When representing individuals in investigations, determining whether to consent to an interview and any interview itself can be pivotal. The following sets forth some potential pitfalls and suggests certain best practices.
16.2Kind and scope of representation
Even leaving aside the multifarious sorts of industries and issues that can be relevant to the representation of an individual, there are various kinds of representations, presenting different types of challenges.
16.2.1Representing current or former employees
Most typically in sophisticated white-collar matters, a company is either conducting an internal investigation into suspected misconduct or responding to a government investigation (regulatory or criminal, or both) of similar misconduct. The former often morphs into the latter, one way or the other. In those contexts, the individual client is usually a current or former employee or board member. Inevitably, the individual’s relationship with the company is crucial, and can materially impact (for good or ill) counsel’s approach to the interview. At the most basic level, the company may or may not have an obligation to advance reasonable legal fees and expenses to the client. Even in the absence of a contractual or other obligation, the company will sometimes agree (or be persuaded) to do so. In either scenario, the company might impose a cap or other conditions on payments. In any event, there are significant advantages to the client establishing a co-operative and cordial relationship with the company (including, at minimum, access to documents and other information) – although this is not always possible.
At times, largely for reasons of efficiency and economy, the client may be one of multiple individuals a single lawyer concurrently represent as a ‘pool’ of clients who are witnesses or potential witnesses in the same investigation – subject to the ethical rules governing conflicts of interest and confidentiality. This usually occurs where the members of the pool are viewed at that time as less culpable and whose interests are thought to be aligned. Such an arrangement presents obvious advantages to each individual. Pool counsel, by definition, obtains a broader perspective and usually has access to more documents than he or she would otherwise, has the benefit of each client’s recollection, and can use insights gleaned from the first client’s interview or interviews to prepare for subsequent client interviews. To be clear, it is usually best practice not to ‘cross-pollinate’ clients (by, for example, telling one client what another said about a particular issue), but pool counsel can appropriately use such information to formulate questions and strategies. Before agreeing to represent multiple individuals, counsel must take substantial steps to ensure that there are no conflicts, document the risk of future conflicts and the waiver of any future conflicts in appropriate engagement letters, and remain hyper-vigilant for developing conflicts. The authors recently experienced a situation in which it emerged – a year into representing a pool of individuals – that one client had negative information about a second client (information both had concealed), leading to significant issues during fraught negotiations with the government regarding one of the two clients. Only the existence of an appropriate engagement letter forestalled more serious problems.
16.2.3Joint defence agreements
Although ‘entering into a joint defense agreement is often, indeed generally, beneficial to its participants, like skating on thin ice, dangers lurk below the surface’. These dangers are illustrated by court rulings disqualifying counsel based on a joint defence agreement, precluding counsel from cross-examining a defector who becomes a cooperating witness, and holding that communications thought to be protected by a joint defence agreement were not in fact privileged. Most of these risks can be mitigated substantially if counsel for the participants consider, discuss and record in some fashion the parameters of their agreement, including the consequences of one or more participants withdrawing from the agreement. On more than one occasion when the authors represented individuals, we received a voluminous quantity of documents from the clients’ former employers, all Bates-numbered to the effect that they were produced pursuant to a joint defence agreement, when there had been no discussion about any such agreement. The tendency of many practitioners to prefer informal joint defence agreements with no specific clarity or agreement on the consequences of withdrawal is puzzling, and the consequences can be severe.
In some jurisdictions, including the Southern District of New York (SDNY), practitioners often prefer to use verbal joint defence agreements. While the agreement need not be recorded in writing, there are numerous advantages to doing so. Although courts may find the existence of a joint defence agreement, despite the agreement being purely verbal, the existence of a written document obviates this inquiry. In a December 2018 decision, a judge in the SDNY held that a former employee failed to establish a common interest agreement with his former employer – even though the individual’s lawyer emailed company counsel a draft document with the subject line ‘Common Interest Privilege Document’, specifically noting that the draft document was being shared ‘pursuant to our common interest’, without any objection or clarification from company counsel. This underscores the importance of documenting explicitly the existence of such an agreement.
Companies under investigation will at times enter into a joint defence agreement with employees or, more commonly, former employees. We have seen such agreements stating that information disclosed to the company will not be disclosed to the government or third parties. This practice is problematic where a company would prefer to disclose illegal or wrongful conduct to the government and minimise its exposure by obtaining co-operation credit, or where the company operates in a regulated industry that imposes a legal obligation on the company to disclose wrongdoing. As a result, counsel for a corporation typically include language in the joint defence agreement that explicitly authorises the corporation to disclose joint defence materials (or a subset of them) at its sole discretion. This kind of joint defence agreement is little more than a glorified Upjohn warning. In representing entities, the authors have in the past used joint defence agreements that protect most joint defence materials – strategy discussions, draft work product, updates on interactions with the government – but specifically carve out ‘historical’ interviews of the individual, which are governed by a standard Upjohn warning. As a practical matter, however, whatever the form of the joint defence agreement, an individual may have little choice but to agree so as to obtain information (including documents) necessary to present a defence.
16.3Whether to be interviewed
At times a client faces real risk in consenting to an interview by the company. Admitting misconduct, even mere violations of company policy well short of criminal violations, can result in discipline, termination and severe financial consequences. Also, one must assume (and advise one’s client to assume) that the company will disclose its version of the interview to the government. Hence, before consenting to an interview, it is crucial to understand the facts (including the documents, the context of the transaction or trading strategy etc., and the client’s version of events), as well as the views of company counsel (to the extent they can be elicited). That said, the client often faces a Hobson’s choice. The company’s advancement of fees (which the client may regard as crucial) may well be conditioned on co-operation and, more fundamentally, in the United States (as opposed to virtually all EU countries) an employer can generally fire an executive who refuses to be interviewed. Even where there is some degree of risk, when the client wants to continue employment, protect his or her financial situation, or simply continue working for a different employer in the same regulated industry, the incentives to consent to an interview will be strong. Even leaving those concerns aside, failure to consent to an interview will almost certainly lead to a cessation of reciprocal co-operation from the company – halting the flow of documents and updates and putting an end to coordination. Obviously, there will be cases where the risks of a truthful interview are so palpable that, regardless of the consequences, declining to be interviewed is the only prudent choice. Similarly, many individual clients face close to no risk. The troublesome choices concern those clients who fall in between.
Consenting to a government interview obviously carries additional risks. Therefore, assessing the client’s exposure in advance is even more crucial in this context. In addition to assessing the facts and documents, prudent counsel will seek the views of company counsel, speak to counsel for other potential witnesses (whom company counsel will usually identify), and if applicable review public record documents, related civil lawsuit filings and media reports (and, increasingly, blogs and other internet commentaries). Equally important are the views, if they can be obtained, of the government lawyers seeking the interview. The United States Department of Justice (DOJ) has a formal taxonomy between ‘target’, ‘subject’ and (less formally) witness. Often, but not always, counsel representing an individual can at minimum get an Assistant US Attorney to answer a question regarding the client’s formal status (although it is imperative that the client understand that the status can always shift). Other agencies – for example the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) – usually will not provide even such minimal information, but there are frequently exceptions.
Of course, even when contemplating a government interview there are often similar employment-related considerations – an obligation to co-operate to avoid a cut-off of legal fees, termination of employment, or even attempted clawbacks of vested bonuses, etc. And, again, certain executives in regulated industries (e.g., registered broker-dealers) can be easily placed between a rock and a hard place. Also, unlike company counsel, the government can always threaten to use grand jury or other subpoenas.
16.4Preparation for interview
For both internal and government interviews, the typical preparation is much the same. This is where having a good relationship with company counsel becomes so important. If company counsel has provided the key documents, identified counsel for other individuals and shared (within reason) the focus of the investigation (from the company’s perspective or that of the government), counsel for the individual client will be well positioned to prepare the client for the interview. Conversely, if company counsel has not been co-operative, preparing the client becomes more difficult. Counsel should in any event push the interviewer (company counsel or the government) to identify in advance the topics to be covered and to share in advance the documents to be used during the interview. How much of this is actually made available varies enormously, based on a number of factors. Sometimes everything requested is supplied; sometimes next to nothing is forthcoming; but usually the requests are partially satisfied. As a very general observation, certain government entities (e.g., the CFTC) are usually more forthcoming than others (e.g., the DOJ). But in any event, there is no harm in asking, if necessary repeatedly.
Even where company counsel shares ‘all’ the key documents, more often than not crucial – unfortunately, at times the most crucial – documents are omitted. Often, company counsel will produce to the individual client’s counsel ‘all’ the documents the client saw in real time that have been produced to the government and a separate subset of the most important documents. One should never rely on the company’s selection. Instead, counsel should run targeted searches on the broader universe of documents. Even then, counsel must bear in mind that that universe (1) obviously does not include documents produced by other entities (which are frequently encountered for the first time when the client is confronted with them during a government interview or SEC testimony); (2) might not include all documents produced by the company; and (3) might also not include other documents (texts, instant messages, WhatsApp messages, private emails, etc.) that may have escaped the company’s net. In this regard, it is important to remember to ask the individual client early on whether he or she has access to any pertinent documents or communications (including texts and other messages on a work or personal cellphone or other device).
Recognising these limitations and risks, the documents are typically an essential part of preparing for an interview. It is often helpful to conduct a preliminary debriefing of the client without delving too deeply into large numbers of documents. Then, armed with the context and insights provided by that preliminary conversation, counsel typically spends substantial time alone with the documents – reviewing, highlighting, annotating, cross-referencing and generally striving to internalise the pertinent documents. While the initial cut of such a review will typically be performed by junior lawyers on whatever electronic document review platform they favour, depending on volume and lawyer predilections it is often easier for the senior lawyer to review and annotate the most significant documents in hard copy, in binders, with highlighters and post-it flags. Every lawyer’s methodology will differ, but the point of the exercise should be a constant: identify those documents that are central to the narrative; flag the phrases, paragraphs and emoticons that will grab the attention of a prosecutor, regulator or company counsel; and put together a comprehensible chronology.
A written chronology is often a helpful vehicle to identify salient points and, at a minimum, provides a helpful tool to refresh recollections. During the life of many investigations, there will often be dormant periods where months go by without much or any activity. When the SEC subsequently calls, having a detailed chronology document to reference is a good way to get back up to speed quickly. In building out a chronology, the precise time of day a message was sent is often overlooked. At times, such details support inferences, good or bad, and the reviewing attorneys must be sensitive to that.
Once counsel has done their level best to carefully scrutinise and organise all the relevant documents available, they should be reviewed in detail with the client. In some cases, there are multiple discrete issues (e.g., a revenue-recognition matter raising different issues for a company’s different customers) and some where there is really a single issue (e.g., an insider trading investigation focused on a single trade by one trading desk). In the former situation, one would generally break up the documents by issue, whereas, in the latter, chronological order usually makes most sense. Even in a case involving multiple different issues, it is important not to be too rigidly siloed. Often, the fact that an email or text regarding one subject was sent shortly before a seemingly-unrelated message regarding another can loom large as to the client’s state of mind or other important issues.
After the documents are reviewed and organised, the client should be walked through them. It often makes sense to provide the client with a collection of the pertinent documents in advance. (On occasion, company counsel will put restrictions on the use of the documents it has provided, including precluding the individual client from reviewing the documents outside the presence of counsel. Where required, clients can review the documents with a junior lawyer or paralegal in the room.)
An important goal of such preparation is to refresh the client’s recollection as to documents and events that often are from years earlier. But almost invariably, portions of some documents will suggest improper conduct as to which the client must be prepared (if possible) to offer a cogent explanation. Sometimes what looks bad to an outside observer turns out to be perfectly proper when put in the context of the industry or transaction at issue. Sometimes what looks bad is truly a joke or sarcasm. And sometimes what looks bad is, frankly, bad.
In identifying potentially problematic aspects of documents, it is important for counsel to put his or her prosecutor’s cap on and cast a jaundiced eye on the documents. To the extent possible, it is also important to speak with counsel for other individuals who received the same document to try to elicit the other individuals’ understanding of it and the views of the government or company counsel (to the extent there have already been interviews).
One strategic issue that sometimes arises has to do with whether ignorance is bliss. There may be times when not refreshing the client’s recollection or, more frequently, not educating him or her about an issue (e.g., an accounting rule, a regulatory requirement) makes sense.
Once the client is as well versed in the documents and other information at issue as can be expected, it is sometimes a good idea to pressure-test his or her explanations and recollection by conducting what is tantamount to a mock cross-examination. This enables the client to become familiar with limiting answers to what he or she knows and remembers, to avoid speculation or characterisations, and to make what was known and understood at the time as opposed to now (following focused review of documents and awareness of the investigation).
16.5Procedures for government interview
After tentatively deciding to consent to a government interview, it may be prudent to preface the actual client interview with an attorney proffer. These are more commonly used with some government agencies than others. For example, they are commonly welcomed by the Antitrust Division of the DOJ. Although practices differ among jurisdictions and government regulators, typically counsel would prepare a detailed outline of a proffer, vetted and approved by the client, and stick to it while presenting to the government.
Counsel should inform the government that the proffer is hypothetical but that the information is what counsel expects the client would say. Counsel should then recount the information prepared in advance and typically not answer any questions the government asks with additional information not vetted with the client. The purpose of such a proffer is to gauge the government’s view of the client’s exposure. Typically, an attorney proffer is used in the context of DOJ criminal investigations where counsel believes the client is in some degree of jeopardy. Often the proffer will conclude with some version of: ‘If the client tells you what counsel has just summarised, would you agree that a non-prosecution agreement would be proper?’
Some years ago, such proffers were very common in criminal cases, particularly where counsel was seeking a co-operation agreement or non-prosecution agreement. Many US Attorney’s Offices have in recent years taken the position that an attorney proffer is no different from a client proffer in that the attorney’s statements are treated as statements of the client for purposes of the Jencks Act and therefore must be disclosed to defence counsel if the client becomes a government witness. Accordingly, prosecutors have been more reticent about agreeing to attorney proffers.
Assuming the decision is made (either given positive feedback from an attorney proffer or otherwise) to go forward with the government interview or proffer, a number of important preliminary matters must be resolved in advance. Perhaps most importantly, counsel must clearly explain to the client – and document – all the risks and benefits of making a proffer, and that it would be voluntary and the Fifth Amendment generally precludes anything but a voluntary proffer. Equally fundamentally, counsel must confirm which agencies, and what offices from each agency, will be attending; not only may the risk profiles differ, but each agency may have different ground rules, including different proffer agreements or no proffer agreements at all.
Although, as discussed below, many proffer agreements today provide imperfect protections, they do provide some protection. Accordingly, one crucial requirement of any proffer agreement is a ‘most-favoured nation’ clause – a commitment from the government agency that it will not share the substance of any proffer with any other agency (foreign or domestic) not bound by the agreement. In this regard, the standard proffer agreement used by the SEC and the typical proffer agreement used by many US Attorney’s offices provides that they will not share the proffer with another enforcement agency unless that agency agrees to be bound by the terms of the proffer agreement.
The most common types of proffer agreements (such as those used by the SEC and most US Attorney’s offices, including the SDNY) have become longer and more complicated over the years. But the basic minimal protection provided by such an agreement has long ensured that the government cannot use the words the client says in the proffer as direct evidence in seeking an indictment (or filing a civil complaint) or as proof in the government’s case-in-chief. This is a material benefit to the client. Absent the proffer agreement (or the agreement by the government to take a proffer subject to the plea-negotiation protections of Federal Rule of Criminal Procedure 11 or Evidence Rule 410 – which the authors have never known to have happened), the government could simply treat the client’s statements as a confession and use them accordingly.
But the exceptions that have been added to these typical proffer agreements over the years, largely supported by the courts, have denuded this basic protection of much of its robustness. Indeed, many savvy practitioners as a matter of near uniform policy will virtually never advise their clients to proffer. One thing is patently clear: if the strategy of consenting to a proffer does not succeed and the client ends up getting indicted, the fact that the client proffered will almost invariably put the client in a worse position.
Assuming the client told a version of his or her state of mind or other issues inconsistent with the government’s view of those matters, the typical proffer agreement permits the government to prosecute the client for false statements – basically, for denying culpability or contradicting what others say.
More commonly, the government uses various terms of the typical proffer agreement to essentially eviscerate the ability a defendant who has proffered to defend himself or herself. Years ago, the typical agreement allowed the government to impeach a defendant who takes the stand with arguably inconsistent statements from the proffer session. That baseline exception has been expanded throughout the years. It is now broadly accepted that if defence counsel makes an argument in opening statement arguably contrary to the proffer statements or cross-examines government witnesses in the wrong way, the government can use the proffer statements – an obviously devastating piece of evidence. Even something as simple as offering documentary evidence tending to show that the defendant was not at the scene of the crime can have the same effect. In at least one case, omissions from a proffer statement were deemed admissible based on cross-examination of a government witness.
So the risks of a proffer, and the loopholes in standard proffer agreements, are very substantial. Again, counsel must make a risk assessment, weigh the pros and cons, and explain all of this clearly to the client and document it.
Probably the last significant preliminary matter (other than pressing, yet again, for advance notice of the documents and topics the government expects to cover) is to determine in what fashion the government agency intends to record the interview. At least some government agencies (in our experience, often Inspectors General of various executive branch agencies) have a policy of seeking to audio-record voluntary interviews. Counsel and client should only consider consenting if the agency agrees to share the recording.
In the ordinary course (and certainly in the typical DOJ and SEC interviews), the government will have a designated note-taker (generally a law enforcement agent in a DOJ investigation) using a laptop or pen and paper. It is crucial that counsel for the client has a note-taker who has clear instructions as to what he or she should be doing. Unlike notes of a preparation session protected by attorney–client privilege, notes of a proffer to the government are protected only as work product. The note-taker in that context should strive to record all substance, even at times in ‘Q and A’ fashion and including interjections, objections, and clarifications by counsel for the client. While in the authors’ experience it happens rarely, there are times when the government’s notes as to a proffer are completely wrong on crucial issues (e.g., state of mind ‘at the time’ of the conduct in question) and the existence of painstakingly detailed notes proved to be an essential weapon in arguments with the DOJ and the SEC. Accurate, detailed note-taking is a must.
Every proffer interview is different. Government lawyers are only human, so the approaches and temperaments of those lawyers run the gamut. Some ask almost entirely respectful open-ended questions. Some start an aggressive cross-examination shortly after initial introductions. Some are respectful and even-keeled but relentlessly ask the same exact question over and over again in an effort to get the client to shift his or her answer and adopt a specific formulation or term that is important to the prosecutor’s theory. All of these happen – often during the same interview – because in a typical sophisticated white-collar matter, there can be two, three, four or more government lawyers asking questions. When this is the case, the individual client’s lawyer must not be ‘a potted plant’. The practitioner has a duty to stop a client answering unfair questions, to rephrase questions that are formulated in a misleading fashion, and to challenge the government lawyers when they misstate the client’s earlier answers or misleadingly summarise documents or ask questions about one document while ignoring another equally relevant one (which counsel will hopefully know because he or she is conversant with all the documents that have been produced). A good proffer is one where counsel largely stands mute. But one cannot be shy when shenanigans like those summarised above are playing out. To be clear: the government lawyers will not like it. They will accuse you of ‘coaching’ the client. They may ask you to step out of the conference room and tell you (in essence) to shut up. That is them doing their job. But you have to keep doing your job – respectfully, strategically and within reason. Counsel will, of course, have prepared the client for this potential dynamic.
Representing individuals in white-collar matters is always fraught with risk. The interview – whether by company counsel or the government – is a key step in any investigation, and one that typically crystallises the risks to the client. Advising a client on whether or not to consent to such an interview is thus something that must reflect your considered judgement. A well-prepared client, whose context you fully understand and whose documents you are confident have been reviewed, may materially advance his or her position by consenting to such an interview. But these risks should always be in the forefront of your mind.
1 John M Hillebrecht, Lisa Tenorio-Kutzkey and Eric Christofferson are partners at DLA Piper.
2 See, e.g., 8 Del. C. § 145 (discussing advancement).
3 See generally Association of the Bar of the City of New York Committee on Professional Ethics, Formal Opinion 2019-4: Representing Multiple Individuals in the Context of a Governmental or Internal Investigation (Opinion 2019-4).
4 See generally Opinion 2019-4.
5 United States v. LeCroy, 348 F. Supp. 2d 375, 387 (E.D. Pa. 2004), as amended on reconsideration (10 January 2005).
6 See generally United States v. Hatfield, 2009 WL 3806300 (E.D.N.Y. 2009).
7 Unfortunately, far too often the sum total of counsels’ ‘discussion’ along these lines can be summarised as ‘This is a joint defence meeting, right?’.
8 See John M Hillebrecht and Jessica Masella, ‘Understanding Joint Defense Agreements: The Implications for White-Collar Defendants in the Second Circuit,’ New York L. J. (25 January 2019).
9 The Southern District of New York (SDNY), centred on New York City, is home to many of the US Department of Justice’s (DOJ) most significant international prosecutions and one of its largest US Attorneys’ Offices.
10 SEC v. Rashid, 17-cv-8223 (PKC) (S.D.N.Y. 13 December 2018).
11 See generally Upjohn Co. v. United States, 449 U.S. 383 (1981). See also Chapter 8 on witness interviews.
12 See Gilman v. Marsh & McLennan, 826 F. 3d 69 (2d Cir. 2016); see also Michael D Hynes, Brett Ingerman, John M Hillebrecht, ‘Second Circuit Affirms Employers’ Right to Terminate Employees Who Fail to Cooperate With Internal Investigations,’ DLA Piper Client Alert (1 July 2016), https://www.dlapiper.com/en/us/insights/publications/2016/06/second-circuit-affirms-employers/.
13 See generally Justice Manual § 9-11.151.
14 The foregoing discussion focuses on the US perspective for individuals located in the United States. For clients located abroad, the calculus may differ in nuanced ways. Among other things, the ability of companies to compel co-operation is markedly less in other jurisdictions (e.g., the European Union) and the ability of US agencies to effectively subpoena persons abroad (through mutual legal assistance treaties or otherwise) is much more limited. (See Chapter 11 on production of information to authorities and Chapter 28 on extraterritoriality.)
15 At least some of the authors have had the unpleasant experience of realising such a connection only in the middle of a DOJ interview, a situation that should be avoided at all costs.
16 Some jurisdictions (such as SDNY) often use non-prosecution agreements for individuals, while others (such as the District of Massachusetts) never do.
17 18 U.S.C. § (Jencks Act); see generally United States v. Triumph Capital Group, 544 F. 3d 149, 161 to 165 (2d Cir. 2008) (reversing conviction because government failed to produce government notes of an attorney proffer).
18 Curiously, if a proffer does not produce the desired result, some clients have a tendency to forget that the risks were clearly explained to them.
19 See, e.g., United States v. Percoco, 16 Cr. 776 (VEC) (S.D.N.Y. 11 December 2017) (individuals who proffered exculpatory explanations during meeting with government after being ‘told that they were “subjects” of the investigation’, not ‘targets’, subsequently indicted for false statements.)
20 See generally United States v. Barrow, 400 F. 3d 109, 113 to 119 (2d Cir. 2005) (where proffer agreement stated that statements could be used ‘as substantial evidence to rebut any evidence offered or elicited, or factual assertions made by’ defence, assertion in opening that another person made certain specific narcotics sales opened the door to prosecution using proffer statements in case-in-chief which discussed drug dealing more broadly; ‘proper rebuttal is not limited to direct contradiction’).
21 See generally United States v. Roberts, 660 F. 3d 149 (2d Cir. 2011).
22 United States v. Vella, 2011 WL 652752 (3d Cir. 2011).