The Government Is Investigating My Company: Now What? Practical Suggestions From The DOJ

Thursday, February 20, 2014 - 09:50

The following is the Editor’s summary of an interactive panel entitled Legal and Strategic Considerations in Government Investigations featuring Allison C. Stanton, Director of E-Discovery, FOIA, and Records, Department of Justice – Civil Division; John Haried, Department of Justice – Executive Office of the United States Attorneys; and Leticia Vandehaar, Assistant U.S. Attorney, Department of Justice, U.S. Attorney's Office, District of New Jersey. The panel was sponsored by Kiersted Systems and was moderated by Linda Gordon, Vice President, Kiersted Systems.

New e-discovery challenges are reshaping civil and criminal government investigations, and astute counsel must be aware of the many legal and strategic e-discovery decisions that need to be made at each stage of an investigation. Litigation with the government may take place in the form of civil investigations; civil litigation (with the U.S. as plaintiff in False Claims Act, FIRREA, contract claims and others); independent civil regulatory enforcement, such as with the SEC and FTC actions; and criminal investigations and litigation. In almost every instance, electronically stored information (ESI) plays a prominent – and, increasingly, an overwhelming – role in discovery. The purpose of this panel was to address recent legal and procedural developments in criminal and civil investigations around discovery issues, as well as to provide practical suggestions on how to engage the government on those issues if you become involved in an investigation.

Mr. Haried began with a brief overview of the Department of Justice’s affirmative work, which includes cases ranging from drugs to terrorism to white-collar crime and therefore deals with every kind of ESI. On the criminal side, the DOJ divides the world of people it contacts into three categories: targets (who may or may not be indictable); subjects (who are on the periphery of the case); and witnesses (whom the DOJ believes have not committed a crime).  See U.S. Attorney’s Manual, § 9-11.151. Civil investigations sometimes utilize analogous classifications. Therefore, it is incumbent on counsel to ask in both criminal and civil investigations which category a client falls into. This may determine next steps and your advice to your client.

Receiving a Civil Investigative Subpoena from the Government

As a jumping-off point for each segment of the presentation, the panel posed an interactive hypothetical and corresponding multiple-choice question to which live-time responses were gathered from audience members via text message.  The answers from the audience determined the direction of the hypothetical and the issues that the panelists had to address.  First was a question regarding a client’s receipt of a civil investigative subpoena requesting all company email from 2012 to the present. Two-thirds of the audience responded that counsel in the hypothetical should, “schedule a call with the government to discuss the subpoena.” Ms. Vandehaar observed that this was a “good approach.” Civil investigative subpoenas from the government are typically broad by design, she explained, and to that end it is best to pick up the phone. Together, you may be able to whittle down the scope of discovery, or at the very least break it down into “bite-sized” chunks.  Ms. Vandehaar did, however, caution to make sure your client’s company is adequately preserving its data in the meantime.

Here Mr. Haried inserted a reminder about Sarbanes-Oxley and the obligation it created to preserve information and the consequences of destroying it, citing 18 USC Section 1519. He added that in his experience, prosecutors see this behavior in criminal cases more than half the time! He also noted that lying to prosecutors will lead to criminal charges, both for violating the law in and of itself, and because it speaks to the mental state of a likely guilty or complicit party.  Prosecutors will bring charges under this provision if there is a failure to preserve information in an investigation.

Counsel should be prepared to discuss the scope of the claims and the scope of the relevant data types. The panel observed that negotiations help focus document demands: who are the custodians; what are the terms; what databases are being requested? “Talk to the government about whether you need to preserve one of your client’s offices, or all of them,” Ms. Stanton advised. “Be creative” about suggesting to the government ways to contain costs, she added. It is usually in no one’s interest, not even the government’s, for your client to be “broken” by an investigation. To that end, Ms. Stanton noted, be prepared to discuss the locations of your client’s relevant data before you walk into the room. Better yet, conduct a kind of “mini internal investigation” so you know where your client’s relevant data resides. Lawyers need to know enough about their client’s technology systems to be able to speak intelligently (as well as provide documentation and/or charts) about their client’s system architecture, key custodians and other aspects of the requested information.  

Another goal for all players early in an investigation is to prevent wasteful e-discovery. For example, Ms. Vandehaar commented, the data the government is requesting may be found in an easily produced chart, which they may prefer to receive over a massive email “dump” that may contain the same information. While elimination of duplicates may be called for, be sure to explain your plan for any deduping process to avoid the appearance that you are “pulling a fast one.” Also critical early in the matter is a discussion with the government about how relevant, yet privileged, documents will be addressed. The panel urged participants to consider entering into clawback agreements with the government so there is a clear, established process for pulling back, for example, inadvertently produced privileged information. The government may also be amenable to a producing party using search terms to cull privileged communications from the collection. These potential privilege scenarios should be discussed early on in the investigation.

In short, Ms. Vandehaar advised, “help the government help you” when it comes to production, and be prepared to continue this dialogue throughout the case. Remember that proportionality benefits both parties.

Negotiations with the Government: Credibility, Transparency and Creativity

Next, the panelists moved on to negotiations with the government following the initial scope of production discussion. To determine the next twist in the hypothetical, the panel queried the audience on how to engage the government in an effort to limit the scope of documents responsive to the civil subpoena.  Should counsel offer search terms, advocate for predictive coding, or limit custodians?

The majority of audience respondents answered they would ask to limit custodians, which Ms. Vandehaar acknowledged may be effective. She added that the U.S. Attorneys’ Offices and other components at the Department of Justice have their own search technology and that in most cases, upon receiving the email for a particular custodian, the office will run its own search terms.

Ms. Stanton cautioned that counsel bear in mind, however, that the government will never promise that it will not come back with requests for additional custodians, so make sure to preserve potential custodians’ data as well. She was clear in asserting that if you are perceived to be misleading the investigation by excluding certain custodians, you will lose credibility.

The panel suggested that when preparing for negotiations with the government, first closely review subpoena/request topics, instructions, and production specifications. Then collect information to inform the negotiations regarding the scope of the request (e.g. topics and data sources).  It is then important to develop a plan to address the form of productions; timing of productions (such as whether to do a rolling or phased production); and protection of privileged and sensitive information.  Ms. Stanton noted that the government will want to know if there is privileged information being withheld and recorded on a privilege log at the outset of production, so be prepared. Ms. Vandehaar concurred that her office would allow a rolling production, but that a privilege log would also need to be provided on a rolling basis.

Next, Ms. Stanton said to consult with IT and litigation technologists to determine your client’s technical capabilities (and limitations) and assess the use of specific search and review technologies, de-duplication, and methods of pre-production review, and determine whether predictive coding and/or analytics may be appropriate. Make sure you can justify your proposals before presenting them to the government, and verify all information before doing so. You can establish credibility with the government by being truthful, responsive and timely.

Additionally, the panel recommended coordinating the roles and responsibilities of your team members in preparation for and during the negotiation. The government is very sophisticated about the use of technology, so think about everyone’s role and responsibilities on the team, and make sure individuals are taking ownership of their particular role so important details or tasks do not go unaddressed.

Throughout the process, uphold the three ideals of credibility, transparency and creativity.

Producing Data From Databases

In the third segment, the panel asked how the audience would respond to a client’s receipt of a civil subpoena for production of a proprietary, structured database.

The panel noted that the government currently is dealing with more and more structured databases and suggested the following as one potential approach: Prior to any production of structured data from proprietary applications (e.g., sales rep call notes, CRMs, SharePoint etc.), the producing party should first provide the database dictionary and a list of all reports that can be generated from the structured database in native Excel format. Ms. Stanton noted that the system may well naturally generate the relevant reports, in which case offering those reports to the government may be advantageous to both the company (costs are kept down) and the government (reports are timely produced).

In addition, providing the government with user guides, including information on what fields have been pulled from the database in order to generate reports, etc., will build credibility. The same approach could be used when producing data from an SAP or similar financial system. If the system naturally provides the desired relevant reports, then offering those reports in response to a government request or in negotiations with the government is one efficient and helpful approach.

The panelists also remarked that they have seen counsel bring in third-party entities to recreate the requested databases or generate the desired reports. Depending on the investigation and the data, offering this solution to the government is yet another potential approach.

Ms. Vandehaar suggested that you get your IT staff engaged with the government’s IT specialists early in the matter and have them participate throughout the dialogue so technical problems can be resolved as they occur. She added that it is critical, for example, for your IT to document collection methods so you are prepared in case any potential questions or issues arise.

In conclusion, when responding to and negotiating a civil subpoena or request from the government, sit down with the investigators and determine what is being asked for. Closely review the government subpoena/request, and then assemble a team of accountable individuals. Address preservation immediately, considering privilege and sensitive information, and then prepare for the negotiations with government. It will be time to act following those negotiations, proceeding to search, collection, process, and review for production. And, of course, consider potential cost savings and efficiencies throughout the process.

Ms. Stanton suggested organizing your investigation response tasks into a chart of what data is needed, who has that data, and where it is stored to guide the team’s process. Be proactive in advising your client, and prepare for changes down the road. The government may widen or alter the scope of its request or subpoena at any time: a civil investigation may turn into a criminal one, so plan accordingly.

The ESI Discovery Protocol for Federal Criminal Cases

Prefaced by a hypothetical regarding the appropriate response to a subpoena in a criminal case post-indictment involving voluminous e-discovery, the conversation turned to Mr. Haried, who spoke about the ESI Discovery Protocol for Federal Criminal Cases, established in 2012. A collaboration of the U.S. Department of Justice, representatives of court-appointed CJA counsel, liaisons from the courts, and the Office of Federal Defender Services, the Protocol consists of recommendations and strategies for managing e-discovery in post-indictment federal criminal cases with the following aim: to utilize advantages of technology; to avoid undue costs for both parties, especially given the recent sequester and current budget cuts; to ensure parties meet their discovery obligations; to identify/solve ESI discovery problems early; to avoid pretrial motions regarding e-discovery; and to keep trials on schedule. Mr. Haried noted that all government criminal lawyers are currently receiving training on this protocol, and he was pleased to report that attorneys in the public defenders office have had huge success with the Protocol in negotiating issues.  (Mr. Haried co-authored key guidance to the Protocol, which may be found at http://mow.fd.org/final-esi-protocol.pdf.)

The ESI Discovery Protocol begins with a recap of 10 principles that “borrow from common sense . . . and encourage discussion rather than litigation,” and first among them is that lawyers need to know technology – a point made earlier by Ms. Stanton and Ms. Vandehaar.

While the Protocol does not change the parties’ legal obligations, it does offer best practices for prosecutors with an emphasis on anticipating and/or solving ESI issues, on communication between parties and on informal resolution of ESI discovery disputes. The Protocol advises that the parties address issues like those in a civil, FRCP Rule 26 meet-and-confer, including software and hardware limitations, forms of production, personal information and so on.

Mr. Haried pointed out certain salient points in the Protocol, including being proactive about testing the accessibility of ESI production immediately when it is received: the government will not be receptive to parties that complain 30 days before trial that a file cannot be opened. And, should an issue such as missing metadata arise, the Protocol recommends that the moving party confer with opposing counsel in a good-faith effort to resolve the dispute.

Regarding form of production, the Protocol states that a producing party in a criminal, post-indictment case need not perform substantial additional processing or format conversion beyond what it has already done for its own case preparation or discovery production – however, if the producing party processes the ESI, the results of processing (unless they are work product) should be produced with underlying ESI.

Mr. Haried went on to outline practical suggestions regarding confidentiality and the appropriate and secure transmittal of ESI discovery.

All of this said, he commented, the legal system has a long way to go before the practices described in this panel are widely utilized. Indeed, the panel hoped that their presentation would serve to spread the word about at least one aspect of their message at LegalTech: get litigation support specialists involved early – when first getting a case; when grand jury subpoenas are issued; when organizing a case; and by all means before speaking with the government. You may try to narrow the scope of the investigation, but be prepared to defend your burden/cost argument. Keep the goal of building credibility top of mind: misleading or hiding information will have consequences, at the very least in terms of time and money. You want the government in and out as quickly as possible. 

Ms. Stanton closed with a simple reminder that’s all too easily forgotten during the heat of an investigation: the mandate of the United States government is not to make your client’s life difficult, but to protect U.S. citizens, and they take that responsibility very seriously. 

For more information about Kiersted Systems, please visit www.kiersted.com.