Dixie Johnson, a partner at King & Spalding (courtesy photo)

King & Spalding partner Dixie Johnson has been part of many internal corporate investigations in her 30-plus years practicing law. Now she has drawn on that experience to create a step-by-step guide for in-house counsel whose companies are considering such self-examination.

Washington, D.C.-based Johnson is on King & Spalding's special matters and government investigations team, and serves as deputy group leader for the government matters unit, a collection of 10 government-facing practices, including with the U.S. Department of Justice and the U.S. Securities and Exchange Commission.

Law firm partners Brandt Leibe in Houston and Grant Nichols in Austin, Texas, worked with her to create the "General Counsel's Decision Tree For Internal Investigations."

Corporate Counsel recently interviewed Johnson about the decision guide and her experiences. Here are excerpts from that conversation, edited for brevity and clarity.

Corporate Counsel: Why did you decide to create this decision tree for general counsel?

Dixie Johnson: I spend a significant amount of my practice time working with companies at the general counsel office level, or board level or both, on internal investigations—whether to launch one, what scope it should be and such. It's a very complex topic and takes a lot of thought to structure it in a way that looks ahead far enough but puts the focus on each moment very seriously. So I thought it would be helpful to create an outline to guide those conversations.

CC: This particular guide is aimed at the energy industry. Can it be used by other industries as well?

DJ: Yes, this has a broader appeal than just the energy sector. We rolled it out first because that is a significant part of our practice, but the plan is to modify it for other industries covered by our firm, including the life sciences, health care, financial services and potentially the automobile industry. A generic version of the article will be part of materials for the Practising Law Institute's annual securities program on Nov. 6 in New York.

CC: In one part the guide talks about who should oversee and who should lead an investigation. Do you believe the general counsel should be in one of those two positions?

DJ: Almost always. Obviously, if the conduct of the general counsel is at issue, then the general counsel shouldn't be part of conducting, leading or overseeing it. But generally, yes.

There is a sensible point that goes along with that, which is: If the general counsel reports up to officers whose conduct is under scrutiny, then it is important to create an independent reporting line that everyone understands, such as report directly up to the board. You never want a situation where a lawyer could be fired because she told the truth. Always be sure the general counsel is protected.

CC: When should an internal investigation be independent of the in-house legal department?

DJ: Sometimes there's a real need by the company to have a fresh look at facts and circumstances so that all constituents can see that everything has been run to ground without bias, and everyone can rely on the results.

One traditional area where that need arises occurs in securities litigation in a derivative context, where there is a worry by shareholders that people running the company are not acting in their best interest. If an independent committee of the board is established and hires independent advisers to seriously look at issues, then the court will usually defer to that independent effort.

It is also helpful when a company is under scrutiny for integrity issues, such as in the #MeToo context.

That's on one end of a spectrum—complete independence from the company. Not every situation requires that level of independence. It's a judgment call to be carefully considered at the outset—what level of independence is needed in the particular circumstances to be investigated.

CC: What are, say, three things you think are the most important pieces of advice for general counsel in investigations?

DJ: One is a reminder about how many constituents will care about the outcome. It's important to stay focused on the need for how to communicate effectively and appropriately with all those constituents. The general counsel is typically the one who helps the company remember all these constituents and think ahead on who needs to be briefed about what.

Second is to develop a plan and then revisit it along the way. These situations often are second-guessed after the fact, so it's really important at the outset to develop a good plan and to revisit it as things change and evolve.

Third, at the outset of an investigation it is good to have in mind how things might end. You need to plan for various outcomes. An item being investigated often has a segment of truth in the middle of it, but the picture when you assemble all the facts is not as alarming as you first thought.

Anticipating at the outset where the investigation might go includes what will happen if we find out there is no there there, who will need to know and how will it be communicated. If there is a big problem, we need to anticipate where that will go as well. If you don't have an endgame in mind at the outset, then things will constantly be frustrating and you will have more surprises than perhaps you needed to have.

CC: In your three decades of being involved in investigations, you must have seen some things go sour. Can you share some examples and any lessons learned?

DJ: In one situation we were brought in to investigate a collection of issues that we were told had already been investigated. But they hadn't. Therefore, this wasn't a "kick the tires on the prior investigation" assignment as we initially thought. The scope had to expand significantly to become a full investigation of the issues.

In another situation, a company identified a list of witnesses but we later found out it did not include people they knew were unhappy about the circumstances being investigated. It's helpful to develop a plan that includes how to address all potential witnesses.

The moral of these stories is to be upfront with your outside counsel from the beginning.