Navigating Government Investigations: A Four-Step Guide to Protecting Your Business

Facing a government investigation is every business leader’s nightmare scenario. Usually, when a business gets sued, they know who the opposing party is and why they’re suing them. However, when the government knocks on your door, it’s a different ballgame. Often, business leaders have no idea why the government has initiated the investigation, whether it’s a civil or criminal investigation or if the company has an internal whistleblower. All of this can lead to a situation fraught with uncertainty, where the stakes are high, and the consequences can be severe. Although facing a government investigation can feel daunting, businesses can navigate these treacherous waters and emerge with their reputations intact. So, what should a company do when served with a subpoena from a government agency?

Step 1: Engage Outside Counsel.

When a government agency contacts you regarding a complaint or investigation, the most important thing to do is to circle the legal wagons immediately. This will involve your in-house legal counsel but should also include engaging outside legal counsel experienced in handling government and internal investigations. Although it might be tempting to skip this step to save money, it’s not advisable for several reasons. 

First, your in-house attorneys still have to handle their day-to-day legal work. Government investigations are time-consuming and labor-intensive. Suppose your internal legal counsel spends most or all of their time on the government investigation. In that case, they can’t devote time to their typical job of protecting the company’s legal interests.

Second, using company-employed lawyers can lead to claims of bias and partiality during the investigation. Hiring outside counsel to lead the investigation and liaise with the government immediately demonstrates that you take the matter seriously, are committed to cooperating, and will work to uncover the truth without bias. Third, outside attorneys who handle these matters regularly have expertise and relationships with government agencies that can help smooth the way. Finally, external legal representation helps solidify attorney-client confidentiality and mitigates potential exposure. 

Step 2: Narrow the Scope of the Request and Ensure Document Retention.

I cannot emphasize this enough – the company must preserve relevant materials and documents. Initially, you may receive an extremely broad government subpoena. Your outside counsel can confer with the government to gain a clearer understanding of what type of information they are seeking, agree on relevant search terms and refine the general time frame of when the relevant information would come from to help narrow the scope of the request. From there, your internal legal counsel should immediately put a retention policy in place for all employees, including notifying the IT team to halt any scheduled or automatic deletions. 

In these types of matters, simply sending an email to all employees notifying them of a retention policy is insufficient. The best practice is to have employees affirm in writing (by replying to an email or signing a document) that they understand they must refrain from deleting or destroying relevant materials and understand the potential consequences of non-compliance. You also may want to talk to your IT department about whether there are controls you can put in place to prevent employees from deleting information.  The worst-case scenario is informing the government that an employee deleted relevant materials. 

The discovery phase will begin once you’ve narrowed the scope and your lawyer and the government have agreed upon search protocols. Whether these searches are conducted internally or by your law firm will likely depend upon the company’s size and the review’s size. Nine times out of ten, it will make more sense for your law firm to handle it because they understand the law, government investigations and what’s relevant. 

Step 3: Make Personnel Decisions.

As the discovery process is underway, your internal and external legal counsel will meet with your company’s C-suite and board, updating and advising them in real-time on personnel decisions or public disclosures that may be required due to the investigation. For example, suppose you can tie the issues to a specific person or people who engaged in inappropriate or illegal conduct. In that case, your legal team can counsel you on handling potential suspensions, terminations, etc., to help firewall the bad actors and protect the company. 

Sometimes, your outside legal counsel will interview employees who may have information about or be engaged in whatever activities the government is investigating. Your attorney will provide them with what’s known as an Upjohn or corporate Miranda warning, stating that they are representing the company’s interests, not the individual’s. 

Step 4: Balance the Company’s Interests with the Government’s.

An experienced law firm will understand how to navigate the delicate balance of providing the government with what it needs while also advocating for the company. Of course, the best-case scenario is that you don’t find anything suggesting illegal activity occurred and have nothing negative to hand over to the government. 

But having an outside attorney is especially critical if you uncover incriminating or less-than-ideal information. They can frame up the findings in a way that protects your interests by sharing relevant case law, statutes, and previous court decisions in similar cases or matters and outline potential mutually suitable resolutions. 

Whether your government investigation is big or small, working with a law firm experienced in government investigations will be a significant help in guiding the company through the process efficiently, effectively and in such a way that the government is satisfied that their concerns or complaints have been looked into and thoroughly investigated. Ultimately, this will also save the company from spending significant time and resources conducting its own investigation and risking a failure to reach a resolution with the government, which could potentially bring the entire company down. 

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