The House Committee on Oversight and Reform recently held one of the most high-profile hearings yet this Congress. Senior executives from the world’s largest oil and gas companies addressed claims of knowingly spreading disinformation about climate change and willfully contributing to the climate crisis. Lawmakers examined the secret recording by Greenpeace activists of an Exxon lobbyist to grab the public’s attention on a key feature of the Biden administration’s agenda.
Whether this hearing eclipses the media attention surrounding the Facebook whistleblower or the GameStop trading matter, together these hearings create the perception that the 117th Congress has had an active year of investigations.
The reality, however, does not bear that out. The Brookings Institution observed a significant decline in congressional oversight letters sent by this Congress. According to the report, hyper-partisanship, political polarization, and Covid-19 have blunted and limited the 117th Congress’s oversight activities.
It is too early to tell for sure whether congressional oversight will return in full force when the pandemic eases, but all signs point to yes. Corporate counsel should prepare for the possibility of a big oversight push ahead of next year’s mid-term elections.
What to Expect
Congressional oversight and investigations pose unique risks for corporations, including misleading headlines, industry-changing legislation, career setbacks, follow-on regulatory enforcement actions, and even criminal investigations.
Corporate counsel must be equipped with a plan that blends deft legal skills and subject matter knowledge, practical experience, bipartisan credibility, and finely tuned political judgment to weather the next oversight storm. Outside counsel experienced in the “unwritten” rules of Congress can expertly prepare and advise clients through the treacherous waters of an investigation.
Political considerations are paramount in any congressional investigation. The individual or entity leading the investigation will often dictate corporate counsel’s approach and affect the scope, focus, and media attention of an investigation.
An oversight letter from an experienced oversight committee chair or party leader is more impactful than a missive from a member of the minority party or a back-bencher who does not serve on any committee with relevant jurisdiction. A bipartisan or bicameral letter, or one signed by multiple members or committee leaders, carries more weight than an isolated single-member strike.
Similarly, inquiries from home state senators and local members of Congress can be cause for greater alarm than those from remote representatives far from a corporation’s headquarters.
Timing also plays an important role in congressional investigations, especially as we approach the halfway mark in the 117th Congress and next year’s hotly contested House races. A House member or senator running for reelection or with even grander ambitions will have different priorities than a member who was recently elected or holds a safe seat. The news cycle and the congressional calendar, including competing priorities like an impending fiscal crisis and upcoming recesses, will all affect the arc of a congressional investigation.
Congressional investigations are unique because they lack clear and defined rules, definitive and agreed-upon facts, and a neutral and impartial arbiter. The lawyer’s traditional role—to effectively develop and advance winning arguments—is still critical, but those arguments are driven by the vast sea of current events, lending an outsized role to media relations.
Without a hermetically sealed courtroom or magistrate to raise objections or limit the scope of requests, it becomes imperative to strike a delicate balance between meeting broad demands from Congress and protecting a company’s interests.
How to Prepare
There are three key things every in-house counsel should do in preparing to respond to a congressional investigation:
1. Select an Outside Counsel to be Quarterback. Outside counsel can play a critical role throughout the investigatory process, from responding to an initial inquiry to prepping a corporate executive for testimony before a committee.
Ideally, outside counsel will have been involved in the company’s initial risk assessment and have familiarity both with the company’s risks and challenges and with its players.
2. Assess Risk on an Ongoing Basis. For companies in highly regulated industries, ongoing risk assessment of congressional investigations is recommended. Business events like a corporate merger and political events like a new Congress or administration attract oversight attention and provide an ideal opportunity for risk assessment.
Companies in the technology, health care, energy, and financial services sectors should be especially attuned to the risk of congressional oversight.
3. Develop a Readiness Plan and Coordinated Team. An action plan tailored to a company’s unique risks and structure allows parties to act confidently and coherently throughout the investigatory process.
Each plan should, at a minimum, include:
- Management, Legal, Public Relations, Investor Relations, and the Board;
- Each stakeholder’s responsibilities;
- A request response strategy; and,
- Pre-drafted media responses.
It is difficult to know exactly where the eyes of Congress will turn next. But history suggests that congressional scrutiny will only intensify and expand over the next year and a half.
For those on the receiving end of that scrutiny, working with experienced outside counsel to evaluate the risks and develop a response plan ahead of time will help mitigate some of the unique—and uniquely frustrating—aspects of a call from Capitol Hill.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
David A. O’Neil is a litigation partner at Debevoise & Plimpton LLP based in Washington, D.C. and is a member of the firm’s White Collar & Regulatory Defense practice.
Carter Burwell is a litigation counsel at Debevoise & Plimpton LLP based in Washington, D.C., and is a member of the firm’s White Collar & Regulatory Defense practice.
Debevoise & Plimtpon associate Valerie Zuckerman contributed to this article.