Podcast - Don't Let Your Monkeys Become Gorillas: Congressional Oversight Post-Midterms
In this post-election special edition episode of our Public Policy & Regulation Group's "The Eyes on Washington Podcast" series, congressional investigation attorneys Tom Davis and Chris Armstrong talk about federal investigations in the next Congress. Mr. Davis and Mr. Armstrong discuss the changes in the Senate and House of Representatives and evaluate the landscape for subpoenas. In addition, Mr. Davis, who previously chaired the House Oversight and Government Reform Committee, explains how to look out for the well-being of clients under investigation. Mr. Armstrong, who served as chief oversight counsel under Orrin Hatch, also provides helpful guidance on how to prepare witnesses for a successful trial. Both attorneys emphasize that companies facing potential investigation should be staying ahead of the curve.
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Tom Davis: Welcome. I'm Tom Davis, and I'm here with Chris Armstrong to talk about federal investigations in the next Congress. I was chairman of the House Oversight and Government Reform Committee for two years, ranking member for two years and subcommittee chairman for eight years. I have extensive experience in the investigatory space. And I'm here with Chris Armstrong, who is a lead investigator over on the Senate side. And, Chris, I'll turn it over to you. Just talk a little bit about your experience, and then I thought we could go through some of the issues we see coming up this year with a very changed Congress.
Chris Armstrong: That sounds great. Thank you so much. Yeah, I was the chief oversight counsel under Orrin Hatch over in finance. And then before that, I worked on Ways and Means as an oversight counsel. And I've now been here at Holland & Knight for about four years now. I'm excited to have this conversation with you, Tom.
Oversight Landscape After Republicans Take Over the House
Tom Davis: Chris, it looks to me with the Republicans now taking the gavels in the House, all of a sudden the whole oversight rule shifts from where it was in the last Congress. Some businesses can breathe easier. Some are going to be more at risk. And I'm jotting down just a few things and want to get your reaction to them. And note that the Senate we're waiting at this point for what happens next Tuesday. This is recorded a week before the Tuesday runoff in Georgia. Should the Democrats get 51 votes in the Senate, doesn't that change basically the dynamics percent investigations versus 50 votes?
Some businesses can breathe easier. Some are going to be more at risk.
Chris Armstrong: It does indeed. You know, under the current agreement, if there is a split Senate, each committee has kind of even split in terms like member numbers. If the Democrats win in Georgia, then, you know, on the committees, especially the oversight bodies, at that point they hold the majority of members. And so, it's easier to issue subpoenas, it's easier to issue reports. And that's, I think it makes a big difference in the Senate.
Tom Davis: You know, generally, if you're under investigation, or even if you're collateral damage in an investigation, when you get an invitation from committees to come testify, it's not a mandate at that point. But not showing up can cause you some embarrassment, can anger the committee, can lead to other things. But I've had, Chris, as I know, you have in several instances where we have advised the clients not to come. Sometimes the committee will move off to the next target. Sometimes they will double down. But they would have to issue a subpoena. And on the House side, issuing a subpoena, even if you don't show, then they have to issue a contempt motion. They've got to take it through the committee, through the House floor. You can see in a 50/50 Senate, they're never going to get on a split vote in the House. In a party line vote, that can happen. It doesn't happen very often. And even when it happens, sometimes it doesn't mean anything because enforcement from that has traditionally been with the executive branch, which belongs to the Democrats. So you've had President Bush's chief of staff, you've had Eric Holder, for example. You had Harriet Miers, who was Bush's counsel. All were held in contempt of Congress, and there was no consequence for them because there was no enforcement mechanism. But in this next Congress, there is something called inherent contempt, where Congress on its own can find people. They can even imprison. That hasn't happened for almost 100 years. But there are authorities that I know Republicans will look at if they get that resistance from the administration and wonder Chris if you have any perspective on that?
Chris Armstrong: It would be a big change. Right? I believe the last time Congress used inherent contempt, it was during the teapot scandal. And if I recall correctly, they imprisoned the individual inside of the Willard Hotel, which is not the worst thing in the world. I doubt that would happen this time. The challenge you have, though, if you explore that option, is the politics of it can get really kind of ugly, I think really, really quickly. If the Congress is out there actually arresting people and holding them, if that's seen publicly as a kind of overreach, I think it has a lot of risk. Although it is a power, you know, Congress hasn't used it in 100 years. Now, I think that's more important, in terms of kind of oversight of the Biden Administration. I think it's less important in terms of oversight investigations of the private sector, because the odds of a private company getting to the point of being held in contempt is so rare because the incentives, if I'm, especially if I'm the public company, are to find a way to either negotiate or have some sort of accommodation. And so ideally, it doesn't it end up there. But it is a power they have. There's no question about it.
If the Congress is out there actually arresting people and holding them, if that's seen publicly as a kind of overreach, I think it has a lot of risk.
Republican and Democrat Priorities
Tom Davis: Well, and I think particularly when you're going after the administration on some of the issues that are really close to the president's heart, they've got to see what kind of resistance they meet before they exercise that. But I know it's something that's being explored. While the Republicans in the House will be going after the Biden Administration, certainly looking at Hunter Biden's laptop and what they consider a treasure trove that goes there. Democrats, if they control, if they have 51 votes in the Senate, can go back to the Trump Administration and his business dealings as well.
Chris Armstrong: But let me add one part on that as well, is that a lot of people are assuming, I think, that oversight expectations in the House will be focused only on the administration or on kind of Hunter Biden issues. And a part of that is because of the expectation that Republicans are hesitant to do oversight of the private sector. I think those days are long gone. And I think the appetite to do oversight of big tech, anything towards environmental, social and governance (ESG) or China is, I think, substantial. And so I expect Republicans will do a lot of oversight in the private sector next year.
I think the appetite to do oversight of big tech, anything towards environmental, social and governance (ESG) or China is, I think, substantial. And so I expect Republicans will do a lot of oversight in the private sector next year.
Tom Davis: Yeah, and Chris let me just roll down a few things that I think private business needs to be wary of in terms of Republican oversight. First of all, it's something that Republicans would consider woke CEOs and woke culture. A Major League Baseball canceling the All-Star Game in Georgia after they changed their voting rules and issues like that. Disney, for example, rebelling at Florida's law. I think a second would be the climate issue that you can see in the Senate. Democrats going one way on climate change, trying to accent the changes that are going on climate and what are we doing about it. On the other hand, Republicans going after ESG in some of these other issues. Remember, from coal states, from the oil patch, these tend to be Republican areas that have taken a different perspective on the climate issue. On China and even Russia, the whole sanctions issue, trade issues with these, I think companies in that space are at risk. We look at this free speech online issue that's being highlighted with Elon Musk right now in Twitter and the way Apple is probing back and forth. I think this is a ripe target at this point for House Republicans to look after, particularly the Judiciary Committee. So that would be just a few things I'd look at before we even get to border, inflation and those kind of things. Democrats, on the other hand, they're going to be on the free speech online. They're going to be concerned about what they consider to be hate speech and untrue speech, falsehoods and that kind of thing. Taking a completely different tack. I could see hearings in different days with different companies up there where the Senate is taking one tack in the House, a different one. You're looking at regulatory enforcement versus regulatory overreach. This is going to be a difference between the houses on that kind of thing. So I think companies in that space need to be worried, and we haven't even gotten to the whole COVID-19 issue in terms of COVID-19 profiteers. And I think particularly with Democrats taking the Senate, if they take that, looking at that, it's going to be right in their target, their sweet spot, particularly since some of the original bills originated under Trump. Republicans, on the other hand, are likely to look at the origins of COVID-19 and that kind of thing. But I think everybody's going to look at who abused the system, why wasn't there more oversight, and companies that were in that space need to be wary and ahead of the curve.
But I think everybody's going to look at who abused the system, why wasn't there more oversight, and companies that were in that space need to be wary and ahead of the curve.
Chris Armstrong: I'll add one more on that. I think that's exactly right, is if you're in a COVID-19 space, if you're in kind of a large bank, there are attacks that will come your way, although because Republicans and Democrats are approaching it from opposite positions, it's a bit like being hit from both sides. And so that's, I think, an incredibly challenging environment, if you're a private citizen.
Tom Davis: Just being in that space gives you a certain level of vulnerability. And I think it's worth sometimes staying ahead of the curve, figuring out where the committees are going. Obviously, in that particular space, you look at the Judiciary Committee under Jim Jordan and the Oversight Committee under Jim Cooper on that. On the House side, just focusing on some of those issues.
Who Decides to Hold Hearings or Issue Subpoenas?
Chris Armstrong: Let me ask you. I recall as an oversight counsel, I drafted a lot of letters, I stopped a lot of hearings and I would draw topics. The question I get a lot is how do, how oversight implications can come about? And as a staffer, I would read something in the media, I talked to a whistleblower, you know, there's other things that are obvious. As a chairman, though, how do you have the process in terms of actually deciding I'll do a hearing on X, Y or Z or I'll subpoena? Explain what that process is like.
Tom Davis: Good question. So, let's start with the beginning of each Congress, you kind of draw up a list. I did it on oversight and it's being done now. These are the issues that we intend to investigate over time, you kind of outline and assign it to your staff. And remember the staff ratios in the house switch from 2 to 1 Democrat to 2 to 1 Republican. There'll be a huge cultural change on that committee in the way they react. So, you have this list, and you try to go about methodically looking at how we're going to get at the answers we want to get out and the questions we want to ask. After that, there is a reactive phase of that. If there is a bad article in the newspaper, sometimes the committees at that point are very reactive to what they see in the press. So, part of a strategy, if you see a problem coming, is to keep things out of the mainstream press, because that puts a lot of eyes on it, and Congress within a week can react to something they see in the press that might be a good hearing, that might be good headlines. And many times, there's no goal in this except simply to get on camera and show you're advocating for the people or whatever. If you have a problem and you see it, it's potentially you're better off getting ahead of it, keeping it out of the press, if you can, because that's less pressure on the committee to move ahead with an investigation. Does that kind of answer your question, Chris?
If there is a bad article in the newspaper, sometimes the committees at that point are very reactive to what they see in the press. So part of a strategy, if you see a problem coming, is to keep things out of the mainstream press, because that puts a lot of eyes on it, and Congress within a week can react to something they see in the press that might be a good hearing, that might be good headlines.
Tips for Responding to an Oversight Letter
Chris Armstrong: Absolutely. That's great. I then kind of transition to the issue of all right, if I'm a company or I'm a (inaudible) and I get a letter and it's an oversight letter, what do I do now? And I look at this in terms of the kind of errors, and how you respond is to treat it as if it's a lobbying issue. Right? It's a pure lobbying issue. And as long as you have, you know, contacts, I know the chair or the staff, I can sort of work my way out of this investigation. And I think that almost, almost never works. On the other side of the spectrum, I've seen recipients treat it as if it's an executive branch investigation and it's to be treated as if it's the FBI or it's Justice, I should say. Are those errors on your mind, or is there, is there a happy middle?
Tom Davis: Well Chris, a client comes to me, and they've got a potential problem, first thing you want to ask is, are you worried about any criminal liability coming out of this hearing if you go up there? Is there a crime committed? And if that's so and Congress starts asking questions, how do we seal that off and protect that from coming up? Secondly, is the result of my client getting a subpoena? Is there any legislation that is likely to result that could in fact, change the rules of the game for my client and alter their business plans significantly? And then the third factor, if it's neither of those two, is what's the brand damage, or sometimes brand enhancement, from coming before a committee and testifying? There are many cases where we will get a client in front of a committee to show their expertise, and that can be a brand enhancement. But more often than not, you get a request from the committee, the committee, to a subpoena from a committee to your client. And you worry about the resulting brand damage being called before a congressional committee. And as unpleasant as that may be, it may be more unpleasant not to show up, or if you're subpoenaed, not to show up. And I've had cases where we've been able to keep our client from being subpoenaed or in some cases making sure that their deposition is taken in private, or they're kept out of public view. We have had cases where I have just kept my clients offshore where they couldn't be served with a subpoena. And you let the committee know you're not going to find this guy and pursuing it doesn't lead you to anything if there's something else we can give you. There is no two cases that are exactly alike, but the rules in Congress are not rules in court. You don't get the same procedural protections that you get in a court of law. And so, it's important that you have counsel or somebody who understands how this works and can talk to the people that are running the investigation and to try to minimize any damage to the client.
There is no two cases that are exactly alike, but the rules in Congress are not rules in court. You don't get the same procedural protections that you get in a court of law. And so, it's important that you have counsel or somebody who understands how this works and can talk to the people that are running the investigation and to try to minimize any damage to the client.
Chris Armstrong: And it's important to kind of add as well, the vast majority of oversight on the Hill does not involve a subpoena. Right? A subpoena is a relatively rare thing. The vast majority of investigations are often ones you never hear about in the media. It's a letter. You know, the counsel goes in, and it talks about the scope of the letter, the timeline of the response, and then it, as he responds, essentially goes away. That's, I would say, 80 or 90 percent of the investigations that I handle. If it comes to a subpoena, if it comes to a hearing, obviously there's a whole additional set of challenges. But at the same time, a subpoena is not a magic wand. A subpoena, until it's in court, it doesn't have the power, it can't essentially compel you to do anything. That said, it has a lot of Public Relations (PR) risk. Obviously, nobody wants a subpoena, especially if you're a public entity. It looks very bad if you get a subpoena. And so, it's such a tough area and it's kind of unlike any other space. That's why counsel who is kind of in the weeds on all these issues is, I think, really, really important.
But at the same time, a subpoena is not a magic wand. A subpoena, until it's in court, it doesn't have the power, it can't essentially compel you to do anything. That said, it has a lot of PR risk.
Engaging Counsel and Minimizing Risks
Tom Davis: The communications with the committee, if you're able to understand what they want and how they can get their information while minimizing the risk and damage to your client or their brand, those are the kind of things that are very important. And without that communication, sometimes things can fall apart pretty quickly. And there are times when they want to get a piece of flesh from your client, you don't want them to get it and you get into hardball situations. You like to avoid those, but if you do, there are a number of ways around it. Let me just briefly explain some of them. Number one is you can keep your client out of the jurisdiction. You can keep them offshore or not have them serve and not accept services from their lawyer on behalf of them. At that point, it may be embarrassing that Congress is subpoenaed if they can't find them, but they can't compel them to answer. And in a criminal, if you see a potential criminal proceeding or something like that, that's one outcome you want to look at. Secondly, if it's going to go to the committee, you might give them, try to give them, the information they want without involving your client, or if your client is going to be there on the rostrum, see if you can get two or three other companies up there to kind of take the pressure off your companies. If that's unavoidable and you go to a hearing and your client is on the menu, you want to make sure you have talked to some members that are going to be sympathetic to your cause. They can put statements in the record. They can ask rehabilitating questions along the way. And the goal in those cases is at worst, to make this a "he said she said" hearing. I have seen stock prices of companies go up and down significantly because of a congressional hearing or sometimes a potential congressional hearing. So as soon as you have an inkling that you might be getting called up there to go before Congress, it's important to engage counsel and try to minimize those risk factors to the individuals and the companies involved.
So as soon as you have an inkling that you might be getting called up there to go before Congress, it's important to engage counsel and try to minimize those risk factors to the individuals and the companies involved.
Chris Armstrong: Absolutely. I would add, it's also important — and I've obviously worked with you on this a lot, Tom — the importance of hearing prep. If I'm a witness who is appearing at a hearing, the importance of preparing the right way and having mock hearings, having practice at answering the toughest possible questions over and over. It's not fun for anybody, although it really, really helps. I think hearing prep to turn a witness who was terrified of actually testifying and to just a face witness, and it's, it's a lot of work, although I think it's absolutely worth it. And, you know, otherwise, I think it's always very dangerous to testify, although sometimes it's unavoidable.
If I'm a witness who is appearing at a hearing, the importance of preparing the right way and having mock hearings, having practice at answering the toughest possible questions over and over. It's not fun for anybody, although it really, really helps.
Tom Davis: Right. And, Chris, sometimes for your hearing prep, you're better off in a deposition behind closed doors where they can have counsel. I mean, keeping them out of the spotlight where they're the target. But if they are, it's not just prep of your witness, it's also prepping the members, so that you have some members on your side. Remember, both houses operate under a five-minute rule where they go back and forth between the parties asking questions. And if somebody has covered your client, you can move back to the other side and maybe have somebody come in and rehabilitate those questions, which makes it more of a "he said she said" hearing, which is sometimes the best you're going to get out of these things if you're on defense. But it's better than going up there, not being prepared and just being a punching bag for both parties. Remember, at hearings, not every member attends every hearing. And you may have people that would agree with you, but they're going to another hearing. Maybe you have a mockup somewhere else and making sure that you have members that are prepped on your side and that they show up for the hearing is very, very important. And that doesn't just happen automatically.
How Can Businesses Be Prepared?
Chris Armstrong: What's going down with a topic that is on the minds of a lot of CEOs out there is, you know, I'm in a company that could become a target of a kind of oversight in the House or the Senate. Obviously, the Congress hasn't started yet. It starts early next year. But what can I do right now to either minimize risk or, if it happens, actually be ready for it?
Tom Davis: So, Chris, let's say you're ABC company, and you come to me, and you say, we've got a problem. First thing I want to do is where are you located — you know, your local congressman, etc., etc. Do you have any relationships, or the company has prior to coming to see us? If you do, you'd like to go to that member and talk them into being your hometown advocate, even if they're not on the committee, they can talk to the chairman and say, "look, take it easy on these guys, these are big employers in my district where they mean a lot." And that member pressure on the committee chairman or the subcommittee chairman in the case, or whoever's got the gavel, can be an important influencer. Secondly, I think, Chris, we would take you up to see the staff and figure out where is the staff going with this. What is the purpose of this hearing? What are they trying to get at? Can they get their information in a way other than calling my client before the committee in a public setting? And you want to explore those. Third, I always try to see if I can meet with the committee chairman. And if you strike out there, of course, with the ranking member and if things are going south, try to find some advocates on that committee that can at least rehabilitate my client if he gets very tough from questions from the committee with the gavel. So, all of these are measures you have to take. And as you prep your witness for this, you want to make sure that your side of the members of the rostrum who may be sympathetic to you are there at the hearing and also understand the issue and can combat some of the things the other side is saying. The good news, it makes this a "he said she said" hearing. No two cases are alike, but it's important to get counsel early because sometimes when clients have come to us, the ball has started rolling and the committee has already decided to have a hearing or a couple of members have already made up their mind in terms of the direction they want to go, or the committee staff, their attitude has hardened. Had we been in to see them prior to this, we could have moved them in a different direction. So, if you take away anything from this, it's see someone, get counsel early before the thing blows up. We've got a saying, "don't let your monkeys turn into gorillas." I have seen a monkey turn into King Kong, just because they put it off, thought it would go away, thought they could do this on the cheap and the things started to blossom, and questions started getting asked. Remember, many of these hearings come from competitors who are using the committee basically to help their competitive advantage. We see this many times with trial lawyers who are actually feeding questions to members of the committee to ask so that they can then be regurgitated in some manner in a court proceeding. This is not your traditional legal proceeding with appropriate safeguards. This has rules on its own. It's important that we get experienced people in those cases to represent us, to understand that changed landscape, which is nothing like I think was envisioned or you read about in your government books.
So, if you take away anything from this, it's see someone, get counsel early before the thing blows up. We've got a saying, "don't let your monkeys turn into gorillas." I have seen a monkey turn into King Kong, just because they put it off, thought it would go away, thought they could do this on the cheap and the things started to blossom, and questions started getting asked.
Chris Armstrong: Yeah. All I have to add to that is the importance of counsel actually is in this area and it's expert to area because it is so unique. You talk about its own rules. It also has its own lack of rules. Right? Like there's a lot of guardrails, as you said, that just aren't here. And so, the importance of actually knowing the members and the staff and, you know, exactly where the rules are and where they aren't, it's all about negotiation. And so, that's I think a top takeaway that I would recommend from this.
And so, the importance of actually knowing the members and the staff and, you know, exactly where the rules are and where they aren't, it's all about negotiation.
Tom Davis: I was going to say it's a very changed landscape from the last Congress, in terms of the priorities for Congress for oversight. And understanding where this Congress is going, where they're likely to go and staying ahead of the curve is, I think, very important for companies who face potential investigations.
Chris Armstrong: And with that, we will wrap up. Everybody, thanks for listening. We really appreciate it.