An industry expert advised construction firms to conduct an internal investigation among its ranks in the face of a possible government inquiry.
Larry Dany, a partner in Sutherland Asbill & Brennan LLP’s New York office, said in a report that construction firms have come under close scrutiny over the past years due to increased legislation and stricter regulatory enforcement.
Dany is also part of the firm’s construction industry practice group and crisis management team.
He explained that an internal investigation would equip firms with a defense to civil, criminal or regulatory charges. It would also put a stop to misconduct and consequently help the company undertake proper corrective measures.
By dealing with any potential wrongdoing internally, Dany said the company is strengthening its business and compliance practices and reducing “reputational damage.”
Documentation of the process would help, since it will be useful for potential litigation, he added. However, legal safeguards must be in place during data gathering, particularly when interviewing witnesses to protect or waive confidentiality as deemed necessary by the construction company.
Further, Dany said a “key consideration” in undertaking an investigation is the preparation of a written report. He stressed that it is a double-edged sword in that it can be used to negotiate for out-of-court settlement, but the downside it is that it can be used as evidence should a suit be filed if disclosed to opposing counsel. As protection, he urged companies to have a lawyer prepare the report and then have it clearly marked as the subject of attorney-client privilege and work-product protection.
