RESPONDING TO BIG TROUBLE: What To Do If You Are Sued or Under Government Investigation

This is the ninth in a series of brief articles that Moye White is sending to its clients and friends to provide practical advice about the opportunities and challenges presented by today's economy.

You and your company’s initial reactions to a government investigation or a recently filed lawsuit often have significant and sometimes irreversible consequences. Make sure your first move is in the right direction.

  • Pick Up the Phone. The single best thing to do when faced with a lawsuit is to call your attorney. The clock starts running on court-imposed deadlines as soon as the lawsuit is served. Failure to respond to the lawsuit within the time allowed may result in the entry of a default judgment. Allow your counsel adequate time to respond to the suit to better protect your interests. Developing a solid strategy early will ensure you are prepared for litigation and may cut costs by exploring the possibility of early resolution.
    • Likewise, call your attorney as soon you become aware of an investigation. In some cases, counsel may be able to persuade the government not to take action against you or your company. Under certain circumstances, voluntary disclosure of information may be offered to avoid further government action; however, voluntary disclosure is not appropriate in all cases. Your attorney will need time to gather facts before engaging the government in any type of negotiation.
  • Protect Privileged Information. A government investigation is invasive and may affect the confidentiality of your protected information. If you receive any government request for information, let your counsel know immediately. Attorneys can act to maintain the confidentiality of privileged information even after the government executes a search warrant, but timing is critical. Subpoenas may also be challenged, especially where they seek documents that may be privileged.
  • Keep Your Finger Off the Delete Button. Destruction of evidence can lead to adverse consequences and can compromise an otherwise strong defense. Individuals and companies should avoid both intentional and unintentional destruction of evidence. Instruct employees not to delete or alter information, whether it is in paper or electronic form. Review your document retention policy to prevent inadvertent loss of important information.
  • Do Not Offer What You Are Not Obligated to Provide. Government investigators routinely request informal interviews. Speaking to an investigator (or opposing counsel) without your attorney present is seldom a good idea. If you are questioned or asked to be interviewed, politely decline stating “I need to speak with my attorney before we have any further discussion.”
  • If an investigator wants to interview an employee of your company, discuss the request with your counsel before approaching the employee about the interview. Avoid any action that could be perceived as obstructing an investigation or improperly influencing a witness.
  • Get Organized. Gathering information for your attorney will help save time and costs. The process may also refresh your memory about important facts. Locate all documents and other information that you believe may be important. Be careful not to overlook electronically stored information. Organize the information in a way that makes the documents easier to understand. For example, place all letters and emails in chronological order.
    • Locate all insurance policies. It is imperative that your attorney be made aware of any policy that could potentially provide coverage. Don’t assume that a policy does not offer coverage for your circumstances. Even if you are being investigated rather than sued, your counsel will, at a minimum, inquire about coverage under a directors and officers policy.
  • Do Not Leave Out the Bad Facts. Your attorney needs a complete understanding of the facts to be a successful advocate for you or your company. It is natural to be defensive when facing a lawsuit or investigation. Talking about the bad facts is not always easy, but they are present in almost every case. A successful advocate can anticipate how those facts may be used against you and minimize their impact.

For more information contact: Chris Leach, Burke Riggs or Jim Miller, Chair, Trial Section at (303) 292-2900.

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Moye White LLP has prepared this bulletin to provide general information, however this bulletin does not provide legal advice and does not create an attorney-client relationship between the reader and Moye White. No legal or business decision should be based solely on the content of this bulletin.


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