Third-Party Risk: Tailoring Contract Clauses, Covenants, and Certifications to Enhance Compliance in a Global Market

Minimizing FCPA and Related Anti-Corruption Risks and Maximizing Key Compliance Safeguards

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, November 6, 2013

Recorded event now available

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Program Materials

This CLE webinar will provide practical guidance for developing effective business ethics and compliance controls when contracting with various types of third parties. The panel will explain how businesses can leverage ethics and compliance clauses and certifications to mitigate liability risks under global anti-corruption laws such as the FCPA and the UK Bribery Act. The panel will also examine the pitfalls of agreeing to ethics and compliance clauses in third-party agreements that are overly broad, ambiguous, or otherwise disproportionate to the engagement.

Description

In response to the U.S. government's heightened enforcement of the FCPA and related laws and regulations, businesses are increasingly under pressure to manage the actions of their business partners.  This robust enforcement climate requires corporations to enhance their efforts to ensure that business partners comply with all applicable laws and regulations and make ethical decisions during the course of an engagement or affiliation.

To this end, businesses are integrating ethics and compliance clauses into contracts with clients, joint venture partners, vendors, sales agents and other third parties.  These clauses generally require business partners to make ethical decisions and to comply with relevant laws and regulations focusing on the FCPA, the UK Bribery Act, and other global anti-corruption laws and regulations.

In addition, businesses are requiring third parties to provide detailed certifications relating to sensitive internal matters, including: (i) whether or not the third party has engaged in corrupt or other fraudulent activity; (ii) details pertaining to past or present internal (or external government) investigations; and (iii) information relating to otherwise confidential settlement agreements.

By omitting these clauses, businesses potentially expose themselves to third parties acting improperly, unethically, or illegally (for or on behalf of the business) in a manner that increases susceptibility to contract disputes, other commercial litigation, investigations, criminal charges, and reputational damage.  On the other hand, ethics and compliance provisions that are inconsistent with applicable laws and regulations (such as the FCPA) can expose a third-party partner to onerous contract terms that may be too costly to comply with or disproportionate to what applicable law requires.

Listen as our authoritative panel of ethics, compliance and internal investigation attorneys explains the reasons for the increase in the use of ethics and compliance clauses in third-party contracts, the impact of the clauses on businesses, the challenges of agreeing to improperly drafted clauses or certifications, and best practices for crafting effective and enforceable clauses and certifications.

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Outline

  1. Factors driving the increase in ethics and compliance contract clauses and certifications
    1. Increased enforcement of anti-corruption and other fraud-related statutes
    2. Government expectations that corporations assure their business partners act ethically and in full compliance with applicable laws.
  2. Impact of ethics and compliance clauses and certifications on businesses
    1. Disclosures on sensitive business operations, investigations, or previously unrevealed settlements
    2. Expansive and/or disproportionate contractual obligations
    3. Overly broad audits by business partners
  3. Identifying and analyzing ethics and compliance clauses and certifications
    1. Determining whether a certification or clause is legally appropriate
    2. Considering methods to comply with such clauses and certifications
    3. Examples of ineffective and disproportionate clauses and certifications
  4. Considerations in determining whether to include ethics and compliance provisions in contracts and certifications
  5. Best practices for drafting effective compliance clauses and certifications

Benefits

The panel will review these and other key questions:

  • What is driving the increase in the inclusion of ethics and compliance provisions in contracts and certifications between businesses and third parties?
  • What are the benefits of including ethics and compliance clauses in third-party contracts?  What are the risks of not including them?
  • What are considerations counsel should take into account when deciding whether to include ethics and compliance clauses in contracts and certifications?
  • What impact do ethics and compliance clauses and certifications have on international contracts or agreements (with multi-jurisdictional components)?
  • What are some best practices for drafting effective ethics and compliance clauses and certifications with respect to third-party engagements?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Cassidy, Margaret
Margaret M. Cassidy

Principal
Cassidy Law

Ms. Cassidy's practice focuses on corporate compliance, internal investigations and white collar criminal defense....  |  Read More

John P. Cunningham
John P. Cunningham

Partner
Baker & McKenzie

Mr. Cunningham concentrates his practice on internal investigations, anti-corruption compliance, and white collar...  |  Read More

Linda Mitchell
Linda Mitchell
Director, Office of General Counsel
PricewaterhouseCoopers

Ms. Mitchell is responsible for delivering and supervising legal support for PwC’s national practice on state...  |  Read More

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