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:
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.