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James A. Fanto, The Professionalization of Compliance: Its Progress, Impediments and Outcomes (Dec. 7, 2020), available on SSRN.

James A. Fanto’s important new work, The Professionalization of Compliance: Its Progress, Impediments and Outcomes addresses a concern that I have been thinking about for quite some time: whether it is appropriate to consider people working in the field of compliance to be “professionals.” Within compliance circles, the phrase “compliance professional” is used constantly. Yet, as Fanto highlights in his excellent work, it is not at all clear that those engaged within the compliance industry meet the traditional hallmarks one finds associated with professional activities. Fanto’s article addresses this puzzle head-on in an interesting and thoughtful manner.

On the one hand, Fanto explains that those currently working in the field of compliance are aware that they “are engaged in a special activity,” and they have “formed organizations of compliance practitioners to share their specialized knowledge and practices.” The Society of Corporate Compliance and Ethics explains that the group “supports the compliance and ethics profession with educational opportunities, certification, networking, and other resources.” Indeed, their certificates send particular signals within the industry and are a way to demonstrate increasing knowledge and expertise in compliance. And yet, it is not at all clear what the boundaries of a compliance profession would be or who would count as “in the profession” as against those who work “in support of the profession.”

Fanto further explains that the hallmarks of what has traditionally been considered a “profession” don’t comfortably fit those working in compliance. In particular, Fanto, building upon the scholarly work of others, provides a helpful framework for evaluating the status of those working in the field of compliance against other professional groups. Professionals are often:

(i) engag[ed] in a distinct set of activities requiring the exercise of judgment and discretion, (ii) hav[e] training for the profession that is in institutions of higher learning but that is controlled by the profession, (iii) hav[e] practitioners with a shared sense of engaging in a common occupation who have established organizations for the sharing of knowledge and practices and (iv) receiv[e] from state governments exclusive control over the professional activities in the form of licensing requirements.

When the field of compliance is assessed under this framework, issues regarding whether it should be considered a stand-alone profession become immediately apparent.

In particular, there is no common and accepted professional training or school for compliance. Fanto notes that compliance courses are taught in both business and law schools. Indeed, both sets of schools have developed certificate programs and masters in compliance in recent years, but there is no commonly accepted curriculum for those interested in pursuing a career in compliance. Meanwhile, as to the fourth factor, there are no state licensing regimes governing the work of those working in the compliance area. Importantly, self-regulation, one of the hallmarks of professional organizations, is lacking in this space. Indeed, Fanto notes that there has not been a groundswell of support for the creation of state licensing regimes for those working in compliance, which cuts against the notion that those working in the compliance area are indeed professionals.

Despite not meeting these markers, I wonder if the compliance industry might lobby more directly for professional status due to an increase in potential liability being sought out by state and federal authorities against them. Indeed, in a recent speech before the National Society of Compliance Professionals, SEC Commissioner Hester M. Peirce discussed Chief Compliance Officer liability and the need to have more conversations about the issue. This focus on the role of compliance is not at all new, as former SEC Commissioner Luis A. Aguilar noted in 2015 that Chief Compliance Officers “play an important and crucial role in fostering integrity in the securities industry.” Individuals outside of those considered professions, of course, may be subject to liability, but moves toward greater liability might encourage those engaged in compliance activities to push for more formal recognition as professionals. This sort of recognition might enable those working in compliance to engage in more self-regulation and, importantly, a greater ability to organize an effort to push back against governmental sanctions.

Fanto concludes the piece by arguing in favor of creating a professional status for individuals working in compliance. He properly notes that, “[i]n the complex legal, ethical, and social environment in which organizations function today, boards, executives and employees need compliance officers who understand well the organization’s business and affairs and the applicable legal, ethical and other obligations applicable to them and who can knowledgeably guide them in meeting those obligations.” And yet, Fanto is unpersuaded that compliance will be granted its own distinct professional status, in part, because of the overlap between the fields of compliance and the legal profession. Instead, Fanto argues in favor of making compliance, in his words, “a recognized part of the legal profession.” This suggestion has its own set of potential challenges. For example, the ABA and the profession have long resisted calls for greater regulation of conduct that is a mix of both business and legal activity.1 At core, that is much of what the compliance function encompasses—an evaluation of legal requirements in light of certain business realities and risks.

There does not appear to be a neat solution to the current status, or lack thereof, of those working in the compliance space. And yet, what makes these issues interesting is the very fact that they are messy. Fanto’s piece lays out the various aspects of the debate, laying bare the difficulties associated with attempting to thoroughly and logically create an analytically defendable argument regarding the proper status of those working in the field of compliance. The puzzle is, for those (like myself) who like them, absolutely perfect in its difficulty, challenge, interest, and mystery.

I highly encourage you to read Fanto’s article and attempt to put the pieces of the compliance professional puzzle together for yourself!

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  1. See e.g., Dana A. Remus, Out of Practice: The Twenty-First-Century Legal Profession, 63 Duke L.J. 1243 (2014) (noting that “a growing number of lawyers occupy roles for which legal training is valuable but licensure is not required”). The ABA has, however, adopted a rule that governs law-related services. Model R. Prof’l Conduct R. 5.7.
Cite as: Veronica Root Martinez, The Compliance Professional? An Interesting Puzzle, JOTWELL (March 9, 2021) (reviewing James A. Fanto, The Professionalization of Compliance: Its Progress, Impediments and Outcomes (Dec. 7, 2020), available on SSRN),