10 Things to Know When Responding to a Government Investigation

February 02, 2015

The Steps a Company Takes During and Immediately After the Launch of a Government Investigation Are Critical to Protecting the Company and its Employees

In a scene becoming more common, an army of government agents and investigators, often donning blue jackets emblazoned with “FBI” or some other government acronym, are showing up at company offices across the country armed with guns and a search warrant.  Every in-house counsel needs to know how to respond during and in the immediate aftermath of a government raid to protect the company and its employees.

  1. Notify outside counsel. Company counsel should immediately contact outside counsel who has the background and experience in how to respond to a government criminal or administrative investigation.  If possible, outside counsel’s presence should be requested during the government’s search.
  2. Meet with agents and review the warrant. The subject (e.g., the company) of a search is entitled to a copy of the search warrant.  See Fed. R. Crim. P. 41(f).  Review the warrant and make sure you understand its scope and the premises that may be searched in order to ensure the agents comply with its terms.
  3. Do not consent to a search. A search warrant will specifically identify what areas can be searched and what items may be seized.  Government agents may seek to obtain the corporation’s consent to search premises or facilities that exceed the scope of the warrant.  Investigators, even when armed with a search warrant, may seek the company’s consent to the search, which gives the government an additional legal basis for the search.  In-house counsel should instruct employees that they should not provide consent to any search of company property.
  4. Attempt to prevent the seizure of privileged materials.  Identify whether any privileged materials within the scope of the warrant are located at the premises to be searched. If there are such materials, identify those documents to agents so the privilege issues can be litigated at a later time, if necessary.  In addition, counsel should create a log of all potentially privileged information that is seized.
  5. Prepare an inventory of seized documents and materials. A government agent on the scene is responsible for preparing an inventory of any property seized.  In-house counsel should also create and maintain a separate inventory rather than relying solely on the government’s.  These notes may prove valuable in any subsequent legal challenges to the government’s seizure of property, the legality of the search, and in resolving any discrepancies between the internal accounting and the government’s inventory.
  6. Gather information about the government’s investigation. Counsel can gain early insight into the government’s investigation by noting where the agents commenced the search, how the search progressed, in what specific items or information the agents seemed interested, and with what employees the agents sought to interview.  In addition, counsel should obtain the identification and business cards of the agents.  This information will help ascertain what the investigation may be about (e.g., what branch of government is conducting the investigation) and will permit counsel to communicate with the agents after the search.
  7. Monitor government interviews of employees. As part of its search, the government will frequently seek to interview employees.  Counsel should attempt to attend these interviews and take notes of what was asked and the answers given.  On-site interviews, however, are not ideal.  Employees are typically nervous, unprepared, and the focus of the government’s investigation is likely not obvious at this point.  Counsel, while avoiding any suggestion that she is attempting to impede the investigation, should advise employees that they have the right not to talk to investigators and to be represented by counsel.  In-house counsel should be careful to avoid implying that she represents the employee as there may be conflicts between the corporation’s interest and the employee’s.
  8. Prevent document destruction. Employees should be advised immediately about the government’s investigation and instructed to not destroy, alter, or remove any documents and information.  Counsel should implement a litigation-hold on all potentially relevant documents.  If the corporation has a general policy governing the retention and destruction of documents, for example, deleting electronic documents after a certain period of time, that policy as it relates to potentially relevant documents should be suspended immediately.
  9. Commence an internal investigation.  Immediately after the search, the company should retain independent outside counsel to perform an internal investigation of any potential wrongdoing. In approaching this task, outside counsel should perform the investigation as quickly as reasonably possible.  Counsel should also be aware that any document or report prepared in the course of the investigation may ultimately be disclosed to the government as part of the criminal investigation, and consequently to plaintiff’s counsel in any follow-on civil litigation.
  10. Retain separate counsel for employees. Because a corporation acts through its officers, directors, and employees, an investigation of the company will often include an investigation of its employees.  As a general rule, the corporation’s counsel should not also represent corporate officers, directors, and employees—certainly not those with potential criminal exposure and preferably none at all.  Potential conflicts of interest often arise between the corporation’s interest and those of its employees.  The corporation, therefore, may want to retain at its expense separate counsel for its employees.  Because the corporation’s counsel does not represent corporate employees, that should be made clear prior to any interviews of the employee.  Counsel should be sure to provide each employee an “Upjohn warning,” which generally advises the employee that counsel represents the corporation, that any information the employee shares is privileged, that the privilege belongs to the corporation, and the corporation may waive that privilege and disclose information provided by the employee.

The Bottom Line:  A government investigation of a corporation can be disruptive to day-to-day business, distracting for employees caught up in the investigation, expensive to manage, and potentially exposes the corporation (and its employees) to criminal charges.  Taking the appropriate steps at the beginning will help better position the corporation to minimize the short and long-term impacts of the government’s investigation and the civil litigation that frequently follows.

About the Author:  Steven Fredley is a partner at Harris, Wiltshire & Grannis LLP, where, among other things, he represents companies and individuals subject to government criminal and administrative investigations.

This ‘Top-10’ analysis is not intended to convey legal advice. It is circulated to HWG clients and friends as a convenience and is not intended to reflect or create an attorney-client relationship as to its subject matter.



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