What to do when the government comes calling


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What to do when the government comes calling

  1. 1. What To Do When The Government Comes Calling Glenn Colton Partner, Practice Head, White Collar and Government Investigations Dentons T +1 212-398-5797 glenn.colton@dentons.com CLE Seminar for In-House Counsel June 5, 2014 Chicago, Illinois © 2014 Dentons. All rights reserved.
  2. 2. I. Responding to Document Subpoenas 2
  3. 3. Responding to Subpoenas • The Seven Rs to Remember in Responding to Subpoenas: 1. Read 2. Review 3. Reserve/Preserve 4. Reassess 5. Round-up/Collect 6. Review Process 7. Ready (for production) *This presentation and set of slides is in no way intended to serve as advice for specific threatened litigations. Every situation is different. As these slides recommend, the advice of outside counsel should be sought immediately upon receiving a subpoena and throughout the company’s response. 3
  4. 4. Step 1: READ the Subpoena • Read the Subpoena With Counsel Carefully • Who issued it? • Type of investigation? o Formal or informal? Criminal, regulatory or civil? • What are they looking for? • Identify people in company with relevant knowledge • Consider who needs to know of investigation • Key Consideration: Evaluate cost-benefit of aggressively parsing the subpoena versus coordinating with the government up front and clarifying the request • Highly situation-specific decision • These judgment calls are where experience of your outside counsel counts 4
  5. 5. Step 1 cont.: READ • Additional Important Considerations: • How does the subpoena define the “company?” o Consider whether it includes parents, subsidiaries, etc. • What is the relevant time-period covered? o How does the subpoena define “present?” • Are some terms overbroad, undefined, or subject to interpretation? • Consider informing government of interpretation of subpoena o Before or after production? 5
  6. 6. Step 2 cont.: READ AND REVIEW • Review and Re-Read with Outside Counsel [if not already involved] • Develop an action plan • Apprise outside counsel of steps already taken • Initial Reaction: Cooperate or Fight? • Discuss w/ counsel how best to cooperate w/ government and establish rapport if appropriate (e.g., timing; rolling production; what information is really important to the government) 6
  7. 7. Step 3: RESERVE/PRESERVE • Duty to Preserve: triggered by “reasonable anticipation of litigation.” • All employees? Isolated Group? Department? Business Unit? • Location? • Written preservation memo sent to all employees “likely” to have documents “relevant” to subpoena • See e.g. Pension Comm. Of the Univ. of Montreal Pension Plan v. Banc of America Securities, LLC, 685 F. Supp. 2d 456, 466 (S.D.N.Y. 2010). • Place hold on hard copy document AND Electronically Stored Information (ESI) (more on this later) • Suspend document destruction policies 7
  8. 8. Step 3 cont.: RESERVE/PRESERVE • How Does the Subpoena Define “Documents?” • Usually Very Broad: • Anything written or recorded • All Drafts -- any Non-Identical Document • Correspondence • Letters • Emails (Texts? IM?) • Contracts • Agreements • Facsimiles • Memoranda • Work Diaries • Calendars • Reports • Meeting Minutes • Notes • Schedules • Appointment Books • Spreadsheets 8
  9. 9. Step 3 cont.: RESERVE/PRESERVE • Failure to Properly Preserve Can Have Serious Consequences: • Negative Spoliation Inference in your Case • Court Imposed Sanctions • Criminal Prosecution “Courts cannot and do not expect that any party can meet a standard of perfection . . . [but] failure to obtain records from all those employees who had any involvement with the issues raised in the litigation or anticipated litigation, as opposed to just the key players, could constitute negligence.” • Pension Comm., 685 F. Supp. at 465. 9
  10. 10. Step 4: RE-ASSESS Take a Breath. Review process until this point. Did you miss anything? Then press forward. Speed counts. 10
  11. 11. Step 5: ROUND-UP/COLLECTION • Hard Copy Documents Round-Up/Collection • Identify Document Custodians • Not everyone at company or even who received lit hold • Certain People Likely Required: o Everyone “involved” in matter subject of subpoena o Those in supervisory position regarding matter o Individuals to whom relevant work may have been delegated • Consider Former v. Current employees o Where are former employees' documents?, laptops/computers? • Identify Where Documents Are Stored • Determine How to Round-Up/Collect • Scan for online review? • Review by hand? 11
  12. 12. Step 5 cont.: ROUND-UP/COLLECTION • ESI Round-Up/Collection • Your Lawyers Will Need to Identify: • Which e-mail/e-document platforms did each part of the company use in each geography in which they operate? • For Each Platform Your Lawyers Will Need to Know: • When was it used? • Was there an electronic data management system used? • What are its searching capabilities? • Do employees use company issued Blackberries or similar devices? o Service Provider? o Synched w/ Company E-mail Network? 12
  13. 13. Step 5 cont.: ROUND-UP/COLLECTION • Blackberries Cont. • If e-mail deleted from Blackberry, maintained on company system? • Does the company allow Blackberry users to communicate via PIN, SMS or BBM messages? • Are you able to retrieve those PIN, SMS or BBM messages? • Where Was the Data Stored? • On mail servers? • On a storage area network? • Is the Blackberry email stored on a separate server than the company email? • On hard drives of desktop units? Laptops? • Anywhere else? • Personal Email Accounts? 13
  14. 14. Step 5 cont.: ROUND-UP/COLLECTION • Is There an Auto-Deletion Function? • How does it work? • Back-Ups? • Email backed up? How often? • To what is it backed up? • How long is the backup retained in the ordinary course? • Who administers the backup system? • For what purpose are backups created? • Is the backup system indexed? • Forensic Images – Recommended & Simpler Than You Think 14
  15. 15. Step 5 cont.: ROUND-UP/COLLECTION • Choose Your Document Vendor Carefully • What are their capabilities? • How are the documents transferred to their system? • How will vendor organize documents? • How responsive are they? • Costs – Hosting, data size, etc. • Your outside counsel should have deep experience here 15
  16. 16. Step 5 cont.: ROUND-UP/COLLECTION • Search Terms: • Parse subpoena language carefully • Work carefully with employees to identify terms • Work closely with Outside counsel to develop appropriate and defensible terms • Consider obtaining approval of terms from government 16
  17. 17. Step 6: REVIEW PROCESS • Review for Responsiveness and Privilege • Who will review? • Contract attorneys? • Outside counsel? • Consider: • Size of review • Attention to detail required • Sophistication of review • How to tag documents 17
  18. 18. Step 6 cont.: REVIEW PROCESS • Review for Privilege • Types of Privilege to Consider: • Work Product and Attorney-Client • Self-Critical Analysis Privilege • Common Interest – Joint Defense Privilege • Ethical Duty of Confidentiality • Subject Matter Rules (e.g., Fifth Amendment, Spousal, Doctor-Patient, Priest- Penitent, Executive, Deliberative Process, State Secrets, Law Enforcement, Peer Review) 18
  19. 19. Step 7: READY (FOR PRODUCTION) 19 • Hard Copy • Leave as hard copy or scan to TIFF? • ESI • How do you want the government to be able to view the data? • Consider manipulability of charts/spreadsheets? • Develop Bates numbering system • Rolling production or single production? • Consider details to include in cover letter
  20. 20. What’s Next? 20 • Highly Situational • Consider internal investigations and interviews • Consider contacting third parties for additional data • Follow up Requests from Government? • Possible renegotiation of search terms • Possible reassessment of custodians • Who Must You Notify and in What Detail? • Auditors? • SEC Disclosures? • Insurance, Banking or Other Regulators?
  21. 21. II. Testimonial Subpoenas/Requests for Interviews 21
  22. 22. Testimonial Subpoenas/Requests for Interviews A. Questions • Subpoena related to Company Business? • If yes, what is subject matter of investigation? • Was investigation previously known to company? • Change in direction of previously known investigation? • New agency in the mix? 22
  23. 23. Testimonial Subpoenas/Requests for Interviews B. Initial Steps • Consult outside company Counsel if one is already involved • If no outside counsel yet, maybe necessary now? • Determine Status of Witnesses Subpoenaed/requested • Are they subjects/targets or otherwise under investigation • Is there a conflict or potential conflict with individual? 23
  24. 24. Testimonial Subpoenas/Requests for Interviews C. Interacting with persons subpoenaed or requested. • “Upjohn Warnings” (a.k.a. “civil Miranda”) • Privilege belongs to company • Company can tell anyone what is said if company, in its sole discretion, chooses to waive privilege. • If conflict or potential conflict arises, cease discussion and re-assess. 24
  25. 25. Testimonial Subpoenas/Requests for Interviews D. Separate Counsel for Individuals? • May be required in conflict situation • Company obligation to pay? • Charter, By-laws, Employment Contract, State law may require • D&O Insurance may cover • Pro’s & Cons • Con. Cost; Individual may “clam up” • Pro: Source of intel; “talk sense into individuals” • Choice of Individual’s Counsel 25
  26. 26. III. Search Warrants 26
  27. 27. Search Warrants A. Basics 1. “Get out of the way” (do not tell LE they cannot do something) 2. All individual actions will be documented –good (e.g. cooperation or at least unobtrusive) and bad (e.g., obstructing search, or concealing/ destroying docs) 3. Call Experienced White Collar Attorney ASAP! 4. Establish yourself and outside counsel as the point of contact and coordinators 5. Identify point of search, company or individual(s)? 6. Get copy of Warrant • Review list of items authorized for seizure • Affidavit will be sealed 27
  28. 28. Search Warrants B. Interviews at Scene • Minimize as much as possible • Insist all contact be through counsel • Counsel can then answer any proper questions C. Carefully document who is on scene • Company personnel – know your witnesses to government behavior • Consider releasing affected personnel for the day • Government personnel – could reveal a lot (e.g., How did SEC know about sealed search warrant??) 28
  29. 29. Search Warrants D. Property Lists 1. Government must leave list of property taken 2. Create own list of property taken as best as possible 3. Negotiate with Government for return of items necessary to do business 4. Seek Court order for return of Property 29
  30. 30. IV. Internal Investigations 30
  31. 31. Internal Investigation • Initial – Corporate counsel needs to initially inquire to formulate strategy and advise management of potential malfeasance, crime, or regulatory violation • Issue – Should formal investigation be undertaken?  Cons: • Cost, disruption, some difficulty in predicting length and direction • Pros: • Keeps Government at arms length • Establishes company credibility with regulatory and LE agencies • Could allow control over derivative actions • Allows for comprehensive and broad strategic review of all company options • Results help hone corporate processes and controls for future 31
  32. 32. Internal Investigation • Who Should Conduct? • Outside Counsel or General Counsel? • Criteria for decision • Experience with law enforcement investigations • Credibility with law enforcement • Possible conflict of interest • Appearance of bias or interest • Scope of investigation • Possible regulatory involvement • Level of possible malfeasance • Perception of company by law enforcement or regulatory body (victim, criminal, or violator) 32
  33. 33. Internal Investigation • Who Should Oversee? • Audit Committee (or AC member) or specially constituted uncompromised group of board members may be best options depending on factual allegations • Management could be appropriate and cost effective in certain circumstances • General Counsel would also be appropriate depending on the situation. 33
  34. 34. Internal Investigation • Scope – Critical to define • Goal: Broad enough to cover relevant topics yet specific enough to avoid “runaway train” • Do not define as “find wrongdoing” • Can always broaden if facts or discoveries warrant • Set specific goals at the outset and periodically reevaluate them as you proceed and circumstances change 34
  35. 35. Thank You! We are very interested in your feedback - please take a moment to leave a note about this class and presenter(s) on the back side of your evaluation form. © 2014 Dentons. Dentons is an international legal practice providing client services worldwide through its member firms and affiliates. This publication is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. Please see dentons.com for Legal Notices. Glenn Colton Partner, Practice Head, White Collar and Government Investigations Dentons T +1 212-398-5797 glenn.colton@dentons.com dentons.com