Use of Specialized Counsel in a FCPA Investigation

In an article entitled, “Risks and Rewards of an Independent Investigation” in the most recent issue of the ACCDocket, authors James McGrath and David Hildebrandt discuss the use of specialized outside counsel to lead an independent internal investigation as compliance and ethics best practices. This is based upon the US Sentencing Guidelines, under which a scoring system is utilized to determine what a final sentence should be for a criminal act. Factors taken into account include the type of offense involved and the severity of the offense, as well as the harm produced. Additional points are either added or subtracted for mitigating factors. One of the mitigating factors can be whether an organization had an effective compliance and ethics program. McGrath and Hildebrandt argue that a company must have a robust internal investigation.

McGrath and Hildebrandt take this analysis a step further in urging that a company when faced with an issue such as an alleged Foreign Corrupt Practices Act (FCPA) violation. The authors suggest that in such a situation, a company should engage specialized counsel to perform the investigation. There were three reasons for this suggestion of the utilization of specialized counsel. The first is that the Department of Justice (DOJ) would look towards the independence and impartiality of such investigations as one of its factors in favor of declining or deferring enforcement. If in-house counsel were headed up the investigation, the DOJ might well deem the investigative results “less than trustworthy”.