February 1, 2023

Podcast - How to Successfully Manage Governmental Investigations

Clearly Conspicuous Podcast Series

In the second episode of his "Clearly Conspicuous" podcast series, "How to Successfully Manage Governmental Investigations," consumer protection attorney Anthony DiResta identifies five key stages of governmental investigations. Mr. DiResta also provides immediate tasks that you should follow as soon as you receive a subpoena or Civil Investigative Demand (CID) as well as other key considerations to keep in mind.

Listen to more episodes of Clearly Conspicuous here.


Welcome to our second podcast of Clearly Conspicuous. As we noted in the previous session, our goal in these podcasts is to make you succeed in this current regulatory and governmental environment that's very aggressive and progressive. We also want to make you aware of what's going on with the federal and state consumer protection agencies and give you practical tips for success. It's a privilege to be with you today. There's so much going on with the consumer protection regulators right now, such as the Federal Trade Commission (FTC) seeking a ban on non-compete clauses in employment agreements, but I want to today to focus on a topic that's on the mind of many companies. The topic is, how to manage governmental investigations successfully. We want to make you aware of the pitfalls of doing it by yourself. Let's start with identifying the nature and scope of a governmental investigation. There are five key steps in the process:

  1. Subpoena or a letter that request documents and information. This is very similar to what you get in litigation within interrogatories and document requests. Immediately upon receiving that subpoena, or sometimes they call it the Civil Investigative Demand (CID), you'll want to narrow the scope of the investigation.
  2. Produce documents and information in compliance with the subpoena. An important tip in this stage is to be an advocate and strategic at every step. You don't want to do a document or information dump. You have to be strategic in how you produce the information and documents, and at every stage of production it's important to have an executive summary that lets the regulators know the kind of documents and information they're receiving.
  3. At the conclusion of the discovery, provide a white paper demonstrating why you didn't violate any laws or regulations. You will want to highlight the key factors to show that the investigation should be closed without any action.
  4. There is a deliberation stage. This can go on for months, but it's when the government steps back and deliberates and studies the information in the documents to see what the next step is. They're going to make a decision. Should we move forward, enter into settlement negotiations or even litigation, or should we close the investigation? I have found in my experience both at the commission and in private practice that you will want to seek meetings with the governmental staff. You will want to provide further evidence to support the positions you took in the white paper. The goal in this phase is to do everything you can to convince the government to close the investigation.
  5. The last stage, if there is no closure, settlement negotiations. 99 percent of the time commence. You will then go into very aggressive settlement negotiations.

Immediate Tasks

So those are the five steps. Now that we have the big picture, let's look at the immediate tasks that you should follow when you get the subpoena or CID. First, at the outset, contact the government staff who's conducting the investigation. Introduce yourself and outside counsel. It's critical that you develop an immediate credibility and trust with the staff. Experienced counsel should be obtained where they can give their background that demonstrates that you'll be transparent and cooperative and to show that you understand the rules of the road. Interestingly, there are internal rules of the road at these agencies that are not public. So it's really important to know what the bells and whistles are, and that's where experience counsel comes in.

I'll also share when I was at the FTC, we had a blue book that actually identified counsel and people that the FTC can and cannot trust. So another immediate task right after the initial introduction is to evaluate the terms of the subpoena. You should get your team together and figure out, once you look at the scope and the nature of the subpoena, determine what's ambiguous, what's vague and what's burdensome. You should really get a handle on the difficulties involved in complying with the CID or subpoena, and you'll want to consider doing this in phases or waves as well. Again, you want to avoid a document dump.

Then after that, you'll set up the meeting. It's called a meet and confer. That's a meeting with the government staff. You'll negotiate the scope and the terms of the subpoena. In that meeting, not only will you want to negotiate the scope and the terms of the subpoena, it's important to give an opening statement. You'll want to tell your story. You want to set the stage and give a flavor and some kind of barometric reading of where you want to go with this investigation. In some cases, I've actually done a PowerPoint before the staff to demonstrate how my client is compliant. There are times where I really introduce the key team at the company to demonstrate the talent and experience of the company. Simply put, you want to show the government that the company and the people at the company are educated, they're compliant, they're good corporate citizens. You need to set the tone at the beginning.

Key Considerations to Always Keep in Mind

There are key considerations to always keep in mind when you're involved in these investigations. The first and foremost consideration is this: The government is the judge, the jury and the prosecutor all wrapped up into one. They play all those roles. Therefore, developing and maintaining a credible relationship with the government staff is critical. Similarly, there's an appropriate touch that's required when dealing with the government, and they have internal procedures to conduct investigations. During my career, I've taken over matters from other counsel or where companies tried to do it by themselves, where the investigation was already in progress, and where things are going downhill. When I evaluate what happened, it's always the same observation to me. The company or its counsel didn't dance in the right way with the government. A mirror was broken. Sorry for all the metaphors, but I hope they make the point. In terms of big picture strategies, when you're dealing in an investigation, don't be on the defense only. You have to be on the offense. You need to be strategic in your production of documents and information. You do it in waves, and you be an advocate of your position. Submit cover letters and executive summaries during each phase of production. Submit white papers that outline the facts and the law and the factors to show why the investigation should be closed.

In conclusion, investigation and inquiries by the federal or state government is very, very serious business. It's truly crisis management. It involves attention by the owners, by the C-suite executives, by the board of directors and its committees and by key employees. In these investigations, your brand and reputation is at stake. So stay tuned for further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Take care.

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