Halloween may still be over two weeks away, but I’ve already donned my ghost costume many times this year. As outside counsel, I frequently ghost write letters, position statements, responses to document requests and other correspondence to governmental agencies to be signed by in-house counsel, compliance officers or human resources managers without, in theory, the government agency ever knowing an outside lawyer has been involved. In both my capacity as an employment lawyer responding to the EEOC, OFCCP, OSHA or the DOL, and my role as an advocate for health care entities facing audits from various divisions with the Department of Health and Human Services, conventional wisdom has dictated to advise clients that if a governmental agency were to become aware outside counsel was involved, the agency would assume the Company had something to hide. Thus, the best course of action for a Company, at least in the initial phases of an agency investigation, has been to hire outside counsel to consult on strategy and to ghost write all correspondence with the agency, but never to disclose the participation of outside counsel. I’ve heard doing so described as everything from “raising a red flag” to “causing the sharks to circle.” The last thing a Company wants when being investigated by the government is to appear vulnerable.
After many years of seeing the results of this approach and in light of recent events, I, along with others, question whether conventional wisdom is still well…wise.
First, with more aggressive investigators seeking to justify their agencies’ budgets, a small business receiving an EEOC Charge is more likely to see an on-site investigation, a government contractor is more likely to receive an OFCCP audit letter and a follow-up request for more information, and if the DOL comes knocking, the investigator is likely to find some kind of violation. When dealing with investigators who aren’t going to “go away” after the initial contact with the Company, revealing your outside counsel signals less that the Company has something to hide and more that the Company is not merely going to back down and comply with every governmental request, no matter how burdensome.
Second, and on a related note, government agencies justify their existence and their expense, in part, based on the amount of monies they recover through these audits and investigations. Signaling that the Company is prepared to fight burdensome and unnecessary requests or unreasonable findings early may also move that particular audit or investigation further down the priority list. The investigator may decide his time is more productively spent on the audit or investigation of a Company that isn’t represented and may be an easier mark.
Third, acknowledging up front that outside counsel is involved means that the agency will begin communicating directly with outside counsel. This saves small business owners, who do not have in-house counsel and may only have part-time human resources managers, from having to answer what can be tricky and difficult questions from the investigator in a follow-up telephone call or surprise visit.
Fourth, disclosing outside counsel’s involvement may allow the Company to make arguments to the agency that shortcut the investigation. Recently a small business contacted me after the DOL sent an audit letter. We made the decision to disclose my involvement immediately, allowing me to communicate directly with the investigator. As a result of those communications, based on a legal argument, we convinced the DOL investigator to cut short what could have been a very long and difficult audit.
Another person advocating for the rethinking of conventional wisdom on this subject is former GlaxoSmithKine Associate General Counsel Lauren Stevens. Ms. Stevens, the subject of recent articles and interviews in the ABA Journal, the WSJ Law Blog, and Corporate Counsel, recently discussed her ordeal with the criminal justice system for the first time at the annual meeting of the Association of Corporate Counsel in Orlando. The quotes from Ms. Stevens in this blog are taken from the Corporate Counsel article describing her speech. Ms. Stevens, who was acquitted of criminal charges in May 2011, was accused of obstructing a U.S. Food and Drug Administration inquiry into off-label drug marketing at GSK by making alleged false statements and withholding information. Ms. Stevens had signed several responses to the FDA as part of the investigation that had been written by outside counsel, but that GSK did not want signed by outside counsel because, according to Ms. Stevens, GSK was afraid that if “we fronted the law firm to the FDA, it would raise a red flag.” She said the first lesson she learned from her ordeal was, “If you’re going to write letters to agencies, have your outside counsel sign them.” In an interview printed on the WSJ Law Blog, Ms. Stevens advised, “When hiring an outside law firm, make sure they know all the facts and also make sure the other parties know you have hired outside counsel.” Although an internal investigation by the FDA of a drug company is in some ways very different from a small business facing an EEOC Charge, Ms. Stevens’ experience and comments are instructive. If outside counsel signs the letters, the Company has made clear from the beginning that its responses are based on advice of counsel and thus, accusing the Company of making capricious arguments or failing to turn over documents with an intent to obstruct the investigation, more difficult.
I may be giving up that ghost costume soon…oh well, I enjoy being a witch more anyway.