Responding to Corruption-Related Compliance Allegations: When Should External Counsel be Retained to Conduct An Independent Internal Investigation?

Ethisphere’s Anti-Corruption Resource Center

In this article, Matt Reinhard discusses how a robust and thorough compliance program is increasingly the norm for companies operating in today’s increased regulatory environment. However, robust compliance programs cannot be instituted and then ignored. Most modern programs provide avenues for employees to internally report potential violations of a compliance code or ethical program, including instances of potential corruption, and one sign of a well-functioning program is that it has the trust and confidence of employees sufficient to actually generate reports. How to respond to these reports, and whether to handle them entirely with internal resources or launch an independent investigation with outside counsel often requires internal compliance officers to make quick (and potentially expensive) decisions with less than perfect information.

There are a number of early considerations for in-house legal and compliance personnel to consider in responding to a compliance allegation and determining whether outside counsel should be consulted, including:

  • What is the source of the allegation?
  • What is the severity of the allegation?
  • What are the potential consequences of retaining outside counsel (or not)?
  • How tightly the flow and dissemination of information needs to be controlled?
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