Battling Government Investigations Series – Civil and Criminal Investigations

July 11, 2018 Articles

It always comes when you least expect it – a government inquiry to investigate your business. While it may instill a sense of panic, there are steps you can take to make sure you’re in the best position possible when the investigation begins.

This blog series by Chrysty Esperanza, Litigation Counsel at Square, Inc., will address this main question: When you receive a subpoena, CID, or informal request from the government, how should you respond?

When Civil and Criminal Investigations Collide

Civil and criminal investigations are not as separate as you may think, and it is quite possible they may blend together. While an internal investigation may be launched in response to a civil request from a government agency, the degree of cooperation between civil and criminal government agencies means an open civil investigation can easily trigger a criminal inquiry. When parallel civil and criminal investigations occur jointly, the government agencies may share the work and information from their respective investigations. For example, a subpoena from the Securities and Exchange Commission (SEC) will always note that information discovered during the investigation can be shared with multiple agencies, like the Department of Justice (DOJ).

In addition, if your company is facing a criminal investigation, you should determine if your officers and directors need their own outside counsel. In some cases, especially initially, a “pool counsel” approach can be a cost-effective and highly valuable option. The value of protecting the attorney-client privilege at every step in the process cannot be overstated.

If you’re unclear about whether parallel proceedings are occurring, you can ask the agency conducting the civil investigation to disclose whether there are other open investigations. If the agency does not answer or is unwilling to answer the question, this could indicate there is another inquiry or investigation in the works.

Managing and Coordinating Costs

Costs can rise quickly when multiple agencies are investigating a matter, but there are measures that you can take to maximize efficiency and manage cost. For example, when facing parallel proceedings, expect multiple requests from different agencies. Many times, the requests relate to the same subject matter, just on different forms and at different times. Feel free to ask agencies to coordinate requests to allow you to produce a single set of responses, coordinate depositions and schedule interviews.

You will also want to avoid issues with providing information in a sequence that may be less than ideal; in essence, prioritize the investigations. Deal with the criminal issues first. Strategize a way to sequence the investigations and aim to resolve the civil investigation on a longer, more favorable timeline. A few quick tips and options for managing multiple investigations include:

  • Seek a stay or injunction on discovery in the civil matter. This will buy you time to focus on the other matter(s), ideally until resolution.
  • Work with multiple jurisdictions and/or agencies to understand what information will be shared.
  • Leverage the power (i.e., secrecy protections) of the grand jury to your advantage because providing information to the government via grand jury testimony or subpoena may quell dissemination of information to other agencies.
  • Understand the impact of international law. When the investigation involves foreign companies, such as when a parent company is located abroad, the government must make requests through various treaties. This can slow the process down considerably, affording you increased leverage through the value of your voluntary cooperation in a criminal matter.