“The Limit Should Be Zero Dollars”

16 Jul

If you don’t read Mark Herrmann’s column on Above the Law, you should.

Today’s column was on one of my favorite topics: the UK Bribery Act, and the semi-ridiculous advice that companies are getting from “experts.”  By the way, if you want an expert, go talk to Barry Vitou at Pinsent Masons.  There’s an expert.  Let’s remember that there hasn’t been a case brought under the UK Bribery Act yet.  (Yes, I know.  But no, there’s hasn’t been).  So most of the so-called experts are people who have just read the statute, and attended some conferences where other people who have no idea what they’re talking about talk about the UK Bribery Act.

Herrmann talks in today’s column about advice he got about complying with the UKBA.  His approach was that the firm who gave him the advice violated that advice about thirty seconds later.  He said “I could rant at this point about law firms giving utterly impractical advice, but I won’t.”

I will.

What was the advice that Herrmann got?  He attended a law firm presentation on the UKBA, and there was a question asked about what the right entertainment limits were.  The answer he got back exemplifies the problem I have with some outside counsel:

The limit should be zero dollars.  That will keep you safe.

Really?  Zero?

Leave out for a moment that the rest of Herrmann’s column is about how that same law firm sponsored a dinner for some in-house folk.  Let’s just talk about how advice likes this harms not just the giver, but the receiver too.  First, the giver.  The person who gives this advice will give it to one of two types of people: people who know what they’re talking about, or people who don’t.  I don’t know which comes out on the bottom.  If the lawyer is giving this advice to a knowledgeable person, that person will likely politely smile, nod, and then put the lawyer in the “idiot” box in his head, and not listen to another thing that lawyer says.  Which is a problem, because maybe in the future—even a stopped clock is right, twice a day—that lawyer will give some advice the client should listen to.  But getting out of the “idiot” box is a rare feat.

Or the recipient won’t know what they’re talking about.  In which case, like a wide-eyed doe, they’ll just accept what the lawyer says as a best practice.  Heaven forbid they go back to their own company and repeat that advice out loud.  (We’re back to the “Idiot” box).  Or even worse, that they’re in a position of authority, and could implement that advice.

Like I said, I don’t know who comes out worse.  Either way you go, someone’s in the Idiot box.

When it comes to hospitality—and here’s my opinion on this—everyone needs to calm down.

Zero is not the answer.  Herrmann’s concern about “killing the business” is probably also a little overblown, if someone wants to go that way.  It’s uncompetitive, certainly.  But you’d be amazed what the market will adjust to.  It’s not something I would recommend.

The number you come up with is entirely less important than the process by which you determine it.  The number can’t be outrageous, but here’s the thing: the DOJ has never brought a case against a company that came up with a reasonable number, and enforced it.  There are few cases where gifts play any role, none where they play a truly primary role, and absolutely none where the DOJ overruled a business decision.  That’s not something the DOJ does, as a rule.  They don’t take a reasoned decision and say “you made the wrong choice.”  Almost all of the time, the company failed to consider the problem, or considered it but said, “who cares,” or the equivalent.

So pick a number.  I’ve heard companies pick one number globally—say, $150 per person—or use different numbers for each region, or each market.  I’ve seen people use their own internal numbers—that is, whatever they’ll reimburse an employee for, that employee can spend on others.  That’s not a bad idea.

The point is, there is no “right answer” here.  It’s what’s right for you.

Just remember, as my friend and colleague Tom Fox always says, “document, document, document.”  Be prepared to tell the DOJ what your number is, why you chose it, who was involved in the decision, and how you’re enforcing it.  Remember, this is a company decision on how it wants to act.  People should know the number.

This applies not just to meals, but to gifts as well.  Same idea applies.  Whatever you decide, just decide.  Pick a number and stick with it.  Enforce it.

By the way, that “zero dollars” idea doesn’t keep you safe.  The business will ignore it, sidestep it, and will do that for just about any advice you give from now on.  You lose credibility with the business, and that’s the ball game!

I have to admit, though, I was always a softy when it came to gifts.  Absent some totally inappropriate gesture, most gifts are harmless, in my opinion.  Tickets to a ball game (or the Olympics) are not, absent something more, really a problem.  Where you need to be a little more careful is when you’re inviting someone where you have an open tender and that person is the decision-maker.  I’ve seen rules which say “here are the rules for everyone except people from whom we’re awaiting a decision, and for those people, they get gornisht.”  That’s a damn fine rule.  Sometimes, zero might be the answer.

But not usually.  And telling people that in a public setting, in my opinion, puts you in the idiot box.

7 Responses to ““The Limit Should Be Zero Dollars””

Trackbacks/Pingbacks

  1. A Little Spooky and Its Not Even Halloween: Idiotic Compliance Advice and the London Olympics « FCPA Compliance and Ethics Blog - July 17, 2012

    [...] is not owned by News Corp. Today he treated us to an online rant in his blog post entitled “The Limit Should Be Zero Dollars”. He was commenting upon a blog post entitled “Inside Straight: The Shoemaker’s Children” [...]

  2. A Little Spooky and Its Not Even Halloween: Idiotic Compliance Advice and the London Olympics - Legal, Ethics and Compliance - July 17, 2012

    [...] is not owned by News Corp. Today he treated us to an online rant in his blog post entitled “The Limit Should Be Zero Dollars”. He was commenting upon a blog post entitled “Inside Straight: The Shoemaker’s Children” [...]

  3. More Ranting on Gifts and Hospitality | FCPA TV - July 17, 2012

    [...] continue my rant from yesterday on gifts and hospitality. Share this:TwitterFacebookLike this:LikeBe the first to like this. [...]

  4. More Ranting on Gifts and Hospitality | FCPA TV - July 17, 2012

    [...] continue my rant from yesterday on gifts and hospitality. ▶ if ( !jQuery.VideoPress.data["0y4399pv"] ) { [...]

  5. Compliance Bits and Pieces For July 20 – Compliance Building - July 20, 2012

    [...] “The Limit Should Be Zero Dollars” by Howard Sklar in Open Air [...]

  6. SFO Director David Green CB QC: on corporate hospitality – thebriberyact.com - September 2, 2012

    [...] an excellent post our friend Howard Sklar recently exposed some legal advice given by one lawyer about the Bribery [...]

  7. Doomsayers Proven Wrong Yet Again-Gifts and Entertainment Under the Bribery Act « FCPA Compliance and Ethics Blog - September 3, 2012

    [...] In an excellent post our friend Howard Sklar recently exposed some legal advice given by one lawyer about the Bribery Act who advised: [...]

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