Litigation: The expanded role of courts in settling government investigations - A growing number of federal judges are closely scrutinizing—and sometimes rejecting—proposed settlements

Government investigations of companies typically end in settlements. These may be civil in nature, in which companies commonly agree to pay money and take remedial measures to deter and prevent the misconduct that the government alleges occurred. Settlements may also be criminal in nature — either agreements not to prosecute the company (deferred or non-prosecution agreements), or a guilty plea pursuant to an agreement negotiated with the prosecutor. Even when company leaders believe the government’s contentions are wrong, the costs and risks of a fight with the government, particularly for a public company, usually lead to a resolution short of litigation, and certainly short of trial.

Traditionally, the role of a judge in reviewing an agreement to resolve civil or criminal charges has been very limited. Although the rules vary in the civil and criminal contexts, the essence is the same: Courts are obliged to consider the reasonableness and fairness of such an agreement in light of the public interest. In practice, courts have largely deferred to the views of the parties, particularly the government, and generally accepted the settlement without much difficulty.

Originally published in Inside Counsel on June 27, 2013.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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