Congressional Probes Often Catch Companies Off Guard. Is Your Company Ready?

"Regardless of the political landscape, there's bipartisan interest in scrutinizing companies, especially larger ones with more perceived influence in the economy," said Kimberly Hamm, a partner at Mayer Brown.

Congressional investigations of companies are becoming more common, and they pose numerous, unique challenges, said Kimberly Hamm, who joined the Washington, D.C., office of Mayer Brown as partner in January after spending most of the last decade in key government legal roles.

She said congressional inquiries often are complicated by political divisions, lack of precedents and the potential that multiple committees will be conducting separate but overlapping inquiries at the same time.

Hamm was immersed in the process herself as chief counsel to House Speaker Kevin McCarthy before his ouster last October. Before that, she was chief counsel for investigations in the U.S. Senate. Other roles included chief counsel to Securities and Exchange Commission Chair Jay Clayton during the Trump administration and associate general counsel of the House.

She started her legal career at Simpson Thacher & Bartlett, where she spent 11 years.

In a conversation with Corporate Counsel, Hamm discussed how her years in government will inform the advice she’ll give clients. She also talked about what sets congressional probes apart from inquiries from other arms of government.

The conversation has been lightly edited for clarity and length.

Corporate Counsel: You have served as chief counsel to an SEC chairman and a House speaker and in the House General Counsel’s Office. How have those experiences impacted the way you advise clients and approach your work?
Kimberly Hamm: In all of my jobs, my role was to take a difficult set of facts or a difficult regulatory issue and create the best advocacy for them.

Across my previous positions, I played a significant role in institutional issues, including determining the best approach for congressional investigations and protecting congressional interests and tools. Also, taking into account all these divergent viewpoints. So in all cases, it was a combination of advocacy, listening and being able to hear different perspectives. In the House, in particular, people have different ideas about how to do things.

The focus has to be on what’s the right thing for the committee and the institution, because protecting congressional prerogatives was a big part of what I did.

CC: What are some of the potential changes in congressional investigations under a new administration that companies or GCs should be aware of?

KH: It’s really hard to predict that. If there’s a Republican president next year, much will depend on whether the Republican Party also controls the House and Senate. Should that be the case, oversight and investigations may focus on the private sector and scrutinize programs implemented during the Biden administration. However, if there’s a split with a Democratic House or Senate, attention may shift toward oversight of the executive branch’s actions, including how they’re implementing laws and spending money.

There will still be a really big focus on the private sector, as we’ve seen this Congress. Regardless of the political landscape, there’s bipartisan interest in scrutinizing companies, especially larger ones with more perceived influence in the economy. So even if there’s a different president, you’ll see private sector scrutiny.

In the House, the majority party determines the direction of investigations. Unlike in the Senate, if a House committee wants to issue a subpoena to either a government entity or private sector entity to get documents or testimony, that can be done unilaterally by the chair—they do not need the minority party’s consent. There doesn’t have to be a vote of the committee. There doesn’t have to be a vote in the House. The chairmen can do that themselves. So whoever controls the majority in the House really controls the direction of investigations.

CC: What are some of the things that companies should be aware of when it comes to ESG investigations? And what should their initial response be should they be faced with an ESG investigation?

KH: One fascinating aspect to consider is the broadening of the ESG debate within congressional investigations. Previously, ESG issues primarily fell under the purview of specific committees, such as the House Financial Services Committee. However, now we’re witnessing ESG-related investigations spanning multiple committees, including the House Ways and Means Committee, the House Oversight and Accountability Committee and the House Judiciary Committee. This poses unique challenges for companies, particularly those in the financial sector, as they navigate interactions with various committees, each with its own jurisdiction and focus.

What began as a narrow discussion on ESG investing has evolved into a multifaceted debate touching on diverse environmental, social and governance matters. Dealing with multiple committees concurrently, albeit investigating similar themes, adds layers of complexity.

Hence, it’s essential to engage legal counsel well-versed across all relevant committees. What attracted me to Mayer Brown is its long and established history of expertise and relationships across committees. That’s really important, because you’re seeing increasingly where multiple committees are getting involved in a single issue at the same time.

CC: What is something that sets you apart as a lawyer in your practice area?

KH: I have a very unique perspective on congressional investigations because of my extensive experience across various committees. During my time at the House General Counsel’s Office, I had the opportunity to advise numerous committees on their investigations, which allowed me to witness firsthand how different committees approach investigations and the tools they use.

If there’s litigation, it’s the House Office of General Counsel that goes to court to enforce subpoenas. So, I have that experience. Working in the speaker’s office provided me with a unique leadership perspective, overseeing committee activities and offering strategic guidance. This dual vantage point—combining litigation expertise with leadership insights—is somewhat rare in the legal field. Few individuals have engaged in litigating congressional subpoena cases, and while litigation is not the desired outcome, understanding the relevant rules, case law and precedents is crucial. So I think that’s a great asset for companies that are finding themselves under scrutiny.

CC: How can corporate legal departments prepare when the government comes knocking? What are some best practices?

KH: Well, the first step is acknowledging that sometimes you won’t have advance notice of an impending investigation. However, in cases like ESG, where companies could anticipate scrutiny if the House shifted to Republican control, early preparation is key. This involves assembling a cross-functional team comprising legal, compliance, government affairs and external public relations and regulatory experts. You want to make sure that your team is assembled and ready to act quickly and that you have at least some of the messaging and the responses ready.

That said, when it comes to congressional investigations, often it’s very event-specific and can move rapidly, catching companies off guard, because there could be an accident or a whistleblower that you weren’t aware of. In that case, it’s really important that you assemble your team quickly and that you make sure that team includes all of the right people, and that team needs to be able to work seamlessly together.

It’s also important to understand how congressional investigations are different from other government investigations. For example, sometimes they can move much more quickly than a regulatory investigation.

Another example is when congressional investigators tell you that attorney-client privilege does not apply, meaning companies will have to potentially produce documents that are privileged. Now, there’s some recent cases that call that into question. But if you have experienced counsel who understands how to navigate that with the committee, it’s really important, because committees can choose to allow those privilege assertions to be made, and they often do, but you really need somebody who knows how to navigate that.

Companies need to be aware that committees can often release confidential documents, and so, when you’re providing information to Congress, you really need somebody to help you navigate that to protect you as much as possible, if you end up providing information.

It’s also important to keep an eye on everything. One aspect that we’re seeing increasingly with investigations is that companies are facing different kinds of investigations on broadly the same topic at one time.

It could be a congressional investigation. It might be a federal such as regulatory investigation, it might be a DOJ investigation. There might also be a state attorney general action or a civil litigation. Maybe your shareholders are starting to make demands and all of these things are happening at one time. Having the right internal and external experts in place who can work together to navigate these risks is very important.

CC: What are some other trends you are seeing, or expect to see, in congressional investigations? How might they impact corporate legal departments??

KH: There are several notable trends emerging. Firstly, an increasing number of multinational corporations are finding themselves embroiled in U.S. congressional investigations. This trend is not entirely new but has intensified as more companies expand their operations beyond U.S. borders or as foreign companies establish a presence in the United States.

As companies engage in cross-border activities, there are heightened risks related to offshore document storage and compliance with local privacy and country laws, which can hinder information disclosure to congressional investigators. Unlike federal court litigation, congressional proceedings lack clear legal precedents, making navigation challenging.

Moreover, bipartisan interest in supply chain risks is growing among congressional investigators. Companies face scrutiny if they source products from regions with human rights concerns or potential national security issues. Because of that, supply chain investigations are becoming more frequent and are likely to persist across different political administrations.

Also, the dynamics of divided government can become very challenging for corporations. With a Democratic administration and a Republican-controlled House, corporate executives can find themselves navigating contentious political issues with divergent expectations from different parties. Companies risk facing increased scrutiny if they are perceived to align more closely with one political party over another. So there are complexities of divided government that companies will have to navigate.

Reprinted with permission from the May 13, 2024 edition of Corporate Counsel © 2024 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.