Saturday, April 28, 2007

NACDL White Collar Conference - Part I

Stephanie Martz, White Collar Crime Project Director at the National Association of Criminal Defense Lawyers (NACDL), guest blogs a six part series on the recent White Collar Crime Track at the NACDL Cincinnati Conference:

Part I -

We’re here this morning (Friday, April27, 2007) at NACDL’s spring white collar track in Cincinnati, Ohio. This is a one-day session in which numerous pre-indictment and post-indictment strategies are on the table for discussion. (In addition, Earl Silbert, a panelist in the first session, is being honored at NACDL’s luncheon today. Silbert was the "first" Watergate prosecutor, who prosecuted the five Watergate burglars and Hunt and Liddy, and is currently one of the deans of the white collar bar, practicing at DLA Piper in Washington, DC).

The first panel is called "The Who’s, What’s, When’s, and How’s of Internal Investigations." Moderator Blair Brown of Zuckerman Spaeder LP.

Joseph Heyd, Senior Litigation Counsel for General Electric, talked first – in response to a hypothetical – about who needs lawyers and what kind, in an internal investigation. He said that one of the first things in-house counsel needs to do when notified of an investigation is to interview the individuals who are the risk factors – those who are alleged (by an FBI agent? By the AUSA?) to have been involved in misfeasance. The interview should be conducted by someone competent in the in-house counsel’s office, complete with a corporate Upjohn warning. (The necessity of a Computer Associates warning was also discussed – and rejected by Heyd as a bridge too far.)

Silbert talked about the role of outside counsel. He said most outside counsel would recommend that outside counsel conduct any kind of mildly substantial internal investigation. The reasons: in-house counsel too closely allied with management; employees might speak more freely. Also, never do the interviews alone! And watch your privilege if you don’t go with outside counsel. But Heyd pointed out a problem: if time is of the essence, it can be hard to get outside counsel up to speed.

The panelists also discussed the necessity for the "rhythm method" for document retention – companies need to have a regular cycle of document retention that won’t raise any timing or motive questions about destroying documents. At the same time, some class of documents will obviously be subject to a suspension order from in-house counsel. This will, in turn, create gossip and speculation in the company. Silbert’s tactic is to distribute to some employees written bullet-point instructions about talking, telling the truth, what’s at stake, etc. At the same time, you must be careful about obstruction and be crystal clear about what you say and don’t say to employees about how to behave – that’s why you want something in writing about what your advice has been.

The perennial issue: attorneys’ fees. Do you require an employee to submit to an interview before paying for a lawyer? Heyd said no, it depends on pre-existing written company policy, which might require an employee to cooperate with all such interviews and investigations but is not a pre-condition, otherwise, for fees.

Kent Wicker, of Reed Wicker LLP in Louisville, KY, played the role of representing an individual (in the hypothetical, a former employee who seems a little too willing to make nice with the company). "I suppose there is a case n which I’d let him testify under oath, but I haven’t found it yet." Wicker also emphasized the necessity to convince the company that it’s good to have no daylight between the employee and the company, in other words, that the employee can be helpful to the company and not harmful. "I’m going to be on the phone and in their face."

Part of the hypothetical also involved the company’s own attempt to unearth information about potential witnesses – i.e. "pretexting" a la Hewlitt Packard. Wicker said you have to be extraordinarily careful, if you use a private firm at all, that you know the person well and give him/her extremely specific instructions and supervision.

On the topic of Joint Defense Agreements (JDA’s): There was a case recently in the E.D. Ky. in which one defendant paid fees for others and the evidence was quite thin about whether there was real obstruction; but the defendant was convicted and the case is on appeal.

(sm/ w/ links by esp)

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