Corporate Pre-Emptive Measures: Review Your Insurance Policy

Many corporate insurance policies include fraud-protection provisions. Those policies may cover both legal costs and fines (up to a predetermined dollar amount). An effective policy protects officers and directors from the enormous litigation costs that accompany a government investigation. We encourage business owners to understand the costs of litigation, and to purchase an appropriate amount of insurance.

Effective business leaders should develop a solid appreciation for the financial costs associated with defending against a government investigation. Consider, for a moment, the process:

• Investigators will subpoena corporate documents.
• They will review every email, invoice, sales script, advertisement, receipt, contract, and so forth.
• They will take notes as they question witnesses.

That investigation will result in tens of thousands of pages, potentially millions of pages.  It may also include hundreds of hours of recorded phone calls.

Business leaders should have a realistic understanding of the evidence that investigators will accumulate. On the government’s side, dozens of agents and interns will sift through the evidence, categorizing it in a well-organized manner. They do not have to be sensitive to costs, unlike the target of the investigation. Investigators can deploy enormous resources, without consideration of a cost-benefit analysis. The investigators then deliver all of that information to government attorneys. Those attorneys will use that evidence to bring charges against individuals and potentially, the business.