If your business is engaged in international transactions you may be interested to know that law enforcement officials are increasingly collaborating across borders on investigations of a host of illegal activities ranging from the antitrust violations, to tax evasion, to bribery of foreign officials, financial fraud, and more.  No longer can you safely escape the clutches of Inspector Clouseau by crossing a border.

Due to this heightened scrutiny, companies with significant international operations are conducting more of their own multi-jurisdictional and cross-border investigations.  Of course every time you leave your home country you are bound to encounter some surprises and challenges. 

An interesting article, titled “Pitfalls of Cross-Border Investigations” identifies four important rules of the road that are worth noting: 

1. Secure relevant documents.  This may be easier said than done due to diverse document retention policies abroad, language barriers, and other technological challenges.
2. Beware of local rules when interviewing employees abroad.  Some countries have privacy laws that entitle employees to bring their own attorney or to decline your invitation to sit down and talk altogether.  Then there are additional hurdles created by language and other cultural barriers.
3. Recognize that the U.S. concept of attorney-client privilege is not universally accepted abroad.  European law in particular is at odds with U.S. law on this front.
4. Give consideration to a coordinated investigation if multiple governments are zeroing in on the same issue.

Conducting business internationally is a trap for the unwary, regardless of whether you have a substantial footprint overseas or are just starting out.  That’s why I’m delighted to be interviewing international legal expert, Carol Emory on December 3, 2009 at 8 pm Eastern ( 5 pm Pacific) about the potential legal pitfall of international business transactions. 

Click here for more information about how you can submit a question that I’ll ask Carol on December 3^rd and mark your calendar to join us for this valuable and complimentary program.

Copyright © 2009 Corporate M.O., LLC

The cold and flu season is upon us and this year it has more than a few employers nervous.  That’s because the new wheezing and sneezing season promises to bring more than the sniffles.  It could feature some seriously pigheaded symptoms thanks to the H1N1 virus, also known as the Swine flu. 

Workplace legal obligations such as the general duty clause of the Occupational Safety and Health Act (also known as OSHA), that requires employers to provide a safe working environment “free from recognized hazards that are causing or are likely to cause death or serious physical harm” to employees. 

And then there is the Americans with Disability Act (ADA).  You have to be careful about the type of health related questions you can ask employees and job applicants.

Thankfully, there are some useful references that contain tips to help you navigate these delicate situations:

1. The Centers for Disease Control and Prevention (CDC) has released Guidance for Businesses and Employers to Plan and Respond to the 2009-2010 Influenza Season;
2. The Department of Health and Human Services, US Department of Homeland Security, and the CDC have issued Preparing for the Flu (including 2009 H1N1 Flu) – a Communication Toolkit for Businesses and Employers; 
3. The Department of Health and Human Services has also assembled a useful website; 
4. The Equal Employment Opportunity Commission has issued some guidance to help you stay within the ADA requirements called Pandemic Preparedness in the Workplace and the Americans with Disabilities Act; and
5. The general government site called Flu.gov.

To you and your employees’ health!

Economics tells us we should engage in rational decision making.  We shouldn’t take irrational risks.  Okay, then tell me why do so many successful, high-profile, and otherwise smart individuals take what appears to irrational risks that can turn their world upside down?   

Enron financial engineers, the Wall Street wizards who helped implode the financial market and deepen our recession, and of course the parade of sex scandals such as Governor Elliot Spitzer and his call girls, former presidential candidate John Edwards and a campaign consultant with a love child, Governor Mark Sanford and his Argentinean soulmate mistress, Senator John Ensign and the wife of a former top aide, and just last week – David Letterman and certain Late Night Show staffers, all demonstrate a lack of “good judgment” or rational risk taking. 

What were they thinking?  How could smart people get it so wrong?

Senator Tom Coburn, in talking about Senator John Ensign who admitted to having an affair with the wife of his close friend and former top aide, offers some interesting insight.  Coburn was recently quoted in the New York Times as saying, “John got trapped doing something really stupid and then made a lot of other mistakes afterwards.”  But my favorite line is when he said, “Judgment gets impaired by arrogance.” 

 Bingo!

Coburn’s observation dovetails with the research done by behavioral economists.  Those are the folks who look below the surface at what we do and examine how decisions are really made.  Among the interesting findings in this field is the role of overconfidence.

Overconfidence contributes to hubris and arrogance.  It causes people to take huge risks.  Their perceptions of invincibility can lead to large scale risk taking and have legal implications that trigger liabilities ranging from negligence to brazen malfeasance, such as fraud. 

Organizations seeking to effectively manage their enterprise wide legal risk need to be cognizant of this behavioral flaw and blind spot it creates.  The best way to guard against it is to properly train all employees, including the most senior AND to create a system of rational checks and balances to protect the business from poor individual judgment.   

The conflict between behavioral economics and business economics presents serious and continuous leadership challenge.

[Editor's note: Today's guest blogger article is a follow-up on last night's Ask the No Nonsense Lawyer interview with Kathy Lang.  Special thanks goes to Ms Lang and the firm of Dickinson Wright.]

The Anticipation of Litigation:  Five Critical Steps to Manage Risks and Costs

By Kathleen A. Lang and Erin J. Stovel

Dickinson Wright PLLC

In today’s economic climate, no company can afford to waste its resources – human or financial.  However, when litigation is threatened, an initial investment of resources to preserve evidence and prepare the defense is critical.  In fact, by taking the proper steps when first notified of a potential claim or litigation, the risks of litigation can be better managed, and the overall exposure and costs spent in litigation can be limited.

 1. Investigate. Often there is notice of a potential claim or litigation long before a lawsuit is filed. Such notices can include demand letters, law enforcement/regulatory inquiries, or an event itself may suggest future claims (such as the occurrence of a personal injury while on a business property or the termination of a problematic employee). However the initial notice of a potential claim is received, it is important to first ascertain and memorialize all of the critical information that may be relevant; such as who the key players are and whether there are documents that relate to the claim. Since there can be significant time lapses between the first notice of a lawsuit and when a lawsuit is actually commenced, it is usually a good idea to interview the important people as soon as possible in order to preserve their best recollections before memories fade.

2. Preserve Evidence. Today many lawsuits do not focus on the merits of a claim, but rather discovery battles over the preservation of evidence before and during litigation. During the initial investigation, steps should be taken to locate, preserve and prepare to produce all information (if it later becomes necessary), including electronically stored information, such as e-mail and data stored on computer hard drives, networks, servers and certain backup media that is, or may be, relevant to the subject matter of the potential litigation. Although not an exhaustive list, the following steps should be considered:

 a. Suspend all protocols that relate to the routine destruction of electronic and hard copy data that may be relevant to the litigation. This includes the overwriting and recycling of archive or backup tapes routinely used for storing and retrieving information. This is typically accomplished with the circulation of a “litigation freeze order” or “litigation hold.” As a general rule, a litigation hold does not apply to inaccessible backup tapes such as those maintained solely for disaster recovery purposes. Counsel can assist you in preparing and implementing a litigation hold.

b. Notify the key players who likely possesses relevant hard copy and electronic information, and instruct them (a) not to destroy any such information, (b) to preserve indefinitely all such information, whether stored in active or archived files, including on PDAs (e.g. Palm Pilots or BlackBerrys), laptops, computer systems or networks, and (c) to place any later-created relevant information into a separate electronic file appropriately labeled.

 c. Appoint a person who will be responsible for implementing, supervising and enforcing these safeguards. Counsel should meet with the person so designated to more fully explain the scope of that person’s responsibility and the current state of the law.

 3. Assess the Risk. Assess the merits of the potential claims with counsel. A detailed assessment of claims may lead to opportunities for an early resolution of a claim before engaging in protracted litigation.

4. Ensure Litigation Prerequisites Are Exhausted. Prior to the commencement of litigation, there may exist certain prerequisites that must be exhausted (administrative remedies, contractual requirements, pre-suit notice). In highly regulated industries, for example, there may be administrative regulations barring litigation, or certain steps that a party must take prior to going to court.

 5. Comply With Orders. At the commencement of litigation or afterwards, the court may issue orders relating to the production of information. Full compliance with any such orders will be extremely important. It is also very important that you notify counsel immediately if you become aware of any potential compliance failures, regardless of their perceived severity. Fulfilling all of these obligations will reduce the likelihood that discovery and document preservation issues will unduly impact the litigation.

While no company desires to be involved with litigation, these precautionary steps can help to manage the risks and costs of litigation.  Often it is important to have counsel involved in this initial phase in order to manage the process and look for other specific measures that should be undertaken to protect the client in the event of litigation.  This initial investment of resources in these types of preparatory actions can result in savings, both in terms of the overall exposure if litigation arises and the costs of litigation.