The United States is one country where a strong legal background is usually required to pursue a career in compliance. There is a growing resistance to this stipulation, particularly given the current shortage of skilled compliance professionals.
While extensive legal knowledge and experience is extremely helpful, it is not an absolute prerequisite for compliance officers to effectively carry out their jobs. It could indeed be argued that individuals without a legal background can bring fresh perspectives and insights that can strengthen compliance endeavours.
So, why is there still this common preference for compliance officers to be trained lawyers?
Understanding of Regulatory Frameworks
Compliance work revolves around understanding and interpreting a vast array of laws and regulations: federal statutes, state laws, industry-specific regulations and international guidelines. A legal education provides a deep understanding of these frameworks, equipping compliance professionals with the knowledge to interpret and apply complex legal requirements accurately.
Lawyers are also trained to read and understand statutes, case law, and regulatory texts. Without a legal background, deciphering these intricate documents can be challenging, leading to potential misinterpretations and compliance failures.
Risk Management and Mitigation
A key component of compliance work is identifying and mitigating legal and regulatory risks. This requires a nuanced understanding of legal principles and the ability to foresee potential legal issues. Lawyers are trained in risk assessment and management, making them well-suited for this aspect of compliance work.
Compliance professionals with a legal background can analyze potential risks from a legal perspective and implement measures to address these risks proactively, protecting their organizations from legal liabilities and financial penalties.
Investigative and Analytical Skills
Compliance professionals often conduct internal investigations to ensure adherence to laws and policies, ranging from routine audits to complex inquiries into potential legal violations. A legal background equips professionals with the investigative skills needed to conduct thorough and unbiased investigations.
Lawyers are trained to gather evidence, interview witnesses, and analyze findings objectively. These skills are crucial in compliance roles, where investigations must be conducted meticulously to ensure accuracy and fairness. Moreover, legal training enhances analytical skills, enabling compliance professionals to interpret data and identify trends that may indicate compliance issues.
Communication and Advocacy
Effective communication is a cornerstone of compliance work. Compliance professionals must communicate complex legal and regulatory requirements to diverse audiences, including senior management, employees, and external stakeholders. Legal training hones communication skills, enabling professionals to convey intricate information clearly and persuasively. Moreover, lawyers are trained advocates, skilled in presenting arguments and defending positions.
Navigating Enforcement Actions
When organizations face enforcement actions or regulatory scrutiny, compliance professionals with legal backgrounds are invaluable. They understand the legal processes involved and can guide their organizations through investigations, negotiations, and potential litigation. This is something particularly helpful in the current climate of enforcement of sanctions regulations, frequently dubbed as the “new FCPA”: legal expertise is crucial in minimizing the legal and financial repercussions.
The counter-argument: hiring compliance professionals with a non-legal background
The changing face of compliance
Compliance now has a far bigger remit than it did 10-15 years ago. Back then, compliance was predominantly focused on FCPA (anti-bribery and anti-corruption), but now incorporates elements of data privacy, human rights, AI, information compliance, ESG and health & safety. As such, the skills and experience required to successfully fulfil a compliance role have also changed.
Balanced skill set
Placing excessive emphasis on legal qualifications can take attention away from other core skills required for effective compliance. Compliance officers need a comprehensive understanding of day-to-day business operations, risk management and ethical decision-making that extends way beyond legal considerations. Non-lawyer compliance officers bring a broad and fresh perspective on compliance matters.
Data-driven compliance
Non-lawyers in compliance roles may also find it easier to effectively interpret and maximize use of data. As businesses increasingly seek to gather data about customers, suppliers, competitors and internal processes, it all provides critical information for assessing compliance with internal rules and regulations and detecting potentially fraudulent or unethical transactions. Compliance officers who have a deep understanding of the business operations possess a natural advantage in their ability to interpret and make effective use of this data. Lawyers may not have had the same level of exposure to this type of data collection.
Interpersonal skills and collaboration
Non-lawyers also have an advantage in their ability to effectively collaborate with stakeholders across the organization, due to their superior knowledge of business operations. They often bridge the gap between legal requirements and practical business realities, effectively conveying compliance expectations and providing tailored guidance within specific operational contexts.
Role clarity
If a compliance officer is also a lawyer and functions as a lawyer, this can create role confusion. Management and legal matters are two separate entities and a compliance officer needs to be able to distinguish the two and so do those who deal with that person. When you deal with legal counsel it is for legal advice. When you deal with the compliance officer it should generally involve management matters. Hiring compliance officers without that legal background can prevent any confusion around role and responsibility.
Conclusion
There are strong arguments for hiring both lawyers and non-lawyers into compliance roles. However, it is clear that the absence of a law degree does not mean that someone won’t have the requisite talents and skills to thrive in a compliance role. It is highly likely that the US will, over time, become more open to different backgrounds – particularly as role continues to evolve and the demand for skilled compliance professionals continues to rise.