The setting: You look out of your high-rise office on a Friday afternoon as you are planning a stealthy early exit due to the “Ferris Bueller’s Day Off” like weather (movie involving playing hooky due to magnificent weather). Your phone rings. Your assistant is on the phone and says there is a person at the front desk with a subpoena…Now what?
For those of us involved in international trade there are several types of subpoenas that might come our way for International Traffic in Arms Regulations, Foreign Corrupt Practices Act, and or import/export violations/inquiries originating from the U.S. Securities and Exchange Commission, Department of Justice, Department of Commerce and/ or Department of State. This article will offer suggestions on steps to take when your company receives a federal subpoena.
- Inform Decision Makers – The decision makers such as the general counsel, COO, CEO or board of directors should be informed immediately about the subpoena. Legal counsel should determine the nature of the allegation or inquiry. What are the scope and the government agency’s legal authority in this matter (jurisdiction, statutes, etc.)?
- Appoint an Experienced Team –If this is a complex matter, a legal, investigative-forensic accounting and data preservation/e-discovery team should be formed to address the issues. The team should have specific experience based on the type of investigation.
- Preserve Documents –Data responsive to the subpoena and within the company’s custody or control should be retained to avoid the appearance of obstruction of justice. This data may include expected data types, such as emails, memoranda, and spreadsheets, but may also include voicemail, databases, wikis, instant messages and Intranet sites.
- Internal information technology, legal and e-discovery experts should discuss what types of data need to be preserved and determine the most efficient method to comply with the subpoena.
a.i. Overly broad data preservation can cost the company in terms of man-hours, legal expenses and storage.
a.ii. Overly simplistic or specific preservation may exclude, and potentially lead to destruction of, data responsive to the subpoena.
- A legal hold memo should be circulated to appropriate employees instructing them to retain potentially responsive data and to cease normal retention procedures, including automatic deletion settings, until the matter has been resolved.
- Counsel should monitor employees who are involved in the document preservation process to ensure proper procedures are followed.
- Open Lines of Communication – Communication (through legal counsel) with the federal authorities that issued the subpoena is critical to protecting your company and efficiently complying where appropriate with the subpoena.
- Legal counsel should immediately contact the prosecutor or agency issuing the subpoena to make an introduction and inform them that the company is represented by counsel and will be cooperating with the subpoena.
- Review the who, what, when, where, and how of the subpoena. Clarify with the issuing agency any questions you may have about the terms of the subpoena. Legal counsel should understand the scope and timing of the subpoena before initiating the document hold process.
- You can negotiate to narrow the scope of the subpoena if it has been drafted too broadly and creates an undue burden on the company. For example, you can avoid potentially costly data collection from hard-to-access sources or foreign locations. If the DOJ is looking at sales transactions involving your export of products to specific countries, you can agree to limit subpoena responses to those countries involved in the transactions.
- You can negotiate timelines with the government by stipulating that the most responsive documents will be produced first as opposed to having one deadline for all documents. The government may not need additional information if the most responsive documents are sufficient.
- You may also be able to negotiate the form in which responsive documents are produced (paper vs. electronic).
- Any agreements you reach with the government regarding the subpoena should be memorialized in writing.
- You can discover whether you are a subject or a target of the investigation by discussing the matter with the government agency. The agency may tell you the employees that need to be interviewed.
- An experienced legal team can assist you in managing expectations with the federal government. Too much information or too little information provided can lead to overreaction by the government. For example: Hypothetically, if you discover that bribes might have been paid to obtain contracts, conducting an initial investigation to determine how strong the allegations are before disclosing to the government that you have FCPA violations will allow you to be more specific in your disclosure.
- Conducting The Investigation – Utilizing experienced investigators/forensic accountants is critical to obtaining the facts of the case. Interviews of the key employees will help determine where the issues occurred related to the investigation.
- Make sure the interviewers inform the employee or employees that they represent the company, NOT the employee. The company should determine if it will provide separate counsel for the employees or inform them that they have the right to counsel.
- Although attorneys for the company may be present during interviews it is a good practice to have separate investigators conduct interviews to allow them to be called as witnesses if necessary. The attorney who is representing the company may not want to be called by the prosecution as a witness.
When receiving a subpoena the steps you take will be critical to avoid misunderstandings and ensure you are cooperating yet protecting the livelihood of your organization. Choosing the right team will allow you to be more efficient when it comes to managing costs and reducing the chance of misunderstandings with the government.