Combatting corporate misconduct in a pandemic era

COVID-19 has created an environment that can cultivate corporate misconduct—a liability that in-house counsel needs to be prepared for.

Torys partners Lisa Talbot and John Fabello spoke with Canadian Lawyer about their Q3 Torys Quarterly article “How to reduce exposure associated with pandemic-related corporate misconduct” and offered advice on what strategies employers can adopt in order to mitigate the risk of corporate misconduct in a pandemic era.

Lisa told Canadian Lawyer that maintaining employee mental health should be at the top of all employers’ agendas. She added that there are a variety of factors—including financial strain, working from home, and managing child and eldercare—that can contribute to the increase of misconduct and fraud in the workplace.

“When you look at economic and societal crises, each one has been accompanied by various sorts of misconduct,” Lisa said.

Lisa also advised organization leaders to lead by example and emphasized that change starts from the top.

“It is more important than ever for leaders to set a strong compliance culture and to set an exemplary tone from the top to make sure that ethics and the value of the business are really enforced in all the decision-making, and not to make exceptions,” she said.

John weighed in on internal compliance protocols and stressed that employers need to maintain robust internal whistleblowing channels throughout the pandemic. He cautioned employers against postponing investigations and encouraged the adoption of virtual investigations or revised procedures that allow for social distancing.

“I would encourage in-house counsel to avoid cutting costs on internal controls because if misconduct goes unchecked, the damage that can occur far outstrips savings,” John said.

“If you don’t follow through with normal protocols and procedures, there is a chance in this environment of significant misconduct going unchecked.”

Lisa and John are co-heads of Torys’ newly launched White Collar Defence and Investigations practice, which helps businesses manage and mitigate risks associated with government oversight and regulatory power to impose sanctions which can lead to litigation and reputation damage.