Taking A Government Investigation Seriously Is The First, And Most Important, Step

Saturday, November 1, 2008 - 01:00

Editor: Would each of you tell our readers something about your professional experience?

Twardy: My professional life has been divided between public service and the private practice of law. From 1985 to 1991, I served as U.S. Attorney for the District of Connecticut, following which I served as Chief of Staff for Governor Lowell P. Weicker, Jr. I joined what is now Day Pitney in 1993.

Considine: I was a law clerk in the Southern District of New York for Judge Shirley W. Kram following law school. From there, I joined the U.S. Attorney's Office in the Eastern District of New York, where I initially focused on organized crime prosecutions. After handling a wide array of criminal matters and trials, I became Deputy Chief of the Long Island Offices of the Eastern District. In 1995, I left to join what is now Day Pitney to work with Stan Twardy, who was just developing a white collar group there. Given the extraordinary reputation of the firm in Connecticut, and Stan Twardy, I thought this represented an opportunity to be part of a very strong practice.

Editor: Please tell us about your white collar practice. Specifically, how has it evolved ?

Twardy: I started the practice in 1993. Over that time we have represented both companies and individuals in criminal defense matters and in investigations and proceedings brought by federal agencies and by state attorneys general. We have also handled a variety of internal investigations.

Over the 15 years of its existence, our practice has evolved from a Connecticut-centric practice - and I point out that Connecticut is home to numerous corporations - to one that has a national reach. We have also begun to appear in the international arena. Mike, for one, has been called upon extensively to represent individuals in international criminal antitrust matters. We have also represented both companies and individuals in Foreign Corrupt Practices Act matters.

Editor: Would you give us an overview of the practice? For starters, what is the overall practice message that the firm is trying to project with this group?

Considine: The overall practice message that we seek to convey is that Day Pitney has a team of former government lawyers, drawn from a variety of backgrounds and experiences within the government, who join together to represent companies in significant and high-profile investigations. We draw upon lawyers throughout the firm in our representation of these companies, which include Fortune 500 companies.

We have eight partners, a counsel and an associate who are former government prosecutors. They are supplemented by a number of other lawyers who may have expertise in the particular subject matter of an investigation. For example, an environmental matter will invariably call for expertise from the firm's environmental law practice group in addition to our White Collar Defense and Internal Investigations attorneys.

Twardy: Unlike many firms, where the lawyers who handle white collar and internal investigations work do both white collar and civil matters, or might specialize in environmental or healthcare investigations, we are primarily focused on white collar defense and related civil fraud matters. Our specialization, if that is the right term, is in defending government investigations and conducting internal investigations to determine possible wrongdoing within the organization. I hasten to add, however, that our practice includes a considerable volume of environmental and healthcare investigatory work.

Editor: In recruiting for the group, what kinds of areas of expertise or specific skills are you looking for?

Considine: While there are no specific criteria, we are interested in lawyers who have had federal law clerk experience along with attorneys with substantial experience trying cases in the U.S. Attorney's Office or in district attorneys' offices. As I mentioned, we have partners with experience gained in the U.S. Attorney's Office in Boston, New York and Connecticut, in the SEC and in the Manhattan DA's office. In New Jersey we have lawyers who have served both as state prosecutors and in the public defender's office there.

Editor: Are there particular business sectors that the firm has targeted for the group's efforts?

Twardy: As I indicated earlier, we have concentrated on becoming specialists in handling criminal investigations rather than focused on particular industries or industry sectors. Simply put, we have gone to where the work is. At one point, environmental cases were at the forefront. Then healthcare matters seemed to be in vogue. In Connecticut, there was a time when corruption cases were a priority. Following the Enron debacle, financial fraud cases received a great deal of attention, and today we are handling matters which arise from the current financial mess. I think all of this translates to our having a certain comfort level with any type of criminal investigation. Whatever the substantive nature of the case, our mandate is to best represent the client in explaining matters that might appear to be intentionally fraudulent, and in this situation we have an extraordinary degree of experience and expertise.

Editor: How do you distinguish the group from its competitors?

Considine: There are a number of things that often distinguish us from competitors. First of all, many of our partners have substantial prosecution experience, many in a supervisory capacity. Secondly, the government - the SEC and the Department of Justice - has asked members of our group to serve as monitors, special masters, and the like in various matters. By working in these positions, the lawyers here have developed good working relationships with the government which is invaluable when we are opposed to the government, which is typically the case. Third, our group includes lawyers who have served as in-house counsel, so lawyers here understand what it means to work in-house and be under siege in the context of a governmental investigation. With such lawyers, we are in a better position to help general counsel and the company's legal department navigate some very difficult waters. Finally, we spend substantial time with clients following the conclusion of an investigation. We strive to ensure that the circumstances which led to the investigation in the first place no longer exist so that the client does not become a repeat customer.

Editor: Speaking of the current financial markets crisis, what do you anticipate happening in the financial arena as it applies to white collar and internal investigations?

Twardy: We believe that the current crisis will result in a significant increase in the volume of federal financial fraud investigations. In addition, the companies that have done business with those attracting government scrutiny are going to need to conduct their own internal investigations. There is a ripple effect here, and it is going to be some time before we are past this particular crisis. Those who have not been targeted by the government in the initial round of investigations are going to have to prepare for the second round.

Considine: In addition to the federal investigations that Stan mentions, we are seeing cases where the federal government is teaming up with local enforcement bodies - the Southern District of New York and the New York Attorney General's Office, for example - to investigate a particular company or industry.

In terms of internal investigations, there are instances where an inquiry in one area gravitates into a new, and sometimes unexpected, arena. For example, we have been engaged in a financial fraud investigation that has evolved into what is essentially a data breach issue. (This is where confidential information - such as credit card information - finds its way into the hands of a third party, which could cause tremendous problems for a company).

Editor: How do you staff a cross-disciplinary case like that? Are the resources of the firm, in terms of expertise and personnel, available to the group?

Twardy: Absolutely. In assessing a case, we focus on the subject matter expertise necessary to handle it in an effective and efficient manner. That might entail bringing people to the team with expertise in any one of a dozen or more areas, but we have found environmental, SEC, employment law, employee benefits expertise and experience across a wide range of technology disciplines to be particularly important. Day Pitney has a very deep bench, however, and in our experience the requisite base of knowledge is available for all of the matters we handle. In addition, I should say that the firm's culture is one of mutual support. All of the firm's resources are available to our group in staffing projects; and we are on call to support others in all of their undertakings.

Editor: What is in the pipeline with respect to the financial arena?

Twardy: One of the principal issues that derives from the current crisis is that of transparency. Originally, we were told that AIG required 45 billion dollars to avoid collapse. Just days later that figure had expanded to become 83 billion dollars, and now we are over the $122 billion mark, with further increases anticipated. What happened? This is a rather startling example of what the transparency issue is focused on, to be sure, but the fact remains that a great many seemingly sophisticated companies did not know the breadth or depth of their problems. And what they said in public about those problems had little connection with reality as the problems became subject to the light of day. I suspect our group is going to be very busy in handling internal investigations which are concerned with the transparency issue.

Editor: Is there anything you would like to add?

Considine: It is essential for each company to take these governmental inquiries with the degree of seriousness they deserve. Sometimes companies adopt the attitude that they have no exposure at the outset of a governmental inquiry. It may well be the case that the company has done nothing wrong and that its employees are entirely free of blame. These investigations are usually not instituted at a whim, however. And even if the inquiry appears to be routine, it is important to review and preserve all relevant documentation. Nothing is more serious in the eyes of the investigator than a failure to preserve records. Companies need to staff a team to respond with relevant experience and to consult with outside counsel when an investigation is launched. Sometimes a 15-minute phone call at the beginning of an inquiry might turn out to be very worthwhile at the end of the process.

Please email the interviewees at satwardy@daypitney.com or mgconsidine@daypitney.com with questions about this interview.