Independent Investigations (Part Four): Motivated Blindness

In the first posting in this series we described two types of independence criteria in investigations – one having to do with an attorney’s relationships with the company and the other  her involvement in the subject matter being investigated. The second posting discussed independence issues regarding board members supervising investigations and the third reported on the then-just-breaking story about the Wal-Mart FCPA matter – and particularly the role of an apparently un-independent investigation in those unfortunate events.  In this fourth post we return to the issue of attorney independence to make a seemingly small but – at least for some cases – potentially important point that is based in part on behavioral ethics.

Balzac famously said, “Behind every great fortune there is a crime,” and, less famously, many C&E professionals have noted that behind many crimes in companies there is a supervisor asleep at the switch. (Indeed, our most recent prior post was about a case of this sort – where the “supervisors” were the members of the board.) What does this (meaning the part about supervisors – not Balzac) have to do with independent internal investigations?

In assessing an attorney’s independence vis a vis a contemplated investigation it is obvious that one should weigh her relationship with the target(s) of the inquiry. Less obvious, one should consider her relationships with anyone else at the company whose interests could be adversely affected by the outcome of the matter – including by the possibility of an investigative showing that a target’s supervisor was negligent in her supervision.

In an earlier post on behavioral ethics,  I observed that the phenomenon of “motivated blindness underscores the importance of the Sentencing Guidelines expectation that organizations should impose discipline on employees not only for engaging in wrongful conduct but ‘for failing to take reasonable steps to prevent or detect’ wrongdoing by others – something relatively few companies do well (and some don’t do at all).”   Given the difficulty that many organizations have traditionally faced in imposing this sort of discipline, they should do whatever is reasonably possible to maximize the likelihood of success.  And in some situations, that includes selecting a lawyer for an investigation who is sufficiently independent not only of the target but also of those who could be reasonably faulted for not having prevented or detected the target’s misdeeds.


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