Reprinted with permission from the October 22, 2013 issue of Corporate Counsel. © 2013 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
In an all-too-familiar scenario, a company or individual is placed in some variation of the following story: a major news outlet publishes an inflammatory—and largely inaccurate or incomplete—story suggesting that a company’s management engaged in questionable and possible criminal misconduct in connection with a business deal or in response to government regulators. As this scenario often predictably plays out, the company soon thereafter receives an innocuous-looking letter on congressional letterhead, asking that the company “voluntarily” provide information—potentially millions of pages of documents—related to the incident, now dubbed a “scandal.” And it would also be appreciated if the CEO and other high-level executives would make themselves available for interviews by committee staffers. At the same time, rumors appear in the Washington, D.C., press that the committee chairman will “invite” the CEO and others to testify before Congress for a planned hearing. What to do?
The first step is craft a strategy to identify the facts underlying the episode at issue, as well as the range of questions and conclusions invited by the press. This is no time for any sugar-coating of the issues—what is required is a full, frank, and dispassionate look at all the facts. The next step is to identify the related legal and reputational risks that could arise during such an investigation, as well as a plan for addressing such risks before they become realities. Finally, it is best to reject the notion that the investigation response—whether in writing or in live testimony—will end the inquiry and congressional interest.
Although it is fair to say that congressional inquiries have no “winners,” the losers are surely those who, in a rush to get things over with, respond inaccurately, incompletely, or in a way that fails to appreciate a potential enforcement action that is likely to follow on. Also, any misstatement of fact, however innocent, can be asserted as the basis of a false statement or perjury charge.
Too frequently, companies and individuals facing congressional inquiries carry with them a number of misconceptions about what is involved in managing a congressional inquiry and misapprehend what is expected of them, the purpose of the inquiry, and its likely outcome. What are those misconceptions, and how can one avoid becoming a victim of congressional politics?
1. Don’t Assume that Congressional Staffers Have Limited Knowledge of the Issues
Often corporations, individuals, and also counsel who are inexperienced in dealing with Capitol Hill make the assumption that Congressional staffers are insignificant bumblers, not skilled in anything but political rhetoric. This can be a costly, even fatal, error on the part of the uninformed.
Failing to engage with the committee staff managing your inquiry can needlessly complicate the investigatory process, as well as Congress’s reaction to a company’s involvement. Although some congressional staff are young or have only a cursory knowledge of the matter they are investigating, other staff—especially senior committee staff—often have a deep and substantive knowledge of the issues within their portfolios, including a knowledge of industry practices and regulatory and enforcement activity. By working with committee staff, subjects of congressional inquiries can understand a lot about the purpose of the investigation—and adjust their strategies accordingly. Additionally, where there are knowledge gaps or misunderstandings on the part of congressional staff, such outreach can be useful to provide needed context.
Understanding the ultimate goal of an inquiry can also inform expectations and allow for better preparation. For example, if a hearing is being called to bring attention to a specific controversial action or issue, one can usually anticipate a more spirited hearing featuring potentially hostile opening statements and questions, necessitating a press strategy to minimize negative collateral exposure. If, on the other hand, a hearing is being called as part of broader effort to build a record for legislation, or as part of a broader oversight effort aimed at another party, a more collaborative approach may be possible, which might even avoid the need for public testimony. However, even where a congressional appearance promises not to be acrimonious, a company or individual is still wise to consider how its testimony could be used to advance either party’s agenda and should be prepared to defend its view on proposed legislation or subsequent Executive Branch action.
Perhaps most importantly, by working with committee staff, the company or individual may determine whether a congressional appearance is linked to a broader outside enforcement action or ongoing litigation. Under these circumstances, the client will have to weigh whether the potential for giving public testimony before a panel of potential interrogators counsels against testifying, or in favor of negotiating with committee staff for an alternative form of response.
2. Don’t Assume that Congressional Investigations can be Managed in the Same Manner as Litigation
Again, all too often corporations, individuals, and their counsel approach a congressional inquiry as they would approach a litigation matter. This is risky, as the targets of congressional inquiries must consider a number of factors and strategic decisions that are wholly unique from those faced in typical litigation. Specifically, companies or individuals facing congressional inquiry may be vulnerable to severe adverse publicity and reputational damage. While litigants may face similar challenges, the existence of a neutral judge and professional requirements and courtesy often act as a check against adverse public comments and inflammatory claims. By contrast, congressional inquiries usually occur in the public sphere, and political considerations can sometimes lead to heated rhetoric. And lest it be forgotten, the press is eager to report any colorful controversy—a fact not overlooked by members of Congress.
Additionally, congressional inquiries, unlike litigation, occur outside the context of an adversarial proceeding in which specific relief is sought and where appeals can be taken. There is also no chance of avoiding a response or a testimonial appearance by settling claims. Unlike in civil litigation, which can typically be resolved through negotiation and compensation, the end game for Congress is not a resolution of claims between two litigants, but often to elevate a problem to bring public scrutiny and accountability to an issue and or specific parties.
Likewise, traditional objections to document requests and testimony do not apply in a congressional forum. For example, some congressional offices do not view themselves as bound by the attorney-client privilege. Although a party can always demand that a committee issue a subpoena that can be challenged in federal court, it is usually far better to attempt to negotiate with committee staff, including any friendly members or minority offices, to resolve difficult issues. This is especially important when sensitive materials, which are entitled to certain protections under House and Senate rules, could expose a company or individual to claims that certain legal or privilege protections have been waived.
3. Don’t Assume that Congress is Always Driven by the News Cycle or Short-Term Goals
Despite the 24-hour news cycle and the reality that some congressional investigations are driven by the zeitgeist of Washington, Congress does not have a limited attention span. This is particularly so regarding issues that are driven by constituent concerns or are core issues to members and their staffs. Congress may be interested in an issue well after it has left the front pages, and many congressional investigations result in legislation that can take years and multiple Congresses before becoming law. Some of these laws may have a significant impact on companies and whole industries. Companies and individuals that understand that there may be significant work to be done well after the committee chair gavels out the hearing will be better situated to reach a positive outcome or avoid a negative one.
By bearing these points in mind and remembering that Congress can be a formidable adversary in a nonconventional forum, subjects of congressional inquiries can minimize the significant legal and collateral risks associated with congressional investigations.
Fred Fielding and Matthew Miner are partners in Morgan Lewis’s Litigation Practice in Washington, D.C. Fielding previously served as White House Counsel to President Ronald Reagan and President George W. Bush, and was a member of the National Commission on Terrorist Attacks Upon the United States. Miner is a former federal prosecutor who served as senior counsel to U.S. Senate committees, including the committee on the judiciary and the permanent subcommittee on investigations.