Find out why the U.S. market is more developed — and where the U.K.’s currently stands.
In recent decades, increased regulation and globalization have meant many businesses are facing an increased amount of regulatory and other legal challenges — yet legal service providers’ experiences dealing with those issues have accelerated faster in the U.S. than in the U.K., according to Neil Gerrard, former partner and white-collar practice global co-head at elite law firm Dechert LLP.
“If a client goes to a law firm in the U.S. they can expect a good level of experience, but there is more of a risk in the U.K.,” Gerrard told the legal publisher Lawdragon. “There are still too many lawyers who are rebranded former litigators without a specialist white-collar background.”
Neil Gerrard Talks the Rise of White Collar Legal Needs
Around the globe, numerous government agencies have intensified their efforts to pursue corruption and other infractions in recent years. As a result, companies have more motivation to examine and monitor their potential liability, both in the country in which they’re headquartered and the regions in which they conduct business, where their operations may be subject to national laws and regulations.
The significant fines, potential public exposure, and resulting reputational damage such cases can involve have made taking both proactive and reactive moves a necessity for companies. To meet the growing demand for related legal services, numerous law firms have enhanced their white-collar practice capabilities.
The legal white-collar market’s evolution, however, has not occurred at an equal pace in all countries, according to Neil Gerrard. In a Lawdragon roundtable interview he participated in during his time with Dechert, Gerrard said the U.K. is “currently five to seven years behind the U.S.,” and Europe remains “five to seven years behind the U.K.”
Some recent research supports his claim. An analysis conducted in 2021 — which noted the U.S. is “widely perceived as the dominant nation in the enforcement and prosecution of global economic crime” — found the nation had been more successful in prosecuting matters under the Foreign Corrupt Practices Act of 1977 (FCPA) than the U.K. had been in Bribery Act 2010-related prosecution. Researchers attributed the difference in part to prosecution attempts not being as frequent in the U.K., stating that just nine Bribery Act prosecutions had been initiated.
U.S. enforcement agencies have also successfully issued more money laundering violations, according to the analysis. Since 2015, the U.K.’s Financial Conduct Authority (FCA) has imposed approximately £380 million in regulatory fines for anti-money laundering rule breaches — nearly half of which came from one fine, whereas researchers said U.S. agencies issued $5.62 billion in fines relating to anti-money laundering issues during the same period.
Former Dechert Attorney Neil Gerrard: Why the US White-Collar Market Is at Least a Half-Decade Ahead of the UK’s
In the U.S., federal law changes in recent decades helped fuel the focus on corporate compliance and internal investigations for both corporations and law firms.
The FCPA, for instance, was amended in 1998 so its anti-bribery provisions would “also apply to foreign firms and persons who cause, directly or through agents,” an act of corrupt payment to take place within the U.S. The Sarbanes-Oxley Act of 2002 increased Securities and Exchange Commission funding.
Also in 2002, then-President George W. Bush established the Corporate Fraud Task Force to investigate the falsification of corporate financial information, insider trading, misuse of corporate property for personal gain, mutual or hedge fund-related fraud, and other infractions.
According to “Big Law’s Sixth Amendment: The Rise of Corporate White-Collar Practices in Large U.S. Law Firms,” a 2011 paper co-authored by two University of California, Berkeley, School of Law academic researchers, other legal changes also contributed to the increased need for white-collar-related legal representation and assistance, including the federal criminal prosecution fines established under new guidelines the U.S. Sentencing Commission issued in 1991.
The potential fines, determined in part by a culpability score, may have served as an incentive for companies to take steps to prevent and detect criminal activities — including obtaining guidance from a law firm — to reduce their related risk.
In turn, the growing demand for compliance and other services led U.S. law firms to fortify their available resources by developing white-collar practice groups.
At The American Lawyer’s Am Law 200 U.S. firms, the number of partners whose primary practice area involves white-collar criminal defense and investigation more than doubled between 2011 and 2017, according to ALM Legal Intelligence research.
The UK Market’s White-Collar Path
While, due to investigations and litigation, the U.S. white-collar legal services market may have been propelled forward in the past 20 years, attention to white-collar matters in the U.K. — while perhaps not at quite the same clip — nevertheless advanced during that period.
As Neil Gerrard noted in 2013 in an article written for Dechert’s site on the U.K.’s Financial Conduct Authority, “While prosecutions in the U.K. are not on the same scale as those ‘across the pond’ they are certainly on the rise,” with the FCA and HM Treasury, at that point, “keen to prove that the U.K. Government takes compliance with these requirements seriously” and wanting to “demonstrate their willingness and ability to enforce compliance with U.K./EU regulations to their U.S. counterparts.”
In recent years, enforcement agencies in the U.K. have focused on addressing bribery and corruption, money laundering, and terrorist financing activities.
However, as Thomson Reuters’ guide to financial and business crime law notes, several factors may have slowed down the matters’ resolution including increased scrutiny of prosecutors’ and regulators’ response to incidents and investigations, resource constraints, and a need for technological investments to help manage the large volumes of data that can be involved.
Why, as Neil Gerrard Says, Attorneys in the UK and US Need To Offer ‘International Reach’
There are law firms and attorneys in the U.K., of course, that have just as much experience in the white-collar realm as firms in the U.S., which is why businesses should perform the appropriate due diligence to confirm they’re obtaining highly qualified legal representation in white-collar matters.
“Nothing is more important than having specialists,” Gerrard said in his 2019 Lawdragon interview. “Liberty and reputation are so important to people, and to protect these things you have to be steeped in white-collar practice and culture.”
Given the scale and scope of today’s white-collar cases, working with true experts in the field is crucial to ensure the best possible outcome.
“These investigations now span continents, take years to resolve, and involve dozens, if not hundreds, of parallel and competing strands,” Gerrard told Lawdragon. “Clients need counsel who are culturally nuanced and have a geographically broad reach.”
Dechert, for instance, is able to draw from professionals in New York, Washington, D.C., London, Paris, Hong Kong, and Singapore when assembling a team at the start of a white-collar case — which, as Neil Gerrard said in his interview, allows the firm to choose the right Dechert attorneys for the work, based on their level and type of experience, language capabilities, and qualifications.
“We might look at specific skill sets that will really add value for a client, which will include people who have served as U.S. attorneys and assistant U.S. attorneys, and as senior lawyers in other agencies and governmental bodies around the world, including the U.K.’s Serious Fraud Office and Financial Conduct Authority,” he told Lawdragon. “We have lawyers on the ground in the U.S., Europe, and Asia, and within all those offices the team is multicultural and multilingual. That experience in managing multi-office teams and the ability to operate in different jurisdictions is crucial.”
With white-collar crime expected to rise in the future — particularly in relation to the COVID-19 pandemic, which 61% of practitioners reported has resulted in new types of fraud and procurement cases, according to a recent survey — proactively conducting a thorough risk review in the foreign markets your organization operates in, with the help of your legal team, can be a key step companies can take now to mitigate potential white-collar-related issues in the future.
“Businesses need to be on the front foot with compliance, obtaining preemptive legal advice as early as possible from lawyers,” Neil Gerrard told Lawdragon. “Systems and processes to ensure compliance … also need to link back to your home jurisdiction, and to the U.S. if you are engaged in international business. You cannot operate two separate compliance systems. So your lawyers need to be specialists in the U.S. and your home country — plus have the international reach to assist you elsewhere in the world when necessary.”