What is the process for responding to a subpoena for documents?
Being served with a grand jury subpoena can be a harrowing experience for any company. Although such subpoenas are common in white-collar investigations, they present daunting tasks for companies that are unfamiliar with federal criminal or regulatory inquiries. Grand jury subpoenas pose more risks and practical difficulties than subpoenas in civil cases, and the consequences for failing to properly respond to one could include jail time for contempt and criminal exposure for obstruction of justice.
What is a federal grand jury subpoena?
A federal grand jury subpoena is an investigative tool which the grand jury uses to gather both documentary and testimonial evidence to assist federal prosecutors in determining whether a company has committed a crime. A grand jury subpoena is the very cornerstone of a government investigation. Unfortunately, companies often do not have advance warning of a pending grand jury investigation. Grand jury subpoenas often call for the production of important and highly confidential business records including voluminous contracts, emails, project files, address books, and bank and credit card records. Failure to respond with appropriate care and skill can prolong the investigation — and could result in the company being kept in the dark about potential criminal exposure and other matters that could be highly damaging to the company’s business interests. Below is an outline of the basic steps that a company must take in order to effectively respond to a subpoena duces tecum (a subpoena for documents) and a subpoena ad testificandum (a subpoena for testimony) in order to manage successfully through these situations.
How to respond to a subpoena duces tecum
Under Rule 17(c)(1) of the Federal Rules of Criminal Procedure, a subpoena duces tecum (a subpoena for documents) “command[s] the person to whom it is directed to produce the books, papers, documents or other objects designated therein.” The subpoena may be issued at any time during the investigation without probable cause or even a showing of relevance. Subpoenas for documents are often drafted broadly to require the production of voluminous records (e.g., emails, personnel files, business records, and bank records).
In responding to a subpoena for documents, a company must:
1. Retain competent outside counsel
The most important initial decision a company facing a grand jury subpoena must make is the selection of outside counsel. Former federal prosecutors and defense attorneys with significant experience handling grand jury matters are often best suited for the task of ensuring that a company is properly responding to the specific demands of the subpoena. Responding to a federal grand jury subpoena requires counsel to balance various (and sometimes divergent) interests — including establishing a good rapport with the prosecutors and agents who are handling the investigation, asserting the company’s legitimate business interest in the confidentiality of business practices and employee privacy, assessing the company’s role in the matters being investigated as well as the company’s potential criminal exposure, and developing an overall strategy to clear the company from allegations of wrongdoing and/or maximize the company’s ability to defend itself against potential criminal charges.
2. Initiate contact with the government
After reviewing the subpoena, counsel must immediately contact the assigned prosecutor handling the investigation. Although prosecutors are reluctant to divulge substantive information about pending investigations, these early discussions can be surprisingly productive.
Because most prosecutors are willing to negotiate an extension to respond to the subpoena based on the scope of the subpoena, counsel should first consider making an immediate request for an extension. Next, counsel should seek answers to certain fundamental questions, such as:
- The nature of the government’s investigation
- The types of offenses that are being investigated
- The company’s role, if any, in the matters under investigation
- Where the company falls on the spectrum of culpability (i.e., target, subject or witness)
- Whether the government would prefer for the company to produce responsive materials on a rolling-basis or as one large production (the former being preferable in large productions because it gives counsel an opportunity to review the production while complying with the subpoena in a timely manner)
3. Evaluate potential grounds for quashing or modifying the subpoena
Under Rule 17(c)(2) of the Federal Rules of Criminal Procedure, a party may move to quash or modify the subpoena if compliance would be “unreasonable or oppressive.” Such a showing normally can be made if the party receiving the subpoena can establish that the subpoena constitutes an unreasonable search or a “fishing expedition.” As a practical matter, a company having difficulty responding to a subpoena should raise these concerns with the prosecutors in an attempt to narrow the scope of the subpoena. In addition, individuals possess a constitutional right not to incriminate themselves and may assert that privilege in any setting including the grand jury. Corporate entities, however, have no self-incrimination protections.
4. Appoint a records custodian
In many instances, the search for responsive materials may be time-consuming, extremely costly and difficult. In preparation for gathering responsive materials, the company should select an employee to serve as the company’s custodian of records. The records custodian should be familiar with the company’s record-keeping process but should not have specific information or knowledge about the matters under investigation. In-house counsel, internal auditors, and drafters of the records being sought should not be selected to serve as records custodian. At the outset of the document gathering process, counsel should go over the subpoena in detail with the records custodian and make himself or herself available to answer questions as the records custodian gathers the documents.
Although in most cases counsel will be able to make arrangements with the government to avoid having the records custodian testify in the grand jury, the records custodian should be prepared to testify about, among other things, the manner in which files are kept at the company, the process used to gather responsive materials, the persons involved in the document-gathering process, the protocol followed to ensure that responsive materials were not destroyed, and the types of documents that the company produced as part of the document production.
5. Circulate a “litigation hold” notice
To facilitate the record custodian’s work — and to protect the company against any claim of wrongdoing or irregularities in responding to the grand jury subpoena — counsel should prepare a “litigation hold” notice or memorandum to all employees who may be in possession of any responsive materials. The instructions should:
- Advise the employees of the deadline for producing the responsive materials
- Identify the specific documents that are believed to be in the employee’s possession, using verbatim the language in the subpoena
- Advise the employee that the company intends to produce all documents called for in the subpoena
- Instruct the employee not to alter, destroy, remove or delete responsive documents or information, including advising the employee to ignore any document retention or destruction policies
- Instruct the employee to search thoroughly for any responsive records in any location in which documents might be stored, including all electronic devices and media
- Advise the employee to be over-inclusive in the production if they are unsure about whether a particular document or item is responsive
- Advise the employee to produce “original” documents and all copies of any responsive documents
- Advise the employee to identify any potentially privileged documents
- Advise the employee to alert the records custodian of other employees who may be in possession of responsive materials
- Advise the employee to contact the records custodian or counsel if he or she has any questions about how to comply with the request
In addition, the company should require each employee to sign a certification form acknowledging that the employee has searched all files, electronic devices and data, and records within his possession, custody or control — and that the employee has delivered all responsive materials to the records custodian.
The production of electronic files often requires special attention. Counsel should ensure that the company is following the government’s guidelines (which should be attached to the subpoena). Counsel should consult with the prosecutor to determine if there might be a mutually agreeable plan to streamline the production process. For example, both sides might reach an agreement to limit the email production to emails that are responsive to an agreed-upon list of “key word” terms.
6. Review responsive materials
In order to eliminate the element of surprise, effectively assess opportunities for cooperation and evaluate potential criminal exposure, counsel has an obligation to conduct a thorough review of all documents which the company identifies as responsive to the subpoena. By reviewing the documents in advance of the document production, counsel may learn additional facts or may identify additional documents that may also need to be turned over to the government. Moreover, a firm understanding of the documents will allow counsel to anticipate concerns that the government might have about the materials and put the company in a better position to respond to follow-up inquiries such as subpoenas for witness testimony.
7. Conduct witness interviews
As part of the due diligence discussed above, counsel must interview witnesses who may have knowledge about the matters under investigation. A thorough understanding of the documents and the facts could enable counsel to educate the prosecutors, convince the government that they should not waste their time on certain avenues of investigation, and redirect the government’s focus away from the company. Such discussions provide the company with clarity about the investigation and allow the company to better assess the value of ongoing cooperation, potential criminal exposure, and potential harm to the company’s business and reputation.