At the ABA Public Contract Section’s March 11, 2015 meeting in Annapolis. Md., a panel of lawyers from Government and the private sector discussed how a company should respond to a subpoena for documents concerning a fraud investigation by the Department of Justice (“DOJ”). This article discusses when a subpoenaed company should also conduct an internal investigation regarding the subject of the subpoena. A prior article in this newsletter discussed the panel’s discussion of issues related to the subpoena and cooperation with DOJ counsel.
Determine whether an internal investigation should be done.
Just because a company receives a subpoena does not mean it is the target of a federal investigation. Receipt of a subpoena is not evidence that DOJ believes the company or its personnel committed any wrongdoing. Instead, the company may just be a source of information concerning matters being investigated by DOJ. If the company is just a witness or source of information, an internal investigation may not be necessary.
If, however, the subpoena suggests the possibility of wrongdoing, the company should have counsel conduct a confidential investigation of potentially relevant personnel, subcontractors, or suppliers. Such an investigation should focus on learning the facts and information necessary to allow the company’s counsel to provide sound legal advice and representation to the company. Employing counsel as the investigator also has the benefit of enabling the company to maintain confidentiality and preserve attorney-client privilege.
While facts are not privileged and must be disclosed, the attorney’s impressions, conclusions and advice to his or her client are privileged. While the DOJ previously demanded that a company waive this privilege as proof of the company’s cooperation with the Government, the Government-counsel panelists confirmed that DOJ has moved away from this practice and no longer requires companies to waive privilege. In addition, DOJ also may accept a redacted version of attorney work product that discloses facts but not the privileged information.
Determine the universe of people and documents potentially relevant to the investigation.
The prior article discussed the importance of identifying the location and custodians of records that fall within the scope of the subpoena. It is equally important to identify the universe of personnel involved in the transactions or occurrences that are the subject of the subpoena and the documents it requests. This includes all personnel – owners/principals, executive, operating, business, technical, financial and administrative employees – having knowledge of the events.
Some of the personnel with knowledge may be “outsiders” – they are not be employees of the company, but may be employed by subcontractors or vendors. Such outsiders are probably outside the scope of the company’s attorney-client privilege, and therefore can only be asked to keep matters confidential.
Upjohn Warnings – Internal Investigations allow counsel to provide legal advice to the company, and are not for the benefit of any individuals.
Counsel conducting the internal investigation must be mindful that the client is the company, and not any individual employed by the company. Before interviewing any individual owner, principal, officer, director or employee, company counsel should warn the individual that counsel represents the company – not the employee. This typically includes warnings that the interview is confidential and privileged and that the employee is to keep it confidential; but the privilege belongs to the company and not the individual; that the employee may retain his or her own attorney in the matter, and that the company may waive the privilege and disclose the interview to the Government or others. These are the so-called “Upjohn warnings” – named for a 1981 Supreme Court decision, Upjohn Co. v. United States, 449 U.S. 383 (1981). In particular, the company may disclose – and may be required to disclose – information to the Government.
Determine whether the internal investigation should prompt a disclosure of facts to the contracting agency and the Office of the Inspector General.
In some circumstances, the FAR requires a contractor to disclose to the Government a violation of the civil False Claims Act or significant overpayments. See, e.g., FAR 9.406-2(b)(vi)(debarment for knowing failure of a principal to disclose). Companies must bear in mind that an internal investigation may produce credible evidence that triggers an obligation to disclose. The involvement of counsel is vital in determining when evidence may trigger this obligation to disclose.
The above suggestions are only starters and are not intended to cover all aspects of a company’s rights and obligations when served a subpoena. They are intended to provide some background for in-house counsel when it becomes necessary to help a company’s principals understand the process of responding to a subpoena and conducting an internal investigation.