Corporate Compliance


The National Center for Preventive Law's (NCPL's) Corporate Compliance Principles provide guidance for designing and implementing compliance programs. The Principles describe the common denominators of successful compliance programs -- i.e., principles of legal risk reduction which compliance programs must follow to be effective. Beyond these essential principles, the Corporate Compliance Principles offer considerations and examples to aid businesses -- large and small -- in constructing their own programs.

The NCPL's Corporate Compliance Principles text begins with a one page summary of the principles. In the next portion of the text, each of the principles is described in more detail along with related considerations that firms may wish to address in applying the principles. This format both defines the major issues in designing compliance programs (corresponding to the principles) and establishes checklists of means to address those issues (in the considerations).

Additional portions of the Corporate Compliance Principles text contain implementation examples describing concrete steps companies can use to implement the compliance principles described here. A hard copy of the complete text of the NCPL's Corporate Compliance Principles can be obtained by contacting Professor Thomas D. Barton, National Center for Preventive Law, California Western School of Law, 225 Cedar Street, San Diego, CA 92101.  Click here to read an on-line version of the complete text.

Adherence to the compliance guidance described in the Corporate Compliance Principles will help companies establish and operate effective compliance programs. Effective compliance programs include business practices that are generally successful in ensuring compliance with legal standards and company values. However, such programs have limitations which should not be forgotten in applying the compliance principles articulated here. First, compliance programs, no matter how comprehensive and well-run, cannot prevent or correct every violation of law or company values. Second, compliance programs may initially uncover more violations than were previously detected, thus creating a short-term artifact of apparent poor compliance. Third, given rapid shifts in legal standards and corporate operations, corporate managers may fail to predict new legal issues and adopt compliance program elements for resolving these issues. Fourth, even the best designed compliance programs will have little impact if they are not supported by persons at all levels of company hierarchies.

Despite these limitations, the case for using compliance programs to further the long-term interests of companies is compelling. Expectations about corporate compliance efforts -- expectations on the part of prosecutors, regulators, sentencing courts, shareholders, customers, and the public at large -- are rising. Compliance programs are the means to meet these expectations effectively and efficiently. Such programs are mechanisms for detecting and resolving compliance problems through established managerial methods.

The Corporate Compliance Principles identify many good managerial practices for ensuring compliance. By using these examples as suggestions for their own compliance program designs, corporate managers should be well on the way to operating effective compliance programs that realize substantial corporate benefits.

---Thanks to Professor Richard Gruner for authoring the beginning text of this page.

Click here to read Michael Goldblatt's account of Ensuring Corporate Compliance:  A Guide for Directors.