Brian Benczkowski testifies at his confirmation hearing in 2017. (Photo: Diego M. Radzinschi / ALM)

Three months after being confirmed as head of the U.S. Justice Department's criminal division, Brian Benczkowski has issued new business-friendly guidance that could curtail settlement agreements that require companies to hire an outside monitor to police compliance.

Benczkowski, speaking at a conference in New York on Friday, announced guidance that urges prosecutors to consider the “projected costs and burdens” of a compliance monitor, often an outside lawyer or consultant who is tasked with ensuring a company adheres to the terms of a settlement.

Benczkowski, a former Kirkland & Ellis white-collar partner in Washington, called for prosecutors to show restraint in deciding to impose a compliance monitor. The new memo, replacing Obama-era guidance prepared by Lanny Breuer, then the assistant attorney general in the criminal division, includes language that companies in settlement negotiations with the government might welcome.

“In weighing the benefit of a contemplated monitorship against the potential costs, Criminal Division attorneys should consider not only the projected monetary costs to the business organization, but also whether the proposed scope of a monitor's role is appropriately tailored to avoid unnecessary burdens to the business's operations,” Benczkowski wrote in the memo, dated Oct. 11.

Read the memo: Selection of Monitors in Criminal Division Matters

The announcement Friday marked the latest steps the Justice Department has taken to lessen or restrict enforcement tools. In March, Rod Rosenstein, the deputy attorney general, said the Justice Department, coordinating with other federal agencies, would work to avoid “piling on” of penalties that involve the same criminal conduct. White-collar prosecutions are down in the Trump era.

The imposition of a compliance monitor should be the exception, not the rule, said Benczkowski, who spoke Friday at New York University School of Law's Program on Corporate Compliance and Enforcement.

“Our approach to the new policy began with the foundational principle that the imposition of a corporate monitor is never meant to be punitive,” Benczkowski said. “It should occur only as necessary to ensure compliance with the terms of a corporate resolution and to prevent future misconduct.”

Benczkowski's guidance tracks closely with Breuer's memo, which was published in June 2009. But the new guidance does include some key differences. It outlines considerations—such as whether a corporation has substantially improved its compliance program and whether the misconduct at issue occurred under different leadership—that could lead prosecutors to conclude that a compliance monitor is unnecessary.

“Where a corporation's compliance program and controls are demonstrated to be effective and appropriately resourced at the time of resolution, a monitor will likely not be necessary,” according to Benczkowski's guidance.

In his speech Friday, Benczkowski highlighted new language that calls for limiting the scope of a compliance monitor's work, keeping their oversight of a company “tailored to address the specific issues and concerns that created the need for the monitor.” Benczkowski's guidance states that monitorship agreements should include terms spelling out the “monitorship's scope”—an addition to the Breuer guidance memo that instructs prosecutors to outline the “responsibilities of the monitor.”

In cases where a monitor is deemed necessary, Benczkowski's guidance echoes Breuer's in instructing prosecutors to advise the defense lawyers to recommend three qualified monitor candidates. But Benczkowski wants more from the defense lawyers: His guidance asks defense lawyers to name the company's first choice for the monitorship. The new guidance also gives a Justice Department committee, part of the monitor selection procedures, more flexibility to deviate from the process.

Hui Chen, formerly the designated compliance counsel at Main Justice, said the changes announced Friday effectively formalized how prosecutors and defense lawyers have engaged in the past over the selection of compliance monitors.

“They might not have been expressly asked what their preferences were,” Chen said, “but that's not stopped them from expressing what they were.”

Chen left the Justice Department last year amid concerns about broader leadership in the Trump administration. She did not seek to renew her contract as compliance counsel, a new position created under the Obama administration. The Justice Department last year had advertised the job following Chen's departure.

Now, the Justice Department does not intend to hire for the post, Benczkowski said Friday.

“Relying on a single person as the repository of all of our compliance expertise also is shortsighted from a management perspective,” he said in his remarks in New York. “Anyone who holds such a job will inevitably and quickly feel a strong pull to the private sector. Their expertise is simply too valuable in this day and age.”

New hiring at the criminal division will focus both on lawyers with trial experience and “those who bring compliance experience to the table,” Benczkowski said.

Benczkowski was confirmed in July, more than a year after his nomination to lead the DOJ's criminal division. His clients at Kirkland included Citibank, HSBC, Viking Global Investors and the Russian company Alfa Bank. Senate Democrats grilled Benczkowski about his work for the bank.

 

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