Putting paid to bribery

Our lead story this week, on Dentons suing its former India head Gauri Advani following the allegation of a bribe (something she strongly denies) and costs of a subsequent court case, is a preview of the future for law firms.

Leaving aside the complex particulars of the action, the forthcoming Bribery Act will have enormous implications for all those firms keen to expand their businesses internationally.

Given that the new act places the onus on ­corporates to ensure their anti-corruption ­procedures are watertight, this will become a ­serious compliance headache for firms ­operating
in emerging markets.

Virtually any firm you can name has been holding seminars on the Bribery Act, due to come into force in April 2011. Yet while law firms have been busily spooking the bejesus out of their clients, I’m not convinced many lawyers – outside of those who work in their firms’ risk management teams – have paid much attention to their own compliance structures. Indeed, most firms are currently ­biding their time until the Ministry of Justice ­publishes its guidance paper in January on what constitutes ’adequate’ procedures.

The US Foreign Corrupt Practices Act essentially permits small-time palm-greasing, which has allowed firms to turn a blind eye. This raises the pleasing spectre of US lawyers having to be trained by their British colleagues to be more rigorous, since facilitation payments are outlawed by the UK act.

But there are also big issues of risk ­management in terms of recruitment. The people you hire in ­markets where political connections are important could be prone to practices that will soon be illegal under English law. Those sought-after individuals have often operated outside normal remuneration ­structures and traditionally kick-started business by parlaying connections into commercial advantage.

So the short cut of hiring a well-connected ­individual in, say, a Middle Eastern jurisdiction or China may become less attractive.

The long view, increasingly adopted by City firms, is to hire trainees from those jurisdictions to inculcate them in the ways of the firm. Unfortunately, as ­Norton Rose found earlier this year (The Lawyer, 16 August), the immigration cap has stymied organic investment. Headaches all round.