Anna Drummond, University of Vermont

Michael Vernick, Hogan Lovells, US LLP

Jim Ward, Georgetown University

Creating an Effective Compliance Response: Government Inquiries and Internal Investigations

Agenda

• Overview, General Principles and Questions– Jim

• The Role of Counsel– Mike

• UVM’s Government Contacts Protocol– Anna

• Fact Pattern Exercise

Overview, Some Basic Principles, Some Important

Questions

Trends: More Interactions With Government

• Bad Economy and Limited Budgets– Buzzwords: “Accountability” and “Transparency.” – Impression that students don’t get a return on their

investment (high cost/bad job market).

• Higher Education’s Expanding Portfolio– E.g., Distance Ed., Continuing Ed., International Programs

• Government’s Expanding Portfolio– E.g., College costs, Student safety, Export controls,

Conflicts of Interest

How Can Institutions Monitor Government Interactions and Maintain (some) Control?

• Every situation is different– Lots of questions to consider and many factors

involved in deciding strategy and tactics for interacting with government.

• But, some general principles apply.

The Basics: Government Interaction for Dummies

• Routine is Better than Extraordinary– Don’t escalate unless you have to.

• Remember the Human Touch– Be polite and avoid adversarial stances whenever

possible.– See government people as people.– Avoid “why are you persecuting us” approach.

Basics (cont.)

• Do the work for the government– Volunteer an internal investigation.

• Respond with an explanation and a plan– Show the government what you do well, explain

problems, and provide a plan for fixing them.

• Follow through

Questions to Ask Yourself

• What are our (multiple) goals?– Speed of resolution, lack of publicity, avoiding

sanctions or penalties, limiting scope, etc.

• What agency, what level?– Who should be the institution’s lead

communicator?

• What other issues are floating around?– Watch out for what you don’t know.

Questions to Ask (cont.)• Is this “routine” or “unusual”?

– How routine or unusual?

• Do we have a routine contact with this agency/office?– How effective is this channel and do we trust it as

a way of resolving this situation?

• How have others handled this situation?– Learn from others, but also understand what

standards others have set.

Role of Counsel

Role of Counsel• Government inquiries take many different

forms:– From day-to-day operational inquiries to formal

investigations• Different types of interaction with the Government

carry with them different risk profiles

– The challenge is to: • Ensure that counsel is involved when appropriate but • Avoid inhibiting the institution’s ability to operate

efficiently

Factors to Consider

• Specialized knowledge/experience• Fact-finding skills• Sensitivity to more significant problems • Distance/objectivity• Attorney-client privilege• Business/policy issues

Practical Considerations

• Involvement of counsel can take many different forms– Serving as the “face” of the institution– Remaining in the background– Everything in between

UVM’s Government ContactsProtocol

Government Reviews Procedure

• Other highly regulated industries– developed compliance programs where compliance takes

lead role in responding to government reviews

• Surprise!—This is less common in higher ed• Purposes

– timely, consistent, deliberative response to government reviews

– internal tracking mechanism, BOT reporting, trend spotting, etc.

Government Reviews

• Intentionally broad definition for what is a “review” – Cast broad net to allow decision-making ability

(i.e. more or less involvement). – Some things that don’t seem like a review really

are--many agencies won’t tell you the real reason.

• Articulate how the process works in your procedure and preserve your ability to be involved.

Process

• Involve the right people, operationally and ensure they understand the importance

• Inform responsible official(s); consider any conflicts of interest issues

• Work with in-house counsel; involve outside counsel if needed, framing issue narrowly.

• Triage team created• Work begins

Develop a Plan• Timely response

– not everyone knows what this is.

• Review Production Request. – what is impossible, what is obtainable with time,

and what can be readily provided? – develop plan for response, request reasonable

extension for what will take longer and propose dates for production (i.e. staggered production).

• Ask for clarification if you need it.

Don’ts

DO NOT:•Avoid, delay or keep things at too low a level.

– Make sure people are aware of the issues and the need for timely response.

•Provide what is not requested.– Provide what is asked for as quickly as you can.

•Waste too much time trying to influence the regulator through your education of them.

– i.e. “if only they understood higher ed.” – Many regulators don’t care about higher ed’s “special status.”

Negotiation

• Understand what you can get• Develop your strategy to get it• Take control of the pencil, if you can. (This

may be more doable at the state level).• Once this turns to litigation, compliance

takes the back seat to legal counsel

Reporting to the Board

• As reviews are going on and as they proceed compliance needs to understand probability and impact in terms of risk.

• This should be reported to the Board as

ongoing and upon completion.

Debrief

• Always debrief with your triage team to develop lessons learned

• Evaluate, from a compliance perspective, what changes to make moving forward

• Track trends and report to responsible officials and BOT

Questions?

• Jim Ward (jew6@georgetown.edu)

• Anna Drummond (atdrummo@uvm.edu)

• Mike Vernick (michael.vernick@hoganlovells.com)