Editor: Michele, I understand that in 2002 you were ranked first by Washingtonian magazine among Washington's top 75 lawyers. Were there cases or other activities in which you were involved that brought you to the public's attention?
Roberts: The case that attracted the magazine's interest was a trial involving the spokesperson for Kenneth Starr, the independent counsel. He was facing contempt charges for allegedly leaking information. That case generated a lot of media interest. I guess the magazine was also impressed by the number of cases I have handled. As you might guess, white-collar practitioners are very busy these days.
Editor: Is your work limited to criminal matters or do you get involved in civil proceedings as well?
Roberts: The good news is that my practice is varied. I am considered a white-collar criminal lawyer, but I am a trial lawyer, so it is not unusual for me to be involved in civil litigation. My practice is about 50 percent civil, including SEC proceedings.
Editor: What is the practical effect on the Federal Organizational Sentencing Guidelines of the U.S. Supreme Court's decision in the Booker case?
Roberts: Under Booker judges are still required to consider the guidelines, but they are permitted to exercise their judgment as to the reasonableness of the sentence under the particular circumstances of each case.
The factors that the guidelines consider important in determining a sentence for an organization are the same as those that any sentencing court is going to look at when imposing a sentence. A compliance program has always been one of the factors a judge will consider significant when making a decision on sentencing.
Editor: What is the impact of the Booker decision on state courts?
Roberts: Most states operated under a guidelines system, both mandatory and voluntary. In Blakley, the U.S. Supreme Court, in connection with a mandatory sentencing guidelines scheme in the state of Washington, ruled that a judge could not rely on facts that had not been found by a jury or admitted by the defendant in determining a sentence. The mandatory sentencing scheme in that case, as in many other states, was similar to the Federal Sentencing Guidelines. The states have had to reform their sentencing guidelines to comply with both the Blakley and Booker decisions.
Editor: Would you then counsel a client to follow the Guidelines from the standpoint of a prosecution at the federal or state level?
Roberts: Given the guidelines and the huge growth in corporate prosecutions as a result of Enron, any attorney representing an organization should immediately suggest to a company that it have a compliance program. There was a time when corporate prosecutions were so rare that people were lazy and assumed that they were not at substantial risk.
Editor: Should directors be alert to the Guidelines?
Roberts: Yes. It is important for any director to understand the kinds of factors that may increase his or her company's exposure or liability. Familiarity with the Guidelines lets everyone know what is important - the kinds of things that a prosecutor will look for. They are also a big help to me as counsel in convincing a director or officer of the importance of having a compliance program in place.
Editor: What impact did the corporate scandals in 2000 have on corporate America?
Roberts: After seeing the result for Arthur Andersen and Enron, companies have become more cautious in their activities. Certainly, Sarbanes-Oxley and the Guidelines have helped. To the extent that they require more controls to be in place, it does reduce the frequency of misconduct. As a result, I would imagine that it has reduced the number of class action suits that would otherwise have been brought.
Editor: Let's look at some of the criteria incorporated in the Guidelines. How important is "Tone at the top?"
Roberts: It is not as important as actual behavior. Uttering the right mantra is great, but if at the end of the day there is no compliance program or a very weak one, mere tone is not going to take you far when facing a sentencing judge.
Editor: What about "risk assessments?"
Roberts: Companies are spending a lot of money on risk assessment. My work includes helping to identify areas of vulnerability and appropriate tools to address them. This can be an expensive process, but it would be foolish not to undertake it. You do not want to find yourself in the position of having to explain why you did not put a compliance program in place that could have prevented a problem.
Editor: How significant is the addition of "Ethics" to the Guideline provision with respect to employee compliance training programs?
Roberts: The ethics piece is more subjective. "Thou shall not steal" should be a familiar motto for every employee in the company. How much more you want to impose on people is more challenging. One employee's ethical bent may be more stringent than another's. It is more challenging because it is not as black and white as other things in the Guidelines.
Editor: How important is it to show a history of imposing sanctions on employees who violate the requirements of a compliance program?
Roberts: Imposing sanctions on employees responsible for compliance violations is necessary to show that a compliance program is not mere window dressing.
If a company is faced with the possibility of prosecution, the bottom line is that companies want to survive and will cooperate with prosecutors to the extent necessary. We have a presumption of innocence in the legal system, but a company is not required to make that presumption. As a practical matter a company does not have the luxury of being able to wait until a conviction of the individuals before terminating them.
Editor: What about the concept of prompt reporting and disclosure of violations?
Roberts: While there may be collateral consequences from that decision, including the risk, for example, of, significant shareholder lawsuits, a company may be better off disclosing wrongdoing as early as possible. Both the federal sentencing guidelines and the Department of Justice view prompt disclosure as mitigating factors in the imposition of sentence and decision to indict, respectively.
Editor: What about cooperation with regulators and prosecutors when violations are uncovered?
Roberts: Unlike an individual, a company, especially a publicly traded one, has a limited ability to fight because the mere fact of an indictment can be life-threatening. Any indictment can have a negative impact on share value and may scare lenders away. In order to prevent this result, companies are frequently willing to do just about anything to avoid indictment. That is why it is important to understand the considerations that go into a Justice Department decision not to indict. For example, notwithstanding the McNulty memo, it can reasonably be assumed that the DOJ will continue to frown upon companies that advance legal fees for employees believed to have engaged in wrongdoing.
Editor: How important is it to have effective policies with respect to e-discovery?
Roberts: It is of critical importance. Under the new federal e-discovery rules, counsel are required to identify potentially relevant data that should be produced with respect to claims or defenses. In the event of litigation, a company is usually in a better posture if it can show that its policy has been to retain data that may be relevant, even if it could otherwise have been purged consistent with the company's retention policy. Counsel should work with their clients to develop appropriate policies with respect to data that is discoverable. Counsel also need to be well-versed in the company's data retention system so that they can address discovery issues that are likely to arise in court.
E-discovery is now more expensive from a company's perspective because the information collected needs to be retained and reviewed for privilege and relevance. The cost of litigation in terms of discovery has quadrupled. There are lots of lawyers who are now using IT experts because of the inevitable discovery fight. If an opponent is insisting on a search that counsel knows will cost the company hundreds of thousands of dollars, it's helpful to have an expert come to court able to persuade a judge that the request is a huge burden because of the expense.
Editor: Are you called upon to provide advice with respect to email policies?
Roberts: Each company must devise a policy with respect to email that works for its particular needs. It is a tough problem, but one that needs to be addressed. James B. Comey, the former Deputy Attorney General, described emails as the greatest tool that prosecutors have ever had. He is right. In just about every major criminal prosecution, emails have been horrific. They are not going away, and the best way to deal with them is to train employees to use email appropriately.
Editor: Given the McNulty Memo, to what extent can reliance be placed on the protection of the privilege?
Roberts: My guess is that most white-collar lawyers are disappointed with the McNulty Memo. It is an improvement on the Thompson Memo in that responsibility for approving requests for a waiver has now been centralized. However, the bottom line and what the client really wants to know is whether waiving the privilege is something that will give the client a better chance of not being indicted. The answer remains "yes."
There has been some talk about amending the Federal Rules so that a waiver would be limited to the government investigators who requested the waiver. This could serve to protect the company from plaintiffs' lawyers who would want to access the privileged information.
Editor: Can the information developed by investigators be protected?
Roberts: Investigations should be conducted by counsel, which means that they are privileged. The problem is not whether the information can remain privileged; the problem is that there is every incentive for a corporate client threatened with prosecution to waive the privilege.
Editor: Do you feel, based on your experience, that a strong general counsel equipped with the staff and tools required to play that role not only can make a difference in judicial and sentencing outcomes, but also can play a significant role in preventing compliance failures?
Roberts: It is a very difficult task being in-house counsel because your client is the company. However, as a practical matter the people corporate counsel interact with are directors and managers, so there may be a thin line that counsel has to walk. Regardless, it is always counsel's job to protect the company. In-house counsel also has to deal with the notion of being perceived as a police officer by those running the company. That could lead to a chilling effect on honest dialogue. To avoid this result, some general counsel rely heavily on outside counsel to play the police role.
To best protect a company, a general counsel should be involved in the design and administration of his company's compliance program. Counsel should closely track investigations of similar companies and be familiar with the kinds of activities that state attorneys general, U.S. attorneys and plaintiffs' counsel are focusing on and work with the company to be sure that controls are in place that will avoid those issues. Counsel should have the staff, tools (including access to outside counsel) and status to carry out these responsibilities. It has been my experience that judges, regulators and prosecutors are less anxious to do damage to the company if there is a system that is designed to allow general counsel to uncover and address potential problems before a violation occurs.
Published March 1, 2007.
