Internal InvestigationsCorporate Internal investigations have long assisted in-house counsel and defense counsel in the marshaling of facts necessary to prepare a defense to criminal or civil litigation. In the wake of Sarbanes-Oxley and Dodd-Frank and associated regulatory requirements, the internal investigation has taken on a more ubiquitous role in the legal affairs of public companies, as officers and directors respond to heightened reporting obligations and outside auditors impose greater scrutiny over legal and financial contingencies. Today publicly-traded companies must report on the vitality of their internal reporting processes and must make an “appropriate response” to reports of wrongdoing, whether through standard “reporting up” requirements or whistleblower claims.
Aside from accounting and securities law compliance, larger companies, and those in more highly-regulated industries, will more frequently encounter internal reports or regulatory inquiries that trigger the need for an internal investigation. Experienced outside counsel will advise the company, usually through the chief legal officer, regarding the numerous structural issues to be resolved at the outset—whether, for example, to appoint a “special litigation committee” or whether the critical issues allow for engagement through the board’s audit committee, the board as a whole, or simply the chief legal officer.
Nearly every enterprise—public or private—will from time to time encounter financial irregularities, compliance red flags, or internal hot line complaints necessitating an independent review. A well structured and privileged internal investigation can determine conclusively whether the company is violating legal requirements or its own corporate code of conduct, is creating unnecessary liability, or is being victimized by internal fraud or embezzlement. In the latter case, a properly conducted forensic investigation can uncover the fraud and construct a case for an insurance claim or criminal prosecution.
Keys to a successful internal investigation rest with the scope of authority vested in the investigating attorneys, the thoroughness of the internal review, and the accurate identification of legal issues raised by the findings. A timely and reliable work product is invaluable to in-house counsel in directing the company’s response, and most government agencies—including DOJ and the SEC—will find an objective and independent investigative report far more credible in cases where certain disclosures are necessary.
We have conducted numerous internal investigations for public and privately-held companies, banks, insurance companies and non-profits. We know how to identify the salient issues, get the evidence—including electronic evidence—and minimize the ever-present risks that privileges will be waived. Without the inevitable conflicts that can entangle large firms, we can quickly deploy an investigative strategy to more economically and discreetly marshal the facts and report to decision makers—on time, on budget, and with results that will work.