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Corporate Compliance Insights
Home FCPA

When to Use Outside Counsel for FCPA Investigations

by Matteson Ellis
February 17, 2014
in FCPA
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This article was republished with permission from FCPAméricas Blog, for which Matteson Ellis is founder, editor and regular contributor.

These days, more and more companies are developing internal resources to manage potential FCPA violations. They bring to bear triage committees, internal audit teams, investigation units and in-house lawyers when running issues to ground.

This trend makes sense. Companies in high-risk industries and countries frequently need to vet indications of foreign bribery. Using outside lawyers, accountants, and investigators every time can be expensive.

Given these trends, when should companies rely on outside counsel for FCPA investigations? The answer is guided by various considerations.

Is the investigation record likely to be reviewed by others? One of the main reasons to hire outside counsel is credibility. Investigations by inside counsel are subject to suspicion as biased – or, worse, as a whitewash. Outside counsel bring (or should bring) both independence and expertise to the table. If your record of investigation could end up on the desk of a DOJ attorney, you will want it to be as credible as possible.

Thus, it is important to consider whether a potential whistleblower, disgruntled employee or aggressive journalist might bring the issue to light. This analysis can admittedly be difficult, as bribery issues tend to come to light in ways that companies might not expect.

What is the company’s reputation? Jeffrey Knox, the chief of the DOJ’s Criminal Fraud Section, recently stated, “I think credibility and reputation go a long way with us . . . A lot does have to do I think with the reputation of the company and the counsel and even to some extent the outside law firm.” Certain companies with leading compliance practices, like GE and Siemens, have built strong reputations. Their internal reviews will inevitably carry more weight. Others that are unknown might not have the same automatic credibility.

What are the company’s internal capabilities? Investigations are often complex because foreign bribery schemes tend to touch multiple jurisdictions, actors and cultures. Companies must consider whether they have the staffing to handle the matter – teams are often already stretched thin. Does personnel have local language skills, expertise in local laws and the manpower to handle complicated reviews? By relying on internal resources, will individuals get pulled away from their normal duties? If the answers are yes, companies are more likely to look externally for help.

How severe are the allegations? Many companies tend to start reviews internally and assess whether outside legal assistance is necessary as they go. For example, they will seek outside assistance as soon as information collected indicates violations of law rather than merely violations of internal policy. They will look outside when evidence implicates the involvement of high-level executives or systemic rather than isolated problems.

How credible are the allegations? When allegations are credible because tips are corroborated by evidence, a whistleblower is known and reliable or the person making the report has direct knowledge of the wrongdoing, this suggests that companies should use outside counsel. When tips appear baseless, internal reviews tend to be more appropriate.

These determinations are rarely easy and involve numerous factors. In my experience, companies that have already made significant investments in their compliance programs generally come out on the issue in one of two ways. They have built impressive internal capabilities for foreign bribery matters and can field many issues themselves. They also recognize that, at times, reliance on qualified counsel is essential. As one former compliance officer told me: “When a company makes significant investments to build a robust compliance program, it shortchanges itself by attempting to go the last mile on the cheap.”

The opinions expressed in this post are those of the author in his or her individual capacity and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.


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Matteson Ellis

Matteson Ellis serves as Special Counsel to the FCPA and International Anti-Corruption practice group of Miller & Chevalier in Washington, DC.  He is also founder and principal of Matteson Ellis Law PLLC, a law firm focusing on FCPA compliance and enforcement. He has extensive experience in a broad range of international anti-corruption areas. Previously, he worked with the anti-corruption and anti-fraud investigations and sanctions proceedings unit at The World Bank. Mr. Ellis has helped build compliance programs associated with some of the largest FCPA settlements to date; performed internal investigations in more than 20 countries throughout the Americas, Asia, Europe and Africa considered “high corruption risk” by international monitoring organizations; investigated fraud and corruption and supported administrative sanctions and debarment proceedings for The World Bank and The Inter-American Development Bank; and is fluent in Spanish and Portuguese. Mr. Ellis focuses particularly on the Americas, having spent several years in the region working for a Fortune 50 multinational corporation and a government ethics watchdog group. He regularly speaks on corruption matters throughout the region and is editor of the FCPAméricas Blog. He has worked with every facet of FCPA enforcement and compliance, including legal analysis, internal investigations, third party due diligence, transactional due diligence, anti-corruption policy drafting, compliance training, compliance audits, corruption risk assessments, voluntary disclosures to the U.S. government and resolutions with the U.S. government. He has conducted anti-corruption enforcement and compliance work in the following sectors: agriculture, construction, defense, energy/oil and gas, engineering, financial services, medical devices, mining, pharmaceuticals, gaming, roads/infrastructure and technology. Mr. Ellis received his law degree, cum laude, from Georgetown University Law Center, his masters in foreign affairs from Georgetown’s School of Foreign Service, and his B.A. from Dartmouth College. He co-founded and serves as chairman of the board of The School for Ethics and Global Leadership in Washington, D.C. He is a member of the District of Columbia, Texas, New York, and New Jersey bar associations. Mr. Ellis is also author of The FCPA in Latin America: Common Corruption Risks and Effective Compliance Strategies for the Region.

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