By William Nelson
Could an American lawyer violate the FCPA just by recommending a foreign lawyer to handle a risky transaction? It hasn’t happened yet, but it could.
To be safe, attorneys cannot simply wash their hands of a transaction once they recommend a foreign lawyer. They have to use due diligence and maintain an active role even after the hand off.
That’s because of the “knowing” element of an FCPA offense. If the recommending lawyer knows or has reason to know the foreign lawyer will take action to violate the FCPA, he or she could face prosecution. Remember -- the determination of “knowledge” will be made in hindsight, as shown in the case of non-lawyer Frederic Bourke.
For due diligence, the first step is to evaluate the risk level. Where is the deal happening? Is it a place where bribery is widespread and condoned? Is there a government-linked customer? Are permits and licenses needed? Start by checking the Corruption Perceptions Index. It ranks almost 200 countries by their perceived levels of corruption, which are determined by expert assessments and opinion surveys. If the risk level is elevated, do more to check specifically on the bona fides and reputation of the lawyer being recommended.
Second, do ongoing due diligence. Periodically evaluate the relationship between the client and the foreign lawyer. Review the pending transaction to see whether the risk for an FCPA violation has increased. If it has, take the action necessary to avoid an FCPA violation, by redirecting the foreign lawyer or recommending someone else.
These steps won’t eliminate the FCPA risk completely but will greatly reduce it.
And remember that it could also be an ethics violation to recommend a foreign lawyer where there’s a likelihood of an FCPA violation. See for example Rule 8.4(a) of the District of Columbia Rules of Professional Conduct. ("It is professional misconduct for a lawyer to (a) Violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another . . . ")
As mentioned, the DOJ hasn’t prosecuted an American lawyer simply for recommending a foreign lawyer who pays or arranges bribes to foreign officials. But does anyone want to be the first in line?
William Nelson serves as an Attorney-Advisor at the Board of Veterans' Appeals and as Adjunct Professor at George Washington School of Law. He's the author of "Attorney Liability Under the Foreign Corrupt Practices Act: Legal and Ethical Challenges and Solutions," 39 U. Mem. L. Rev. 255 (2009). He can be contacted here.