Editor: What types of civil investigations are handled by the U.S. Department of Justice (DOJ)? Who are the major players in large corporations with whom you deal?
Stanton: DOJ investigates everything from antitrust violations to civil rights abuses to financial fraud. In FY12 alone, DOJ, for example, secured $4.9 billion in settlements and judgments in civil cases involving fraud against the government. There are also other government agencies that have independent civil regulatory enforcement capabilities, such as the SEC and the FTC, and the DOJ coordinates very closely with them on certain types of investigations.
Given the increase in digital information and data, electronic evidence plays a tremendous role in investigations. It is valuable for us to be able to interact with a variety of individuals throughout a company in an investigation – from the C-suite (CEO, CIO, CFO) to IT system directors to mid-level managers. Because electronic information can play such a key part, one of our initial goals is to get a sense of where potential evidence may be and how to have it produced as quickly as possible. As a result, company players include individuals with a very good grasp of the company’s technical systems and data. During investigations, it’s important to have factual information about a claim but also critical to know where information resides and how it is managed within the company’s technology infrastructure.
Editor: How is technology changing the investigation process?
Stanton: Technology is changing investigations on many fronts. Not only are there now numerous investigative tools at the government’s disposal but, on the corporate side, the variety of information – and sources of information – being generated is growing exponentially. There are innovative processes and technologies that companies are developing for their own business missions and purposes. As a result, data and documents that may become relevant to an investigation come in many shapes and forms – from data stored on tablets to information stored in the cloud. Methods of corporate communication, internally and externally, are also moving away from email and taking on other forms like instant messaging and using social media. While these technologies are helpful for business purposes, I have also seen them present great challenges for companies when an investigation arises. Companies have to have good information management, including knowing who has access to information, and where and in what form the information is being generated and stored. Otherwise, it gets complicated when dealing with investigations or lawsuits, which require the data to be extracted and used in a different context.
So, technology is changing the substance and nature of evidence pertinent to an investigation, and it affects a company's ability to respond, for example, to an investigation. Effective information management enables all parties to move quickly and successfully to a close. Technology that is not proactively structured to facilitate a company‘s collection or preservation of information may actually become a hindrance and cost for that company.
Technology is also changing the investigation and analysis process itself. On the civil side, we are focusing on how companies transmit information to the DOJ, including the format of productions, so we can use a broad range of advanced search and analysis tools to speed the process along. It is quite an exciting time when you consider how technological innovation is really changing what we do.
Editor: What is the level of sensitivity from the DOJ’s perspective as to controlling costs for the benefit of all concerned?
Stanton: We are trying more to be sensitive to cost; however, such concerns must be balanced against our core mission to protect the American public. It is not in our interest to have investigations drive companies out of business, particularly if they are providing a valuable service for the American public. At the same time, we have our own goals to achieve, and we investigate for a reason. We know there are budget and cost constraints, and, in certain respects, we are open to discussions with companies about these issues.
The best strategy is for a company to tell us – in nuts-and-bolts terms – the costs and burdens they anticipate. For instance, they might explain that responding to the scope of a subpoena will have “X” impact on normal business practice and will lead to “Y” amount of costs, and then offer how they can efficiently get us information that is responsive to our requests. We want proportionality; however, we will not be able to disclose the details of what and why we are investigating. Thus, the process may not always seem proportional from a company’s standpoint.
Editor: Tell us about any recent guidance from the DOJ relating to e-discovery.
Stanton: Over the last couple of years, the DOJ has done a lot of outreach to the legal and corporate communities through conferences like LegalTech, Masters Conference and others. I bring my own experiences from having worked in the private sector. We want to understand the communities’ perspectives as we develop our strategic philosophies and approaches.
A number of divisions at the Department have taken concrete steps. For example, my colleagues in the Antitrust Division have published discovery protocols for second requests, and they have a robust and strategic way of engaging companies. On the criminal side, criminal discovery protocols were established for matters post-indictment. In the general civil context, we’ve been working across the Department to develop standard approaches in certain cases for engaging with the other side. These approaches help ensure that at the beginning of a case, for example, everyone clearly understands what the company needs to preserve and collect.
It is important to recognize that informational needs vary across government agencies; what the SEC collects may be different from what the DOJ seeks. We try to be clear in the early stages – in a subpoena, for example – as to what the acceptable format for document preservation and collection is and what metadata fields and information a company must retain.
Editor: Enacted in 2002, 18 USC § 1519 pertains to the “destruction, alteration, or falsification of records in federal investigations and bankruptcy.” Are there any unique considerations in applying this statute to today’s digital world?
Stanton: Certain types of preservation obligations are unique in an investigative context. Application of this statute, for instance, is separate and apart from the case law that has developed around the triggering of a litigation hold – i.e., the reasonable anticipation of litigation.
The key here is for companies to understand the different sources of information, how the information is being managed, when to launch a preservation effort for that information, and then how to engage the government. At the very beginning of a case, there’s always discussion about what information is out there and what is required, but the need for diligence is more pronounced when a statute with significant ramifications is applicable. Practically speaking, companies need to be proactively aware of their digital information and systems, and they must ensure, for example, that automated systems don’t override or delete information that may be relevant to the investigation. Because, remember, 18 USC § 1519 provides for a felony charge and the potential for a substantial sentence should a violation occur.
Editor: What are the important aspects of collaboration between the DOJ and a company under investigation? Talk about the rationale for embracing technology in this process.
Stanton: The three essential themes are credibility, transparency and creativity, and their importance only increases in light of technological advances and the unbelievable growth of information. For companies and their outside counsel, building credibility is about assembling the right team and doing everything possible to speed the process along while satisfying the government’s information requirements. In many cases, large or highly regulated institutions will be repeat players or will be subject to numerous types of investigations from different agencies. Ours is a small community. We all talk about experiences with companies or counsel. You can, however, be a very strong advocate and still remain credible. That’s an important talent, and I was privileged to work with attorneys when in the private sector who were very skilled at walking that line with successful results.
Transparency goes to the company's and counsel’s preparation for discussions with the government. Knowing who the important organizational players are and explaining, for example, how the company will conduct searches and then produce information is essential. If a company used predictive coding and advanced analytics before producing information, for instance, it can hurt a company’s credibility if they don’t tell us up front that they are planning to use these technologies. Transparency can also help when explaining to the government the real costs and burdens of an investigation and their impact on a company’s core mission.
The last theme is creativity, which ties directly into technological innovation and strategic approaches. Companies and counsel should think outside the box and offer solutions to the government when faced with large volumes of complicated data. Offering sample productions or database access before production, for example, can be valuable, cost efficient and a creative solution to technically complex issues.
Editor: Let’s talk about the process of defining the scope of discovery. Does the DOJ look at a company’s data retention policy in this context?
Stanton: Yes, we are interested in understanding how companies generate, store and destroy information as part of their normal business practice. It ties back to the credibility theme I mentioned. In fact, in highly regulated industries, data retention policies are a must, not only for investigative processes but also for regulatory purposes.
For all companies, having a good handle on their information will enable faster and more efficient responses to investigations. We are interested in knowing a company’s normal business practices in light of the three themes I discussed and because it helps us figure out both what’s available and how to scope the discovery. Having this information has sometimes enabled us to skip through the first six months of the investigation process, so data retention plans are an important piece in the dialogue.
Scoping an investigation comes down to, in part, applying common sense. It’s not about the mere exchange of search terms but rather discussions about goals, facts, witnesses, custodians and the law. We’ve found that sampling, for example, can be a successful approach to determining if larger data sets are relevant to our needs.
It’s also important to remember that not all information we seek is electronic. There may be paper documents or tangible objects, such as lab samples or prototypes, that are key for companies to preserve and produce in investigations. Sometimes even if we have a sea of electronic information, hand-written notes or diaries end up being the important information. Document retention policies should address these data sources.
Editor: What is the process for establishing acceptable search terms and validation procedures?
Stanton: Using search terms is just one means to locate potentially responsive information. Developing search terms is an iterative process that involves sampling, discussion and give-and-take between the parties. It can include discussions with technical consultants who are familiar with company systems and can involve considerations of the language of the company culture, such as a nickname for a project. And even after terms are established, companies should expect further follow-up and the possible need for revisions as the investigation progresses.
There is no formula for validation. It can be very case determinative and cannot be defined by specific touch points to satisfy the DOJ or a regulator. There are certain aspects to keep in mind, and many of them are matters of common sense. Trust is a key issue, so it’s important to disclose what tools are being used; how and by whom they are being used; and how results are tested. Are there any obvious gaps in your results? What is the precision and recall when using advanced searching tools? These are questions counsel should think about.
Technology has become an important part of today’s legal advocacy, and lawyers and their clients have to acknowledge this reality and find ways of addressing the technological aspects of discovery in the digital age. Search terms, validation and all of these advanced technologies are now part of the dialogue in an investigation.
Editor: Can the company’s or outside counsel’s collaboration with technology consultants facilitate the process?
Stanton: We have seen a variety of approaches including involving technology consultants directly in conversation with us. We have a number of resources and experts on our side, which can help to cut to the chase and ensure that everyone is speaking the same language. However, companies should not just rely on consultants. There is great value in involving sophisticated counsel who understand the technology and electronic discovery. It behooves counsel to be more knowledgeable of these matters as we have seen uninformed conversations lead to misunderstandings, misrepresentations, wasted time and loss of credibility.
Editor: Once an investigation is anticipated, what can a company do to mitigate the cost and make the process more efficient?
Stanton: This really depends on the potential allegations and what is at issue. Sometimes the people who know best are the investigators and the government attorneys, and there are good reasons not to share the full scope in order to protect the American public.
What companies can do is to make sure they remain on the investigative train as it continues to run, which means being proactive and prepared. Proactive measures include calling a meeting with counsel and appropriate company personnel as soon as they receive the subpoena to understand the allegations and engage the government in early discussion, for example, about the scope of preservation.
The most successful investigations I’ve seen involve dialogue, with people coming to the table with legal and factual positions prepared and laid out. These days, factual positions can depend on the location of evidence as well as how quickly and in what format it can be provided. Working collaboratively and acting quickly can save a company a lot of resources and pain and resolves investigations faster. Companies and counsel involved in investigations should focus on credibility, transparency and creativity when dealing with the government. We are open to dialogue about costs and efficiency, but the companies must work with us to meet our requests. Because at the end of the day we are focused on our mission, and our mission is to protect the American public.
Published February 25, 2013.
