Government and Internal Investigations: Managing Risk from Both Sides

When a company first learns that government investigations are underway or that internal investigations are needed, the decisions made in the first hours and days determine whether the company will control the narrative or be controlled by it, and internal investigation services counsel managing the opening phase of government and internal investigations must evaluate what the government investigators already know, how the company's document preservation obligations under both government investigations and internal investigations should be implemented immediately, and what communications with board members, auditors, and insurers are necessary before the company takes any action that could be characterized as obstruction.

The attorney-client privilege is the most important legal protection available to a company conducting internal investigations, and it can be lost if the investigation is not structured from the beginning to ensure that all significant communications and work product are created under the direction of outside legal counsel, and white collar investigations counsel advising on privilege protection in government and internal investigations must evaluate whether every written communication generated during the internal investigations is marked as privileged and prepared in anticipation of litigation.

A company that receives a grand jury subpoena or a civil investigative demand in a government investigation must immediately assess what the government investigators are seeking, whether any of the requested documents are protected by privilege, and whether the scope of the subpoena is broader than what the applicable law permits, and SEC investigations counsel responding to a government investigations document demand must evaluate whether the company's document preservation system has captured all materials responsive to the request.

A company that cooperates with government investigations by producing documents promptly, making witnesses available, and disclosing the findings of its internal investigations receives cooperation credit that can significantly reduce the penalty that the government ultimately seeks, and corporate compliance and risk management counsel advising on the resolution of government investigations must evaluate whether a deferred prosecution agreement, non-prosecution agreement, or civil settlement offers a more favorable outcome than contested litigation.

An internal investigations process that is perceived as biased or superficial will not satisfy government investigators and will not protect the company if the matter proceeds to litigation, and employee misconduct counsel overseeing internal investigations must evaluate whether the team conducting the internal investigations is sufficiently independent from the employees and business units under scrutiny and whether the internal investigations scope is sufficient to capture all relevant conduct.

Digital evidence collected during internal investigations must be preserved and analyzed in a manner that would allow it to be introduced as evidence in a subsequent government investigation, regulatory proceeding, or civil litigation, and eDiscovery counsel advising on the forensic aspects of internal investigations must evaluate whether the collection methodology creates a forensically sound copy of the original data and whether the chain of custody documentation for evidence gathered during internal investigations satisfies the standards that courts apply to determine admissibility.

A company that completes internal investigations and discovers evidence of misconduct must decide whether to proactively disclose those findings to government investigators before the government has independently identified the same information, and anti-corruption investigations counsel advising on the voluntary disclosure decision in government and internal investigations must evaluate whether the government is likely to discover the misconduct independently and whether the benefits of the cooperation credit for voluntary disclosure in government investigations outweigh the risks of triggering a broader inquiry.

A company that implements genuine compliance program remediation after government and internal investigations demonstrates to regulators the kind of institutional accountability that influences whether the government will agree to a deferred prosecution agreement or other resolution that avoids a criminal conviction, and whistleblower and compliance counsel advising on post-investigation remediation must evaluate which compliance program deficiencies identified during internal investigations are most material to the government's theory of the case.