2007 Issue 1 - New York City Bar Association

L A W Y E R ’ S R O L E I N C O R P O R A T E G O V E R N A N C E
for the government. Investigations often address conduct that is problematic,
but not clearly unlawful, and the investigative record is never
perfect. Counsel is required to exercise discretion concerning how to characterize
events, to judge witness credibility and motive, and to determine
whether conduct crossed the line from questionable or inadvertent to
improper. In making these assessments, investigative counsel has a client—a
client who may be keenly interested in whether conduct is characterized
as improper or criminal and in how investigative counsel exercises
discretion. Sometimes that client will have an interest in protecting the
employees under investigation; other times, it will have an interest in
trying to build a case against those employees. It will rarely be disinterested.
It is important for investigative counsel to be aware of the different
constituents who have a stake in how counsel’s discretion is exercised,
and to be cognizant of the consequences that would flow from exercising
discretion broadly or narrowly.
Most of the commentary on this issue involves situations where counsel
“under charged” during the course of an investigation. We have all read
about investigations conducted by counsel who is too close to management,
or had some prior involvement with the transactions under review, and were
not sufficiently skeptical of motives and events and, consequently, failed
to ferret out wrongdoing. But the issue can also arise in the other direction,
and investigative counsel also may err by being too quick to find
there was unlawful conduct based upon minimal or equivocal evidence.
There are many incentives that may cause investigative counsel to
“over charge.” For example, the various Justice Department and regulatory
pronouncements reward corporations (and their counsel) who uncover
wrongdoing and root out wrongdoers. 207 There is a one-way regula-
207. See Cutler, Remarks Before D.C. Bar, n.177 above, at 6:
The larger lesson is the continuing importance of what we refer to as cooperation . . . .
First, I believe the Commission is placing a greater emphasis than ever before on assessing
and weighing cooperation when making charging and sanctions decisions. . . . Second,
I think the Commission is using a more graduated scale when it assesses cooperation.
There are cases in which the Commission has found cooperation early in an
investigation to have been inadequate, and taken that into consideration, even if the
conduct of the same party was later exemplary. In other words, the Commission no
longer begins and ends its assessment by asking, ‘did this party cooperate, yes or no’
Now, it routinely goes on to consider, if the party did cooperate, how much How
often You should expect that we will seek to reflect the answers to these sorts of
questions when we resolve investigations and actions.
Thompson memo:
The main focus of the revisions is increased emphasis on and scrutiny of the authen-
T H E R E C O R D
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