Editor: You're among the handful of former long-standing prosecutors now working at law firms who conduct internal investigations. How are the skill sets you developed as prosecutors useful in your new role as internal investigators?
Smith: Inherently, the issue in every investigation, whether you are wearing the hat of a prosecutor or of an internal investigator, is to determine what happened. It is only after that determination that you are in a position to successfully advocate on behalf of your client. Now, in private industry your mission goes a step further. The goal is to maintain the integrity of the process to best advise your client and maximize options for the successful balance of business objectives and legal responsibility. The skills developed as prosecutors go directly to the quality of that determination. This process relies on piecing together inferences from the integration of documents, interviews and physical evidence. Kenya and I have decades of experience in talking to thousands of witnesses and assessing volumes of evidence that educated us in methods best suited to obtain the facts. Our shared experience and expertise offer to our clients a breadth and depth of experience that few practices can offer.
Editor: How does the fact that you served as prosecutors help you shape the investigation and establish rapport with prosecutors and regulators?
Mann: As a prosecutor, I welcomed the fact that an internal investigation was taking place. I knew that I would get the information that I needed, particularly if there were former prosecutors involved because I knew they would have the skill sets to give me what I needed in determining whether I would indict, whether there would be civil penalties involved, or whether there was no need for me to act at all.
Smith : We understand how prosecutors think. We understand how the prosecutor's office works. We are in a position to open and maintain a dialogue with the prosecutor and assist our clients in understanding the government's perspective, which is a tremendously helpful set of skills to bring to the table.
Editor: Now that you are working in the private sector, has there been a change in the way in which you approach the facts of each investigation?
Smith: It is very much the same. Contrary to the general impression, prosecutors do not approach the facts with a conviction-oriented bias. As a prosecutor, I followed the facts wherever they led. I only became an advocate when I stepped before a jury. An important prerequisite for me was to collect and review the facts to determine whether to charge, what to charge, strengths, weaknesses, best arguments and defenses. Similarly, clients in the private sector value someone with my experience in devising ways that help them gather and determine the facts. They also know that it is in their best interests for me to maintain independence in that determination. Only after a neutral and independent investigation can I give my client the best-case scenario in light of all the facts.
Mann: One of the things corporations appreciate and benefit from is that when I go in and seek the facts, I ultimately determine what caused the problem. Clients want and need to know this so that they can take steps to see that the problem doesn't happen again. I can tell you that as a former federal prosecutor, for it to get to the point where I would go to trial, I had to perform a thorough investigation and had to pull evidence together to satisfy myself that a crime in fact occurred. A similar fact-finding process is required in internal investigations.
Editor: How important a role do factors like "tone at the top" and the effectiveness of a company's compliance program play in your investigations?
Smith: Very important. We want to make certain that the prosecutors know that the compliance failure being investigated occurred notwithstanding excellent tone at the top and a state-of-the-art compliance program. We communicate that remedial steps have been taken to prevent a recurrence of the problem. Collecting such information to support those two goals is normally within the scope of our investigative mandate.
The Federal Sentencing Guidelines require that a company's compliance programs have teeth and that they include provisions applicable to that company's industry, size and needs (for example, in the health care industry, OIG provides guidance with respect to the elements applicable to that industry). Per the McNulty Memorandum, a key element of charging decisions is whether you have a pre-existing and effective compliance program or merely a "piece-of-paper" compliance program that is stuck in the middle of an employee manual. To pass muster with a regulatory agency or a prosecutor, we help companies draft and/or implement an effective, open, active and growing compliance program that evolves with the needs of the industry and reflects continuing education.
Compliance is key and is essential to survival in the aggressive enforcement climate of today's corporate world. We are always looking for ways that compliance and issues such as tone at the top can be improved. It doesn't help to just look at the narrow facts concerning a compliance failure without looking at how it happened, how it can be prevented and what changes can be made.
Mann: When companies hire us, they don't hire us to walk in with blinders on. They want us to help them. If we learn about something of importance to them, we let them know. We are proactive as well as reactive. Because we are very sensitive to what prosecutors really want to know about a company, and because we recognize that they are only getting information from one side, we function to help them understand the big picture in a way that makes sense to them.
Editor: When knocking on the corporate door, what is the first thing that prosecutors or regulators focus on?
Smith: When a problem first surfaces, it is important for the company to demonstrate its dedication to responsiveness. If the board decides to bring in independent outside counsel to investigate, that action telegraphs a commitment to independent fact-finding, a commitment that will serve them well with law enforcement.
Cooperation should start the minute you get a knock on the door, a phone call, or are served with a subpoena. You should have procedures in place so that your initial reaction to a government inquiry is not viewed as uncooperative. Cooperative conduct is key to gaining the confidence of regulators and prosecutors.
Mann: If people handle calls from regulators or prosecutors in a consistent way, the company will not only gain credibility, but avoid serious mistakes. It means that if something happens, everyone will be operating under the same guidelines.
Editor: How do you manage protection of the attorney-client privilege?
Smith: In conducting the investigation on behalf of a corporation, it is imperative to let employees know who you represent, why you represent them, what is privileged, that the company holds the privilege, that only the company can waive the privilege, and that you do not represent any individual employee. We have developed the ability to deliver this delicate message in a way that both maintains good relationships with employees and encourages forthright cooperation.
Maintaining the attorney-client privilege and the work product protections is a vital concern of ours. We recognize the importance to our clients of staying current in light of frequent changes affecting the issues of attorney-client privilege, including the McNulty Memo and the passage by the U.S. House of the Attorney-Client Privilege Act. While progress is occurring at the federal level, the same may not be true at a state level.
The challenge of maintaining the privilege and continuing to indemnify employee witnesses will continue to exist given the severe effects of an indictment. However, because there is still room for negotiation, we feel that our background as prosecutors places us in an excellent position to handle such negotiations.
Editor: What do many people not know about your backgrounds?
Smith: I served for more than eighteen years as an assistant district attorney in the Philadelphia District Attorney's Office where I was responsible for the investigation, preparation and prosecution of high-profile and complex criminal cases. While there I tried thousands of bench trials and over 100 jury trials. Since joining Ballard, I have managed numerous investigations for both individual and corporate clients resulting in financially and legally favorable conclusions.
Mann: I was an Assistant U.S. Attorney, Criminal Division, in the Eastern District of Pennsylvania. I have nearly 20 years experience in criminal defense and prosecution and have tried a broad range of cases, from complex fraud and political corruption to computer crime, tax evasion and large-scale narcotics distribution. I held a senior position with the Pennsylvania Attorney General's Drug Strike Force Section and also was a Philadelphia public defender. Among the notable events in my career were the successful prosecutions of a Philadelphia City Councilman accused of bribery and corruption and a New Jersey millionaire who was convicted in one of the largest-ever international sex-tourism cases. I am now a partner in Ballard Spahr's litigation department and a member of the white-collar group.