CCR: Q&A with Steve Solow on Corporate Crime and Compliance
Published June 26, 2024 in the Corporate Crime Reporter
For more than twenty years, Steven Solow has worked as a defense attorney at some of the largest corporate criminal defense firms in the world, including most recently at Baker Botts.
Last month, Solow announced he was opening his own firm in Washington D.C. – “a law firm dedicated to helping organizations and individuals in the United States and worldwide navigate and identify solutions to complex legal and strategic challenges.”
In tandem with the opening of Solow, PLLC, Solow has also joined Affiliated Monitors as managing director of Global Compliance and Corporate Culture.
Affiliated Monitors, founded in 2004, was the first company in the U.S. to focus on providing independent integrity monitoring services across a wide range of regulated industries and professions.
In addition to practicing law, teaching has been a central part of Solow’s career. Since 1997, he has been an adjunct professor at the Elisabeth Haub School of Law at Pace University, for which he founded and directs the Washington D.C. Environmental Externship program.
He also served as a full-time professor and environmental law clinic co-director at both Pace and at the University of Maryland School of Law. He is currently a Senior Fellow of the Zicklin Center for Governance and Business Ethics at Wharton. Solow holds a J.D. from New York University School of Law and a B.A. from Brown University.
Why leave the big firms and start your own?
“I am interested in the minutiae of cases,” Solow told Corporate Crime Reporter in an interview earlier this month. “And that’s difficult for a high priced partner to get into. It doesn’t make much sense from a leverage point of view. Clients who call me often want my full engagement down to the level of what’s happening on the floor. That’s something that is harder to do as part of the structure of a big firm. And I felt it would be easier this way.”
You are attracted to the work of monitors. Why is that?
“It’s the notion of problem solving,” Solow said. “The joke among defense lawyers is that the ideal client is guilty and rich.”
“I did not go into law for those reasons. My interest in trying to solve problems for clients often resulted in work on individual matters that ultimately expanded into looking at why that matter arose.”
“The notion of a root cause is that any particular shortcoming, violation or criminal behavior in a large organization is a symptom. And the question is – what is it a symptom of?”
“Unless you explore that, you may address the immediate issue but you may leave the organization susceptible to risk of failure in the future if you don’t address the underlying issue.”
“That was the main issue of the judge overseeing my monitorship. And it has been an issue that has been of interest to me throughout my career. The problem is not the issue that is immediately in front of you – the shortcoming, the failure, the regulatory violation, the financial crime – whatever it might be. That is almost always a symptom of some systemic issue that needs to be addressed.”
“I wrote about that recently in light of the Boeing case. I wrote about a prosecution I was involved with many years ago with a major airline. They had been carrying dangerous amounts of hazardous materials on passenger planes. It’s not that they lacked a program or failed to invest in it. But they had a separate program that created an incentive to put more cargo on planes and in effect overrode the training.”
“And we see that over and over again. Companies invest a huge amount in compliance training and then scratch their heads in frustration when various compliance issues arise. The government is aware of this as well. Lisa Monaco, back in October of 2022 gave a talk in which she said the Department of Justice would be taking a more holistic view of compliance when deciding whether or not to prosecute a company.”
“She said they would look at a company’s ability to manage its compliance obligations, not just in the area that is the subject of their current investigation. She recognized that having a particular shortcoming may be indicative of more systemic issues that need to be addressed. Whether that’s through an external monitor or internally on their own, creating a pathway to examining those issues, we are on the cusp of a new chapter, a new phase of compliance.”
“In thinking about our conversation, I thought there were two things I wanted to emphasize – one is positive and one is not. Professor Bill Laufer wrote an article not too long ago titled – A Very Special Milestone – about the huge level of investment in compliance that has been made. He made the point that there are more compliance officers in the United States than there are police officers. And yet, we continue to see shortcomings.”
“Professor Laufer was concerned about what I would call compliance theater. If you can show you met the criteria set out in the Sentencing Guidelines, that would be enough to show that you have done what you need to do. But what companies and the government are increasingly realizing is that is not enough.”
What’s the positive?
“When you look at the work that Hui Chen started under Andy Weissman at the Department of Justice and that Matt Galvin has continued in the current administration, it is a positive recognition that there are analytical means to identify flaws in compliance that are becoming increasingly capable and sophisticated. That is important work in part because it raises the bar of expectation for the work that entities are doing with their own data. That’s Matt Galvin’s key point – you have the data in your hands. You don’t need to create new data. You need to create better ways of using your own data to identify compliance shortcomings.”
“That is one part of the picture. The other part is culture. It is widely remarked that culture eats strategy for breakfast. One of the things that people are beginning to realize in a more sophisticated way is that you can have the pieces of a sophisticated compliance program, you can use the data in ways that people like Hui Chen and Matt Galvin have talked about, but culture ultimately is key.”
“I have worked with companies that did not have much of a program in terms of compliance, but they had a tremendous compliance culture because of their leadership. As a result, they achieved amazing compliance results. People are not stupid. If you make clear to them that the key to success in your organization is compliance along with achievement of your business objectives, people figure out a way to do that.”
“The difficulty is creating effective empirical means of assessing compliance that is legitimate. There are people out there who will say they can assess a company’s culture. But not all of them do that in a way that is representative or reliable as a basis of making decisions.”
Okay, so the positive is there are ways to create an effective compliance culture and we are developing ways to judge those that are and those that are not.
What’s the negative?
“I’ve been a law professor for almost all of my career as a lawyer. My challenge today is not leaving a large law firm and starting my own. The challenge is facing my law students, who have decided to throw in with a career that I really value and explaining to them that depending on what happens in a few months, the system of law as we know it may be gone.”
You are talking about Trump?
“Yes. It’s like a ship of fools scenario. We are talking about applying resources to attain compliance and how to measure issues like culture, how to determine levels of compliance. But in the Olmstead case, Justice Brandeis said – the government is the potent omnipresent teacher. And crime is contagious. If the government becomes a law breaker, it breeds contempt for the law.”
“You cannot be a compliance lawyer for a company in a country where the government becomes a lawbreaker.”
If you want to talk about the United States as a lawbreaking country, that’s going to be a longer conversation. But I wanted to focus on what you said earlier. These compliance programs tend toward compliance theater. Let’s look at the large corporations – the top 500 or the top 1000. How systemic is compliance theater?
“No one knows. You don’t know and I don’t know. One of the biggest failures of the Sentencing Commission has been the failure to adequately do what it is supposed to do – collect data and assess the validity of their approach on corporate crime.”
“There are people like Duke Law Professor Brandon Garrett, who collects a lot of empirical data. But we don’t have adequate empirical work. Bill Laufer, in 1993 at a conference on the good corporate citizen, made a plea for better empirical data on compliance. And we don’t actually have it.”
“I have seen the insides of some of the largest companies in the world that are making good faith efforts. And I have seen culture in some of the largest companies in the world where people are not afraid to put up their hand and raise an issue. There is no question that the highest rate of return on investment on compliance has been where there is a culture of compliance that has been inculcated.”
“And where that occurs, we see a remarkable level of adherence to requirements. When I was in the government, I was very conscious of the fact that most companies most of the time appeared to be complying. But the question was – why the outliers? What was causing them to be outliers? What was the problem to be solved?”
You say we shouldn’t be bean counting, but one indicator of whether the government is taking corporate crime seriously or not is if they are bringing criminal cases against the most powerful corporations. If they are not bringing these cases, that’s one indicator. If the government said – we are not going to bring any more corporate crime cases, that would be one indicator that they are not taking corporate crime seriously.
“There are other issues here also. One is resources. In 2000, there were a little over 200 EPA agents and something like 35 or 40 dedicated prosecutors in the environmental crimes section. A quarter of a century later, those numbers are unchanged or lower. I don’t think anyone would argue that those cases have become simpler, less labor intensive, less demanding, less sophisticated.”
“One question is – what are we willing to invest in understanding the causes and potential cures for corporate crime? And what are we willing to invest in prosecutorial resources before we say – why aren’t you doing more?”
[For the complete q/a format Interview with Steven Solow, see 38 Corporate Crime Reporter 25(12), June 17, 2024, print edition only.]