With the current global economic outlook, climate change issues may be taking a back seat to fiscal woes, but corporate counsel will want to stay on top of the issue given recent developments in the area of environmental adaptation. A recent report from the National Round Table on the Environment and the Economy suggests the cost of climate change could top the $5-billion mark in Canada in less than eight years, and rise to between $21 billion and $42 billion by the 2050s.

The NRTEE suggests the magnitude of the costs depends on a combination of two factors: global emissions growth and Canada’s economic and population growth. The report addresses what those costs could be and underscores the fact that while there is an environmental cost to climate change, there is also an economic cost: a cost of climate impacts occurring and a cost of adapting to protect against those impacts.

Since climate change impacts manifest in different ways in different regions and sectors of Canada, NRTEE conducted specific “bottom-up” studies to assess the costs of climate change on three representative aspects of Canada: its prosperity (timber supply), places (coastal areas), and people (human health). “By the 2050s, the impacts of climate change on the timber supply through changes in pests, fires, and forest growth are expected to cost the Canadian economy between $2 billion and $17 billion a year,” states the NRTEE report entitled, “Paying the Price: The Economic Impacts of Climate Change for Canada.”

The report also points out that the coastal land area exposed to climate-change induced flooding from rising sea levels and increased storm activity across the country is roughly equivalent to the size of the Greater Toronto Area. Climate change, it adds, will lead to warmer summers and poorer air quality, resulting in increased death and illnesses in the four cities studied in the report: Montreal, Toronto, Calgary, and Vancouver. In Toronto alone, the report suggests the cost to the health care system for climate change-related illness could top the $11 million a year mark by the 2050s.

Adaptation is a concept that’s still gathering momentum and hasn’t broken through the public consciousness yet, says Chris Tollefson, a professor of environmental law and sustainability at the University of Victoria in British Columbia, but the academic community is squarely focused on the issue. “We have scientists, both hard scientists and social scientists, looking at how we manage the timber supply, the species of plants we grow, the measures that need to be taken to protect communities from forest fires, and how we maintain healthy economies,” he says, pointing out there can be significant returns on investments made in adaptation initiatives. “There are things that can be done around adaptation that can support mitigation and achieve a good bang for the buck. In the mitigation debate, people wonder if the bang for the buck is worth it.”

Donna Shier has witnessed a lot of change in environmental law over the last 30 years. When Shier began her Toronto practice, Willms & Shier Environmental Lawyers LLP in 1978, environmental mishaps where the lawyers were called in were referred to as “toxic torts.”

“It was barely a discipline,” she says. “From there we moved to environmental management problems, and there was a lot of it in the late 1970s and early ’80s: midnight dumping, buried oil drums; that was the heyday of that sort of thing.”

Since then, Shier insists, there has been much consciousness raising and companies have followed suit, incorporating sound environmental practices into their overall business operations. “A dozen years ago, I would have said environmental management is not like heat, lights, and taxes, but today I would say waste disposal and property waste management are right next to the heat, lights, and taxes” on the financial balance sheet.

A recent report from the Conference Board of Canada emphasizes the obligations of the private sector in responding to climate change by developing strategies that promote resilience and adaptation. The August 2011 report “Beyond Sandbagging: Building Community Resilience to the Impacts of Climate Change,” states that “given the importance of critical infrastructure to mitigating and recovering from a climate-induced threat, owners and operators have an important role to play.”

Serving up protection

To date, much of the work in climate change has been focused on mitigation efforts that aim to reduce carbon emissions on a global scale, but for a variety of reasons, these efforts have realized only moderate success. Add to the equation a lack of global consensus on targets for reducing emissions — and a precarious global economy — and the results are predictable.

“We’ve seen in the last five years a situation where climate change has been relatively high profile in the media and it’s still not enough to drive public policy,” says Douglas Clarke, a partner with Gowling Lafleur Henderson LLP in Montreal. “In many areas of the world such as Asia and India, there is tremendous economic growth with little greenhouse gas mitigation measures in place. When I look at it, I think if the most educated, sophisticated, knowledgeable people on this topic can’t change their conduct, how do we expect anyone else to?”

Many experts suggest mitigation efforts alone will not be a sufficient response to climate change. They argue that even if emissions growth could be brought to a grinding halt today, it would do nothing to stem the impact of greenhouse gases already in the atmosphere. Rather, businesses and communities will need to take steps to adapt to the changes in climate affecting them.

The idea of adapting to climate change has been around for a long time and is something that doesn’t replace mitigation efforts, but rather, works in tandem with them, says Jennifer Cleall, a partner with Davis LLP in Edmonton. “We should continue our efforts in the area of mitigation and we should reduce our emissions in an effort to slow down climate change, but we have to recognize it’s happening, and we have to ask, ‘what will you do to make yourself less vulnerable,’” says Cleall.

The whole idea of adaptation is that it’s complementary to the mitigation objective, says Alex MacWilliam, of Fraser Milner Casgrain LLP’s Calgary office, whose practice is almost exclusively devoted to environmental matters. “There are those who would argue that increasing the focus on adaptation is not the way to go, but I don’t agree with that,” he says. “I don’t think we’ll be able to effectively mitigate all the man-made impacts to the environment caused by emissions, so how do we adapt going forward?”

Calling on in-house counsel

If internal corporate lawyers haven’t come face-to-face with the legal ramifications of environmental adaptation, they need to prepare themselves. “For corporate counsel, there are issues they need to be aware of,” says Cleall. “They need to understand how climate change is impacting their organization, and they need to identify what the risks and opportunities of adapting to those changes are.”

Companies that manufacture energy-efficient appliances, she says, are an example of an adaptive response to climate change. Front-load washing machines, for example, use 50-per-cent less water than traditional top-load machines. “That’s adaptation, and for companies that are able to successfully adapt to changes in the environment, they’ll see tangible returns on their investments.”

Cleall advises in-house counsel to study the issue and identify the risks and opportunities for their organizations now. “Ensure there are policies and measures in place to deal with it, and put those into your planning process so when the climate change impacts become bigger, they won’t seem insurmountable.”

Meanwhile, MacWilliam points out that adaptation initiatives fall under the domain of an organization’s overall risk management strategy, and this issue could provide in-house lawyers with an opportunity to lead the charge. “Over the years, I’ve noticed that sophisticated companies are involving in-house counsel more and more in policy discussions,” he says. “There was a time when in-house counsel got involved strictly on an operational basis, but more and more they’re involved at the policy level and quite often involved with discussions their companies are having with industry associations or governments.”

Cross-border implications

While many businesses are starting to recognize the need to deal with adaptation issues, only a few truly understand all the risks and opportunities it represents,” says Radha Curpen, a Toronto partner with Bennett Jones LLP. Curpen’s firm works with clients who have both Canadian and U.S. operations, many of which are publicly traded. Bennett Jones, she says, is seeing a lot of client activity in the area of disclosure.

For public companies, investors are increasingly interested in how companies are managing their risk,” says Curpen. “They are seeking disclosure on the adaptation front on both sides of the border. If you’re a mining company, you need to look at the impacts of physical climate changes on water resources, for example.”

There are continuous disclosure obligations for the environment, both in the annual information forms that are filed and in the management discussions and analysis, Curpen adds. She points to two cases that have set the stage for environmental considerations having a more critical profile in a company’s public reporting process. The Supreme Court of Canada’s 2004 decision in Peoples Department Stores Inc. v. Wise, ruled that “it may be legitimate . . . to consider . . . the interests of shareholders, employees, suppliers, creditors, consumers and the environment. The 2008 Supreme Court decision BCE Inc. v. 1976 Debentureholders stated: “directors acting in the best interests of the corporation may be obligated to consider the impact of their decisions on corporate stakeholders. This is what we mean when we speak of a director being required to act in the best interests of the corporation viewed as a good corporate citizen.”

For in-house counsel, Curpen recommends a thorough assessment of their current governance system to begin with. Both the Securities Exchange Commission in the U.S. and its Canadian counterparts have clearly stated that boilerplate disclosure is not sufficient. “Companies need to specifically report how their operations could be impacted if they are material,” Curpen says. In-house lawyers, she adds, are often the first line of defence in identifying, assessing, and managing those risks. “Some companies may have cost projections in the event of climate risk,” Curpen explains. “Start with your existing processes and you may need to build on those. There may be opportunities in terms of market needs. There may be other stakeholders in the company who have taken a leadership position with respect to climate change. Start engaging those partners in the discussion.”

A mid-September webinar gave Patricia Wilson an insight into the waves Canada’s anti-spam law is making in the in-house community. The Ottawa partner at Osler Hoskin & Harcourt LLP co-hosted the event, which drew an unseasonably large audience of well over 300 viewers from across the continent, mostly corporate counsel hungry for information on compliance with the new legislation. “I think many businesses are just realizing that this applies to them, too. They’re all going, ‘Oh my God, what do we have to do?’” Wilson says.

Bill C-28, or CASL, as it’s become known, received Royal assent in December 2010, and while Canada arrived late to the anti-spam party — it was the last of the G7 nations to enact legislation dealing with the issue — it’s been making up for lost time since, quickly establishing itself with some of the toughest provisions the world has seen.

The act bars senders from delivering unsolicited commercial electronic messages, which includes text messages and e-mails, without receiving express or implied consent from the recipient. The broadness of the legislation has challenged common conceptions of spam, and forced businesses to rethink the way they market themselves and sell to the public.

“Anti-spam legislation is typically considered as something that goes after the bad apples. People think of those in-the-depths-of the-night type e-mail spammers who are running scams or sending viruses,” Wilson says. “This legislation has quite a broad scope and it will capture many regular business operations by legitimate operators, so in-house counsel are starting to realize that this imposes additional requirements that they’re going to need to take into account.”

To give it some muscle, the government has backed up its new measures with some impressive potential fines. Individuals who breach the law can face penalties of up to $1 million, while corporations are liable for as much as $10 million. Officers and directors may also be held liable if they participated in or acquiesced to the breaches. The act also creates a private right of action for CASL violators, paving the way for potential anti-spam class actions, with remedies capped at $1 million per day.

Those headline-grabbing numbers have been enough to attract the attention of many legal departments, but at the Globe and Mail, legal counsel Logan Willis says they’re not the only things that should concern them. “Penalties can be very high, but there are also reputational risks associated with non-compliance. At the Globe, for example, two-way engagement with our readers and the users of our media is very important to our business, so it’s critical we live up to their expectations as well. Those expectations will be shaped by this legislation in the future,” Willis says. “We’re treating compliance very much as a priority, and getting prepared is a lot of work.”

U.S. companies with Canadian customers face an additional headache, says Wilson, because CASL applies to any commercial electronic message sent from or received by a computer in Canada, and sets a higher bar for consent than its U.S. equivalent, the 2003 CAN-SPAM Act. “It’s difficult for U.S. businesses. Most are very compliance oriented, but they have the additional difficulty of having to locate recipients to confirm they are Canadian, as well as making sure they comply with the law,” Wilson says.

At the Globe, Willis has established an anti-spam team, with representation from across the company, to educate personnel on the requirements of the new law. They are then tasked with cascading the information down through their own departments. “We’ve found with other legislation that making sure people understand it is really the best defence for ensuring there’s no non-compliance in the future,” Willis says. The Globe is also conducting an audit of all existing communications the company has with clients and users to identify which relationships meet the strict consent requirements and which raise compliance concerns.

At Johnson & Johnson Inc., Andrea Freund, the company’s vice president of law, has taken a similar audit-based approach. But Freund says her company and others have been handicapped by uncertainty over when exactly the legislation will come into force, and what regulations will come under it. “The problem is since the regulations haven’t been finalized, we can’t put in place the final processes, training, and implementation plans. The audit itself is a large undertaking, and I think unless the regulations change, there’s going to be a significant amount of work still to do for many businesses.”

After the legislation passed Parliament in 2010, Industry Canada and the Canadian Radio-television and Telecommunications Commission, the bodies tasked with enforcing the law, released draft supplementary regulations the following summer. There was hope in the business community that the regulations would narrow the scope of the legislation and provide for exemptions, but Alexander Adeyinka, senior regulatory counsel at Rogers Communications, says it didn’t live up to expectations. “Unfortunately, when the draft regulations came out, frankly they didn’t do anything about the concerns that industry mentioned about the scope of the legislation itself,” says Adeyinka, who has also been active in the Canadian Wireless Telecommunications Association’s response to the legislation. “In fact, the regulations themselves in our general view went overboard in terms of some of their compliance requirements.”

As they currently stand, the regulations require senders of commercial electronic messages to make requests for express consent in writing. Consent can be implied where the recipient has had a business relationship with the sender in the last two years. There is also a “business card exemption” that allows senders to use e-mail addresses disclosed in the course of doing business, as long as the recipient does not object to receiving unsolicited messages.

Once consent has been obtained, all commercial electronic messages must also comply with form requirements, which means that the name, mailing address, web site, and phone number of the person sending the message, as well as any business on whose behalf they’re sending it, are contained in the message. Messages must also have a mechanism that allows recipients to unsubscribe from future messages.

The draft regulations attracted a barrage of comments, with more than 50 trade and public interest organizations making their concerns known, most from critical businesses and industry associations bristling at the compliance burden they will impose. Wally Hill, the vice president of the Canadian Marketing Association, says his members were particularly disappointed that consents obtained in the past under the Personal Information Protection and Electronic Documents Act would no longer be considered good enough for compliance with CASL. If the requirements are to change, he suggests old lists should be grandfathered to minimize disruption and costs. “Otherwise, companies are put in a position where they have to go out and re-qualify their entire database,” he says.

Susan Copland, director of the Vancouver-based Investment Industry Association of Canada, says the new rules could impede her members from acting on client referrals, and calls the “in-writing” requirement for consent requests “highly impractical” in an increasingly electronic world. “It basically precludes you from using electronic communication to get consent, or even verbal consent over the phone. The reality of business is that communication is instant, and people get impatient when they face a two-second delay when they’re sending e-mails, so it really doesn’t make sense,” Copland says.

Adeyinka is keen to stress that he, and most of the commenters, support the broad goals of CASL, but want to see more done to combat what he calls its “unintended consequences.” He says it’s unnecessary for the draft regulations to capture innocuous communications such as the text messages Rogers Communications sends to welcome new customers or to warn them when their pre-paid balances are low. “It may sound like businesses crying, but the way the regulations are right now, it will create inconveniences for customers as well,” he says. “We are extremely concerned about spam, and it’s in our interest to protect customers from being on the receiving end of it from anyone.”

John Lawford, counsel for consumer organization at the Public Interest Advocacy Centre, says he has little sympathy for those critical of the regulations. “They don’t want to face up to the fact that you can’t e-mail people you don’t know. Some of the marketers have woken up and realized that this thing may actually apply to them, so they’re attacking the regulations,” Lawford says.

Michael Osborne, a partner at Affleck Greene McMurtry LLP, says the tumult around CASL is unlikely to end with its coming into force. He calls the legislation Canada’s “biggest restraint ever on freedom of speech” and says he expects various provisions to be

challenged in court. “If I want to send a flyer to your house, I can do it. That’s part of the trade-off for living in a free economy, and I don’t see why e-mail would be any different. I don’t like getting junk at my door or in my inbox, but if I want to live in a free economy, I think I have to accept that,” Osborne says.

And while startup companies struggle to market themselves, and law-abiding companies shell out cash to upgrade their databases and track their communications, Osborne says he expects CASL to have a negligible effect on the inboxes of ordinary Canadians. “True spammers will thumb their noses at this. They’ll carry on sending e-mail for unlicensed pharmaceutical products and the like,” he says.

While the debate rages on over the regulations, larger companies are positioning themselves so that they’ll be ready to comply, whatever the final regulations say. Craig McTaggart, director of broadband policy at Telus Communications Co., says the real compliance problems will be for smaller companies. “Telus and other major companies have the resources to come to grips with this legislation now, but I’m convinced there are a lot of industries and companies that still don’t really know much about this legislation. There’s so much unknown, even among those who are fairly up to speed, so my view is the government is going to have to give a reasonable time for businesses and other organizations to bring themselves into compliance,” McTaggart says.

The backlash against the regulations has set back the “in-force” date for CASL until at least early 2012. Industry Canada and the CRTC are working on a second set of draft regulations, and some believe it may be 2013 before all the loose ends are tied up. Even if the legislation does come into force before then, many commentators say a transition period will be needed to give companies a chance to fully comply. “Anything less than six months would be mind-boggling,” says Hill.

Traditionally, managing a large portfolio of litigation can involve e-mails and reams of paper travelling back and forth between a company and its law firm, waiting for phone calls to be returned and workflow grinding to a halt if any of the above fails to happen on schedule. But in an effort to align litigation management with their broader business and technology goals, in-house counsel at several Canadian companies are making moves to bring their portfolios of claims online, through a portal run by their external law firm.

Gowling Lafleur Henderson LLP’s XClaim portal went live earlier this year, and is a response to some of the inefficiencies and expense associated with traditional claims management, explains one of XClaim’s founders, Louis Frapporti, a commercial litigator in Gowlings’ Hamilton, Ont., office. “One of the things that was immediately apparent to me was that we needed to change the way in which we did the work, we needed to use technology much more effectively,” he says.

Considering technological innovations and how in-house legal departments address cost issues, Frapporti says he began to piece together a business model that would leverage technology in a way that clients already do internally and give them greater value.

The portal, currently used by several of the firm’s insurance and non-insurance clients, works by allowing staff and lawyers designated by the in-house legal department to log in and view a high-level snapshot and the status of all of their files. Clients can then go into each individual file, find out who the players are on the external legal team and all of the steps that have been taken in the file as it progresses through the various stages.

For example, clients can see any digital notations that have been made in the file, the history of offers exchanged between the parties over the course of the litigation, a history of all of the motions, the parties involved, when a hearing took place, and whether the result was granted or not by the court. Clients will also be able to generate their own reports from the system, rather than having to ask the external legal team for information.

Gowlings also provides many of the XClaim-related services for a fixed, rather than hourly, rate. “The goal here is to attempt to do everything — every aspect of a file, from the documentary production and correspondence to what would normally be memos to file is all digitized,” says Frapporti.

For many in-house legal departments, moving away from older forms of claims management in the digital age is also in line with their broader business goals. “I think it’s a highly innovative tool and being the general counsel for ArcelorMittal in Canada, we’re being constantly pressed by our company to be innovative and to find better ways of doing the things we do. In the legal world, the challenge is quite difficult because the legal culture is by its nature very traditional and slow moving,” explains Robert Soccio, general counsel, corporate secretary and compliance officer with ArcelorMittal Dofasco, which started using XClaim in late 2011.

Before the technology came along, managing a portfolio of claims came with the hassles and cost involved with exchanging large files, photocopying, and other administrative tasks, as well as adjusters having to wait for a response from outside counsel, explains Heidi Sevcik, vice president of claims at Cambridge, Ont.-based Gore Mutual Insurance Co. “Insurance companies have a constant need to control costs yet make sure that they get the right outcomes on their litigation files, so it’s a balance. But as margins continue to be challenged in our industry, we really need to look to our costs overall, to our claims costs overall, to make sure that we’re being prudent in managing those,” she says.

Before it started using the portal in early 2011, Gore Mutual had already put a lot of effort into document management systems and broker portals. “We very quickly realized we were very well aligned in terms of our business goals, and so we partnered right at the get-go to help them develop that solution for the property and casualty insurance industry,” says Sevcik.

At the moment, all of Gore’s casualty adjusters have access to XClaim, where they can view the status of litigation whenever and wherever they choose and communicate immediately with the legal firm. They also know when instructions or comments are being reviewed.

Ralph D’Angelo, senior counsel in Gowlings’ Hamilton office, moved from the insurance industry to become national manager of the XClaim portal. He explains that insurance companies are already using their own programs similar to XClaim, which monitor every stage of the process including their other non-legal service providers, when files are being handled internally. “There’s that level of transparency that has developed within the insurance industry, in terms of their usual service providers, except lawyers. Once the file goes out to external legal counsel, it’s like it disappears into a black hole,” he says. “They lose that control and what we’re doing here is we’re giving them that sense of control again into the litigation stage.”

While the portal has been met with a positive response, one concern raised by clients and prospective clients is privacy, admits Frapporti. Ultimately from a security perspective, he says, there is no issue as the files are encrypted, only clients have access to the portal, and they can internally negotiate and structure access arrangements depending on the seniority within the institution. “Privacy, security, accessibility, workflows — all of those things were issues but because we knew they were issues, we could work through those to make sure the security is tight, privacy is restricted through the proper use of user IDs and passwords,” says Sevcik.

While it’s still in the early days, Sevcik says the tool is already saving adjusters time, helping them assess reserves more quickly, request settlement authority, and complete internal reports without waiting. Essentially, it gives them the time to do the reviewing, assessing, and analyzing part of their job as opposed to processing. “We’re able to see everything through the portal immediately. The efficiencies are tremendous when you’re able to do that,” explains Sevcik. “It’s the immediacy of the information that makes a big difference.”

Indeed, one of the keys to the portal for clients is its transparency. “They essentially see everything we see. It’s as if the client is actually in our offices, or we’re in theirs, that was a key part of this idea of transparency. How can you be completely accountable for what you do, have the client trust and feel as if they know everything that’s going on and nothing’s being withheld from them, and also I think, very importantly, create a system in which you’re working collaboratively with the client,” says Frapporti.

This is not always the case when

it comes to traditional litigation

management, which Soccio says can be “a mystery.”

“Lawyers don’t like transparency. They want to be the gatekeeper to the information that they provide to their clients, you know, I would find this probably very uncomfortable for many lawyers, where their clients know the status of litigation in real time, the reminders that they put in for themselves, expenses, all the documents,” he says.

Normally, he says, when in-house counsel are working on a file and need information, they call the external lawyer or the legal assistant who would then either have to send it by fax or e-mail, describe it over the phone, or draft a letter. “That’s sort of the mundane kind of minutiae that really grinds things to a halt and this tool just bypasses all that,” he says. “If I want to look at a litigation file that’s in progress or that hasn’t been reviewed in a while, I just access the portal and there’s all the information. I think it’s really transparent and really effective.”

ArcelorMittal Dofasco uses the tool to manage all its commercial litigation. The company is moving towards having all of its files on the XClaim portal, including those with historical legacies. Both Soccio and Sevcik add that there are no barriers to using the portal for managing either Canadian litigation or litigation in the U.S. “This is very innovative and it saves time and money, but I think for me, it’s the convenience, the accessibility, and the transparency that goes with it,” says Soccio.

Down the road, Gowlings is looking at integrating project management tools into the system, as well as some additional knowledge management and document processing tools to focus on large individual cases.

When Riccardo Trecroce went in-house for the first time, he didn’t expect to become chief executive officer — a role that prepared him for his current job at one of the world’s most diversified automotive suppliers.

Trecroce, now vice president and general counsel for North America with Magna International Inc. in Aurora, Ont., which designs, develops, and manufactures automotive systems, learned throughout his career how to negotiate conflict and work with teams from other parts of the world.

When he took on his previous job as general counsel at Patheon Inc. in 2000, the Canadian pharmaceutical manufacturer was acquiring plants at the rate of almost one per year in Canada, the U.S., and Europe. But when the company acquired a major competitor, it took on a lot of debt; then things didn’t go as planned. There were also some unexpected management changes, leaving the company without a CEO at a critical time, so the board of directors asked Trecroce to step in as interim CEO.

Over 18 months, Trecroce led a reorganization and refinancing of Patheon. But in 2008, he decided it made sense to move on when the company looked for a CEO, and for the first time in his life he found himself unemployed. He considered his options: move back into private practice or set up his own firm.

It wasn’t long, however, before another opportunity came his way to join Magna as vice president and general counsel for North America, with responsibility for South America and Asia. His interest was piqued: Magna is a global company with 275 manufacturing plants and 84 product development, engineering, and sales centres in 26 countries on five continents. Of its 104,000 employees, Magna has about 40 lawyers around the world; some work within corporate offices, and some work within operating groups aligned to specializations. “For a global company like Magna, you need to be both global and local,” says Trecroce. “You need to have global policies and procedures and cultural values that apply throughout the organization, but they need to be adapted to the local rules, laws, cultural practices, and norms.”

He believes the best way to do that is to work with highly experienced lawyers in other countries who not only speak the language, but be an ambassador between the corporate office and operating groups that are several thousand miles away.

An average day for Trecroce could involve developing policies and procedures, hiring lawyers in other parts of the world, managing a staff of about 20 at the corporate office, and providing advice to executives. He also acts as a sounding board for colleagues in Mexico, South America, and China. “Finding ways for all of us to communicate together effectively is a big challenge,” he says. If you have a conference call at 10 a.m. in Toronto, for example, it’s 10 p.m. in China.

Another challenge is that a policy or procedure that makes sense from a North American perspective often requires a fair amount of adaptation as it’s rolled out into Europe, South America, and Asia. “Rules are different — privacy laws or employment law matters or other laws you’re not necessarily aware of, or even cultural practices,” says Trecroce.

Sometimes, when the corporate office sends out a draft policy, they find out it’s not permitted by virtue of a particular privacy directive from the European Union or an employment law in China. The exercise then becomes about finding a balance and ensuring local autonomy and respect for cultural and legal differences.

“They’re 5,000 miles away and they need to do what they need to do on their own for the most part,” says Trecroce. “It’s impossible to micromanage by telephone and e-mail across thousands of miles, so the key is to find the right people, make sure they’re highly qualified, highly ethical, and independent minded — able to work very much independently but know when to come back for support.” A specific area of focus for Trecroce is business ethics. “In China or other parts of Asia they may have a different approach to gift-giving, and one of my colleagues is developing a guideline to help our business people understand what is appropriate from our code of conduct in the context of gift-giving in countries where the cultural norms are different,” says Trecroce. “How do we ensure that we’re being culturally sensitive but at the same time ensuring we’re not perceived to be manipulating the decision-makers of a customer, supplier, or government official.”

Trecroce earned his law degree from McGill University in Montreal, and went on to get a bachelor’s degree in international relations at Concordia University. Originally, he thought he wanted to be a litigation lawyer. In 1981, he moved to Alberta to article with Edmonton-based Parlee McLaws LLP and practised there for three years. During that time, he made a discovery: as he was working on a file that had dragged on for 14 years, he wondered why someone hadn’t already resolved the dispute. “I realized I wasn’t well suited for litigation and litigation wasn’t well suited for me because I didn’t enjoy the adversarial process,” says Trecroce. “I learned  I was more of a dispute-resolution person.” He moved into the corporate department, where he found resolutions to standing issues.

At that point, he decided to move to Toronto and joined Fraser Milner Casgrain LLP for about 15 years, mostly doing corporate and M&A work. At FMC, he had the opportunity to interact with general counsel outside Canada, since many of his clients were international. In 2000, he moved in-house for the first time as general counsel with Patheon.

“I was their first lawyer,” says Trecroce. “I got to establish a law department — they didn’t even have a filing system when I arrived. It was very different from being in a big downtown law firm where people deliver coffee in nice china to working at a plant. Our corporate offices at the time were right beside the plant and it was roll-up-your-sleeves and start building a department.”

The experience at Patheon building a law department from scratch to nine lawyers in the Americas and Europe, and then moving on to become CEO — suited his personality far more than litigation.

At Magna, his job is focused on helping colleagues work through business issues, and that’s what he enjoys doing. “I’m talking to people around the world all the time,” says Trecroce. “It’s intellectually stimulating, and every day is different from the other.”

Increasingly, what used to be U.S.-only experiences in law are creeping north. The differences between Canadian and U.S. systems were discussed on several panels during the Association of Corporate Counsel annual meeting in Denver this past October.

One session in particular, on the U.S. Securities and Exchange Commission’s new whistleblowing legislation, drew a packed room with standing room only. The topic is getting a lot of attention and rightfully so, especially from Canadian in-house counsel as it may be moving into Canada, complete with financial incentives.

The Ontario Securities Commission announced Oct. 21 it was looking at a number of new enforcement initiatives including the prospect of introducing a whistleblower program, under which incentives and/or protection from retaliation might be provided to those who have information about marketplace misconduct. If implemented, it would be a first for securities regulators in Canada. There are big question marks around how it would be funded and whether legislative change would be required.

The SEC’s whistleblower program provides significant incentives to bypass internal reporting mechanisms. It stipulates that if people voluntarily provide original information to the SEC that results in successful enforcement and monetary sanctions of more than $1 million, the whistleblower would be eligible to receive between 10 and 30 per cent of the amounts recovered. That’s a significant incentive to report to the SEC and not internally first.

So what are companies to do? David Kohlenberg, deputy general counsel, corporate development and finance law with TransCanada PipeLines Ltd., speaking on an ACC panel in Denver about Canadian securities regulations, noted many companies have invested in code of ethics hotlines for employees to use, but what else can be done internally to get people to report to them first? The U.S. model provides greater incentives to bypass any internal reporting mechanism.

Another aspect of all of this, Kohlenberg pointed out, is that the SEC whistleblower program includes foreign private issuers, such as TransCanada.

Kohlenberg says it comes down to setting the tone at the top of the organization that misconduct is not condoned. At TransCanada, there are seven ways an employee can make contact in an organization to deal with misconduct. There is also an annual certification program to provide training around corrupt practices and security regulation matters. Each employee who takes the program is required to say they understand the conduct policy and they aren’t aware of any misconduct that should have been reported.

In developing an internal program, Kohlenberg says set it up so you can show you have the engagement of executives and directors; that you’ve done risk assessments and due diligence, and you have built trust in your employees so they feel comfortable coming to you. They have to feel some bond to the organization to report on any perceived misconduct.

Do the work now. Don’t wait for the OSC to make it more attractive for employees to call them first.