Photo courtesy of Wilmer Cutler Pickering Hale and Dorr LLP.
It is a familiar scene in corporate governance: A company learns of potential malfeasance within its ranks. Its board forms a special committee and hires outside counsel to conduct an internal review. Outside counsel interviews key employees and prepares a detailed account of events which it presents to the board. The board then decides whether to part ways with any employees who breached company policy or broke the law.
A key additional decision facing the company is whether to cooperate with government authorities, some of whom may already be investigating the incident. For many (if not most) companies, this is a decision in theory only. Failure to cooperate can result in reputational harm among the public and stockholders, massive fines or even indictment of the company – an event that many company counsel and their boards fear could be a mortal blow.[1]
