A few years ago, Thomas Curran, a partner at construction law firm Peckar & Abramson, perceived an increasingly aggressive regulatory environment for his clients and the patchwork of federal, state and local authorities regulating them. That set off a firm-wide effort to bridge the sometimes-clashing interests of regulators and the regulated.
The result was the Construction Industry Compliance and Integrity Institute, a partnership with the Building Trades Employers’ Association, a longtime client of the firm that represents New York City’s trade union contractors and construction managers. A two-day forum in October sought to educate the construction industry on ever-changing, complex compliance requirements while helping law enforcement and elected officials understand how those regulations affect the industry. Since last fall, the association and Peckar & Abramson have held shortened versions of the event for clients and small groups across the city. A second forum will be held later this year.
Curran, 48, said his experiences in public service and private practice highlighted differences in how, for example, the U.S. Securities and Exchange Commission treats firms it oversees, and how regulators approach the construction industry.
Before coming to Peckar & Abramson, Curran served as an assistant district attorney in Manhattan under Robert Morgenthau, prosecuting securities fraud and complex white-collar criminal cases. He now advises public and private companies on regulatory compliance, white-collar criminal defense and internal integrity reviews.
Q: You have worked as a prosecutor and a defense attorney. Does each call on the same set of skills? Was it difficult to make the transition to the private sector?
A: On criminal matters, whether as a prosecutor or as a defense lawyer, I was fortunate to be trained by some truly excellent people to be mindful that I am first and foremost an officer of the court. As such, my progression from private practice to prosecutor and back to private practice has not been difficult.
As an officer of the court my primary duty is to our system of justice. Having performed as both a prosecutor and as a defense lawyer in furtherance (hopefully) of the system has enabled me to be better in both roles, I believe. Having been a prosecutor provides me with a perspective of how a criminal investigation proceeds, how a target of an investigation (and the conduct in question) is viewed and whether and how a criminal case may ultimately be built and charged. This perspective enables me to better counsel clients involved in the criminal process.
Q: You recently were appointed by Manhattan District Attorney Cyrus Vance Jr. to a task force on the state’s white-collar crime laws. Is there a need to change those laws?
A: It is a great honor to have been named to the New York State White-Collar Crime Task Force by District Attorney Vance. The task force consists of criminal justice professionals, including prosecutors, defense lawyers and academics, and it is a privilege to serve with such a talented group of people.
The task force is evaluating both the substantive and procedural law and statutes in an effort to make them more efficient and fair—for the prosecution and the individuals and companies that may be exposed to the criminal justice system. Any endeavor designed to make the criminal justice system more efficient and fair is important and I feel there is always a need to strive for that.
Q: What kinds of clients do you represent at Peckar & Abramson?
A: In addition to general commercial counseling including civil and criminal litigation, my practice has become focused on advising clients about the complex regulatory environment and the risks it presents to their businesses. This includes representing clients before both civil and criminal authorities on the federal, state, and local levels. While a large number of clients are members of the construction and securities industries, my practice includes clients from sundry other disciplines, including lawyers, law firms, major educational institutions, members of the fashion industry, industrial supply companies, insurance entities and not-for-profits. My practice involves white-collar matters, the civil regulatory matters that so often precede or follow such matters, and internal investigations.
Q: Your firm is legal counsel to the Building Trades Employers’ Association. What is the function of the association and what service does the firm provide?
A: The Building Trades Employers’ Association (BTEA) is a representative organization for 27 trade union contractor associations. These associations, in turn, represent the 1,700 construction managers, general contractors, and specialty subcontractor firms which employ 120,000 people in New York City.
The BTEA’s mission is to advance the interests of its members and their corporate constituents in order to assure the continued success of the vibrant, unionized construction industry essential to New York’s economy.
Peckar & Abramson, and especially Bob Peckar and Steve Charney, performs basic, full-service, and traditional counseling to the BTEA in all its endeavors. Such is our belief in the value of the BTEA to the industry and community that we provide these services pro bono.
Q: Do you represent individual builders? How much of your firm’s business comes from the construction industry?
A: Peckar & Abramson counsels the industry’s most successful contractors, professionals/individuals, and associations. That is not to say, however, that our firm’s practice is limited to the construction industry. Indeed, what attracted me to the firm a little more than three years ago was overall depth of its practice groups and the ‘results’ oriented approach of its people.
The firm now boasts approximately 100 lawyers in nine U.S. cities and affiliations around the globe. We are now a full service firm, albeit one that is wisely mindful of its roots as the go-to firm for the construction industry.
Q: In your experience, how does regulation of the construction industry differ from regulation of the securities industry?
A: There exists, to paraphrase President Eisenhower, a burgeoning ‘Regulatory Industrial Complex.’ The need for these industries to engage in ‘regulatory risk management’ is predominant.
The securities industry benefits from the existence of one, primary regulator in the form of the Securities and Exchange Commission, which has been at it since the mid-1930s. As a result, the industry has great familiarity with the SEC and its processes and there exists a well-developed body of precedent relating to SEC regulation and enforcement. When a rule or law regulating the industry is contemplated, Congress or the SEC seek and receive the input of the securities industry.
The regulatory environment with which the construction industry must interact is without a single, preeminent authority. The industry must comply with regulation, and resultant investigation if not enforcement, imposed by multiple entities simultaneously on the federal, state, and local levels. The construction industry must also often abide by private regulators in the form of monitors and so-called ‘IPSIGs’ [independent private sector inspector generals].
Q: How important is the construction industry to the economy of New York?
A: The importance of the construction industry to the economic vitality of New York and its people cannot be overstated. Much is made, appropriately so, of the value of a vibrant Wall Street. I believe that the overall value of a vibrant construction industry is every bit the equal.
First, the construction community for more than a century has been the leader in providing support to the middle class. The BTEA, for example, and its constituents members ultimately support more than 120,000 employees and their families through well-paying jobs with benefits, training, safety and security. These families, in turn, form the backbone of New York’s rich tapestry of communities.
Q: Do builders get a fair shake from state and local regulators, and have regulations evolved?
A: As the regulatory environment has grown, I believe that it has also evolved. The people and public and private agencies that enforce regulatory compliance have become more familiar with the industry. That familiarity, however, has been drawn more from a prosecutorial experience than through dialogue.
That said, I would not characterize whether the construction industry is ‘getting a fair shake’ or not from any regulator. The regulators, especially those representing the public agencies responsible for taxpayer money funding a construction project, have a mandate to protect how that money is spent.
Consideration and understanding of the industry and its practices through dialogue is very much needed—it can only lead to a compliance environment that is more effective and inherently more ‘fair’ to the industry members. And, I note, this efficiency also benefits the taxpayers funding large capital projects.
Q: Can you give some examples of the way onerous government regulations harm the industry?
A: I think the word ‘onerous’ is misplaced. That said, I believe that the performance of civil and criminal regulators as regards certain regulation programs has been wanting.
M/W/DBE [minority, women and disadvantaged business enterprises] programs are a good example here. The ultimate goals of such programs are to be lauded and are not the source of problems from the construction industry’s perspective. Instead, it is the manner in which these programs have sought to achieve these goals that has been poorly conceived. The unfortunate result has been a regulatory scheme that is largely unworkable and, most regrettably, one that has failed to secure the intended goals.
Instead of reworking these programs to advance the presence and success of M/W/DBE firms, regulators have increased investigative and prosecutorial efforts in a flawed effort to vindicate the ineffective programs as they exist. I have seen instances where regulators, regrettably, only get involved when they find some performance lacking, and then only in the role of blaming or criminalizing members of the construction industry for any shortcoming.
This ‘blame the construction industry’ approach, which by no means applies across the board to government and quasi-public regulators, is most unfortunate. Regulators need to do more to work with the construction industry, which has a rich history of truly advancing traditionally disadvantaged groups in our society—to ensure the real advancement of disadvantaged enterprises.
Q: D.A. Vance said in a recent presentation prepared for your construction integrity conference that the ‘best-guess estimate’ was that an average of 10 percent of funds spent on New York City building projects is lost to fraud each year, $2 billion in 2011 alone. Do you agree with that estimate? Why is there so much fraud in the construction industry?
A: I have deep respect and admiration for Vance, but I do not know what possible basis there could be for this statistic and have never seen any analysis purporting to support it. Intuitively, it does not appear plausible. I do know that profit margins on most construction projects are paper-thin, especially as compared to some other business models for other industries. Moreover, the increased transparency of the bidding, building and billing processes are such that I very much question whether this number is accurate.
Q:Does the presence of fraud in the industry show a need for stricter regulation?
A: The question presumes an existence of fraud—intentional, material, and dishonest conduct designed to cheat—that I have not seen in the industry generally and certainly not as to our firm’s clients. Moreover, the presumption makes the question rhetorical: who could deny that the presumed presence of ‘fraud’ requires greater efforts to eradicate it?
Of course, I believe part of the problem here is a basic disconnect between the industry, its practices and those who regulate.
Q: Why was the Construction Industry Compliance and Integrity Institute started?
A: Regulation by prosecution or accusation has too often led to a situation in which the industry first learns about areas of particular concern as a result of an indictment or guilty plea.
The BTEA’s goal in starting the Construction Industry Compliance and Integrity Institute was to create a forum to enable the industry to share and help develop best practices collectively, as opposed to having individual companies sort through and deal with this evolving, prolix landscape alone.
Q: What elements should be included in a comprehensive compliance program?
A: While the composition of an effective compliance program may vary from firm to firm, there are certain benchmarks that the regulators look for when evaluating whether a firm has an effective compliance program. For example, having a clear, written policy that is distributed throughout the company is crucial. So too is a demonstrable capacity for tracking internal compliance with the policy, including the presence of an internal (or, for a smaller firm, external) compliance official who has the backing of firm management to monitor adherence to the firm’s policies. And there must be meaningful training of all personnel. There should be a demonstrable mechanism by which notification of violations may be imparted (a hotline is often a useful tool in this regard) as well as meaningful enforcement for any violation.
And as the regulatory environment is evolving, compliance programs should also be flexible and evolving to meet changing regulatory views and initiatives.
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