For most corporate counsel, preparing for a search warrant is pretty low on their list of priorities. After all, search warrants are used against drug dealers, fraudsters and their ilk; a company would really have to be doing something seriously criminal to trigger a search warrant, right?
If a company is a regulated industry or takes federal dollars in some manner, it is at risk. And it doesn’t take much. The mere allegation of wrongdoing by a sufficiently senior whistleblower can be enough for a prosecutor to convince a judge to issue a search warrant. And even if the government eventually realizes there is no merit to those allegations, that won’t come until long after significant legal expense, public relations damage and business disruption. Worse still, once the government starts investigating, nothing stops them from discovering sources of liability unrelated to the original allegations.
Fortunately, there are several steps in-house counsel can take to protect their company in the event of a search:
1. Take preventative measures
Prevention starts with a strong compliance program that fits both the company and industry. In particular, there must be an outlet for employees to report concerns without fear of reprisal. In most corporate criminal cases, the information supporting a search warrant is a company insider or an ex-employee. Well-intended employees who have an internal option to report concerns may use it instead of reporting to authorities first. This gives the company a chance to correct a misunderstanding or, if a problem does exist, to take corrective action.
If an investigation is already underway, counsel should maintain an ongoing dialogue with the government. That dialogue can garner important case information and allay concerns about document destruction or other circumstances that could lead to a later search warrant. Quick debriefings of any interviewed employees and an appropriate internal investigation can also reveal information important to heading off a warrant and inform future discussions with the government.
2. Develop a plan
Execution of a search warrant is stressful—it’s unannounced, armed agents arrive, employees are frightened—so the time to develop the plan is not when there are agents in the lobby.
A good plan must indicate who should accept service of the search warrant, who should be first contacted, who will be the company’s point person with law enforcement, and who will handle media inquiries or issue press statements. While inside counsel is often the first person contacted, back-up personnel must be appointed to fill that role if counsel is not on-site or otherwise unavailable.
That plan should also set out company policy as to which employees should remain at the scene and which should depart. Most searches at corporate offices take many hours. In general, the fewer employees who need to remain for business functions the better.
Agents always use the shock of a search to their advantage, particularly to interview unsuspecting employees. Most employees don’t know their rights, so they should be educated that they have the right not to speak to agents at all or to set interview parameters (i.e., only after speaking to counsel or a supervisor, only on certain subjects, etc.). Care must be taken never to suggest that the company is encouraging employees not to speak to government agents—allegations of obstruction of justice could follow—but employees must know that it is their individual choice.
Likewise, employees should know that agents cannot force them to remain at the scene unless they are under arrest or being detained. Employees should be trained to ask clear questions so there can be no post-hoc rationalizations by law enforcement: “I want to leave now. Am I free to leave? Am I under arrest? Are you detaining me here?” A little advance education can empower employees so they are not—intentionally or unintentionally—intimidated by agents into forgoing their rights.
4. Minimizing business disruption
For most companies, at the time of a search warrant, legal concerns take a backseat to business issues. Counsel (or the other point of contact) should immediately address business-disruption issues with the lead agent or, better, the lead prosecutor. They may be able to negotiate certain aspects of the search, such as whether computers can be imaged on-site rather than removed and whether documents can be copied in lieu of seizing originals. At a minimum, counsel should try to copy critical documents before they leave with the agents. Finally, tracking the items seized—don’t rely on the government’s inventory—can help identify items that need to be quickly retrieved for business purposes.
5. Follow up
Finally, after a search, counsel must quickly take stock of what was seized, debrief any interviewed employees, and plan next steps. Memories fade fast, so it is critical to gather as much information while it’s fresh in employees’ minds. At the same time, counsel should again initiate a dialogue with prosecutors, particularly about practical issues such as return of property, copying seized records, and ensuring business operations continue. While it is premature to discuss the merits of the case or issues not yet fully investigated, the work toward getting back to “business as usual” cannot begin soon enough.