Internal Investigations

Ten Things: Becoming the Company Watchdog (Spotting and Dealing with Corporate Badness)

I assume most of you have been following the spectacular collapse of FTX, the cryptocurrency exchange that was once worth $34 billion and is now worth less than the coins in the cushions of your couch, with theft, fraud, and a host of other felonies thrown in for good measure.  If you’re like me, you probably had this reaction: “What the f**k happened here?!”  If you are a regulator or law enforcement, you might also be thinking (among many other things): “Where were the lawyers, and what did they do to stop this?”  Sadly, these are now common questions as expectations regarding the responsibilities of in-house counsel to spot and stop corporate malfeasance have changed dramatically over the past two decades.  These expectations (and new laws) are driving more in-house counsel to look for ways to beef up their role as the “watchdogs” of the company, on the prowl for trouble and wrongdoing – and one clear way to show the value of the legal function.  It’s not an easy task, however.  It’s can be fraught with risk and conflicting loyalties.  And it often seems like the in-house lawyers are bringing a water gun to a knife fight, i.e., they need more help.  Warren Zevon said it best way back in 1978:

“Send lawyers, guns, and money.  The shit has hit the fan!”

(Lawyers, Guns, and Money)

The problem for lawyers is that guns and money may not be enough (though they certainly help, especially the money bit).  They need a plan and a process for how best to identify problems and what to do if they uncover (or suspect they have uncovered) serious wrongdoing.  This edition of “Ten Things” walks you through a plan for doing just that:



Ten Things:  Partnering with HR (1 + 1 = 3)

One of the most important internal relationships for an in-house Legal Department is with the Human Resources team.  Much of the HR department’s day-to-day work directly involves legal issues and analysis.  Likewise, some of the nastiest and “headline-grabbing” litigation involves employees and their claims alleging mistreatment, discrimination, malfeasance, etc.  Regardless of whether there is any merit to such claims, these disputes tend to be very public and can negatively impact your company’s brand and reputation (along with economic consequences in the event the company pays a settlement or loses in court).  That’s why it is very important that Legal and HR closely cooperate and align on how to best protect the company from employment-related issues.  Working together, one plus one can add up to three.