In Congressional Investigations, the Game is Played in the Hearing Room, But the Score is Kept Outside
Rafi Prober has an apt description of what it’s like trying to help corporate clients navigate investigations on Capitol Hill.
“Quite often the game is played in the room, in a congressional hearing room, but the score is kept outside,” Prober told me this month.
Last week, Prober, who co-leads congressional investigations practice at Simpson Thacher & Bartlett, was among the specialists who walked Litigation Daily through how the rules of engagement on the Hill differ from the sorts of depositions and hearings that litigators are accustomed to. Today we’re going to explore the idea that what happens on the Hill doesn't necessarily stay on the Hill. Testimony and documents produced to Congress can migrate into civil litigation or attract the attention of prosecutors and regulators. And lawyers responding to congressional inquiries have to make decisions with all of those potential audiences in mind.
That means lawyers need to take what Prober called a “360 degree view of the entire field.” What happens before Congress needs to be managed carefully, in coordination with parallel litigation or regulatory matters, as well as the company’s communications and government affairs efforts.
“If you lose sight of all those other pieces, they can actually be of more consequence and import down the road,” Prober said.
Ed O'Callaghan, co-chair of the white collar defense and investigations practice at Cahill Gordon & Reindel and chair of its congressional investigations practice, agreed with Prober’s formulation of the score being kept outside the hearing room when I put it to him last week.
O'Callaghan said the hearing can sometimes lead to “even more significant ramifications than the hearing itself,” including reputational concerns, potential hits to shareholder confidence, further congressional scrutiny and interest from enforcement agencies. He said he’s seen an uptick in threats, at least, of criminal referrals to DOJ for either failure to cooperate with an investigation or alleged perjury before Congress.
When Congress and Litigation Collide
For litigators, one of the most consequential places where the score can be kept is in court.
Giancarlo Pellegrini, who joined Squire Patton Boggs this year after seven years working on the House side of Capitol Hill, said he's seen the intersection between Congress and civil litigation work in both directions.
There may not be a litigation problem when a congressional investigation begins. In that situation, Pellegrini said, counsel needs to consider whether “there’s going to be one after this document or this interview.”
But the reverse can also happen where there is existing, potentially existential, litigation out there that the company is coming at with a very tactical approach. “All of a sudden they’re getting yanked into this other forum where they’re a little bit less protected in terms of what they can try not to share,” Pellegrini said. “But whatever they say is going to come right back into their pre-existing litigation.”
At that point, he said, the issue is no longer theoretical: “This problem is live. It’s today. We’ve got to all sit down this morning and figure out how to avoid creating a new problem.”
O'Callaghan told me lawyers must account for the possibility that sworn testimony before Congress could be leveraged in civil litigation that's already “percolating.”
And it isn't just testimony that can travel.
“We always counsel clients that whatever we’re producing to staff in the course of a congressional inquiry is something that they should expect can be circulated publicly,” O'Callaghan said.
Pellegrini similarly called eventual public disclosure of materials produced to Congress “a healthy assumption.”
“I have seen situations where people are astonished that that happened, and they’re furious,” he said. “Maybe just understanding that that is plausible, if not likely, is a healthier place to be.”
And public disclosure isn’t the end of the potential chain reaction.
O'Callaghan, who has worked in a variety of roles in the Department of Justice, said testimony or a document that surfaces through a congressional investigation could attract DOJ's interest and serve “as a roadmap” for its own investigation.
When I asked O'Callaghan how a prosecutor views documents or statements that first surface through Congress, his answer was concise.
“It’s fair game,” he said.
That doesn't mean congressional staff can simply hand prosecutors something and automatically trigger a grand-jury investigation, O'Callaghan cautioned. But if DOJ receives apparently authentic documents and sees enough to suggest a potential violation of federal criminal law, prosecutors can turn to their own subpoena authority to pursue the evidence.
Look Beyond the Letter
That all helps explain why responding to the congressional letter immediately in front of you may be the wrong way to think about the problem.
Karen Christian, Prober’s co-leader of the congressional investigations practice at Simpson Thacher and a veteran of Capitol Hill, told me counsel sometimes needs to take a step back after all the immediate focus on the initial letter.
“You almost have to back up and make sure you understand all the different spokes coming into it,” Christian said.
Otherwise, she said, someone might give a response without taking another issue into account and leave their answer open to misinterpretation.
That 360-degree view also requires more than one kind of expertise.
Pellegrini told me that where a tangible litigation risk exists, litigators must be involved from the start. But he quickly broadened that prescription.
“Litigation needs to be involved from the start, but so does everybody else,” he said, particularly pointing to public policy and congressional investigation specialists on top of class action litigators.
O'Callaghan described a similar approach at Cahill, where lawyers with congressional and Justice Department experience work together. Depending on the investigation and client, he said, that can also mean working with government-affairs and communications professionals. When a public-company CEO may be called to testify, communications professionals can participate alongside the lawyers during mock hearings.
There isn't necessarily a simple answer about which forum should drive the strategy when litigation and congressional scrutiny collide. Pellegrini said that depends on the relative stakes.
Existential litigation might tilt the scales in one direction. Being the central target of a congressional investigation with members from both parties focused on the company may tilt the scales the other. But if you're one of 30 companies receiving essentially the same congressional letter, he said, there may be room to work through the request on a timeline that doesn't wind up “wreaking havoc on our litigation.”
Recognizing potential downstream consequences, however, does not mean that companies should simply stonewall Congress.
O'Callaghan described the preferred approach as “productive cooperation,” which can mean talking with congressional staff about what they're actually seeking and trying to narrow a production accordingly.
“What are you really trying to get at here?” O'Callaghan said of the conversation counsel can have with staff. The idea is to produce what the staff say they need rather than turning over a large cache of material where “it’s just impossible to keep a handle on.”
The same need for discipline applies when it comes time for someone to testify.
O'Callaghan said witnesses must be prepared to answer the question actually asked and stay within their personal knowledge, even if that sometimes means saying they don't know or don't recall.
“The worst thing you can do is actually go over your skis and answer a question that you really don’t understand,” he said. “That’s inevitably going to lead to a dozen more questions that, … when you break it down, you don’t know the answer to.”
For a CEO accustomed to being the person expected to have all the answers, O'Callaghan acknowledged that possibility can be difficult. But once a witness strays beyond what they actually know, he said, “you open the door, and so here we are.”
O'Callaghan said perhaps one of the biggest mistakes a company can make when a congressional inquiry arrives is convincing itself that whatever happens on Capitol Hill will stay there. He described that mistake as failing to “triage” how events on the Hill can “roll down into other areas of inquiry.”
Clients' initial reaction, he said, can sometimes be: “Oh, this was nothing.” Or: “This had a lifespan of two weeks in our complicated business,” and it's going to blow over.
If an issue has gotten enough attention for a congressional committee or a member to demand documents, O'Callaghan said that's probably not a safe assumption.
“It’s congressional. It’s not a grand jury subpoena,” he said. “It could lead to that, though, and there’s all this other potential risk exposure that you have to consider.”
