An in-house lawyer not only faces legal challenges but must also ensure that the company and its employees respond appropriately and compliantly to a possible inspection by the competition authorities. You cannot prevent an inspection, but you can prepare for it. In-house lawyers are also a hub for contact with board members, company’s staff, officials, and external counsel.

Practice shows that mere knowledge of law is not sufficient to mitigate all the risks associated with an investigation. That is why we are passing on some of our tips and tricks, which are derived from our experience and which we consider to be essential to know.

Before the inspection – “Brace yourself!”

An inspection is best compared to a 'lightning strike'. It happens suddenly and causes a large shock to the company. The task of the in-house lawyer is to prepare the company for this eventuality and to mitigate the risks that may occur. 

• Know your company

An in-house lawyer is the intuitive first point-of-contact for officials and external counsel asking for specific information about the company, such as its internal organisation, the functioning of a company's IT system (see our article on forensic aspects of an investigation), and a company's distribution network. In-house lawyers are not obligated to know all of those, but they should know where to find and/or who to ask. If you are a newcomer, you should immediately familiarise yourself with those aspects.

• Prepare short, practical guidelines for each category of employees. 

A dawn raid can be very stressful, especially for employees who are not lawyers. Even when they have familiarised themselves with the procedures beforehand, the stress causes information to fade from memory. 

Therefore, a short practical guide consisting of a few simple points on what to do next in a search situation, which they can refer to during rather than before the dawn raid, will enable them to perform their duties effectively. For more information of employment-related aspects, please see our article on employment considerations.

• Contact a law firm that would expect to be contacted in the event of a dawn raid.  

It could be difficult for just one person to coordinate and safeguard a company's interests during a dawn raid. There will usually be more than a dozen people involved in a dawn raid, including officials and police officers, and the dawn raid itself affects many areas of the company. 

It is therefore advisable to use the services of specialists who only deal with the competition aspects and have experience in dealing with dawn raids. 

Ask the lawyers to arrive promptly and stay in touch with them throughout the duration of the dawn raid so that they can guide you through if necessary.

• Make sure that your company marks information that contains legal advice with the words "Privileged & Confidential”. 

This marking will allow both the officials and “shadowers” to react to the fact that they are dealing with classified information before they see it. This principle applies to documents as well as to emails or other communications. What has been seen cannot be unseen.

• A good strategy to test the effectiveness of a company's operations during a dawn raid is to conduct a 'mock dawn raid'. 

You should take note of whether your staff are following the guidelines, the timing of the arrival of external lawyers and how communication between “shadowers” and coordinating lawyers is handled when dealing with classified information. Identify risks and mitigate them before the actual dawn raid.

The inspection begins…

The in-house lawyer will probably be the first person to be confronted with the dawn raid. It is therefore their task to coordinate the company's activities and deal with the officials until the arrival of external lawyers.

• Make sure that the information on the inspection has not been disseminated to any other persons than those already having contact with the officials (except for board members and legal counsel).

The authorities emphasise that the inspection has an 'element of surprise'. Communicating the impending inspection to other employees counteracts this effect. For this reason, the authority may regard this as obstructing the inspection and impose a fine. 

An inspection is an unusual event and employees may share this information, not only to warn other employees, but also because they have relationships with their colleagues. It is important to categorically stop employees from spreading information about the investigation. It is important to remember that that these types of communications would be quick to detect by the officials who, as the next step, would demand access to communication devices of certain employees of the company, including mobile phones.

• Arrange a dedicated room where the officials can conduct the inspection. 

Assume that this room would be out of the company’s control for the next few days. For that reason, there should be no documents or computers there. All meetings in this room should be cancelled or rescheduled.

• “Gather your party before venturing forth”.

In-house legal teams will most likely be dealing with a team of several competition officials accompanied by police officers or other law enforcers. To retain the maximum degree of control over the situation, you should not receive them alone, but ask other colleagues to assist you until external counsel arrives. 

These colleagues do not need to be lawyers – their role is to “shadow” each official. Ideally, there should be one (but not more) 'shadower' attributed to each official.

During an inspection – remain vigilant

External lawyers, although experienced in competition law, do not know the company as thoroughly as in- house lawyers. 

Therefore, the task of the in-house lawyer will be to mediate communication between the company and the external lawyers, and in some cases between the company and the external lawyers and the officials.

• Provide a thorough explanation of the IT data collection architecture to officials. 

Throughout the course of a dawn raid, IT will be one of the most important departments. This is because most companies aggregate data in their IT architecture, so officials looking for specific information, will primarily interfere with this architecture. 

For officials to be able to begin working with the company's architecture, you and external counsel will very often need the urgent assistance of the IT team.

However, communication problems may arise given the difference in competencies between officials and IT specialists. 

You should help the external lawyers solve communication problems and be the intermediary between the company's IT specialists and officials, and to explain the officials' needs to the IT team. 

For more information, see our articles on the forensic aspects of an investigation as well as our article on how to cooperate efficiently with the forensic IT team.

• Each employee interviewed should be assisted by legal counsel

During an inspection, the officials may interview board members or employees of the company. To make sure that no self-incriminating questions are asked, the interrogated person should be accompanied by a lawyer.

It is also crucial that the interrogated person carefully reads the minutes of the interview before signing it. A good practice is to have the interview recorded.

• Hold debrief meetings at the end of each day of the inspection

It is important to update management on the status of the inspection in real time and to inform them of any risks that arise (e.g. a possible allegation that the inspection has been obstructed). This will assist in making fast decisions on leniency (if necessary) and mitigating any future fines.  

• Agree the communication strategy with your management and liaise with your PR department as soon as possible.

Some authorities make public the information that the inspection has been conducted in some industries or even specify the identity of companies raided.

• Make sure that all seals remain intact until the officials return to open them

The room made available to the officials will probably be sealed overnight. Make sure that the seals remain intact until the officials return to open them. Inform the employees and cleaning staff that they should not tamper with the seals. If possible, procure a security service to guard the seals. 

Although as an in-house lawyer you might be overqualified to take care these types of activities, the competition authority has the power to impose hefty fines for breaking the seals and they have done so in the past.

Aftermath of the investigation

External lawyers may need the help of in-house lawyers to establish certain facts during an inspection. This is particularly the case if the company decides to challenge some of the inspection actions before the hearing officer or the court, or in responding to the authority's post-inspection report. 

The key to effective action before the authorities is the speed with which accurate information can be provided to external lawyers. In many countries, the time limits for challenging actions during an inspection are very short. 

Therefore, even after the inspection has been completed, the in-house lawyer should ensure that staff members prioritise their actions for the search issue, so that when the need for their information arises, they can provide it immediately.

We strongly recommend checking out the Bird & Bird Dawn Raid App that relates to inspections made by competition authorities. 

You can use it to prepare for a search step by step and increase your chances of success. The app also contains many other tips that you may find useful.

For more information, please contact Katia Dunker, Szymon Golebiowski, Tamy Tietze and Marcin Gorzkowski.

This article is part of a special edition on Investigations of our monthly newsletter Competitive Edge.

READ MORE ARTICLES ON INVESTIGATIONS HERE

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