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Brian Benczkowski, an assistant U.S. attorney general, didn't expect everybody to applaud his speech on corporate monitors.
After all, he was speaking to students at New York University School of Law. They don't usually follow the nuances of corporate compliance.
But business leaders around the country virtually gave him a standing ovation when he announced a change: the Justice Department is cutting back on using corporate monitors.
Exception, Not the Rule
Compliance monitors typically conduct extensive investigations, overseeing requirements in corporate plea agreements. They assess and report back to the government on a company's compliance and ethics programs.
Benczskowski, who heads the criminal division, explained that every case requires a "deep look" into a company's compliance program. Deciding whether to install a monitor is "one of the most significant aspects" of any case, he said.
But times are changing in corporate America, and that means a new policy on corporate monitors. He said they will be "the exception, not the rule."
"The imposition of a monitor will not be necessary in many corporate criminal resolutions, and the scope of any monitorship should be appropriately tailored to address the specific issues and concerns that created the need for the monitor," Benczskowski said.
A Cottage Industry
In considering corporate compliance deals, he said, prosecutors should consider the financial costs and burdens on business operations. Monitorships cost millions of dollars; in one case, a company reportedly spent more than $130 million in monitor-related costs.
"The use of monitors has become so prolific that it has resulted in a cottage industry of lawyers -- typically former prosecutors or even judges -- from consulting companies or large law firms who serve as monitors with broad authority," Benczskowski said in his speech.
Those people -- the lawyers and judges working as monitors -- did not applaud.