Advice for General Counsel on Government Probes
Government investigations are unpredictable and often unexpected. General counsel must be prepared to respond effectively and in a timely manner. Failure to do so can lead to fines, audits and even criminal liability. The following 15 tips can help general counsel better prepare for and manage a government investigation:
1. Look closely at your compliance program. Make sure it is solid and effective. Enron and Arthur Anderson had compliance programs, but clearly they were not able to weather investigation. Prosecutors scrutinize plans to see how well organized you are when it comes to compliance.
2. Divide the duties. Avoid having the compliance officer also serve as in-house counsel. This follows the same advice of not having all your eggs in one basket, in terms of who has responsibilities.
3. Watch the tone at the top. People at the top of an organization tell what’s important. What are you telling people about what’s important? Make sure your employees are prepared.
4. Know the rules before you need to know them, including the U.S. Department of Justice policies. Investigators rarely call to tell you that they are coming. Getting your act together during an investigation will be too little too late. They want to catch you off-guard.
5. Don’t panic. Investigators use pressure to their advantage, since no one thinks well under the gun. Being prepared for sudden action neutralizes this advantage.
6. Don’t always consent. Don’t give up right to counsel. Don’t answer questions without a legal requirement. But think carefully about resistance. You can resist, but the resistance is going to be held against you. But you’ve got shareholders. You’ve got responsibilities to them.
7. Send people home. Some agencies send enough investigators to talk to everyone in an organization. However, the ones who don’t need to be there should be sent home. You don’t want anyone talking without the benefit of counsel with them.
8. Find out who is running the investigation. If it’s the U.S. Justice Department, it’s probably a criminal complaint. Investigators could be from other federal agencies, such as the Treasury Department or the IRS. Or, they could be from the state government, although states will typically let federal agencies take the lead and expense of an investigation, if possible.
9. Get friendly with the investigators. Follow up. Keep in touch. Find out what they’re looking for, who they suspect and when they think it happened. Then focus on those individuals, separate them, and if necessary, toss them under the bus in order to protect the company.
10. The company is always the client. The board of directors and other executives are not the client. Be careful who in the organization has access to information regarding an investigation. Again, a general counsel’s primary responsibility is to protect the company and its shareholders.
11. Never lie. Lying during an investigation equals getting indicted.
12. Trust documents. Get them. Keep them. Witnesses change their story. It’s human nature. But the one witness that will never change is a document. The documents will set you free, because you will find the truth in them.
13. Always do your own internal investigation. Put someone in charge of it. Make a report. Stamp the report “attorney work product.” Then it belongs to the attorney, not the company, and it is the attorney’s to keep and to hand over at the strategic moment. The goal of the internal investigation is to “make you smarter.”
14. Never do solo interviews. Have two interviewers in internal investigations—one to ask questions, one to take notes and be a witness. Do interview people one at a time to avoid collaborations.
15. Remember that many times, the government is “dead wrong.” Sometimes prosecutors are young and inexperienced. They have tremendous power. But they are not infallible. Sometimes investigators are just out of their league. Sometimes a corporate counsel has to fight back. It may not seem cooperative, but it is your duty to represent what is right.