For organizations under investigation by government regulators or prosecutors, it is a matter of necessity to prepare a litigation strategy for both civil and criminal proceedings, often at both the state and federal level, and often against both private and public actors. Frequently, federal regulatory bodies, such as the SEC or EPA, team up with the Justice Department and use civil and criminal proceedings in a pincer movement to squeeze pleas and settlements from targeted organizations and their employees. For any organization facing such a threat, it is imperative that counsel grasp the Fifth Amendment's effect on the proceedings.
First, the basics: The Fifth Amendment provides citizens with protection from self-incrimination. Organizations do not have the right to invoke the Fifth Amendment privilege, but their employees do as long as they are not acting in a custodial capacity for the organization. The privilege applies in both criminal and civil proceedings. However, an important difference exists. While no adverse inference may be drawn against a criminal defendant who invokes the privilege and chooses to remain silent, the same is not true in the civil context. Some courts will allow an adverse inference against a corporation when its employee asserts the Fifth Amendment. Some courts have even allowed an adverse inference when a corporation's former employee asserts the Fifth Amendment. The effect of this legal framework is that organizations facing parallel proceedings due to their employees' alleged malfeasance frequently face the following dilemma: In light of actual or threatened criminal proceedings, the organization's employees invoke the Fifth Amendment privilege in the civil proceedings, which sometimes creates an adverse inference against the organization in the civil context and makes it appear as though the organization is being uncooperative in the criminal proceedings.