31 Days to a More Effective Compliance Program - Selection of investigative counsel

Thomas Fox
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Dan Dunne, in a Compliance and Ethics Professional article, entitled “Foxes and henhouses: The importance of independent counsel”, discussed what he termed a “critical element” in any investigation, which he denominated as “fair and objective evaluation.” Dunne wrote that a key component of this fair and objective evaluation is the Who question; that is, who should supervise the investigation and who should handle the investigation? Dunne’s clear conclusion is that independent counsel should handle any serious See more +
Dan Dunne, in a Compliance and Ethics Professional article, entitled “Foxes and henhouses: The importance of independent counsel”, discussed what he termed a “critical element” in any investigation, which he denominated as “fair and objective evaluation.” Dunne wrote that a key component of this fair and objective evaluation is the Who question; that is, who should supervise the investigation and who should handle the investigation? Dunne’s clear conclusion is that independent counsel should handle any serious investigation.

There are three reasons for a company to retain independent counsel for internal investigations of serious whistleblower complaints. First, André Agassi was right, perception is reality. Secondly, if regular outside counsel investigates their own prior legal work or legal advice, a very large and potentially messy number of loyalty and privilege issues can arise in the internal investigation. The third reason is the relationship of the regular outside counsel or law firm with regulatory authorities. If a company’s regular outside counsel performs the internal investigation and the results turn out favorably for the company, the regulators may ask if the investigation was a whitewash or at the very least, less than robust. If the SEC or DOJ cannot rely on a company’s own internal investigation, it may perform the investigation all over again with its own personnel. Further, these regulators may believe that the company, and its law firm, has engaged in a cover-up. This is certainly not the way to buy credibility.

Three key takeaways:

Serious allegations demand a serious response, with seriously good lawyers leading the investigation.

The biggest thing that any person or company brings to the table when sitting across from the DOJ or SEC is credibility.

Use of regular corporate counsel can negatively impact your investigation because of the issues of loyalty and privilege. See less -

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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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