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Arguably one of the most important developments within the compliance industry of the past several years is a greater reliance on data and measurement. Both scholars and leaders within the compliance industry have argued that firms should spend time and effort empirically assessing whether the systems within their compliance programs are actually working. For example, Professors Brandon Garrett and Gregory Mitchell have argued for more “evidence-based compliance” efforts.[1] Additionally, Professors Benjamin van Rooij and Melissa Rorie have articulated the trade-offs “involved in using different quantitative and qualitative approaches to measure corporate compliance and its predictors.”[2] And industry leader Hui Chen has argued that companies “should avoid treating their compliance programs like a checklist and focus on ethics, metrics and measurable results.”[3]
Arguments like the ones highlighted above have, I think, led to more measurement within corporate firms that have sophisticated compliance programs. Firms are thinking more analytically about whether the systems they employ are actually creating a more ethical and compliant organization. Moreover, the rise of tools in the data analytics space has aided this effort[4]; making it more feasible for firms to engage in the measurement scholars and industry-leaders have called for.
There is, however, another entity where measurement of whether the initiatives being used actually work might be worth undertaking, and that is at the Department of Justice.
The Department of Justice has long emphasized the use of a range of carrots and sticks[5] to incentivize corporate firms to (i) engage in effective self-policing efforts and (i) adopt effective ethics and compliance programs. The carrots are often some sort of cooperation credit, leniency, or even a declination. The sticks are monetary penalties and fines, as well as negotiated settlement agreements and monitorships. What we have not seen, at least not publicly, is an empirical analysis of whether these carrots and sticks actually do the things the Department believes them to do.[6]
In past writing, I have highlighted the vast amount of information about corporate misconduct and corporate compliance programs that moves through the Department.[7] Because of this, it is uniquely positioned to test whether certain interventions have worked at deterring misconduct within corporate firms or incentivized corporations to do things like voluntarily self-disclose misconduct. I continue to believe that the Department should use the information it has to help firms better understand what types of strategies will improve compliance programs. That said, today, I am increasingly concerned with something a bit different, which is whether the Department is assessing its own tools—its own sticks and carrots—to see if they actually work at addressing corporate crime in this country. Industry is now making these sorts of assessments; it may be time for the Department to follow suit.
Footnotes
[1] Brandon L. Garrett & Gregory Mitchell, Testing Compliance, 83 Law and Contemporary Problems 47-84 (2020)
[2] Benjamin van Rooij & Melissa Rorie, Measuring Compliance: The Challenges in Assessing and Understanding the Interaction between Law and Organizational Misconduct, in Measuring Compliance: Assessing Corporate Crime and Misconduct Prevention (2021).
[3] Lori Triopli, Hui Chen Suggests Companies Focus on Ethics and Metrics to Move Beyond a Rules-Based Approach to Compliance, Anti-Corruption Report (Nov. 15, 2017), https://www.anti-corruption.com/2567336/hui-chen-suggests-companies-focus-on-ethics-and-metrics-to-move-beyond-a-rulesbased-approach-to-compliance.thtml?.
[4] See e.g., White & Case, Use of Data Analytics in Compliance Programs (June 13, 2023), https://www.whitecase.com/insight-our-thinking/2023-global-compliance-use-data-analytics-compliance-programs; Deloitte, A Dynamic Data Driven Approach to Compliance Monitoring, https://www2.deloitte.com/sg/en/pages/energy-and-resources/articles/a-dynamic-data-driven-approach-to-compliance-monitoring.html.
[5] See e.g., Lindsay Whitehurst, DOJ to Use ‘Carrot and Stick’ Approach on Corporate Crime, AP News (Sept. 16, 2022), https://apnews.com/article/elizabeth-holmes-crime-lisa-monaco-congress-f6011a36dc1db3d48f051657762fc735
[6] The U.S. GAO highlighted a need to better evaluate the effectiveness of its use of deferred and non-prosecution agreements in a report publicly released in 2010. GAO, Corporate Crime: DOJ Has Taken Steps to Better Track its Use of Deferred and Non-Prosecution Agreements, but Should Evaluate Effectiveness (published, Dec. 18, 2009; publicly released Jan. 8, 2010), https://www.gao.gov/products/gao-10-110.
[7] Veronica Root Martinez, The Government’s Prioritization of Information over Sanction: Implications for Compliance, 83 Law and Contemporary Problems 85-111 (2020).
Veronica Root Martinez is a Professor at the Duke University School of Law.
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