Law firm experience and a penchant for technical details will bode well for anyone interested in a career in the exploding area of compliance and regulatory law.
Chris Mathers is a former undercover agent who used to pose as a money launderer in order to catch drug traffickers. In the ’90s, Mathers charged criminals a service fee of eight to 10 per cent to pretend to launder their money. Since then, Canada has passed new money-laundering legislation — aimed at exposing and detecting dirty transactions — and financial institutions must comply with it or face severe consequences. As a result, all the work that compliance officers now do in this area is making it harder for real money launderers to ply their trade. The proof? They’ve raised their service fees to upwards of 20 per cent.
“Having said that, this money will flow no matter what,” says Mathers, who now sets up and tests compliance programs, trains staff, and conducts fraud, money-laundering, and terrorist-financing investigations for large financial institutions. “Just as the bad guys have to come up with new ways to move their money, compliance people have to keep up with that and come up with new ways to prevent it.”
Anti-money-laundering compliance is just one specialized area in the exploding regulatory compliance world. In fact, talented lawyers with compliance expertise have become hot property thanks to the growing maze of specialized laws and regulations that corporations and financial institutions must adhere to. According to a 2007 Robert Half Legal survey, 47 per cent of law firms and companies plan to add to their current teams. Of these, almost half are looking to hire lawyers in the area of ethics and corporate governance.
Experts say one of the main factors driving the compliance revolution is the American Sarbanes-Oxley Act, passed in 2002 in response to a slew of corporate-fraud scandals in the United States. Following this, Canadian securities regulators also introduced new disclosure rules. As a result, most public companies listed here and on U.S. stock exchanges now have in-house compliance departments to help them navigate the law and avoid the fate of Enron.
Complying with the law can also boost sales by improving public perception of the company. And, of course, good in-house lawyers also show employers how to take advantage of loopholes.
But compliance pressures don’t just come from regulators and the government. Sophisticated institutional investors also keep an eye on public companies and will sue if they see a company going off the rails, says Cristie Ford, an assistant professor at the University of British Columbia’s faculty of law. And environmentally and socially conscious consumers, as well as non-governmental organizations, also keep watch. “At the slightest hint of non-compliance, they will push the issues onto the front pages of newspapers,” says Evaristus Oshionebo, an assistant business law professor at the University of Manitoba’s faculty of law.
Financial institutions have also staffed up their compliance departments. In simpler times, bank compliance functioned more as an adjunct to the legal department, and handled things like conflicts of interest and client disputes. But now banks must cope with a growing thicket of specialized laws and regulations.
Banks are constantly on the lookout for new lines of business to invest in, and need advice on whether the federal Bank Act places constraints on the market sectors or product lines banks are considering entering into, says Peter Murphy, a banking and financial services lawyer at Fraser Milner Casgrain LLP in Toronto. On the law firm side, banking lawyers sometimes provide opinions on these matters, but more frequently advise foreign banks about ways to secure the necessary regulatory consent to enter the Canadian marketplace.
New products launched by the banks are also becoming increasingly complex and the globalization of the securities market has meant that financial institutions must be in tune with the principles in other jurisdictions as well with those in their own, says David Lang, head of Canadian global capital markets and Canadian wealth management compliance for the Royal Bank of Canada.
But despite the high demand, new lawyers rarely walk straight out of law school into compliance positions at financial institutions or companies, because they don’t have enough experience. So how should the next generation of compliance superstars carve out a career path in this area?
Develop the ability to thrive in the mist of complexity
Experts say it’s important to hit on as many business law courses as possible at law school. Some schools offer a concentration in business law, so students take a certain number of courses in a certain range and then receive a business law concentration on their transcripts, says Ford. Those interested in bank regulatory compliance should also add a course on bankruptcy and insolvency law along with the more obvious courses, such as corporate law, banking law, and securities law and regulation, says Murphy.
In addition, it’s wise for aspiring fraud, money laundering, and terrorist financing compliance officers to bulk up on criminal law courses, says Mathers. “Most of the guys I work with took one crim course the first year, so it was a pretty steep learning curve for some of them,” he says. “All of this is related to crime, so unless you have a healthy grasp of the nuts and bolts of
those crimes, it’s going to be a bit of a challenge for you.”
But no matter what courses you take, it’s crucial to develop the ability to problem solve and to deal with complex interrelationships of principles, says Tom Smee, the Royal Bank of Canada’s senior vice president and deputy general counsel, who practised corporate law (with a focus on securities regulation) at Davies Ward Phillips & Vineberg LLP before moving over to RBC almost five years ago. “Anything that you approach in that way, whether it be jurisprudence through to advanced contract law, will help you to develop your ability to thrive amidst complexity.”
The path to compliance
Although there are exceptions, most young lawyers will need to spend a few years at a large law firm practising corporate law, securities law and regulation, or banking law before they’ll become interesting to corporations or financial institutions. And those who work for securities regulators will also gain invaluable experience, say experts.
When lawyers are offered compliance jobs in organizations other than law firms straight out of law school, they should consider the long-term implications of going this route, because they could end up pigeonholing themselves, cautions Jonathan Veale, legal recruiting manager at Robert Half Legal in Toronto. “It’s very difficult to lateral out of compliance into a general corporate-commercial role as a lawyer,” he says. “It’s much easier for someone who has that general experience with a compliance piece to it to go into compliance, and then, if they decide it’s not the route they want to be in, they can move out.”
RBC’s Lang, a former securities litigator at Borden Ladner Gervais LLP and prosecutor in the Ontario Security Commission’s enforcement division, says a law firm is a good place to start. “It’s where you learn how to keep a file, how to comport yourself at a meeting, how to be organized.” When scanning resumes, he looks for people who come from a law firm or another financial institution and have the kind of experience he can build on. Lawyers who demonstrate adaptability and a continuous interest in learning also peak his interest. And he says many lawyers who end up in compliance jobs have a litigation background. “It’s not directly suited towards compliance, but I think it attracts a certain type of personality, probably someone who is up for the battle and sees two sides of a story and can communicate well.”
Read constantly
No matter where you hope to work, it’s crucial to keep up with new developments. “One of the jobs for lawyers is to stay current on where their clients are going,” says Murphy. “So a very useful way for law students to understand where the financial industry is going is to be reading financial business journals and commentary.”
It’s almost impossible to get a job in this area if you don’t know what the laws and regulations are, says Oshionebo. And when the rules change, they won’t always make the pages of mainstream newspapers. “You need to constantly read newsletters from the securities and exchange commissions, not just here in Canada but in the United States,” he says.
Evaluate your motives — do you really, really love it?
Before you embark on a career in this area, ask yourself if you are fascinated by business or simply fascinated by the paycheque. Students often pick courses not because they are interested in the subject matter, but because the professor teaching the course has a reputation for being a lenient marker, says Oshionebo. And more often than not, those students end up being disappointed. “The same thing applies here,” he says. “To do this kind of work, you have to be interested in it because there are so many technicalities. Unless you are interested in that kind of work, you may not find those technicalities interesting at all.”
Lang puts it a different way: “It’s probably the same with every job, but the people who seem to be mixing a job with a hobby are the ones who do the best and enjoy it the most.”
