Ed.Note-today we continue with our profile of thought leaders. Today we profile Kevin LaCroix, Founder and Editor of the D&O Diary, which for my money is one of the the best resources regarding Directors and Liability insurance issues available in the blogosphere.
1. Where did you grow up and what were your interests as a youngster?
I grew up in Fairfax, Virginia, a suburb of Washington, D.C. We had a small house and a large family – I am the fifth of six children. Growing under those conditions helped foster independence, resilience and self-reliance. For obvious reasons, we spent most of our time outside. I am astonished how freely and how far we roamed as children. It was a different world then. As a young child, I developed a lifelong affinity for bicycle riding. In the summer of 1969, when I was 13 years old, I suffered a serious injury to my right foot. I spent the entire summer in bed, reading. It was during that summer that I developed a lifelong interest in historical literature, particularly biographies. Prior to that time, I had not been a particularly diligent student, but my attitude began to change after that. I went on to attend Fairfax High School, where I was fortunate to have several excellent teachers, including a Geometry teacher who convinced me that I could learn anything I decided to try to learn. Surprisingly, given the foot injury, I went on to run track and play soccer in high school. As I said, my upbringing fostered resilience.
2. Where did you go to college and what experiences there led to your current profession?
I was extremely fortunate to have been able to attend the University of Virginia, which was then and remains now an absolutely terrific place. It was, for me, just the right mix of serious academics and active socializing. After I arrived, I looked around and figured out that the best undergraduate department was the English Department, so I decided to become an English major (which in retrospect was a remarkably wise way to choose a major). I enjoyed every class I took in college. There may be other students who have gotten as much out of college as I did, but nobody has ever gotten more out of it than me.
While at UVa, I was able to study creative writing with John Casey (who went on to win a National Book Award) and with James Alan McPherson (who won the Pulitzer Prize for fiction while I was taking his class). The extent to which I write well at all now is owing to those classes – my many faults as a writer are of course exclusively my own doing. Casey and McPherson are both law school graduates and both encouraged me to consider law school. I might have found my way to law school eventually anyway, but their encouragement gave me confidence to pursue the opportunity.
I wound up attending the University of Michigan Law School, where I spent what may have been the best three years of my life. I loved law school. I loved my classes, I loved my professors, I loved my classmates (in one case, literally – my wife was a classmate), I loved the townie bar on Packard Street, I loved running in the Arboretum, I loved going to Michigan football games, I loved sitting in the reading room at the Law School, I loved the Lawyers’ Club dining room, I loved the big old house we lived in on Monroe Street. In the end, I may or may not have been meant to be a lawyer but I definitely excelled at being a law student. (I am not hinting that I got the highest grades, because I didn’t. I am just suggesting that I had the best time in law school.)
3. What led you to begin the D&O Diary?
In the spring of 2006, I started a new phase of my career, as a wholesale insurance broker. I had run an insurance underwriting operation for the prior ten years, but now I was trying something entirely different. It was tough at first. I didn’t have any clients to start with and the phone wasn’t ringing. To keep myself occupied, I deciding to write some professionally related articles. Out of simple curiosity, I started playing around with the Blogger application on Google.
I once heard someone say that starting a blog is about as difficult as making urine. So before I even knew what I was doing, I had created a blog. I had no plan at first or really even the slightest idea what I was doing and I certainly had no idea that the blog would become what, now eight years later, it has become.
It has turned out to be the most rewarding thing I have ever done in my career. Nothing I have done professionally has provided me with as much satisfaction. Since starting the blog, and as a result of having the blog, I have been able to travel around the world and it has been so amazing to me that wherever I go – from Boston to Barcelona to Berlin to Beijing and from Seattle to Stockholm to Singapore – I meet people who tell me how much they enjoy my blog.
True story – when I was in Singapore a couple of years ago, a women came up to me at an industry event, introduced herself, told me she was from Mauritius, and asked if she could get a picture with me on her iPhone. I asked her why in the world she wanted my picture, and she said “Because you’re the D&O Diary guy! You’re world famous!” As I said to my wife when I returned home, if someone from Mauritius tells you that you’re world famous, by definition that means you’re world famous. To which my wife replied, “That’s nice dear. Take out the trash, please. “
4. I love your ‘Mug shot’ series? Where did you come up with the idea and what are some of the highlights of the series?
About a year ago, I read an article in the New Yorker about Henry Blodgett’s website, Business Insider. The article made me think a lot about the Internet as a publishing medium. In the article, Blodgett talked about how important it is for a website to connect with its readers. This observation set of a tumble of different thoughts, at the end of which out came the idea for the D&O Diary mugs. I couldn’t possibly reproduce the thought process that led to the idea, but the basic concept was to try to do something to make my readers feel like they are part of the blog. If I gave them a mug and asked them to send back a picture of themselves with the mug, and then published the pictures, then readers would feel connected to the blog.
I guessed that some readers might be interested but I never anticipated how great the interest would be. I went through 288 mugs in no time at all. I would have liked to have sent out even more mugs – the demand for many more mugs was certainly there. But my wife put her foot down. She was taking care of the shipping and it was incredibly time consuming for her. Also, a very large percentage of the mug requests came from overseas, and I hadn’t really thought about how expensive it is to ship things overseas. We spent several thousand dollars on shipping. Sadly, many of the mugs sent overseas were damaged in transit.
Overall, though, the project was an immense success. I was continuously amazed at the places people would take the mugs in order to get just the right mug shot. I had readers send in pictures with their mugs from inside the U.S. Supreme Court, at the Wailing Wall, on the Old Course at St. Andrews and in jungle covered ruins in Cambodia. People sent in pictures that were taken from mountain tops, in vineyards, on safari, in the snow, in the sunshine, at sea, on vacation, at work, and even from their back porch. (My most recent mug shot post, which has links back to all of the prior posts, can be found here.)
I had people send in pictures taken in Moscow, Beijing, New Delhi, Rotterdam, Shanghai, Paris, London, Montreal, South Africa, Hong Kong, Scotland, Warsaw, Toronto, Jerusalem, Sydney, Cambodia, and Bermuda, as well as at the Grand Canyon, the Baseball and Hockey Halls of Fame, Fenway Park, Mesa Verde National Park, in Napa Valley, at the No. 2 Course at Pinehurst, on Wall Street, at the America’s Cup races in San Francisco Bay, at the original Cheers bar in Boston, at the Naval Academy, at Stanford, in the Press Room at the White House, with their dogs, with their kids, with elephants and zebras, and always with the D&O Diary mug in the picture. I even published one picture of a mug that arrived in Shanghai in pieces.
I liked all of the pictures readers sent in, but I would have to say my favorite, simply on the score of most unusual, was the one taken at the veterinarian artificial insemination clinic at Stephen F Austin State University in Nacogdoches, Texas. The picture was taken with the mug in the foreground while an insemination procedure was underway in the background. Yep, I didn’t expect that one.
5. What issues might you see from your perspective regarding D&O insurance regarding the FCPA going forward?
Foreign Corrupt Practices Act and anti-bribery enforcement generally has been an area of concern in the D&O insurance arena for some time now. The issue is not the massive fines and penalties that companies get hit with, as those amounts typically are not covered by D&O insurance. The issue has more to do with the costs of investigation and defense, as well as the possibility of follow-on civil litigation.
There are a number of factors that will affect the extent to which coverage is available for investigative costs and defense expenses under a D&O insurance policy. Among other things, it will be important whether or not the company involved is a private company or a public company, as the types of policy form used for the two different kinds of companies provide significantly different entity coverage. Other issues that will affect the availability of coverage include the stage of the investigation; to the extent D&O insurance policies provide coverage for investigative costs at all, it is usually restricted to formal investigations. (Some modern forms now also provide coverage for individuals for pre-claim inquiries.) Another issue that will affect the availability of coverage for investigative costs is the identity of the investigative target. If the target is just the company itself, it will be more difficult to establish coverage for the investigative costs, as many policies restrict investigative cost coverage for the corporate entity.
Where the D&O Insurance can be a much more significant is if the FCPA enforcement action or investigation triggers a follow-on civil lawsuit. As I have noted frequently on my blog (most recently here), though there is no private right of action under the FCPA, it has become an increasingly common phenomenon after an FCPA investigation or enforcement action is disclosed for investors to file a lawsuit against the company’s officers and directors. These lawsuits typically take the form either of a securities class action lawsuit (an example of which is discussed here) or shareholders derivative lawsuits (as discussed here and here). These lawsuits are not always successful for the plaintiffs, yet the plaintiffs’ lawyers continue to pursue these kinds of claims.
These types of follow-on lawsuits represent the very kind of exposures for which companies purchase D&O insurance; at a minimum, the insurance permits the company and its executives to defend themselves from these kinds of claims. I expect these kinds of claims to be an increasingly significant part of the D&O claims environment for some time to come, particularly as anti-bribery regulatory and enforcement authorities outside of the U.S. step up their activities.
