The Stevens Case and Lessons Learned
Much has been written about the Laura Stevens case. You will remember that she was in-house counsel for Glaxo Smith Kline and indicted for obstruction of justice and false statements for submitting an incomplete response to an FDA inquiry letter concerning off-label marketing tactics. The federal judge in Maryland granted a Rule 29 Motion for Judgment of Acquittal and rebuked the prosecutors for bringing the case in the first instance.
It turns out that the US Attorney in Maryland refused to sign the indictment because he thought the evidence was insufficient to prosecute Stevens. It is clear that the prosecutors stretched the evidence. As the evidence showed, Stevens relied on outside counsel to advise her in preparing the response and conducting a search of responsive documents. The government’s position focused on the failure to turn over documents which were clearly relevant.
Putting aside the merits of the case and the problems with prosecutorial discretion, there are still lessons to be learned from the case. In-house counsel have a hard enough job as it is to worry about dealing with criminal liability in these circumstances. What are some of the lessons?
1. When responding to government inquiries, in-house counsel need to exercise caution. This may sound too obvious but in-house counsel in heavily regulated industries are frequently responsible for company submissions to the government. This is an area where the Justice Department has focused its attention. Criminal prosecutions against company gatekeepers are a high priority for the Justice Department and in-house counsel who are responsible for such responses are high on the target list. While it is clear that the Justice Department is trying to hold in-house counsel to a very high standard of conduct when responding to government inquiries, in-house counsel need to adhere to best practices when responsible for preparing the response to a government inquiry.
2. In conducting a document search in a company, in-house counsel need to document the manner in which the search is conducted. In order to avoid government challenges of a document production, in-house counsel need to conduct a search which is thorough, comprehensive and responsive. It is absolutely critical for in-house counsel to document each and every step undertaken as part of the search. If done correctly, this will help to defend against any claims of malfeasance. Although it may be difficult to adhere to this high standard in heavily regulated industries which have numerous interactions with regulatory officials, it is important to try and meet such a high standard.
3. In preparing responses to government inquiries, in-house counsel need to protect themselves by engaging outside counsel to create an advice of counsel defense, if necessary. For Laura Stevens, outside counsel’s role in assisting her in the response to the FDA was important in her overall defense. The Justice Department prosecutors could not overcome outside counsel’s role in the case, and was specifically cited by the judge when he dismissed the case. An advice of counsel defense is an important protection against DOJ’s “gatekeeper” prosecution strategy and may help to dissuade DOJ from such an obvious attempt to target gatekeepers in major companies.