When people hire defense attorneys to represent them in a government investigation, those defense attorneys look forward to the “discovery” phase. While the business owner will consider the mountain of evidence a burdensome nuisance, the defense attorney may see something else: billable hours.
Indeed, the defense team will insist upon reviewing every piece of evidence the investigators accumulated. They will insist on listening to every recording, watching every video, reading every note that memorialized what a witness revealed. Attorneys review the evidence to prepare for the case, to protect the client, and to make sure that they’re ready to defend against accusations. Without insurance, the client ends up paying for those hours, at great expense.
In big cities like New York, San Francisco, Chicago, or Washington DC, defense attorneys that specialize in government investigations bill at rates that may shock the conscience of a typical business owner. Why? Because those attorneys are in the business of practicing law. In other words, attorneys need to stay current with case law and regulations and defense strategies. To be the best in the world at what they do, attorneys must invest countless hours researching decisions without pay. Clients therefore pay for that expertise at rates that may exceed $2,000 per hour. Multiply that number by the hundreds (or thousands) of hours necessary to read the mountains of evidence that investigators present. For this reason, legal costs associated with defending against a government investigation can easily surpass $10 million for some businesses.
Such fees can decimate a company that does not have adequate insurance. For individuals that lack insurance indemnifying them against legal fees, a government investigation can bring enormous personal stress and lead to personal bankruptcy.
Consider the case of Rod Kazazi, who held the position of Chief Operating Officer for a real estate development company when the Federal Trade Commission sued his company for violating the Federal Trade Commission Telemarketing Sales Rule and the FTC Act. Rod hired former Assistant U.S. Attorney, David Wiechert, to represent him in the matter. Since Rod lacked financial resources to litigate the case, the attorney persuaded Rod to cooperate with the investigation. His cooperation could potentially shield him from liability on a judgment that would exceed $100 million.
In order to settle the case, Rod Kazazi agreed to provide false and unsubstantiated testimony to support the Federal Trade Commission’s case. He also agreed to make a payment of more than $250,000.
In crafting the settlement agreement, the FTC attorneys slipped in misleading language that would protect them, at the expense of Kazazi’s attorney. Kazazi’s attorney did not catch one particular sentence in a settlement agreement spanning several thousand words. As a result, the FTC later filed documents to void Kazazi’s settlement agreement, and also hold the attorney personally liable for more than $250,000.