Mintz On Air: Practical Policies — Crisis Management: A First Hours Focus

An anonymous hotline complaint comes in. The allegations are serious. The clock is ticking. What should you do first?

In this episode of the Mintz On Air: Practical Policies podcast, host Jen Rubin is joined by Mintz Member Marc Axelbaum for a practical conversation on navigating the critical first hours of a crisis investigation.

Together, Jen and Marc explore key factors organizations should keep in mind when a corporate crisis arises, including:

• How to determine who the “client” is and who should lead the investigation
• When and how to engage outside counsel while preserving attorney-client privilege
• How to quickly build the right internal and external team (IT, HR, PR, and more)
• Common early mistakes, from mishandling communications to overlooking press strategy
• Why thoughtful planning, documentation decisions, and legal hold notices matter from the outset
• The role of empathy and human judgment in managing high-stakes, high-pressure situations

Designed for in-house counsel, board members, and corporate leaders, this episode offers practical guidance on responding decisively in the earliest moments of a crisis, while protecting credibility, maintaining control of the narrative, and supporting the people involved.

Mintz On Air: Practical Policies — Crisis Management: A First Hours Focus Transcript

Jen Rubin (JR): Welcome to the Mintz On Air: Practical Policies podcast. Today’s topic: Crisis Management: A First Hours Focus. I’m Jen Rubin, a Member of the Mintz Employment Group with the San Diego–based Bicoastal Employment Practice, representing management executives and corporate boards. Thank you for joining our Mintz On Air podcast. If you have not tuned in to our previous episodes and would like to access our content, visit us at the Insights Center at Mintz.com, or you can find us on Spotify. 

Today I’m joined by my San Francisco–based litigation partner, Marc Axelbaum, who has seen his share of — shall we say — predicaments. Marc is a versatile litigator whose practice encompasses criminal and civil cases, sensitive internal investigations, and disputes for high-net-worth individuals. Marc handles high-stakes matters across a broad range of industries, including technology with an emphasis on AI, life sciences, health care, financial services, real estate, energy, and construction. He was recently named one of the top 100 leading AI and legal tech advisors in the country by a leading publication, the only lawyer in the white collar and investigations category. Some of the most significant clients in the artificial intelligence industry consider Marc to be their trusted advisor.

So thank you, Marc, for joining the pod today. I’ve been looking forward to this discussion, not just because our practices often intersect, but because that collaboration typically occurs at the axis of matters that are urgent, super sensitive, and typically playing out in a number of dimensions — sometimes in the very public eye, with press attention becoming an important consideration. For that, I’m really grateful because I always learn something after working with you, and I appreciate you as a person.

Marc Axelbaum (MA): That was a lot to live up to. The feeling is very mutual, by the way, on working with you and learning from you. It’s true, our practices do overlap a lot, which we’ll probably get into. And hello listeners, thanks for listening to us today. 

JR: OK, enough with the accolades. People are waiting for substance here.

Crisis Management 101: First Steps in an Internal Investigation

JR: Mintz recently launched a Crisis Management Practice Group led by Marc and my partner Erek Barron out of our Washington, DC office. The purpose of that group is to leverage a multidisciplinary approach to solving some really touchy problems. The matters we handle are often bet-the-company, bet-the-reputation, or both — highly sensitive situations that can be really challenging for our clients.

I’d like to focus on what happens in the first hours of a crisis and provide some practical suggestions, with Marc’s help, about some things to think about as a crisis is unfolding. We all understand that one of the hardest things to do when things are moving at a rapid pace is to actually pause and think. My hope is that our listeners will leave this pod with a few tidbits they might call upon during one of those rapidly developing situations. 

I’d like to set us up with a scenario that is likely familiar to most professionals in the crisis business. Let’s say an anonymous complaint comes into the audit committee’s hotline accusing an executive of some credible-sounding, serious misconduct with respect to workplace behavior.

Let’s say, Marc, you get the call. Let’s assume it’s from the general counsel who’s been notified of the hotline report. And let’s assume it’s appropriate for the general counsel to run with the particular matter. Let’s turn to the triage the general counsel should do right away. Marc, what is the first step here?

MA: First question with any potentially emerging internal investigation, which I think is what this is, is to figure out who is going to be the client and who is going to therefore be directing the investigation. And there are generally a few possibilities. One is the company itself, meaning management running often through the general counsel, but not always. Another option would be the board itself. A third option, which is a common one, is the audit committee. You mentioned that this was an audit committee hotline, but even if it were coming in through any kind of hotline, especially allegations of financial improprieties and anything that would normally fall under the auspices of the audit committee, the audit committee might be the ones directing it.

Then sometimes there’s a need, depending on the nature of the allegations, to form a special committee of disinterested directors, occasionally even bringing new directors in for the purpose, depending on how widespread the allegations may be. My first question would be, who’s the client going to be? And that leads inevitably to another question, because if the allegations are serious enough, we’re going to need to get counsel on board and we’re going to need to have an engagement letter for that purpose.

If the general counsel is used to hiring his or her own regular outside counsel for the company — let’s say it’s an audit committee that’s going to need to lead the investigation, the audit committee should get an engagement letter with outside counsel that specifically runs to the audit committee. We’ll talk a little bit about that in a second.

You also want to focus on steps to preserve privilege, delineating the lines for communications, who’s inside and outside the scope of the privilege depending on the nature of the allegations, and then figuring out whether others in the organization might need their own lawyers, or getting requests from others for their own lawyers looking at indemnification obligations, corporate charters, and Delaware law, if that applies.

Those are some of the things I’d be looking at in those initial hours. And of course, there’s the one thing I didn’t say, which is, what’s alleged? What do we know at this point? Has anybody told me anything other than what’s on the whistleblower hotline? And is there anything I could judge from what I heard from that? Does this person sound like a crackpot or somebody who has substantive material information we need to take seriously? All of those are part of the triage process. 

Building the Investigation Framework and Assembling the Team

JR: So we’ve got, in the immediate aftermath of the report, the question of who is the client? Who was engaged as the lawyer to preserve the privilege? How is this going to move forward? That’s the basic framework. You know, once you have that basic framework, then what? How do you move on from there? 

MA: By the way, sometimes this could take more than the first few hours. It may be that there’s going to be back-and-forth talking to members of the board, talking to others in management, depending on the nature of the allegations. That may take a day or so. But once it’s ironed out, who’s going to be leading the investigation? That and hiring outside counsel, which we’ll discuss a little bit later in this podcast. You have to figure out who in that client group will be running point. Again, if it turns out it’s something that can be management-led, that person is often the general counsel or the general counsel’s designee, often in the law department.

If it’s the audit committee, it’s usually the audit committee chair. If it’s a special committee, it could be anybody. I’ve had investigations where we started out with an audit committee, but sometimes the allegations mushroom and maybe there’s concern about members of the audit committee being independent of the nature of the allegations, or somebody gets sick and you’ll have to nominate new directors. You want to actually paper that through corporate resolutions to make sure the right body has the authority to do the investigation and potentially come up with recommendations for remedial steps, depending on what the outcome is. So that would be the first thing: Who’s going to run that point?

The next question is, who’s going to be involved in the investigation in addition to the person who’s running point? Is IT going to need to be involved? Usually the answer is yes. For instance, typically we’re going to need to have a legal hold notice put out. We’re going to need to potentially make sure that emails, Slack messages, and other documents that are typically going to need to be reviewed in an investigation are preserved. You’ll want to make sure that is done properly at the IT level because sometimes you’ll hear, “we preserve everything.” But if you haven’t actually talked to the folks who turn the knobs and flip the switches, you may be missing something. Figure out whether HR needs to know about whatever the issues are — maybe there’s an employment law overlap. I’ve done investigations where there were both issues of alleged accounting fraud and at the same time issues about management improprieties that typically fall under the HR umbrella. This is why I often work with somebody like Jen in those types of investigations. Is there somebody in the finance organization that you need to be talking to throughout the investigation?

These are all things you’ve got to lay out: Who are going to be the players that you’re going to be in communication with? You also want to be aware of potential internal alliances. If the allegation is that, for instance, the CFO was cooking the books in some way, are you talking about the investigation with somebody who’s close with the CFO? You’re going to want to avoid that so that you maintain the integrity of the investigation. 

You’re also going to want to think about press. PR. This is perhaps the most important thing for many companies, depending on the nature of the allegations. Think about what this will look like on the front page of a newspaper or website or on social media. How can we help the company shape that narrative as much as we can? I often talk to my clients about retaining crisis management press outfits. There are a number of good ones, and they have different styles. That’s its own question. Do you want somebody who’s going to take an active role or be more laid back and passive? Some want to be their own spokesperson. Some will want someone within the company.

Another thing to think about is corporate governance. I often will work with a corporate lawyer who’s used to setting up the niceties of committee work and documenting deliberations of board members. I like to get the help of a corporate lawyer who’s used to creating the structure around board committee deliberations, making sure minutes are done properly. Those are the things I want to be thinking about. I want to think about SEC reporting obligations. Is this a public company? Are we going to be talking about restatements? Are we going to have to pull the financials for a quarter or more? Those are things we need to be thinking about right away and obviously talking in depth about with our clients. Is this something that presents the possibility of criminal law exposure? And do we want to start thinking about self-disclosure to the US Attorney’s Office? Because there are incentives for companies that take a proactive approach, report their own alleged misconduct, and work with the government on ferreting it out. 

I will also again talk a lot about financial advisors, which is so often the type of allegation that’s in an investigation. Do I need forensic accountants? The answer often is yes. If it’s something that’s deep in the books, forensic accountants can be a great adjunct to the investigation’s work — especially because we lawyers don’t do math in law school, and they usually did. 

Lastly, government relations, not just the US Attorney’s Office. Is there something that may be interesting to regulators of whatever this company is involved in?

Those are all the kinds of things I’m thinking about in the first few hours and talking to my clients about. 

JR: I’m a little overwhelmed hearing the list. We’ve got the who, we’ve got the what, and the how. We’ve got all these things to think about. As I mentioned at the beginning, it’s multidimensional.

Early Mistakes to Avoid During a Crisis Investigation

JR: It’s important to have an initial plan as you tackle these things, because there are so many different issues on the table in the first hours of a crisis. Having a plan and tackling that plan in a thoughtful way is the most sensible way to approach these things. Marc, can you talk about some of the things you should and shouldn’t be doing as you execute on that plan? 

MA: I’ve mentioned some of the things I would be thinking about doing. Let me focus on the don’t do part of your question. 

First let me come back to press. One of the biggest mistakes people make in the early hours of an investigation is not thinking about press and letting whoever is aware of the allegations talk to reporters without thinking about whether that’s a good idea and what should be said in those conversations. A good press consultant can help you get ahead of it. Do we want to be doing it on background, off the record? Do we want to be quoted on things? Often the answer is less is more — that’s generally my view — but it’s not always the right answer, depending on how high-profile the allegations are and depending on how leaky the organization is. You may have people within the company who have their own contacts with reporters, and you’re having to think about how to counter that narrative to the company’s benefit. These are things that can’t be scripted. They all depend on the facts. 

Another thing you need to think hard about is whether you’re doing a lot of written communication about the issue, because, as I am fond of saying and have said probably too many times, the only email that can’t be compelled to be produced or inadvertently disclosed is one that was never written in the first place. Obviously, if you’re at the point of an investigation, it’s probably too late to start telling people to be cautious about what they put in writing and that anything you put in writing might end up on the front page of The New York Times or its website — but you still want to be thoughtful about that in the middle of the investigation.

As an extension of that, there’s often a request for a report of the investigation. Once we do this full investigation, we collect all the documents, we interview all the witnesses, the client wants it tied up in a neat bow because that’s what they’re used to seeing. Some written product. I don’t always want that written product. I will often caution clients that it’s not such a great idea, for the reason I identified before: It can’t be compelled and it can’t be disclosed if it doesn’t exist. I like oral reports of investigation — and if there’s a need for writings, we take it as it comes.

Let’s take a more micro issue, but an important one: sending out that legal hold notice. Anybody who’s ever dealt with litigation has probably dealt with this. Telling people to preserve documents, making sure nothing gets inadvertently deleted. You have to be careful about how those notices are worded, because if the allegations are sensitive, or they’re about a high-ranking person or actually about any person in the company, you want to be specific enough to make sure the documents get preserved, but not so specific that you’re essentially calling the person out, saying bad things about the person, inadvertently or tacitly. But still being specific enough.

JR: That is something that is hard to balance, because you do have to make sure that people are preserving any potential evidence. But by the same token, typically when you’re doing an investigation like this, the last thing you want to do is have some sort of broadcast, company-wide, that there are allegations. As we know, sometimes the allegations turn out to not be accurate, and there are other consequences. 

Crisis Management Best Practices: Establishing Credibility and Supporting the Client

JR: Let’s pivot away from mistakes and let’s talk about some best practices our listeners might emulate as they move through the first hours of a crisis. And by the way, Marc, I want to tell you to not be worried about being self-serving, because this is a Mintz-sponsored podcast. With that said, what are some of the things people can do and should be doing? 

MA: I would say first call a lawyer you trust who has dealt with these sorts of issues, who has actually done an investigation before. I’ve got one I can recommend, who happens to be on this pod. 

JR: Call Marc Axelbaum! 

MA: There are plenty of good colleagues of mine out there! But yes, I’d like to think I do this the right way. In any event, the other thing you want to do is think about what you could do to make sure the client is feeling supported, not just legally, but emotionally. Typically in the matters I’m working on, not only in internal investigations, but on the white collar defense side, there’s a real human component. Often I’m working on my client’s worst nightmare, the thing that’s keeping that person or people up at night. You have to take a pause and make sure that folks are OK and managing expectations and providing them some anecdotes that might speak to them about their situation.

Some practical things I might suggest thinking about: I mentioned this at the outset, about hiring lawyers to advise whoever the client is that’s leading the investigation. One thing you want to think about is whether you should be using regular outside counsel. If the scope of the matter touches the C-suite or the people who are used to giving direction to those regular outside lawyers, are they the right people to be doing the investigation? Are you better off hiring someone you’re less familiar with specifically for the task? For example, signing a specific engagement letter with an audit committee coming in from the outside and working it, as you can. There actually are some reasons to do this in the public company context. Sarbanes-Oxley Section 301, Rule 10A-3, and then NYSE and Nasdaq rules, are keen on not just the independence of audit committees themselves, but their authority to engage independent counsel and other advisors.

So those are the kinds of things you want to think about, to maintain the integrity of the investigation so that it’ll have credibility going forward if you’re dealing with outside constituencies like the government, the US Attorney’s Office, the exchanges, the SEC — or if you’re dealing with private plaintiffs’ lawyers in shareholders litigation down the road. 

Protecting Attorney-Client Privilege and Managing Internal Communications

MA: This brings me to another practical thing I think people should think about — and I mentioned this earlier in terms of delineating who the client is and who’s inside and outside the scope of the privilege: Sometimes in an investigation when, for instance, a CEO or CFO is under investigation, you have to think about whether that person is somebody you can be communicating with, other than to gather facts or to interview that person and find out what that person has to say for himself or herself about the issues under investigation. Can you really talk to that person about what’s going on in the investigation? Often the answer is no. And if you’re violating that, are you then creating communications that are not privileged and that can be compelled, either if they’re in writing or if they can be compelled through discovery requests by private plaintiffs — or if you could put people in deposition chairs and ask them questions about those conversations.

There’ll be assertions of privilege waivers or there never being a privilege. This was a big issue a long time ago — some of us remember this. Stock options backdating investigations produced very significant shareholders litigation where that very issue was teed up and often went against the folks who were trying to preserve privilege over documents where the courts ruled that there were adverse interests, even within a company.

Managing a Crisis with Empathy

JR: I’d like to close with a best practice to emulate: There’s an important component that’s going to sound very non-trial-lawyer-litigator from our world where everything is supposed to be so hard-charging. Of course there’s that component of adversity — that’s at the core of what we do as lawyers in the courtroom. But Marc, can you speak to what I’m going to call “managing a crisis with empathy” and how that can impact how things are handled internally and what you do as a lawyer and why you think that’s important?

MA: This is a hugely important thing a lawyer can bring to the task at hand, not just knowing what the law is and how to conduct the investigation in terms of analysis and asking the right questions, processing the numbers, etc. A lot of it is just sitting down with your clients and talking through what’s bothering them. Hearing from them about what they’re worried about. Not just because that’s sympathetic or even empathetic — it’s often when you’ll get some of the most useful information for framing the overall story. So it serves dual purposes of developing both client satisfaction for feeling like the client’s been heard and understood, and also for figuring out how best to frame the story.

JR: It’s interesting and something I’ve been focused on in some of my other podcast episodes. This concept of the humanity of what we do. In this world of AI, everybody’s pushing things toward the technological focus. But I think having that person-to-person communication, asking questions like “why are you feeling this way?” or “what is important to you?” Understanding people’s motivations really does help you be a better lawyer. And having those conversations with empathy, I think, does make you a more effective crisis manager.

MA: You just reminded me of something. I had an investigation a few years ago, similar to the example we’ve been talking about, where a CFO was alleged to have engaged in accounting improprieties. This was a company on the cusp of being public. A very stressful situation for the company, taking them off their task. But also issues came up about this officer’s management style. What you’d hear consistently from employees when interviewing them was that this person was tough to work for. And you started wondering, is it possible that second set of allegations, that were on the softer side, were maybe leading to harsher judgments on the hard numbers? As it turned out, that actually was the case. Understanding those dynamics and being able to talk with the client about, for example, the potential benefit of some management coaching is helpful. That all gets into the human aspect of workplace situations, and if you’re not focused on that, you really can miss something. 

JR: I totally agree with that. Again, this goes back to the idea that empathy makes you a more effective crisis manager — being able to have that conversation with somebody and seeing them for who they are and understanding what the context is. I’m sorry, I don’t think AI is ever going to be able to replace our capabilities as humans to communicate with each other on that basis, at least as of yet. There’s always hope for us as humans. 

MA: Some of my clients in the AI industry might beg to differ, but I tend to agree with you.

JR: Understood. I think we can work together. AI can enhance us, right? But hopefully not replace us. So thank you, Marc Axelbaum. 

As a reminder about the firm’s launch of our Crisis Management Practice Group, led by our partner Erek Barron, a former US Attorney for the District of Maryland: Erek manages a multidisciplinary group of lawyers and crisis communications experts here at Mintz who work together to solve some of these delicate and human problems. For more information about that practice group and other thought leadership, visit us at the Insights Center at Mintz.com, and you can look for the Mintz On Air: Practical Policies podcast on Spotify.

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