Washington Lawyer - January/February 2019 - 34

TAKING THE STAND
Even with all these countermeasures, a monitor may well run up against resistance or obfuscation within the company. Despite this, the monitor must insist
upon interviewing the necessary employees and independently viewing
records relevant to the matter being investigated; accepting management's
word isn't enough. It helps if the lawyers have experience with the specific
industry or enterprise they are overseeing. If it's a pharmaceutical company, the
monitor should be thoroughly familiar with the regulatory process and issues
related to approved and off-label marketing practices, generic and non-generic
pricing structures, and Medicaid reimbursement. A monitor appointed to
oversee a labor union should probably have experience as a prosecutor
investigating labor racketeering.
After some criticism in the mid-2000s over how monitors were appointed,
Justice Department officials put out a series of memoranda making the process
more transparent and allowing corporate defendants to object to monitorships
that would be too onerous or expensive.

SCOPE OF THE WORK
Under current Justice Department rules, monitors have clearly defined roles and
duties. Those include:
* Independence. The monitor isn't an employee of the company or the
government.
* Oversight. The monitor must regularly ensure the company is complying
with the terms of the settlement agreement.
* Scope. The monitor's role should be limited to ensuring the company
doesn't engage in further misconduct.
* Reporting. All three parties - the monitor, the government, and the
company - should communicate freely and the monitor should make
periodic written reports.
* Implementation. The company isn't required to implement the monitor's
recommendations, but the government must be notified if it doesn't. Refusal
might signal the company isn't complying with the terms of its settlement.
*
*
*
*

* Recurrence. The settlement agreement should specify which misconduct the
monitor must report immediately to the government, but the monitor should
also have discretion to report other types of misconduct.

Subject-matter expertise;
Trusted colleagues and associates worldwide;
Translation services; and
Forensic accounting team.

Of these, the last is frequently essential. The monitor must not only be able to
pull internal financial statements but have access to forensic accountants who
can detect the signs of fraud, money laundering, and other improper activities.
The attorneys in charge of a monitorship frequently have background experience as prosecutors and apply the same type of reasoning and investigative
instincts as a government lawyer investigating a crime. They know which
questions to ask and how to get answers.
Forensic accountants, on the other hand, are trained to identify suspicious
patterns such as abnormalities in spending and revenue trends or bookkeeping
gamesmanship. Their role is to help the monitor uncover and understand the
company's finances, which often provide the first signs of wrongdoing.
The requirement for complete independence also dictates practices that are
foreign to any sort of normal attorney-client relationship. Team members
should have counterintelligence training to thwart efforts to infiltrate and influence their monitoring efforts. There should be redundancies in vital functions
and safe reporting mechanisms. On long-running assignments, it's also a good
idea to switch team members around on a regular basis to reduce the risk of
fraternization. Here, the challenge is balancing the need for independence with
the benefits of gaining expertise with how the business operates.
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JANUARY/FEBRUARY 2019

* Duration. The monitorship should last long enough to solve the problems
identified in the settlement. The agreement should provide the government
the power to extend the monitorship or end it early.
When a company finds itself in the crosshairs of a government investigation,
sometimes the best strategy is to start negotiating. And the end result of those
negotiations often will include a corporate monitor. For the relationship to
work, both sides must understand the role of the monitor and the stakes for
failing to maintain openness and transparency for the entire time the monitor
is in place.
When it works, it can be an extraordinarily effective mechanism for change -
if the company is willing to accept an independent agent in its midst.
Michael A. Battle is a partner in Barnes & Thornburg LLP's Washington, D.C., office
and a member of the firm's litigation department. His practice focuses on commercial
and civil litigation, white collar criminal matters, and appeals.
Karen A. McGee is a partner in Barnes & Thornburg LLP's Washington, D.C., office and
a member of the firm's international trade practice group and the corporate and
intellectual property departments. She concentrates her practice in the international
trade area.

http://www.dcbar.org/

Washington Lawyer - January/February 2019

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