Dominika Stępińska-Duch and Janusz Tomczak: When should a law-abiding company seek advice from a criminal lawyer? | In Principle

Janusz Tomczak: There are more and more criminal provisions in business law. Beyond the Penal Code itself, there are criminal provisions in over 100 other statutes, and almost every act governing specific spheres of business activity contains some criminal provision or other. There is a noticeable trend toward stepping up prosecutions in areas such as irregularities in securities trading reported in the press.

Not to exaggerate, but there seems to be a trend toward more frequent use of criminal provisions to regulate areas related to business activity. The European Union requires that more extensive criminal sanctions be imposed for all manner of environmental violations than under current law, and legislative initiatives are already underway in this area. It is businesses in particular whose activity poses a threat to the environment that may be subject to criminal liability in the event of a catastrophe or other events causing harm to the environment.

Dominika Stępińska-Duch: Of course it is impossible to eliminate human error completely, or its consequences, which are also covered by criminal law to a certain extent. The effects can at least be minimised, including the consequences for the organisation. Emphasis should be placed on a number of different elements that in one way or another fall into the category of fault.

Criminal law is focussed on individuals’ responsibility for their actions. Thus a manager has an interest in seeing that the company is run in a transparent manner, with clear distinctions in authority and duties among specific personnel. Increasingly, attention is drawn to the need to establish proper communication channels between staff and management, so that any irregularities are immediately reported and quickly eliminated, and further incidents prevented in the future.

Codes of conduct should be established—internal best-practice rules and regulations that help minimise the risk of irregularities, including those that may give rise to criminal liability. Finally, measures need to be in place that encourage use of the procedures in practice.

All of this should help minimise potential risks with respect to specific individuals, particularly the managers of the enterprise.

Observing what is going on nowadays in Poland, what seems to be particularly lacking is a preventive culture, inculcating good habits. Companies will typically seek legal advice when it is too late, and the only thing left to do is damage control.

Janusz Tomczak: This is reflected in the legal advice offered in Poland in the area of criminal law. Criminal law specialists are equated with defence counsel in criminal proceedings, and there are not many criminal lawyers advising businesses how to protect themselves from risk, how to approach situations that cause problems within an organisation, how to prevent such situations from developing, and so on. As mentioned, internal regulations that help uncover irregularities and diagnose the problem quickly are of paramount importance—particularly within large organisations.

Dominika Stępińska-Duch: The point is also to properly assess the permissible level of risk in order to avoid a threat of liability, including criminal liability. We know that every enterprise bears a certain amount of risk associated with doing business. But managers sometimes forget that in practice all of their actions need to be based on rational grounds. Otherwise we enter into an area of fault, which may constitute an offence, or at least come under the scrutiny of law enforcement authorities.

Janusz Tomczak: Managers often are not aware, or forget, that criminal liability may be imposed for negligent or reckless actions—or, to use the criminal law terminology, unintentional offences. We are not talking here about persons who deliberately commit a crime. We mean people who are threatened with criminal liability because of a lack of due care, deliberation and consideration.

Dominika Stępińska-Duch: Foreigners are in a somewhat special situation. They are not treated more lightly in Poland. Polish law applies here, so anyone who serves as a member of a management board or performs some other function in a Polish company cannot claim ignorance of the law, language or practices as an excuse. But the differences in criminal law from one country to the next are often major. Foreign businesspeople may be surprised by the degree of intervention in the private sector by law enforcement officials in Poland.

Janusz Tomczak: To answer the question briefly, legal commentators often refer to the “reasonable person” standard—acting with due diligence, taking decisions on rational grounds, striving to prevent improprieties, and hiring specialists to analyse risks, because that is cheaper than cleaning up after a catastrophe.

Janusz Tomczak: Businesspeople are rarely sentenced to a mandatory prison term for economic crimes. However, the criminal conviction or finding of guilt will still be disclosed in the National Criminal Register. This may prevent the person from serving on company boards or prevent the company from competing in public tenders.

Dominika Stępińska-Duch: The purpose of these regulations is to prevent persons convicted of crimes from conducting business. What may prove more painful in practice is stripping the person of the right to perform certain functions, or an outright ban on conducting business activity. Not only that, it is also possible to apply such sanctions as a “preventive measure” during the pendency of a criminal case, which immediately prevents them from acting on corporate boards.

Janusz Tomczak: It should borne in mind that in certain fields of business, where there is a close connection between the private and public sectors (e.g. pharmaceuticals, medical equipment, and infrastructure investment projects), transparency and credibility are crucially important.

Anywhere the Public Procurement Law applies, where public funds are being invested, compliance with procedures and the actions of the participants will come in for heightened scrutiny by state oversight institutions and law enforcement authorities, such as the Central Anticorruption Bureau and the Supreme Audit Office.

Dominika Stępińska-Duch: These authorities have highly advanced technology at their disposal, and they look closely at technical issues that may go unnoticed in everyday work. At critical moments, compliance with principles of due care in carrying out basic tasks becomes relevant.

Dominika Stępińska-Duch: Yes, but not from a criminal lawyer.

Janusz Tomczak: Businesspeople treat the risk of criminal liability as a marginal issue. This is based on certain experience. There are industries and areas of operation that require special caution and sensitivity to risk, and there, before signing an agreement, it is important to consult with a specialist—but not necessarily concerning criminal law. The point is to exercise due care when taking various important decisions.

Dominika Stępińska-Duch: First they should consider what the matter is about and what they expect. Managers shouldn’t decide about things they do not know about. Maybe that doesn’t sound much like legal advice, but it is one aspect of the right attitude.

When it comes to legal advice as such, it is important to remember that advocates and legal advisers are required to maintain the confidentiality of information given them by clients. A court can release them from this obligation only under exceptional circumstances. In the case of defending a suspect or the accused in a criminal matter, attorney-client privilege is absolute. In criminal cases, which are inherently sensitive, this is particularly important.

Janusz Tomczak: Also bear in mind that commerce crosses borders, which means that economic crimes increasingly often have a cross-border character. In criminal matters with an international element, the experience of the lawyers and the firm is important, and their ability to manoeuvre quickly in the international legal world and obtain legal advice that may be needed in various other jurisdictions. Our firm, for example, has actively participated for many years in international legal organisations with members who are criminal lawyers from all over the world, which in practice means that we can quickly coordinate legal assistance both in Poland and abroad for our clients.

Dominika Stępińska-Duch: We often forget how much we can “help the case” at the preparatory or investigative stage, when the law enforcement authorities are trying to figure out what happened in the matter they are looking into.

Oftentimes companies, as large commercial organisms, ignore the importance of inquiries from law enforcement, and react only at the stage when an indictment has already been issued, or a motion for punishment, or the case is already scheduled in court. Oftentimes the real bulk of our work takes place at the stage of the preliminary proceeding. This typically involves gathering evidence and providing a full explanation of issues that the police or the prosecutor’s office has taken an interest in. This often heads off unnecessary measures, protecting both the authorities and our clients from incurring unnecessary costs.

Janusz Tomczak: We should also pay attention to the proper understanding of events that are of concern to us. Recently we dealt with a situation where our client was summoned to submit a number of documents to the prosecutor’s office. Only a few months later did the client realise that the summons concerned a matter in which the company might be involved as the injured party, because the case involved an allegation of acting to the detriment of the company, even though the notice of a crime was filed by a third party.

Dominika Stępińska-Duch: Definitely. There are a whole array of measures that law enforcement authorities can take in order to redress injury or minimise the material consequences. In our view, what is crucial in cases of this type is close cooperation between the injured party and the authorities—with the proper flow of information and an awareness that we are on the same side.

Janusz Tomczak: It should also be borne in mind that often excellent results may be obtained by combining the instruments offered by civil and criminal procedure, when prosecutors and civil courts are both interested in the same events. An active approach to dispute resolution, in the character of the injured party, may achieve good results, even if only in the form of access to information or evidence. This can make it easier and faster to repair the harm done to companies that become victims of crime. This is one of the most worthwhile aspects of commercial criminal law.