corporate world. Crisis teams may be getting more interest, for example, if the Ontario Securities Commis- sion's whistleblower program has wide take-up. The program offers compensation of up to $5 million to people who come forward with tips that lead to enforcement action in relation to possible violations of Ontario securities law, including illegal insider trading, market manipu- lation and accounting and dis- closure violations. "We are expecting to see more investigations start as a result of whistleblowing," says Danielle Royal, a partner at Stikeman El- liott LLP. "Whistleblowing is not new, but the policy to provide in- centives is." Royal is part of the white col- lar and regulatory crisis response team at the firm. She says her group had been doing a signifi- cant amount of white collar crime investigations over the last 15 years but only officially branded the group four years ago. "We saw our competitors branding practice groups in the U.S. and Canada," she says. "We knew we had as much, if not more, expertise from a Canadian law perspective. It's important for marketing but also for letting clients know that we have exper- tise both in respect of investiga- tive practice and subject matter." Royal says if allegations of cor- porate wrongdoing occur, one of the benefits of retaining external counsel in the initial fact-finding stage is in establishing a potential privilege claim. "When a company retains le- gal counsel, the contents are sub- ject to attorney-client privilege. If the internal compliance group do the initial investigation, that is disclosable both to regulators and in the event of a civil action," she says. Royal observes that often, when crises erupt, there is pres- sure to do something quickly. "Decisions are made without thinking about the consequenc- es. The companies want trans- parency, so getting information out to the public is more impor- tant than preparing for future lawsuits," she says. "We have seen how these crises unfold and the repercussions. With our involve- ment, the company can make an intentional decision [whether to waive attorney-client privilege]." Norm Keith, a partner at Fasken Martineau DuMoulin LLP, is part of the firm's white- collar defence and investigations group. He says that regulators expect the alleged wrongdoer to hire a lawyer. "It's necessary if you want them to consider deferred pros- ecutions. It makes sense to co- operate with regulators," he says. Keith considers the whistle- blowing program to be contro- versial because it encourages turning alleged wrongdoers into an outside agency instead of an internal compliance group. "Rather than encourage com- pliance, it encourages non-com- pliance and profit." He is particularly concerned that a co-conspirator is not dis- qualified from recovering under the scheme. "A person can technically profit from their own crime, which is against the English common law precepts," he says. Royal is more optimistic about the program. "The Securities Commis- sion has tried to strike a balance between the potential for abuse and providing an incentive for individuals who notice a prob- lem and feel they are in a posi- tion that they can't bring it to their own employer's attention. It's given them a path. It remains to be seen if they have struck the right balance," she says. Whistleblowing is not the only area where crisis teams are expecting to see increased activity. Growing regulatory scrutiny and law enforcement are expos- ing corporations to the risk of criminal and regulatory pro- ceedings as well as conduct-relat- ed civil litigation. Jim Douglas, national co- head of the investigations and white-collar defence group at Borden Ladner Gervais LLP, re- calls that his team was developed in response to the growing com- plexity of commercial crime in the securities, competition and trade areas. "We formally decided about five years ago to stake out some turf in the area of internal investi- gations and white-collar defence. We put a label on what we were previously doing under the rubric of our capital and security mar- kets litigation practice," he says. "There is increasing pressure on law enforcement to devote at- tention to the white-collar area," Douglas says. "Take, for example, the capi- tal markets area. Regulators now have formal co-operation with what were previously wholly independent policing bodies through the OSC's Joint Serious Offences Team," says Douglas. "This is one of the many dif- ferent initiatives undertaken to advance the regulatory and po- licing world's expertise in the area. They are making more use of tools and regularly looking to expand powers and tools." Keith has also observed that regulators are becoming more aggressive. "There is a growing sense amongst the common people that people who wear suits shouldn't get away with crime just because they scrub up better and wear a white shirt and tie," he says. "Regulators are feeling more public pressure to use all their tools to root out potential wrongdoing." The teams all offer advice on risk avoidance as well as crisis re- sponse services. "We provide services to de- velop risk assessments of what potential risks they face in the marketplace, depending on the nature of the industry," says Royal. "We provide internal and ex- ternal protections and public re- lations expertise to put contacts in place so corporations are not operating in reactive mode. We hope they don't need it, but it's ready to go if they do." LT FOCUS ON LITIGATION FOCUS Danielle Royal says she expects to see more investigations launched into cor- porate wrongdoing due to the launch of new whistleblowing program. IT'S TIME TO RANK… THE TOP 10 INSURANCE DEFENCE, TAX, WILLS, TRUSTS & ESTATES BOUTIQUES Complete the survey online at canadianlawyermag.com/surveys and make your picks. SURVEY IS OPEN UNTIL OCTOBER 31 st Untitled-5 1 2016-09-13 2:57 PM

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