How to Respond to a Government Inquiry about your Business

Metropreneurial Legal Insights — By on October 18, 2012 at 8:00 am

No matter the size of your business, at some point you will be called upon to respond to a government investigator of some sort.

It might be the federal, state, or local government, and it could involve any number of subjects. It may be a phone call, a visit, or a letter or other document.  It could be a very preliminary inquiry that will result in no further contact after you respond, and it may be something much farther along, such as a grand jury subpoena.

Bill Nolan

It may not even be an inquiry into your business. For example, an agency might be seeking information about one of your customers or vendors or even employees. While each situation is different and should be analyzed on its own terms, there are general principals that will be helpful in dealing with these situations.

What you say can and will be used against you
We have all heard the joking line, “I’m from the government and I’m here to help,” the implication being that we know the person communicating that really is not there to help. Most government inquiries for most businesses will not ultimately result in serious legal problems, but a healthy sense of fear is in order when you get any request for information from a government agency.

For example, even if you are not raising your right hand and swearing to tell the truth, you may very well be signing a document that gives your statement the effect of being under oath. And there are laws that may make it a crime to make false statements to particular government agencies. Even inadvertent misstatements may set a negative tone for the continued interactions.

In short, how you respond at each stage can have serious consequences.  Do not panic, but assume the possibility of a worst case scenario and proceed accordingly.

You have rights
Most government agencies have been given the legal authority to obtain the information they need to perform the functions given to them under the law. For example, many agencies have subpoena power to obtain documents if they cannot obtain them in a less formal manner. However, those rights are not unlimited, and your business has rights that should be carefully asserted as well. Experienced legal counsel can guide you in the particular situation.

Call your lawyer sooner and not later
Perhaps nowhere is it more true than here– calling your lawyer at the earliest possible time will probably save you money in the long run. A lawyer who has dealt with the agency in question should already have credibility with the agency and the investigator that will serve you well. The lawyer will know what your rights are and be able to help you strike the right balance between asserting those rights and cooperating.

Cooperation and credibility usually are in your best interest
There will be times that your interactions with government investigators may need to become adversarial in order to protect your rights, but many times establishing a working relationship with the investigator will be in your best interest.

On one level, most investigators are doing what you are doing– trying to provide for themselves and their families by doing their job. Most have no personal ax to grind with your business, even if their approach may make it seem that way.  The best way to work with them will be for them to perceive you as understanding that and as somebody who, subject to protecting your own interest, is trying to work with them to bring the matter at hand to a prompt conclusion.

Have a strategy for your stakeholders
It will be the minority of government investigation situations where your employees, customers, or other stakeholders will be contacted without your knowledge. However, you will want to be constantly mindful of their knowledge of and role in the investigation.

Your aforementioned rights may include the ability to manage communications with them.  And certainly as an employee relations and business matter, you want to be anticipating if and how they will hear of a government investigation and be proactive about that. At the same time, you will want to avoid doing anything that might be viewed by the government as interfering with the investigation.  But anticipating these issues is an important part of dealing with the investigation.

Be careful about hitting delete
Even unintended missteps in responding to a government investigation may create bigger problems for your business than the subject matter of the investigation itself. In other words, being perceived as interfering with the investigation can cause a bigger legal problem than what might have been a relatively minor subject of an investigation.

There is no better example of this than not being to provide documents or communications you are expected to have because you deleted them, even in the course of routine document destruction practices. Your normal document practices and how they relate to the investigation should be a topic of early discussion between you and your legal counsel.

Check your insurance
Many subjects of government investigations may not be insured, but some are. You should consider as soon as possible after you hear from a government investigator whether rights and obligations under your insurance policy are triggered. To the extent you have insurance coverage, receiving the benefits of that coverage may require you to have given the insurer prompt notice of an issue. Thus, this should be considered at an early stage to be sure you are protecting your business’s rights on this front.

Working with the government is a part of doing business, even for the great majority of companies who have no intent to violate any laws. Approaching situations that do arise with government agencies with the proper blend for each situation of asserting your rights and cooperating with the agency will minimize the time you spend on these issues so you can maximize the time spent on running your business.

Bill Nolan (22 Articles)

Bill Nolan has practiced law in Columbus since 1989. In 2009, he opened the Columbus office of Barnes & Thornburg LLP, a large full-service law firm that seeks to take a more entrepreneurial and cost-effective approach both to client service and its own business. Barnes & Thornburg lawyers will be providing this column on a monthly basis.