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Internal Investigations: Why Conduct One and Who Should Do It

Carol Starkey, Chair of the White Collar/Regulatory Defense practice area at Conn Kavanaugh launches the first in a planned series of short videos about Internal Investigations—which are crucial to the proper defense of wrongdoing allegations.

Internal Investigations: Why Conduct One and Who Should Do It

Presented by White Collar Criminal & Regulatory Defense attorney Carol A. Starkey

Learn more about internal investigations with Carol on our Criminal / White Collar / Regulatory practice area page.

Video Transcript

Hello. My name is Carol Starkey, and I’m a partner at the law firm of Conn Kavanaugh here in Boston. I am also the co-chair of the firm’s white collar crime and regulatory practice group. I’m here today to talk to you about why it is so important to hire an outside firm when an internal investigation is needed at your company.

You know, even the finest organizations can find themselves in a situation requiring a swift and competent internal investigation. For example, when a CEO or other C-suite executive learns that an employee or a subordinate has engaged in misconduct, it is absolutely critical that a company take swift action to avoid becoming the target of a government investigation. And whether that misconduct involves a financial fraud, for example, or a matter of potential public corruption, or whether it’s a matter of a disgruntled employee making a wage and hour claim or a sexual harassment claim, company management or counsel will have to decide how to respond and whether to investigate that alleged misconduct.

So whether your company is a for profit, a nonprofit, or even a public municipality, you could find yourself at risk of ending up in a regulatory or enforcement action or even a white collar criminal investigation if you’re not prepared. Companies that operate in heavily regulated industries may even be at further risk for government intervention if leadership of that organization does not act swiftly.

What I mean by that is acting proactively at the first sign of misconduct. And there are so many reasons why a robust and thorough investigation may be appropriate, including the basic fact that an investigation will help reveal the facts of what happened. And that can really help company management, in turn, do several things. First, it will help comply with regulatory obligations so terribly important in today’s environment.

Secondly, it will prevent negative publicity and give the company a chance to respond. It can also set a tone at the top that really values transparency so important for company culture, and it can identify current or future breaches of corporate policy. A well-planned and strategic internal investigation can protect a company from additional exposure and really help mitigate those future risks.

Of course, if misconduct is already being investigated by the government and a regulator is already knocking on your company door, you may have no choice but to hire an outside firm to represent the company. But even at the first sign of trouble before that happens, you know, we’ve seen the results when company management chooses to do nothing and the risks are very real.

That can include, you know, exposing sensitive company information to the public or to the government that may be damaging both reputationally to the company and to individual defenses. As a former prosecutor, I know how the government works in these cases. And the goal is always to hold the most senior person or persons accountable in an organization, and that places the CEO and other top executives at risk for being held personally responsible for misconduct that he or she may not have even been aware of when the misconduct was occurring.

And how does the government go about operating? Well, it can be based on very little evidence, frankly. The government can come in and demand that a company hand over tens of thousands of emails or company documents, for example, from which a handful of those documents or emails may be taken out of context in order to accuse a CEO or other company leader of having some kind of guilty knowledge or being complicit in misconduct.

The benefits to hiring an outside firm to come in and do an internal investigation at the first sign of trouble, or even to prevent disruptive behavior, are so many in our experience. You know, first, many companies may simply not have the resources to conduct a thorough investigation. They may not have a team of seasoned trial lawyers at their disposal who know what documents to look for and can conduct a comprehensive review or know how and when to interview employees.

Such a sensitive exercise in an internal investigation, especially for in-house or internal employees to conduct. Second, a company may not have the expertise required to ensure that an investigation is done correctly. And what I mean by that is by without waiving internal, important company privileges that could be detrimental to the successful defense down the road of not just the company but individuals within the company.

And importantly, hiring outside counsel is really the best way to preserve the attorney client privilege and the attorney work product in the United States right now. And finally, you know, having outside counsel often means you have someone that has relationships with regulators and prosecutors and can really assist in the strategy during investigation. I know we have those kinds of relationships and it helps us know when and if to push in certain circumstances and when not to.

I’ve seen companies who have tried to do their own internal investigation and proceed to make some really catastrophic mistakes, not only to the future defenses of the company, but to the defenses of individuals within the company, including, you know, the CEO and other company leaders. An experienced team can help you develop a prevention plan to mitigate future risk of a public and sometimes damaging reputationally investigation.

And finally, you know, outside counsel really helps give an investigation a greater independence, a quality that regulators, outside auditors and other stakeholders really expect today. Despite the very best internal efforts, internal investigations that are conducted by company employees or in-house counsel will often be viewed as lacking that independence. Having an outside team conduct the internal investigation really creates a safety net of objectivity.

Keeping a CEO or other company leaders within the company from being accused of not looking in the right places or perhaps trying to cover up misconduct for fear it will reflect poorly on them. You know, if you’re in a situation where you feel your company requires an internal investigation to get at the bottom of some alleged misconduct or even to be proactive, to avoid any government investigation or enforcement action in the future, please feel free to reach out to me and my team.

We will ensure that whatever the reason, your company receives the very best recommendations and advice to handle any matter confidential and swiftly and to reach a successful outcome. I want to thank you for checking in with me today and listening to me, and I hope this has been helpful. Remember, we are here for you and thank you again.

Have a great day. Goodbye.


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