Cost Of Cooperation With DOJ Just Increased

The DOJ, in its “Principles of Federal Prosecution of Business Organizations,” asserts that “for a company to receive any consideration for cooperation” in matters of corporate misconduct the company must identify all individuals involved in or responsible for the misconduct – thus necessitating an internal investigation. Now, in a decision handed down in May, the Supreme Court has made it considerably more difficult for corporations hoping to recoup some of the costs of those investigations from employees who violated the law. In Lagos v. United States, the Court took a narrow view of what expenses could be the subject of mandatory restitution, and rejected the view that costs associated with an internal corporate investigation come within the statute. The justices held unanimously that “investigations” and “proceedings” are limited to criminal prosecutions and do not include other types of inquiries that a company might undertake to aid the government. Corporate misconduct often spawns multiple civil investigations along with potential criminal prosecutions, so a company may need to consider how much it is willing to pay to show that it is cooperating.