If you manage employees at any level of your organization, you are a policy maker. And if the government investigates your branch of the company for any pattern of alleged misconduct, your own conduct will likely be scrutinized. During more than a decade as a federal prosecutor, and more than another decade as a white collar defense lawyer, time and again I have seen many of the same warning signs that may signal trouble and a potential government investigation ahead.
1. No road sign: The oral tradition
While primitive tribes can pass down stories orally for generations with little or no change, somehow oral instructions from management often fail to remain intact past the very first sales call. Whether right or wrong, employees often take oral instructions as mere suggestions. Having a well-written policy leaves no room for misunderstanding, whereas oral directions often lose their meaning when passed down from top management. Having written policies in place can help protect managers from the actions of employees.
2. Confusing road signs: Subtext and pretext
Written instructions often keep employees on the straight and narrow. In contrast, subtext and pretext often lead directly to serious problems. A common example of subtext is the situation in which sales representatives are told that more aggressive tactics may be called for than the formal parameters allow. A common example of pretext is the use of euphemisms in describing certain practices to hide what's really happening. Both subtext and pretext are clear signs that something is amiss.
3. Highway under construction: Frequent rule changes
If you've driven in Boston during the last decade, you know the chaos caused by constant road changes. Overly frequent changes in corporate policies and practices can create the same trouble. Outdated policies and practices need to be changed, but they also take time to be implemented. When the rules change too quickly, employees confuse the old with the new, and eventually some employees give up even trying to follow. If your company's or division's policy and practice changes start making you dizzy, it's time to voice objection or at least demand to understand the reasons.
4. Divided highway: Different rules for different teams
A significant number of corporate criminal cases involve divisions and other groups that operated under different rules than the rest of the organization. Often, the organization decides that the mission of the subgroup is so important that the conventional rules of engagement need not apply. While special incentives and creative work arrangements are often laudable, employees should never believe that the rules of the larger organization are someone else's problem.
5. Steep decline: The cynical perspective
Some skepticism about rules and regulations is inherent in every large organization. Dilbert resonates much more with the typical corporate employee than does the chief compliance officer. The trick is to prevent a healthy skepticism from becoming cynicism, when employees begin ignoring rules for their own gain. It can be hard to draw that line. Perhaps the spirited executive is only trying to be funny when he refers to lawyers as the "sales prevention department." But maybe he's setting a dangerous tone. Combat the cynical perspective, even if it makes you feel like a stick in the mud.
6. Danger ahead: Legal and regulatory "risk"
Regulatory lawyers frequently employ the word "risk" to prospective conduct that, while not clearly unlawful, falls in a gray area. Few if any companies in a regulated industry can avoid all legal and regulatory risk, especially when potential rewards or internal forces loom large enough, and no law clearly forbids the conduct. However, red lights should start flashing in your head when you hear decisions and advice couched in the language of risk: Who can get caught holding the bag if the government decides that the conduct falls on the wrong side of the line? Is only the company at risk, or are you and other managers also vulnerable? You should never hesitate to get a thorough answer to these questions from legal counsel.
By the time I am hired to represent a company or an individual under government investigation, it's too late to wind back the clock. However, if executives heed these warning signs it can help avoid trouble in the first place. They can keep the government away from your door, or at least minimize the likelihood of personal trouble if the government comes knocking.
Robert Ullmann is a partner and chairs the Government Investigations and White Collar Crime group in the Boston law firm of Nutter McClennen & Fish LLP. He was formerly chief of the Criminal Division in the U.S. Attorney's Office in Boston.
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