General Counsel Internal Investigations Decision Tree for the Technology Industry

For many years, technology companies enjoyed relative freedom from regulatory scrutiny. Recently, however, state and federal regulators have significantly increased enforcement activity and investigations concerning business operations and activities in the technology sector. And new legislation, particularly in the areas of consumer privacy and protection, has also increased the stakes of compliance for technology companies and their employees. When combined with fierce competition to innovate, a need to protect intellectual property and attract/maintain talent, customers and users, and pressure to earn the confidence of investors, this “new world” of regulatory pressures and scrutiny has resulted in more frequent situations in which technology companies encounter situations where an internal investigation may be required to determine how the organization should respond. Examples of relevant concerns include those related to corporations and partnerships generally, including Foreign Corrupt Practices Act compliance, cybersecurity and data breaches, whistleblower complaints, risks introduced by the use of third parties and human resources issues. For many small or emerging technology companies, dedicated compliance staff and in-house legal resources to assist with both compliance training and awareness, or with subsequent internal investigations, is not possible. For such smaller companies, this playbook can help stabilize the company and mitigate further damage when a volatile event such as a whistleblower complaint occurs, a subpoena is served on the company or allegations against senior leadership are made. For larger established technology firms, while having a robust compliance department and program can help avoid many issues, not all issues can be foreseen or avoided. This internal investigations playbook is designed to help in-house counsel facilitate the identification and remediation of issues and is an important complement to a well-designed and functioning compliance program. It also will facilitate the in-house team’s communications with outside counsel, who have a range of experience guiding companies through these precarious situations. In addition, adherence to a well-crafted playbook helps companies meet the expectations of enforcement authorities, such as the Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and State Attorneys General (as well as others), which can materially mitigate potential enforcement efforts and sanctions.