The winds of change are blowing when it comes to corporate criminal responsibility

There are many adjectives you could pin on 2020, but uneventful isn’t one of them. It’s therefore unsurprising that most businesses probably haven’t paid close attention to the controversy over a range of legal reforms that have been simmering away in legal circles since November of last year. That was when the Australian Government appointed Australian Law Reform Commission (ALRC) released a discussion paper laying out potential – and, some would say, long-overdue – reforms of corporate criminal responsibility law.

It’s definitely unsurprising that this discussion paper proved contentious, given that it was itself one of the many offspring of another controversial reform document, the damning Hayne Commission report recommending sweeping reforms of the banking sector. That report revealed several acts of malfeasance on the part of some financial services companies, and made it inevitable that the question of corporate criminal responsibility would need to be revisited for the first time since 1995.

Corporations made criminally liable for any wrongdoing by rogue employees?

In the following ten months, many lawyers and law bodies have spoken out publicly about the proposed reforms, some in favour and some more critical, including the powerful Law Council of Australia. Arguably the most controversial reform was proposal eight, which “deems the conduct and state of mind of any “associate” to be that of the company”. As legal experts argued, this would make corporations criminally liable for any wrongdoing by rogue employees and increase costs for consumers. The prospect of a new and poorly defined legal risk alarmed many businesses who were paying attention.

On the last day of August, the final set of recommendations from the ALRC were finally published and the good news is that the Commission appears to have listened on this point. Proposal eight has been dropped from the final set of reforms that were tabled in Parliament. Elsewhere, there is much that businesses need to pay attention to, given the impetus behind these reforms and the strong likelihood that they will indeed lead to changes in laws and regulations.

At first, the news might seem alarming for businesses, given that – as Lawyers Weekly notes – the reforms are focused on “strengthening criminal action enforcement against corporations.” However, closer inspection reveals that this stronger stance will be mostly directed at large corporations indulging in the most appalling practices. In this sense, they remain true to the Hayne Commission report which first sparked the reforms into life. Given that some of the offences named include tax evasion, slavery, human trafficking, violation of foreign sanctions, torture, crimes against humanity, war crimes and financing of terrorism, it is to be hoped that most businesses will neither disagree with the reforms nor fear them.

Good news for small businesses?

There is, in fact, some good news for small and medium-sized businesses in that the reforms address the injustice that in the past it was more likely that a small corporation would be targeted for prosecution than a large corporation, with their armies of lawyers. The ALRC makes this absolutely clear in their report: “Small corporations are more likely to be targeted than large corporations, even though the wrongdoing of large corporations may potentially affect far more people.”

There is more good news for small and medium-sized companies. Currently, there is a bewildering range of laws that could potentially apply to businesses. The ALRC’s research identified over 3,100 criminal offences across 25 statutes, which create a significant regulatory compliance burden that impacts all enterprises. The reforms seek to simplify and streamline these laws, reducing the amount of red tape for businesses in the future. Another key recommendation is that there should be greater national consistency with respect to corporate criminal misconduct, something which has been needed in Australia for some time.

How does it impact organisations doing business overseas?

Unfortunately, if you are doing business overseas, the reforms may pose greater challenges. Partly as a result of transnational scandals, particularly in financial services, the reforms seek to beef up laws in this area. This will likely add greater responsibility to companies to ensure compliance with the laws against corporate misconduct not just in Australia but also overseas, which will mean a greater regulatory burden, not a lesser one.

Don’t think that this subject is closed now, however.  Although the Government has pledged to examine the reforms closely, this is likely to be a long process and – as Bennet & Co note – “all or none of the recommendations may be accepted and put into legislation”. If the reforms are adopted they will almost certainly require a major overhaul of Commonwealth legislation, something which is likely to generate further controversy. No matter what happens, smart businesses will need to keep an eye on the reforms as they proceed, or make sure they have legal advisers who monitor developments on their behalf. The winds of change are blowing when it comes to corporate criminal responsibility, and it’s always better to adjust your sails before those winds hit you than be caught by surprise and capsized.

Have any question about commercial law? Get in touch and one of our experienced and competent lawyers will be on your side. 

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Mark Lazarus

Mark Lazarus, the visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.

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Barry Lazarus

CEO & Notary Public

barry@lazaruslegal.com.au 

We’d be lying if we told you that this bloke isn’t the big honcho of our team, but his name is a dead give-away. The founder of Lazarus Legal, Barry is an old school, tough as nails lawyer. They don’t forge litigators like this anymore.

With decades of experience in both Australia and South Africa, his wisdom is as renowned as his name. Back in the days when Schwarzenegger and Van Damme were kicking ass on VHS, Barry was kicking ass in the courtroom. And after all these years, he still has a reputation for refusing to back down.Barry is definitely the badass you’d want in a fight – in court or otherwise. But really, he’s a big softie. Just don’t let him know you know that (although he probably won’t read this anyway – navigating the Internet is not his strong point).

Aside from putting other lawyers in their place, taking long walks on the beach and spending time with his family, Barry enjoys seeing others succeed. Not only is Barry a staunch and unmoving litigator, he has sharp business and commercial acumen having started up ventures from scratch and growing them into full-blown franchises – from real estate to creating ice cream, to making pasta. With his experience on both sides of the commercial and legal equation, you want this guy to be on your side, whether you’re the next Zuckerberg realising your genius, or the next Zuckerberg taking on your opponents in court.

When Barry is not busy lawyering about, he is a part-time lawn bowler and a wannabe comedian, but never took both as a day job, because let’s face it, he’s a lot better at his day job.

If someone ever threatens you to lawyer up…relax, call Barry and he’ll handle the rest. 

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Mark Lazarus Director

Mark Lazarus

Director

mark@lazaruslegal.com.au 

The visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past stories and experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.

He’s a bit of jet setter, splitting his time between Australia and the UK, maximising every hour of his professional life. He thrives on this adrenalin. It allowed him to work in private practice in Sydney, act for a host of famous celebrities in London, do a two year stint as a NSW barrister (and not the pretentious coffee type in the Melbourne laneways) and more recently did a gig as the Legal Director covering Europe, the Middle East and Africa for one of the world’s coolest fast-moving consumer good brands!  

As an Aussie and UK lawyer and former barrister, Mark not only has the gift of the gab but he’ll walk the walk to prove it too. He likes to think he’s a bit like Harvey Specter or Michael Corleone, the main difference is you can actually retain him as your lawyer and consigliere. He’ll tell you how it really is and will take on any challenge head on. Although litigation and court advocacy comes naturally to him, commercial and IP is what gets his blood pumping! 

When Mark is not out there doing his thing, you will probably catch him chilling at home with his family, on the sidelines of the soccer (football) pitch cheering on his two boys, crawling through mud obstacles, or training hard at the gym. Passion and commitment is what drives Mark to succeed, along with his burning desire to disrupt the legal profession by finding new ways to change the game.

He has sights on the future. So if you’re breaking new ground, ahead of the times, and on the verge of something big, but you need someone who’s got your back and who can give you straight up advice, this is the guy you will want on speed dial.

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