Litigation: The expanded role of courts in settling government investigations
Traditionally, the role of a judge in reviewing an agreement to resolve civil or criminal charges has been very limited.
June 27, 2013 at 04:00 AM
14 minute read
The original version of this story was published on Law.com
Government investigations of companies typically end in settlements. These may be civil in nature, in which companies commonly agree to pay money and take remedial measures to deter and prevent the misconduct that the government alleges occurred. Settlements may also be criminal in nature—either agreements not to prosecute the company (deferred or non-prosecution agreements), or a guilty plea pursuant to an agreement negotiated with the prosecutor. Even when company leaders believe the government's contentions are wrong, the costs and risks of a fight with the government, particularly for a public company, usually lead to a resolution short of litigation, and certainly short of trial.
Traditionally, the role of a judge in reviewing an agreement to resolve civil or criminal charges has been very limited. Although the rules vary in the civil and criminal contexts, the essence is the same: Courts are obliged to consider the reasonableness and fairness of such an agreement in light of the public interest. In practice, courts have largely deferred to the views of the parties, particularly the government, and generally accepted the settlement without much difficulty.
This state of affairs is changing. In a growing number of cases, particularly those involving financial institutions, federal judges have started to scrutinize settlements much more closely than in the past, making a once very predictable and commonplace process a good deal more doubtful and complicated.
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