Local Counsel is Critical for Governmental Enforcement Actions

by David Cosgrove

First, a statement of the obvious: State and federal governmental agencies do not confine their enforcement efforts to domestic entities. As such, established corporate citizens of any magnitude must be prepared to face litigation in any state in which they are doing business. The selection of local defense counsel is a critical first step when even the potential exists for such litigation.

As a former government enforcement official, I am hired from time to time by out of state counsel to represent his or her client in a Missouri or Illinois enforcement action or investigation. The establishment of clearly defined roles for the local counsel is the first and most important step for effective and efficient representation.

Some out-of-state counsel seek a local attorney to fill a strictly limited role. But, local counsel must appreciate the magnitude of the professional liability risk in such engagements. Filing a motion for pro hac vice and handing over one’s “ticket” to an unknown defense team is risky, and actually abdicates one’s professional responsibilities. On the other hand, local counsel must be candid and honest as to the extent of its experience, resources, and applicable relationships. Mature attorneys understand that an “over-sell” will be the start of an embarrassing and short-lived charade.

Many out-of-state counsel reflexively seek out a large local law firm under the false assumption that the government agency at issue will be impressed or intimidated. An experienced general counsel, however, is more likely to understand the financial burden and potential embarrassment around the corner if one acts upon this assumption. Experience and relationships are more critical. Cost-effectiveness is a bonus.

Each state and federal agency has its own enforcement protocols, authorizing statutes, and regulations. Formal and informal spheres of influence may be equally important when navigating the client to the seat before the right audience. A productive, albeit adversarial relationship early on in the dispute might save thousands if not millions of dollars in litigation costs, fines, and remedial sanctions, not to mention damning publicity.

In sum, the task of finding the right local counsel for your client must be undertaken with strategic care. Once you have contacted what you believe to be the right firm, be sure to have a defined point of contact in that firm going forward. Finally, resist the temptation to exclude or under-utilize the local player when setting out (in writing) the firm’s respective roles and expectations. Food for thought.

David has served as an Assistant Attorney General in Missouri and Massachusetts, as General Counsel to the Governor of Missouri, as Chief Counsel of the Missouri Attorney General’s Consumer Protection Division, and as the Missouri Commissioner of Securities. He returned to private practice in 2006.