Bloomberg Law Report: Risk & Compliance: How to Control the Selection of Your Company's Monitor
New York partners George Stamboulidis and Lauren Resnick authored an article for the August 2008 edition of the Bloomberg Law Report: Risk & Compliance titled, "How to Control the Selection of Your Company's Monitor."
According to Resnick and Stamboulidis, who is head of the firm's White Collar Defense and Corporate Investigations practice group, "As a result of the publicity surrounding designations by the United States Attorney in New Jersey of former Bush Administration appointees to serve as the monitors of several health care companies, Congress has expressed heightened interest in the Department of Justice's process for selecting monitors to supervise its deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) with corporations."
Monitors,"typically private sector lawyers and subject matter experts, many of whom have had prior government regulatory or enforcement experience," serve as an independent third-party responsible for assessing a company's compliance with the terms of a DPA or NPA with the federal government.
The authors continue: "In light of the political sensitivities and varying departmental practices around this process, the Department of Justice (DOJ) issued new guidelines for the selection and use of monitors in
settlement agreements with corporations (DOJ Guidelines) to preempt legislative intervention. The DOJ Guidelines set forth uniform procedures to facilitate the impartial and merit-based selection of independent monitors and reinforce the need for participation of the corporations in the process to ensure the selected monitor is conflict-free."
Resnick and Stamboulidis go on to detail the revised DOJ guidelines for selecting a qualified monitor and the rights a company has with regard to selection of that monitor. "In selecting a suitable monitor, the DOJ Guidelines envision a collaborative process between the government and the corporation to ensure a merit-based appointment free of potential or actual conflicts of interest and instill public confidence in the selection process . . . A corporation should negotiate firmly to secure an active role in the selection process, recognizing that the government will control the final decision to ensure the credibility and independence of the oversight envisioned by the agreement," state Resnick and Stamboulidis.
The authors also discuss the issue of privilege with regard to monitorships, as well the outcome of the monitorship—which could include an extension of the monitorship or, under specific circumstances, early termination.