Independent Corporate Investigations

Other times, outside counsel are retained to investigate suspicions or allegations of wrongdoing by or within the company. These investigations may proceed under a growing threat of ' or pursuant to ' government inquiry and rising investor and employee fear and confusion. One of the company's primary goals in retaining investigatory counsel is to conduct a fair, thorough and complete investigation so it can assure investors, regulators and employees that it has discovered the extent of any problems that exist and has a plan not only to correct them but to prevent their recurrence.

Whether the company succeeds in providing these assurances depends in significant part on the degree of confidence these groups have in the outside counsel conducting the investigation. One thing is certain: unless they trust that the investigation was truly an independent one, they are not likely to have faith in its outcome. Such a lack of faith can have devastating consequences for the company: valuable employees distrustful of management may leave, investors may pull their support, and regulators may disregard the results of the internal investigation and decide to conduct their own, disrupting the company and further undermining the investing public's faith in it. And if regulators feel that the investigation was deliberately compromised by the lack of independence, they may decide to investigate the company and its senior management further.