On Teaching Compliance

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Compliance should be incorporated into administrative law as well as offered as a separate upper-class course.

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After the financial thunderstorms that lasted from 2007 through 2009, compliance programs have sprouted like mushrooms in both the United States and around the world.

Banks, drug companies, insurance companies, securities firms, exporting companies, military contractors, hospitals, educational institutions, mutual funds, and investment advisers—indeed, nearly all companies with significant regulatory responsibilities—have greatly upgraded their compliance operations over the past decade.

While the trend cannot maintain its upward trajectory forever, few doubt that at the end of the day, the spectacular growth of compliance and its close cousin, risk-management, will transform the businesses of highly regulated industries.

Responding to marketplace demand, a number of law schools have instituted courses or programs in compliance, and more are contemplating doing so. Convenient teaching materials are now available in the form of my book, The Law of Governance, Risk Management, and Compliance. Every law school should consider making available instruction on this topic.

The rise of compliance as a law school course raises an obvious question: Where does it fit within the curriculum?

The problem is similar to one law schools faced a century ago when administrative law developed as an academic and teaching field. Administrative law issues were once taught as part of the law of remedies. But this was obviously not the right category. Administrative law had features of other law school courses – civil procedure, constitutional law, torts, contracts, equity – and it also brought its own unique issues and problems into the mix.

A similar problem is now presented by the law of compliance.

Compliance has a natural base in administrative law, given that most compliance activities are responses to the actions of administrative agencies. But compliance also has roots in other fields – civil procedure, criminal law, torts, corporate law, financial institution law, employment law, health law, and constitutional law, to name only some. Like administrative law – although not on as large a scale – the law of compliance is developing into an independent field of study, owing substantially to its roots in other fields, but also presenting unique issues and problems.

In my view there is no one “right” answer to the question of where compliance fits in a law school’s curriculum, just as there is no “one-size-fits-all” compliance program within a regulated organization. A good model for curricular fit, however, would have core concepts taught in a first-year or second-year class on the administrative state, which could be a prerequisite to a full, stand-alone compliance class offered in the second semester of the second year or in the third year of law school.

In addition, schools may elect to offer specialized compliance classes taught by adjunct professors who practice in particular fields (e.g., health law, import-export law, foreign corrupt practices). As to these, a basic compliance class could be either a prerequisite or a complementary class that students would be encouraged to take if they wish to explore a career path in the compliance space.

This is only one model, however. I have found that the compliance class can be taught without any exposure to the administrative state – and therefore that it is suitable for LLM students, including foreign students who often express an interest in returning to compliance jobs at home.

The compliance course is, in short, quite adaptable to the needs of each particular law school and its students.

The coming decades will likely clarify whether the field of compliance is a short-term phenomenon that will flourish for a while and then fade away, or whether it represents a durable development that deserves long-term recognition within the universe of legal education.

Geoffrey Parsons Miller

The author or editor of numerous books and research papers on business law, compliance and risk management, financial institutions, and securities law, Geoffrey Parsons Miller is also the Stuyvesant P. Comfort Professor of Law at NYU School of Law and co-director of NYU’s Program on Corporate Compliance and Enforcement.

This essay is part of The Regulatory Review’s five-part series, Innovations in Teaching Regulatory Law.