Businesses set to come under scrutiny as long-awaited bribery law is enacted

It is ironic that legislation as heavily debated and with such a potentially far-reaching impact such as the Bribery Act should be among those rushed through in the last few days of the current Government. The much-disputed statute is set to take the UK from the backwaters to the forefront of bribery and corruption legislation when it comes into effect later this year.

Over recent years the UK has been subject to strong international criticism, not least from the Organisation for Economic Co-operation and Development, to provide greater clarity in the field of bribery which until now was largely covered piecemeal under an amalgamation of separate acts. And with many partners claiming this clarification is long overdue, there is certainly a large contingent of lawyers relieved to see the bill pass.

However, it seems some clients are questioning whether the legislation has gone a step too far. For law firms, new legislation means new work, but the question the UK's top corporate and anti-corruption lawyers cannot answer is whether the law will be another impediment to the competitiveness of UK businesses.

With the new laws harsher and significantly more far-reaching than those of the US, whose Foreign Corrupt Practices Act (FCPA) is feared and respected by business worldwide, the worry is that strict enforcement in the UK could mean that economy-boosting cross-border business going forward will search out more lenient jurisdictions.

General counsel suddenly have a whole lot more on their plate, with the Act making companies liable for operations carried out by a third party on their behalf – a particular concern for any overseas affiliates. The legislation also has a greater reach than the FCPA, placing an onus on foreign companies that have business in the UK to put in place 'adequate procedures' throughout their international business.

A whole host of City firms have jumped on the bandwagon and are targeting clients to advise on the new legislation, stressing that they need to be preparing best practice before the law comes into effect. Partners are now specifically approaching clients in sectors reliant on high-risk jurisdictions where bribes and 'grease payments' are part of the daily course of business.

And law firms say that while they are still awaiting further guidance – the Secretary of State will produce a document before October – they are not completely at a loss in the meantime, with companies able to fall back on similar strategies as those taken for money-laundering and other risk compliance issues. But, as one senior City anti-corruption partner puts it, there is really only one piece of advice a lawyer can give, and that is to abide by the law. For certain sectors, that means telling the client to completely overhaul the way it does business – not something they want to hear.

And as several partners have pointed out, it is worth remembering that law firms themselves are not immune to the legislation. There is still some issue over the clarity of the wording concerning gifts and expenditures, so make sure that client lunch was for the purposes of improving working relationships and not intended to affect the way they choose to do business.