American Bar Association Adopts Standards for Corporate Monitors

It is with great pleasure that I can announce that last month (August 2015), the ABA House of Delegates approved Standards for Corporate Monitors.  These “black letter” standards will be published with commentary in ABA Standards for Monitors, 4th ed., ©2015 American Bar Association.

This work originally began with an Ad-Hoc Task Force on Corporate Monitor Standards, that was assembled by the Criminal Justice Section (CJS) of the American Bar Association (ABA) in 2010.  In late 2013, after over two years of study on the topic, the Ad-Hoc Task Force was disbanded and a formal Standards Committee designated to develop the Standards.  I had the privilege of serving on both the Ad-Hoc Task Force and the Standards Committee, which delivered our product to the CJS in August of 2014.  After two readings before the CJS Council, these Standards were passed by the CJS Council in April 2015 and presented to and approved by the ABA House of Delegates in August 2015.

Though they presently lack commentary, they are the only official set of Standards currently applicable to lawyers who serve in the role of an Independent Corporate Monitor.  The Standards define a Monitor broadly, as a person or entity:

  • Engaged by a Host Organization pursuant to a Court Order or an Agreement and Engagement Letter;
  • Who is independent of both the Host Organization and the Government;
  • Whose selection is approved by the Government or ordered by a court; and
  • Whose responsibilities and authority are established by Court Order or by the terms of the Agreement and the Engagement Letter.

Recognizing that Monitors are used and/or contemplated beyond the DOJ Monitors whom many have come to be familiar with, we drafted these Standards broadly (see the definition within the Standards of “Government”).  For instance, the World Bank and Suspension & Debarment Offices have routinely used Monitors for years and we wanted to ensure that our Standards incorporated best practices sufficiently broad so as to include the many Monitorships that occur outside of DOJ.  In addition to the issues that have brought public attention/criticism to this practice, such as the selection process for Monitors, we devised and deliberated on a host of other issues affecting the practice and, where it was appropriate, devised Standards to address them.

One of the first steps taken during the Ad-Hoc Task Force’s work, was to open communication channels with a variety of government law and regulatory enforcement agencies, as well as other oversight organizations, who were using or considering the use of Monitors.  The purpose was to ensure that the concerns of such agencies and oversight organizations were considered as we developed these Standards.  The Standards Committee also included representatives of the DOJ and State AG Offices to further ensure that relevant concerns and issues would be considered.

I am humbled to have been included among such a distinguished group of professionals who comprised our Committee and very proud of the Standards that we created, which I believe to be robust, comprehensive, and thorough.  Given how eager the various agencies and oversight organizations were to share their concerns with us, I am certain these Standards will have a significant impact on future Monitorships.

I must caution readers that the “black letter” Standards can, at points, be difficult to fully appreciate absent commentary, which may not be available for quite some time.  If anyone has a question about what our Committee was thinking associated with any of the “black letter” Standards, please email me at JHanson@ArtificeForensic or call me at (202) 590-7702 and I would be happy to provide my personal opinions/thoughts (I speak only for myself and not the Committee, ABA, or CJS).

It should also be noted that these Standards only technically apply to attorneys.  Many Monitors are not attorneys (myself included).  It is hoped that they will nonetheless be broadly construed as “best practices” for anyone serving as a Monitor.  Towards those ends, the International Association of Independent Corporate Monitors (IAICM) was formed in 2015.  The IAICM is a 501(C)6 not-for-profit Membership organization serving those who practice in this field and is presently developing a Code of Professional Conduct that will establish Standards for its members.  The IAICM’s Code, though consistent with the ABA Standards, may cover additional areas and/or delve more deeply into some areas than the Standards.  The IAICM Code, together with the Standards, should be more than sufficient to establish best practices for Monitors, regardless of their professional designations/experiences/certifications/licenses.

The IAICM, though legally formed and anticipated by many government and oversight organizations that use Monitors, has not yet made its website publicly accessible – but be on the lookout for it soon!

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The Fraud Guy

John has over 27 years of fraud investigations, forensic accounting, corporate compliance & ethics, and audit experience. He has applied his extensive experience in these areas across a wide array of areas and industries, frequently assisting counsel, government agencies and companies with internal corporate investigations and other matters arising from alleged fraud or misconduct. John is a thought leader and expert on Corporate Monitors/Compliance Monitors, a practice area involving the imposition of an independent third party by a gov't agency or department upon a corporation to verify that corporation’s compliance with the terms of a settlement agreement. John has previously served in a leadership role in a federal Monitorship and was involved in six other federal monitorships: three as the named Monitor, one as the "Independent Business Ethics Program Evaluator" and twice in support of the named Monitor. In these roles, John has reported to the Department of Justice, the Department of Interior, the Department of Transportation, the Small Business Administration, the Federal Highway Administration and the Massachusetts Department of Transportation. His practical experience as a Corporate Monitor and extensive knowledge in this area was applied to the development of formalized Standards for Corporate Monitors through John's Membership on the Task Force on Corporate Monitor Standards of the American Bar Association. John is also the Founder of the International Association of Independent Corporate Monitors, a not-for-profit Membership association dedicated to the practice of corporate monitoring. John is a frequently sought speaker on the topic and has provided practical advice, ideas and strategies to lawyers, government officials, and corporate executives involved in such matters, as well as newly appointed Corporate Monitors. Prior to Artifice, John spent over 5 years as a leader in the fraud investigations and forensic accounting practice of a large publicly traded international financial consulting firm. Before that, he served for 10 years as an FBI Agent, specializing in complex fraud investigations.

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