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'An Extremely Dangerous Game': Prosecutors Tell GCs to Play Ball
06/10/2010

If state or federal prosecutors come knocking on your corporation's door, the general counsel should avoid adopting "a bunker mentality," according to a panel of current and former federal prosecutors who spoke Tuesday at the 22nd Annual General Counsel Conference in New York.

The panel session, entitled, "Responding to Crisis: Corporate Criminal Investigations & Compliance Programs," stressed the importance of cooperation and communication with authorities.

The panelists advised general counsel not to treat the government as the enemy, to keep the board of directors informed early on, to start preserving documents immediately, and to try and find out if there is a problem and its extent, "so you know what you're dealing with."

David Siegal, a partner in Haynes and Boone's white collar criminal defense practice in New York, said, "The worst thing you can do is have people try to destroy documents or hide them."

Siegal, also a former assistant U.S. attorney, said, "It's an extremely dangerous game for a corporation to try to do battle with the federal government. If you believe the allegations are wrong or misguided, the role of general counsel is to find a way to explain it before the government takes precipitous action. You need to convince the government that you'll cooperate, and that you'll find and punish any wrongdoing."

And it often comes down to trust, the experts said. Lawrence Finder, a former U.S. attorney in Houston and now a partner at Haynes and Boone there, recommended not hiring "your go-to law firm" to conduct an internal investigation. The prosecutor may think that you are using your usual defense counsel and may not trust them as much as a more objective outside counsel, Finder said.

Finder said prosecutors and judges have become very focused on compliance and cooperation as key factors in determining whether to charge a corporation with wrongdoing, as well as in sentencing.

Under recently enacted Justice Department guidelines, a corporation is considered to be "cooperating" with law enforcement if it discloses the relevant facts about misconduct. This disclosure does not require breaking attorney-client privilege, legal advice, or work product.

But, Finder asked, how much cooperation is enough? And when do the costs of lengthy internal investigations outweigh the benefits? The panel did not have a good answer.

"You have to toe a fine line at times," Siegal said, explaining the role of the general counsel. "In order to save the company, you have to convey to the authorities that you will do what it takes to be good corporate citizen."

This has been excerpted from Corporate Counsel. To view the full article, click here.