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Lawyers Are the Big Winners in the Inquiry Into the Election
White Collar Watch
By PETER J. HENNING MAY 22, 2017

The appointment of Robert S. Mueller III as special counsel to oversee the Justice Department’s investigation of possible Russian involvement in the 2016 election means that White House staff members and others connected to President Trump’s presidential campaign will need to do one thing quickly: Lawyer up.

The investigation can be expected to unfold like others involving senior federal officials. The focus will begin with those beneath the top players, and prosecutors will try to build their case by gaining the cooperation of staff members who can identify potential misconduct.

The multiple investigations during the Clinton administration taught an important lesson to lower-level workers — that they needed to get their own lawyers to navigate the dangerous shoals of a potentially wide-ranging investigation. That will end up costing them quite a bit of money and could even effectively bankrupt some.

There are different potential avenues for cooperation in an investigation. They range from an acknowledgment from the special counsel’s office that someone is only a witness to a grant of immunity for those with potential exposure to criminal prosecution. If wrongdoing is uncovered, then prosecutors usually demand a guilty plea with a light sentencing recommendation in exchange for full cooperation.

That process puts a premium on having a good lawyer who knows how to deal with the Justice Department and the F.B.I., which usually involves taking a client through so-called proffer sessions to give a preview of what information the person can offer. It is a well-known dance between defense lawyers and prosecutors as the crucial prelude to completing a deal to obtain the best outcome for the client.

The New York Times reported that advisers to Mr. Trump were urging him to hire his own lawyers to advise on the special counsel’s investigation. Other members of his family involved in the election campaign and working at the White House can also be expected to retain their own lawyers. Given the family’s wealth, it will not be much of a challenge for them to get high-priced legal talent.

For those without the same financial resources, however, hiring experienced counsel will usually turn out to entail significant financial hardship.

A top-level white-collar practitioner can charge upward of $2,000 an hour, and the case often involves a cadre of lawyers reviewing records, attending meetings and preparing a witness. Add to the mix the potential for congressional hearings on Russian involvement in the election, and the costs can quickly reach six figures before much has even taken place.

Some lawyers may discount their rate for a government employee, but that may offer only a small mitigation in the face of a potentially huge legal bill.

When an officer or director of a large company is caught up in an investigation, the corporation is usually responsible for paying the legal fees. Delaware law, which governs the majority of publicly traded companies, authorizes them to pay those expenses and many make it mandatory in their bylaws as a way to protect their executives when an investigation occurs.

That can result in very significant costs for the corporation, even requiring payments on behalf of former officers or directors who ended up causing harm to the company. For example, The Times reported that Goldman Sachs paid the bulk of nearly $30 million in legal fees for the defense of its former director Rajat Gupta, who was convicted of insider trading in 2012 for tipping confidential information about the investment bank.

Federal employees cannot expect that kind of generosity from the government and are largely on their own to pay for the lawyers. A federal regulation allows the Justice Department to provide representation or pay for outside counsel when the person is sued, but that is only when the lawyer is needed to protect the interests of the federal government. This provision is used most often when a law enforcement agent is sued and accused of violating the Fourth Amendment in a search or arrest, but not for those under investigation for potential personal wrongdoing.

Mr. Trump could offer to pay for the lawyers of those involved in the investigation, and the legal ethics rules allow a lawyer to accept payment from a third party so long as the interests of the client are put first and foremost. But there are limitations on gifts to federal employees, and the optics of a president paying for lawyers for others who might have information that is incriminating could make this politically unpalatable.

Under the old independent counsel law that expired in 1999, individuals who were the subject of an investigation could seek the payment of their lawyers’ fees if they were not indicted as long those costs “would not have been incurred but for” the inquiry.

Bill and Hillary Clinton sought the payment of over $3.5 million for their personal legal fees from the Whitewater investigation, arguing that they were subjected to a wider-ranging investigation than an ordinary private citizen would have had to endure. A federal appeals court rejected that argument, awarding them only about $85,000 to cover the cost of responding to the final report filed by the independent counsel.

The Whitewater investigation also showed the dangers of consulting with the White House counsel’s office during an investigation. The United States Court of Appeals for the District of Columbia held that a deputy White House counsel could not assert the attorney-client privilege to shield discussions with President Clinton about the case.

As those in the White House and elsewhere start to hire lawyers, another issue that will arise is the potential for conflicts of interest. The white-collar defense bar is a fairly small fraternity, and with so many repeat players there is the possibility that a previous representation will raise concerns about its impact on a new client.

Even Mr. Mueller faces the potential for a conflict of interest that could affect the investigation. Before his appointment last week, he was a partner at WilmerHale, one of Washington’s premier law firms with an extensive white-collar practice group that includes a former solicitor general, Seth Waxman, and a former director of enforcement at the Securities and Exchange Commission, William R. McLucas.

Reuters reported that among the firm’s clients are Jared Kushner, the president’s son-in-law, who is represented by Jamie Gorelick, a former deputy attorney general, and Paul Manafort, the former campaign manager for Mr. Trump. Both had contacts with Russians and therefore could be a focus of the investigation.

Under the legal ethics rules, a lawyer leaving a firm who did not represent one of its clients does not necessarily have a conflict of interest that would prevent pursuing an investigation of that person. But if Mr. Mueller brings in other lawyers from WilmerHale, then the issue of a potential conflict will have to be dealt with for each person hired to determine whether he or she had any involvement in the representation of Mr. Kushner or Mr. Manafort.

The independent counsel investigations of the 1990s are a good example of how a case can drag on for years and move in directions that were never anticipated. The investigation of Henry Cisneros, former secretary of Housing and Urban Development, lasted from 1995 until 2006, and veered off into a long-running inquiry into possible obstruction of justice by the Justice Department and the Internal Revenue Service, although no charges were filed on that issue.

The legal fees required to deal with Mr. Mueller’s investigation will be substantial, placing an enormous burden on those who do not have the resources of Mr. Trump and other wealthy members of his administration. As is often the case, the primary winners in an intensive investigation are the lawyers.

https://www.nytimes.com/2017/05/22/business/dealbook/lawyers-2016-election-investigation.html?ref=politics