Protecting And Defending
Your Rights And Freedoms
  1. Home
  2.  | 
  3. White Collar Crimes
  4.  | Why Executives Need Independent Counsel

Why Executives Need Independent Counsel

by | Apr 14, 2020 | White Collar Crimes

Corporate executives often mistakenly assume corporate counsel will represent their interests in the event of a federal investigation or lawsuit. However, the reality is that corporate counsel represents only the corporation and not the executives. Typically, corporations will try to blame individual executives to escape or mitigate corporate exposure when serious trouble with the federal government arises.

This article isn’t intended to inspire fear and mistrust among executives. Rather, my goal is to highlight a frequently misunderstood situation and remind executives to remain vigilant and to proactively take steps to protect themselves during corporate investigations.

In this article, I’ll explain:

  • The role of corporate counsel and where their allegiance lies
  • When and why executives might need to hire their own independent counsel
  • Industries and areas of law that are “high-risk” for investigations and lawsuits, and
  • How independent white-collar defense attorneys can help executives protect themselves

The Role of Corporate Counsel

It is essential to clearly understand the role of the corporate counsel and why executives shouldn’t believe that such an attorney will protect them in an internal or federal investigation.

It’s important to emphasize again that corporate counsel only represents an organization and not its executives. Their job is to defend the corporation and eliminate or minimize a federal investigation’s impact on it. The ultimate goal is to take steps so that the company can continue to operate without serious repercussions. This means that corporations facing the spectre of a federal grand jury investigation and indictment are highly incentivized to blame executives for any wrongdoing rather than admit systemic illegal corporate conduct.

In this situation, corporate interests and an executive’s personal interests are pitted against one another — creating considerable tension in times of legal upheaval.

Unfortunately, this legal strategy doesn’t always reflect the way corporate decisions are made. Most executives do not make decisions in a vacuum. Instead, they follow long-standing internal policies and often make decisions as part of a group. Likewise, few corporations permit executives to make decisions without some form of accountability (or at least running a potential decision by others).

Bottom line: During serious legal investigations, corporate counsel must focus on representing the needs of the company, even if that means throwing an executive “under the bus.” This is not necessarily a malicious act, but a matter of business survival. After all, in-house counsel represents the corporation — not individual employees.

Executives Need to Hire Their Own Independent Attorney

Many executives are leaders who value teamwork. They make decisions as part of a team and always try to serve the best interests of other employees, consumers, and shareholders. Most executives have been with their companies for decades, forming trusting personal relationships with their colleagues. But close friendships often take a backseat when companies find themselves in legal hot water.

Because executives have decision-making power and authority, mistakes that occur lower along the chain of command can come back to “bite” higher level employees, even if they weren’t personally or directly involved. Moreover, executive decisions made in the regular course of business (and in the best interest of the corporation) can sometimes result in government investigations. When this happens, most in-house counsel scramble to protect the company and find a suitable scapegoat to blame for any mistakes.

This is precisely why executives need an outside attorney who is completely independent – with no allegiances to the corporate employer.

Of course, many executives trust the recommendations of in-house counsel (partly because they have developed long-standing friendships with their fellow colleagues). This trust can be problematic, however. To put it simply, there is a bit of a “good ole boy” system when it comes to in-house counsel and private white-collar defense attorneys.

In many cases where a corporation is facing a serious lawsuit, in-house counsel will refer executives to a “private” attorney. Usually, this is an attorney that in-house counsel knows on a personal basis. Those defense attorneys usually do work for corporations (in addition to executives) and aren’t entirely independent. Private attorneys with “corporate connections” are incentivized to avoid any legal action that could potentially ruin their relationship with in-house counsel or the corporation as a whole.

Here’s a real example: A former client of mine was originally referred to the son-in-law of the attorney who was hired to represent the company in an internal investigation into potential Foreign Corrupt Practices Act (FCPA) violations. My client was suspicious that this recommendation was motivated by the corporation’s desire to throw him “under the bus” by hand-picking an attorney they believed would not vigorously fight against his father-in-law who represented the company. When he retained me instead of going with the pre-selected attorney, the corporation dug their feet in. They resisted sharing with me any evidence including evidence that I ultimately obtained elsewhere that exonerated my client. As it turned out, the corporation was in fact going to throw the executive “under the bus” for actions of other employees that he was unaware of. By reviewing thousands of documents, we uncovered emails that implicated other employees in violations of the FCPA.

In the end, my client was the only executive not charged by the SEC. Had he chosen to work with the hand-picked attorney he may have faced an entirely different and unjust outcome.

Areas Subjected to Increased Scrutiny

Most people do not plan to be sued or wind up at the center of a major legal battle (let alone those that could land them in prison). For high-level corporate executives, this is especially poignant. Few people expect that years of hard work and success will be “rewarded” with such life-shattering consequences, yet it does happen (and probably more often than most of us would like to believe).

With more than 35 years in the field of white-collar defense, it’s easy to identify emerging patterns. Different administrations and current events prioritize the prosecution of certain federal crimes. Today, the government is incentivized to pursue cases that are likely to yield financial rewards through fines or damages for fraud involving the government.

Right now, the federal government is aggressively pursuing specific types of cases, making certain industries especially “high-risk” for executives. The following four areas are priorities for government investigation: Coronavirus fraud, foreign corrupt practices, healthcare fraud, whistleblower complaints, and tax fraud or evasion.

Coronavirus Fraud

The pandemic outbreak of COVID-19 has put fraud cases associated with it at the top of the Department of Justice’s prosecution priority list. Each U.S Attorney’s Office has been instructed to designate a Coronavirus Fraud Coordinator. All fraud tipsters are being referred to the National Center for Disaster Fraud (NCDF) hotline (1-866-720-5721) or by e-mailing the NCDF at [email protected]. These initiatives signal that DOJ is going to be aggressive against all types of alleged fraud related to COVID-19 including all money distributed in the $2.2 trillion relief package.

Foreign Corrupt Practices Act Litigation

In some countries, making payments to a foreign official is a normal part of doing business. The United States, on the other hand, considers this bribery. The Foreign Corrupt Practices Act (FCPA) strictly regulates business practices and payments between U.S. companies and foreign officials. Specifically, the FCPA prohibits American corporations and individuals from paying foreign officials to obtain or maintain business. Any American corporations that do business on foreign soil need to be especially wary of FCPA regulations, and executives in particular need to protect themselves from potential investigations.

A lot of companies facing FCPA violations rely on government work for income. Since a FCPA violation can lead to sanctions that prohibit a company from ever working with the government again, companies tend to do everything to avoid such a charge. Because of this, companies are highly motivated to conduct their own investigation and turn all evidence over to the government: protecting the company in exchange for exposing executives.

Healthcare Litigation

The healthcare industry has also been a frequent target of federal prosecutions. Recently, there has been increased investigation of “pill mills” run by doctors who “over-prescribe” opioids.

However, Medicare and health care fraud allegations can involve many different types of conduct including:

  • using incorrect CPT codes to bill for more expensive procedures than those actually rendered (“upcoding”)
  • unbundling or charging medical procedures separately when they should be charged together
  • billing for services not rendered
  • performing unnecessary medical procedures to receive insurance payments
  • misrepresenting elective surgeries as medically necessary; or
  • paying or receiving kickbacks to induce referrals of patients.
  • Healthcare parent companies are highly incentivized to pin the blame on employees because sanctions could lead to their exclusion from Medicare and Medicaid programs. Sometimes fraud can be difficult to prove since prosecutors have the burden of proving beyond a reasonable doubt that the defendant intended to commit fraud. An experienced white-collar defense attorney can help healthcare executives vigorously challenge allegations that they intended to commit healthcare fraud.

    Whistleblower Suits

    Government agencies including the IRS, SEC, FTC, and DOJ have whistleblower programs that encourage individuals to report perceived government fraud. Successful whistleblowers may be eligible for a financial reward which provides a strong incentive to file complaints. In some cases, disgruntled employees try to report violations with little merit simply trying to get a big payday for themselves.

    Given the breadth of federal conspiracy law, there is a very real possibility that whistleblowers could incriminate themselves in a criminal case by filing a complaint.

    If you feel a need to report corporate fraud or you become involved in an investigation, you’ll want to enlist the help of an experienced private attorney who’s not affiliated with the corporation. In situations where the government decides a complaint is worth pursuing, investigations can be extensive, time-consuming, and costly. The government has nearly limitless resources at their disposal and you’ll need independent counsel who’s capable of launching their own thorough investigation to defend you properly.

    Tax Litigation

    Tax law is another high-risk prosecution area. Hundreds of new special agents are aggressively pursuing cases for tax evasion, preparing and filing false and fraudulent tax returns, the failure to declare offshore bank accounts, the use of sham offshore trusts, and failure to file tax returns.

    Uncovering and pursuing tax violations is the priority of the Internal Revenue Service and can be a super high-risk for executives. The Internal Revenue Service is highly motivated to prosecute and collect back-taxes at both the personal and business level.

    How an Independent White-Collar Defense Attorney Can Help

    Most white-collar crimes are prosecuted by Federal agencies, with nearly limitless resources at their disposal. Virtually all federal offenses can lead to potential prison time, and, unlike state sentences that allow for early parole, federal prison sentences are usually served in their entirety. For this reason, white-collar cases can be some of the most expensive, time-consuming, and frightening cases out there.

    For defense attorneys, the over-arching goal in a white-collar case is to prevent the government from filing an indictment. This requires hiring a white-collar defense attorney to be proactive before an indictment by conducting a thorough investigation of the evidence to protect you to the fullest extent possible. Only with an independent investigation can an experienced attorney figure out exactly what happened or if there is any merit to the allegations under investigation.

    An attorney who isn’t zealously investigating the usually complicated facts on behalf of their client can easily overlook or miss evidence that provide reasonable explanations for allegedly illegal behavior. Most data that has to be reviewed is electronically-stored-information (ESI) such as emails and text messages. To be thorough, multi-relational databases must be created that can be used to create timelines and uncover patterns. This work requires a tech-savvy and meticulous attorney.

    As a former federal prosecutor and longtime white-collar defense attorney, I am familiar with the investigative tactics and legal strategies the government employs in these types of cases. The first thing I do is assemble, catalogue, and analyze all available evidence to poke holes in the government’s theory of the case. Knowing what the government is required to prove, I’m able to identify weaknesses and create a strategic plan for moving forward.

    If you’re interested in learning more about my practice and my track record, peruse my website ( for more information and keep a close eye on my blog for more topics. In this way, I endeavor to provide executives with free legal information on the most topical and relevant areas of law. If you find yourself in need of an experienced, independent white-collar defense attorney, contact my office today.